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How the .0001% Made its Money


Stashed in: Wealth!, Zuck!, Peter Thiel, Billions!, America!, Charts!, Sergey Brin, Freakonomics

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1. Finance2. VC

3. Retail/Restaurant (geez, they obv lumped these together for effect. Am curious what the break down is individually)

4. Diversified (wtf does that mean)

5. Consumer

6. Media

7. Energy

8. RE

Diversified probably means two or more of these categories.

What I find fascinating is that you really do need at least a middle class background and a decent education to have a shot at rising to the top:

The data for the above charts comes from a research paper, "Family, Education, and Sources of Wealth among the Richest Americans, 1982-2012." Its authors - Steven Kaplan of the University of Chicago and Joshua Rauh of Stanford - argue that the rising share of the Forbes 400 List accounted for by technology and finance supports theories that explain America’s rising income inequality by how technology has favored the accumulation of wealth and made certain sectors more scaleable. Tech moguls like Mark Zuckerberg and Sergey Brin account for a rising share of new fortunes. But among all the businesses whose owners are on the list, the number with a strong technology component (such as energy companies using fracking) has increased from 7.3% in 1982 to 17.8% in 2011.

Over the last 30 years, income inequality has grown and intergenerational mobility has decreased. The rich are getting richer and drawing up the ladder to the upper class with them. 

The story differs for the members of the Forbes 400 List. 

Kaplan and Rauh find that America’s wealthiest are no longer a collection of Rockefellers and Carnegies. During the period the researchers investigated, the number of individuals on the Forbes 400 who were the first in their family to run a business rose from 40% to 69%. Sixty percent of individuals on the list grew up wealthy in 1982 while only 32% did in 2011.

Although being born into wealth is less and less necessary for admission to the club of America’s wealthiest individuals, being born into the middle class and getting a college education remains an important prerequisite. The percentage of Forbes 400 members without any college experience declined from 17% to 5% (although the number of college dropouts rose from 6% to 8%) and the share born into poverty stayed level at 20%.

America’s .0001% is becoming more meritocratic, but the means of a middle class background remain a necessary launching board. 

Peter Thiel's experiment to get people to forego college seems... Low probability of success.

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