Forbes spins a bogus Horatio Alger story about its 400 richest list

[salvorhardin]

Forbes touts its annual list of the 400 richest U.S. billionaires as evidence “that the American dream is still very much alive,” claiming that 70 percent of them “made their fortunes entirely from scratch.” I noted that in a post the other day, and questioned whether it was true.

Its not. The liberal group United for a Fair Economy has done the heavy lifting on Forbes’s bootstrappers, and its report, “Born on Third Base,” shows that the vast majority of the country’s plutocrats either inherited their money or had significant help from family members. What’s surprising is that this is surprising to Forbes.

Just 35 percent of the Forbes 400 last year were raised poor or middle class, compared to 95 percent of the broader public, as (reasonably) defined by UFE. Twenty one percent inherited enough money to join the 400 without lifting a finger, what UFE calls being “born on home plate.” Another 7 percent inherited at least $50 million or a “large and prosperous company,” 12 percent inherited at least a million bucks or a decent-sized business or startup capital from a relative, and 22 percent were “born on first base,” into an upper class family or got a modest inheritance or startup capital (UFE says it was conservative in assigning people to bases, so its report understates their advantages somewhat). So, at least 62 percent did not, in fact, make their fortunes “entirely from scratch.”

In other words, contra Forbes’s assertion, its 400 list is more a picture of class immobility and stratification than a portrait of an American dream of opportunity for all if who are willing to work hard. It has gotten the story exactly backward.

Full smackdown: http://www.cjr.org/the_audit/made_from_scratch.php

[no_hypocrisy]

1. Donald Trump's version of Horatio Alger would be he's from Queens.

Except he doesn't want anyone to remember that or that he inherited his wealth, not built it.

[HughBeaumont]

2. Yet another smackdown on the Forbes vanity list from 2007:

http://www.commondreams.org/archive/2007/11/07/5075

To see what's wrong with this idea, it's easiest to start with criteria that ought to disqualify a person from claiming to be "entirely self-made." After we've applied these criteria, we can see who's left in the pool. So, then, let us scratch from the list of the self-made anyone whose accumulation of wealth has been aided by any of the following:

* Laws concerning property or contracts, and the public agencies that enforce such laws
* Public schools or employees educated in public schools
* Employees or customers who rely on public transportation
* Roads, bridges, airports, sewers, water treatment plants, harbors, or other utilities built and maintained at public expense
* Mail systems built and operated at public expense
* Public hospitals and government-licensed physicians
* Health and safety regulations created and enforced at public expense
* Police and fire protection provided at public expense
* Public libraries and parks
* Any public amenities that add value to commercial or residential real estate
* Government contracts
* Government-provided business incentives
* Regulatory agencies, such as the Federal Trade Commission or the Securities and Exchange Commission, that sustain trust in the stock market
* A government-granted license permitting the exclusive use of a broadcast channel
* The Internet
* A form of currency legitimated and backed by a stable government
* Social welfare programs that keep the poor from rebelling
* The U.S. military

If we use these criteria to determine who can legitimately claim to be "entirely self-made," the Forbes number drops dramatically. It's not 270 out of 400. In fact, it's precisely zero.

If not for the legal and political arrangements that we create and maintain as a society -- with contributions from us all, costs to us all, and benefits to us all -- and if not for what we call "the public infrastructure," nobody could accumulate wealth. In short, there can be no private wealth without common wealth.

Forbes and the economic class it represents would like us to forget that wealth always depends on collective effort. Why? Because of what the "entirely self-made" myth implies: If I have amassed a fortune solely through my individual talent and hard work, then it is wrong for the government to take any of it away. By further implication, taxation is wrong, and progressive taxation is really wrong.

[Egalitarian Thug]

3. Thanks for finding and posting this. I was tempted to point out Forbe's BS when I heard it

a couple days ago, but figured it wasn't worth it while the election circus is in town.

[salvorhardin]

4. Columbia Journalism Review is great at scrutinizing counterfactuals in the media

They're also an excellent place to find out about excellent investigative journalism. In particular, Ryan Chittum (the author of this article) does excellent work on business and economic reporting. CJR does have some right wing contributors, and if you're not a journalism geek their full feed might be a bit of an overload, but overall I think it does important work.