Pretty encouraging

Oxfam has released a report claiming that the top 80 wealthiest people in the world own more wealth than the bottom half of the world combined, i.e. the poorest 3.6 billion people. The Pareto distribution of wealth is always of concern to progressives, seeing, as they do, income (from which wealth is derived) as a zero-sum game. From an economics perspective, the empirical evidence for the detrimental effect of Pareto wealth distributions is much less clear save in the most extreme cases. An economist is less concerned about the existence of a Pareto distribution and is more concerned about how wealth was generated. In crude terms, in a well regulated free market system, extreme returns merely reflect a superior capability of meeting the freely expressed desires of a population with goods or services that create value for the recipient. What an economist is concerned about is whether wealth is generated through non-value creating activities such as inherited wealth, wealth generated through corrupt actions (against the law), and wealth created through market manipulation and curtailment of choice such as monopolies, rent seeking and regulatory capture.

None-the-less, the Oxfam exercise is an interesting view into how wealth is created and by whom. FiveThirtyEight has a summary here.

Americans represent some 5% of the world's population but Americans are 44% (35 of 80) of the world's richest people. The 35 Americans represent 50% of the total wealth of all the 80.

66% of those 35 Americans are self-made millionaires, somewhat higher than for the world at large (60% being self-made outside of the USA). Twelve of the 35 inherited their wealth though two of those twelve have multiplied their inheritance many times since their inheritance.

There are only eleven women on the global list of 80, six of whom are American (55% of the world's wealthiest women). All six American women inherited their wealth from husbands or fathers. Six American men inherited their wealth as well. All five of the non-American women inherited their wealth from their fathers but two of them have multiplied their inheritance significantly since their inheritance.

Concentrated wealth is most repugnant when it arises from regulatory capture, rent seeking, and corruption. Very positively, for none of the Americans is there a robust argument on any of those accounts. While the two Koch brothers are a favored bete noir of the Left, with a plethora of wild accusations, there is no evidence that they are anything other than honest, hard-working businessmen.

The same is not quite true at the global level. Roughly 16 of the 45 non-American billionaires have fortunes founded on expropriation, government cronyism, or other such activities.

None-the-less, the list of 80 is a pretty powerful anecdote for the gloom and doom that sell newspapers. Americans are still disproportionately productive. 63% of all billionaires are self-made which is hugely impressive. 80% of all billionaires made their money relatively cleanly, i.e. not through exploitation of regulatory or government favors. Of the 30 who inherited their wealth, more than half have significantly expanded their inheritance. Nineteen other countries have produced billionaires that make the top 80 list including members from every race and from all continents.

All in all, pretty encouraging once you set aside an aversion to the reality of Pareto distributions.