Evaluating wealth in America shows we are indeed in the beginnings of a new economic revolution . . .
Aristocracy of Talent: Social Mobility Is the Silver Lining to America’s Inequality Crisis | Newgeography.com
. . . which is creating new billionaires and will soon be infusing the entire country with massive, before unseen, wealth.
"Yes, wealth concentration is insane. But the ways in which wealth is shifting are surprising—and give reason for a little optimism.
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To get a sense of these trends, researcher Alicia Kurimska and I tapped varying analyses from the Forbes 400 list of richest Americans. No list, of course, captures all the relevant data, but the Forbes list (I am a regular contributor to that magazine’s website) allows us to look not only at who has money now, but how the dynamics of wealth have changed over the past decade or more.
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What we are talking about is a concentration of wealth and power unprecedented since the turn of the last century. According to an analysis by the left-leaning Institute for Policy studies, America’s 20 wealthiest people own more wealth than the entire bottom half of the population—152 million people in 57 million households. The top 100 own as much wealth as the entire 44.5 million-strong African-American population (there are only two African Americans on the list), and the top 200 have more than the entire 55 million-strong Latino population (there are 15 Latinos on the list). To make an international comparison, the 400 have more wealth than the GDP of India, arguably the most up and coming big economy on the planet.
The Rise of the self-made
Not all the news is bad, however. The proportion of the 400 who inherited their money has been steadily decreasing. There are more self-made billionaires than existed in the 1980s. Kaplan and Rauh report that since the 1980s the share who grew up wealthy fell from 60 percent to 32 percent.
This does not mean so much the return of Horatio Alger --- the share who grew up poor remained constant at 20 percent --- but that most super-wealthy came from affluent but not rich families, which gave them some head start, notably in education.They did not hand the keys to the kingdom to their offspring. Rather than country clubbers clipping coupons, the rich since the 1980s have become largely, if not entirely, self-made."
Kotkin and Kurimska go on to discuss which industries have created this wealth, which regions have attracted the wealthy, and then wrap up with a summary. Read it all it is worth your time.
None of this should be a surprise, but Kotkin does seem to be surprised, and his conclusion seems very misplaced. At one point he compares the current crop of wealthy with the post WWII wealthy, and at another he compares them to the turn of the 20th century wealthy, but todays wealthy do not resemble those groups. Turn of the 20th century, and post WWII wealth occurred in the middle of the Industrial Revolution, both were making wealth only once the new economic model was set, and long after the confusing early wild, wild west period.
Today we are in the midst of creating a new economic model, which will transform society, work, culture, economy, technology, personal lives, living arrangements, housing, everything really.
It would be most appropriate to look back at the changes at the end of the hunter/gatherer period going into the Agricultural Revolution, but there are no records for this. However, it is the time when humans underwent the most massive changes to each and every institution. The next most appropriate time would be to look at the change from the Ag Revolution to the Industrial Revolution. While the changes here were dramatic, I suspect they will ultimately prove less extensive then the changes we will see with the current shift to the Information Revolution.
I find the weakening of the position of the average person to be essentially something we should expect. The average person does not have the skills or knowledge to be maximally productive in the new economy, so he remains in the old, and that, of course, pays much less. Only a few people, and, they only accidentally, discover the things which will form the new economy, even fewer capitalize on these findings. Those that do become billionaires. The wealth inequality is a natural spasm which occurs due to the chaotic changes occurring to nearly all human institutions. As the economic model becomes more well known, the lottery like effects of the early period will lessened, and more people will be able to follow the model, and build wealth, albeit a far lesser amount than the early transition "lottery" billionaires
To reach steady state, the Ag Revolution took millennia , and the Industrial Revolution took more than a century. The Information Revolution will only take a few decades. The result with be income inequality, for a while, then a shift where the average person becomes increasingly productive within the new economic framework. This does assume we will follow the same longterm pattern after revolutionary economic change. I can see no reason why that would change during this economic revolution.
Kotkin ends with this graph, "The prognosis for the future of American wealth, then, is for an ever-expanding role for both tech and private investors, and a gradual shift away from basic industries that are geared to our diminishing middle class. This may not be good for America but will be wondrous indeed for the ever more powerful, and outrageously wealthy, new ruling class."
If this is a short term prognosis, I would agree, if it is longterm, I would strongly disagree. I fully expect that by 2100 we will see the average American's life will have improved by an order of magnitude. The comparison would be to compare lifestyle between 1700, near the end of the Ag Revolution, to the lifestyle of the average American today.
Just as the accumulated wealth during the initial decades of the Industrial Revolution propelled it to its peaks in the late 20th century, so will the wealth created today propel the Information Revolution to even more incredible peaks.
While the next few decades will be problematic, what with the decline and fall of the blue model economics, our children, in the end will lead wealthier, safer, and more productive lives than we.