The Guardian tells us that the richest families have been getting ever richer. This should not happen – therefore abolish capitalism:
Self-made billionaires including Jeff Bezos and Elon Musk made huge profits during the Covid-19 pandemic but a new report shows there’s no beating family money when it comes to getting – and staying – really, really rich.
Ten of the US’s richest families, including the Walmart family and the dynasties behind industries including candy and cosmetics, also saw their assets balloon over the pandemic, with a shared increase in their combined net worth of over $136bn in 14 months, according to a report by the Institute for Policy Studies (IPS) published on Wednesday.
Hmm, well, that’s sounding all a little Piketty. The rich get and stay rich, we must do something!
Dynastic family wealth grew 10 times the rate of ordinary families. For the 27 families that were on both the Forbes 400 list in 1983 and the Forbes Billion-Dollar Dynasties list in 2020, their combined assets have grown by 1,007 percent over those 37 years. This is an increase from $80.2 billion to $903.2 billion in inflation-adjusted dollars. In contrast, between 1989 and 2019, the wealth of the typical family in the U.S. increased by just 93 percent in inflation-adjusted dollars.
Ah, yes, so they are in fact being that stupid. Their method of measurement builds in survirvorship bias.
Yes, this is important. They are counting those who are rich now and those who were rich then. OK. They are counting only those who are rich now and also only those who were rich then. But in order to conclude – or even discuss – whether the rich get and stay rich we need to look at who were the rich then and who are the rich now?
To look only at those who were or are rich twice is to limit our data set to those who are rich both times. Which is to already select from that list of rich people both then and now.
To see what I mean consider this:
The Forbes 400 Hall Of Fame: 36 Members Of Our Debut Issue Still In Ranks
Now that’s making a different mistake, in that folks who died but without counting them as dynasties will have fallen out of the list. And yet, you know, a more than 90% turnover of folks in the top rich list isn’t quite the same story as the rich get and stay rich now, is it?
Few of today’s readers would likely remember the gentleman who topped the original list: Daniel Keith Ludwig, with a $2 billion fortune, or about $4.8 in today’s dollars. Press-shy Ludwig ran a shipping outfit that built tankers for the US during World War II and is credited with creating the first supertanker.
Yes, he also then went on to lose almost all of it with, umm, rubber in the Amazon? Something like that.
So, what IPS is doing is starting out with a list of folks who stayed rich. Then claiming this is evidence that people who got rich stayed rich. It, for example, leaves out the Stroh family who did in fact lose it all over this period:
Yet today the Strohs, as a family business or even a collective financial entity, have essentially ceased to exist. The company has been sold for parts. The Stroh Companies has doled out its last dividends to shareholders. The last remaining family entity owns a half-empty office building in Detroit. While there was enough cash flowing for enough years that the fifth generation Strohs still seem pretty comfortable, the family looks destined to go shirtsleeves-to-shirtsleeves in six.
Yes, there is a certain elegance to using a Forbes article to make the point. They’re only measuring the survivors.
Then there’s this, just a factual point:
In 2020, America’s 50
wealthiest billionaire family dynasties together held $1.2 trillion in assets. By
comparison, the bottom half of all U.S. households—an estimated 65 million families—
shared a combined total wealth of just twice that, at $2.5 trillion.
As we know from Saez and Zucman the bottom 50% of a wealth distribution never do have much above 5% anyway. The main driver of this being that it’s possible to have negative wealth – a large portion of the world’s poorest, by wealth, are the young in rich countries who have borrowed to invest. Borrowed to invest in something that isn’t counted as a financial asset – say, a degree. And yes, these folks are poorer, by wealth, than some peasant in India because no one will lend to the peasant therefore he can’t have negative wealth.
It’s also true that these 25 families hold perhaps 1% of American household wealth (which is, around and about, $100 trillion). Scary, eh?
Then one more statistical point. They’re measuring “families”. Lord alone knows how many Pritzkers there are out there but they seem to have had at least one to spare to misgovern Illinois (is it?). Measuring by family over the generations doesn’t quite work of course, as the number of people in the family does tend to increase over said generations. That there are 5,232* trying to live off the Rockefeller money, 2,300** off the Kennedy, is the way that dynastic wealth does diminish. Counting them all as the same dynasty doesn’t, really, quite work, does it?
But if we really want to see casuistic bollocks try this:
For the most part, these are relatively small, closely-held private foundations where family
members control the giving decisions.
Yep, even when they “give” the money away they still control the foundations.
In 2018, the 248 private foundations managed by dynastically wealthy families paid out grants
to charity at a median rate of 5.7 percent of assets, just slightly higher than the 5 percent
minimum mandated by charitable giving laws.
Folks obey the law! Then they praise this:
Since Walter’s death, Annenberg’s tight-knit group of descendants has, in
turn, given much of their time and wealth to the his foundation; his daughter Wallis is the chair,
and three of his grandchildren sit on the board. The foundation currently has assets of almost
$1.5 billion and gives out well over a hundred million dollars each year in grants, including
significant support for the Public Broadcasting Service and four schools of communication,
public policy, and education at major universities across the country.
Which is 6.6% of assets. Who knew that under a percentage point made the difference between laudable and miserly?
Koch was one of the co-founders of the seminal Cato Institute71 and the founder of the
Charles Koch Institute72, both libertarian public policy think tanks. He founded Citizens
for a Sound Economy73, an advocacy organization that helped to create the Tea Party
movement, and that is now split into separate groups focused on anti-tax lobbying and
funding political campaign ads.
Koch also founded the Bill of Rights Institute75, a nonprofit that provides material for
high school social studies classes across the country that, in the words of one expert,
“cherry-picks the Constitution, history, and current events to hammer home its
libertarian message that the owners of private property should be free to manage their
wealth as they see fit.
And he’s a bad guy, obviously.
But do’ye see why he is? He’s spending his money on things the IPS thinks are bad things. The Annenbergs are spending their money on things the IPS thinks are good things. Thus the different treatments.
So, they start with an horrendous statistical bias towards survivors only, miss entirely the economics of both wealth distributions and also family sizes and go on to reach tendentious conclusions through casuisty.
Oh well, what did we expect from progressives?
BTW, here’s the IPS funding list:
American Postal Workers Union
Common Counsel Foundation
International Union of Bricklayers and Allied Craftworkers
Lucy and Isadore B Adelman Foundation
The Moriah Fund Inc.
Open Society Foundations
Park Foundation, Inc.
Rockefeller Brothers Fund
Sally and Dick Roberts Coyote Foundation
Samuel Rubin Foundation
Schumann Media Center
Sigrid Rausing Trust
Stewart R. Mott Foundation
The Annie E. Casey Foundation
The Atlantic Philanthropies
The Bauman Foundation
The James Irvine Foundation
The Nathan Cummings Foundation
The Progress Fund
The WhyNot Initiative
Unitarian Universalist Veatch Program at Shelter Rock
W.K. Kellogg Foundation
Wallace Global Fund
Warner Fund Inc., The
William H. Donner Foundation
I assume that last funds barbeques in the California mountains.
This is fun, isn’t it? Kellogg, for example, has been dead this 70 years but his foundation is top notch. The report actually says so. Because, of course, his carefully foundationed wealth supports the IPS. You know, familial philanthropy is just fine if it does good things.
Hypocritical tossers is all we need to know about these folks.