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June 27, 2008

The Billionaire Society

Niko Karvounis

This year Forbes magazine listed 1,125 billionaires in the world, compared to 946 in 2007--and a measly 140 billionaires in 1986, the first year of the publication's ranking. Clearly, the ranks of the billionaire class have swelled.

This week, The Century Foundation hosted a three-day conference on "Billionaires and Their Impact" as a session of the 2008 New York Times Journalism Institute, which seeks to inform and enlighten prominent journalists on important--and under-reported--issues.

You might think that the identities and exploits of America's billionaires are anything but underreported--and you'd probably be right. We hear a lot about Bill Gates, Warren Buffet, Rupert Murdoch, and all the rest; but what we don't hear all that often is what's going on around them. How does the rise of billionaires tie into inequality? To globalization? What is their influence on society and politics? In short, what does it mean to live in the 'Billionaire Society'?

According to Tom Hertz, a professor of economics at American University and a presenter at the event, one thing it doesn't mean is that America has some special claim to being the land of opportunity--at least in the way we usually think of it.

Looking at the Forbes list of billionaires between 2003 and 2007, Hertz found that, across most continents, a similar proportion of billionaires is classified as self-made:

Landofopportunity

Note that the odds of becoming a billionaire are slightly better in the U.S. than in most other places (i.e. the ratio of billionaires to general population is highest here), but that, save for the Middle East and Africa, which, Hertz notes, tend to have very precarious economies hampered by the effects of monarchy, the odds of a billionaire being a self-made man or woman are about the same everywhere. Our moguls aren't that different from those in other nations.

This may come as a surprise. As Americans, we tend to think that the U.S. is a world leader in socio-economic mobility--and that, by extension, a greater share of people reach the pinnacle of wealth by their own efforts. But this doesn't seem to be the case. Nor is it true that America is the most mobile of nations, even for those of us outside the ranks of the billionaires club.

Julia Isaacs, a fellow at the Brookings Institution, showed some compelling data at the conference, noting that the class structure of the U.S. is a lot more rigid than you might think. While the proportion of people in the top quintile of income earners who stay rich is about the same in the U.S. , Sweden, Denmark, Finland, Norway, and the U.K. (somewhere around 35 percent), a greater share of Americans in the lowest quintile of earners stays poor (42 percent) than in these other nations.

Richmensclub

Taken together, the numbers from Isaacs and Hertz make for a compelling one-two punch: the richest folks in America are no more self-made than their international peers, and our poorest citizens have less of a chance of moving up than their global counterparts. Now that doesn't sound like socioeconomic mobility, does it?

But don't fret, if worse comes to worse, you can always try to rake in the billions via hedge fund. Professor Steven Kaplan from the University of Chicago Business School spoke a little about the rise of mega-money on Wall Street, and offered the following graph of hedge fund profits over time:

Hedgefund

Yep, that's right: hedge funds raked in almost $80 billion in fees in 2007. Talk about bringing in the bucks! Here's a good question to ponder: how many of those making a mint off hedge funds--billionaires or no--do you think come from the lower income quintiles of America? My guess is not too many.

The concept of the Billionaire Society where individuals make obscene amounts of money is very sexy, but for those who value the principles of the American dream--entrepreneurial spirit, upward mobility, and societally productive means of wealth creation--it's not all it's cracked up to be.

Look for more posts coming out of this conference--including video highlights of the proceedings--in the near future.

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Comments

Rejino Abraham

how can we reach these people inorder to invite them for a social function.

Eduardo Adalrerto

THIS MAIL IS ANCHORED ON A STRONG DESIRE TO OPEN A BUSINESS RELATIONSHIP WITH YOU. I AM THE CHIEF ACCOUNTANT WITH THE NIGERIAN NATIONAL PETROLEUM COOPERATION (N N P C) LAGOS. EDUARDOR ADALRERTO BY NAME FROM SEVILLE ANDALUSIA IN SPAIN .AND MY SCHEDULE OF DUTIES COVERS THE SUPERVISION OF PAYMENT MADE TO FOREIGN CONTRACTORS FOR THE NIGERIAN NATIONAL PETROLEUM COOPERATION ( N N P C ).
I AM CHARTERED TO BE APPOINTED AS ONE OF THE SEVEN MEMBERS OF THE CONTRACT AWARDING COMMITTEE (C A C) OF THE COOPERATION. IT IS THE DUTY OF THIS COMMITTEE TO CONSIDER TENDERLY AND AWARD CONTRACTS TO QUALIFIED CONTRACTORS.
DURING THE SECOND QUARTER OF THE YEAR 2006, THE FEDERAL GOVERNMENT AWARDED CONTRACTS FOR THE EXECUTION OF SEVERAL PROJECTS FOR THE NIGERIAN NATIONAL PETROLEUM COOPERATION ( N N P C ) THIS PROJECTS WERE LAYING OF UNDERGROUND PIPES TO VARIOUS PART OF THE COUNTRY FROM LAGOS STATE AND THE CONSTRUCTION OF OIL DEPOT IN SOME LGA IN LAGOS STATE WHICH WAS ABOUT US$90,000,000 (NINETY MILLION DOLLARS ) . ALL THE PROJECTS WERE FINALLY COMPLETED THIS YEAR 2008 BY THE CONTRACTORS. BUT INCIDENTALLY, THE TOTAL CONTRACT SUM WHICH IS US$90,000,000 (NINETY MILLION DOLLARS ) WAS OVER ESTIMATED BY THE CONTRACTORS AND OVER INVOICED BY THE FEDERAL GOVERNMENT .US$90,000,000 ( NINETY MILLION DOLLARS ) WAS THE ESTIMATION FOR THE CONTRACT AND CONTRACTORS .US$60,000,000 (SIXTY MILLION DOLLARS) COVERED IT ALL.
FINAL PAYMENTS HAS SINCE BEEN MADE TO THE CONTRACTORS WHILE THE SUM OF US$30,000,000 (THIRTY MILLION DOLLARS) WAS LEFT IN A DOMICILLARY ACCOUNT OF FIRST BANK OF NIGERIA PLC UNDER THE CARE OF THE CHIEF ACOUNTANT OFFICER OF FIRST BANK O F NIGERIA PLC LAGOS BRANCH.THE GOVERNMENT HAD TO OPEN A DOMICILIARY ACCOUNT BECAUSE ALL THE IMPLEMENTS, EQUIPMENTS AND TOOLS USED FOR THIS PROJECT WERE BOUGHT ABROAD AND THE PAYING OF THE CONTRACTORS WERE ALSO BY TRANSFER.
DOMICILIARY ACCOUNT IS AN ACCOUNT USED ONLY TO SEND MONEY OUTSIDE A COUNTRY NOT FOR SAVING AND ONLY THE RIGHTFUL OWNER CAN WITHDRAW THE MONEY IF HE CHANGES HIS MIND ABOUT SENDING.BEFORE THE EXECUTION OF THIS PROJECT BEGAN, THE FEDERAL GOVERNMENT MADE INVOLVED THE FEDERAL JUSTICE OF LAGOS STATE TO ASSIST ME IN THE SUPERVISION OF ALL PAYMENTS TO BE MADE TO THE CONTRACTORS AND EVERY IMPLEMENTS,EQUIPMENTS AND TOOLS BOUGHT FOR THE TWO YEARS SCHEDULED FOR THIS PROJECTS.A MONTH AGO AFTER PAYING UP ALL THE EXPENSES LIKE I SAID , US$30,000,000 (THIRTY MILLION DOLLARS) WAS LEFT IN A DOMICILIARY ACCOUNT OF FIRST BANK O F NIGERIA PL C ,
THE FEDERAL JUSTICE OF LAGOS STATE SUMMONED A MEETING PRAISING US FOR A JOB WELL-DONE , ALL THAT WERE INVOLVED IN THIS OVER HONESTY AND SINCERITY . AT FIRST , NO OF US KNEW WHERE HE WAS DRIVING AT .BUT FINALLY,HE ASKED THE CHIEF ACCOUNT OFFICER OF FIRST BANK OF NIGERIA NOT TO RETURN THE MONEY TO THE FEDERAL GOVERNMENT.WE SHOULD SHARE IT ALL.FOR THE FEDERAL GOVERNMENT NOT TO FIND OUT , WE HAVE TO TRANSFER THIS MONEY ABROAD.SO IT WILL BE CLEAR ON THE DAY OF INSPECTION THAT ALL WERE USED FOR THE PROJECT.THE FEDERAL JUSTICE AND THE CHIEF ACCOUNT OFFICER HAD TRANSFERED THEIRS ,US$5,000,000 (FIVE MILLION DOLLARS) EACH TO THEIR FAMILIES ABROAD . THE CONTRACT AWARDING COMMITTEE (C A C) HAS ALSO TRANSFERED THEIRS US$2,000,000 (TWO MILLION DOLLARS) EACH ALSO TO THEIR FAMILIES ABROAD, LEAVING US$6,000,000 (SIX MILLION DOLLARS) FOR ME AS THE HEAD OF THE SUPERVISING TEAM.BUT AS IT IS NOW,MY FAMILY IS HERE WITH ME SO I INTEND TO TRANSFER MY SHARE US$6,000,000 (SIX MILLION DOLLARS) TO A FOREIGN ACCOUNT WHOSE OWNER WILL PROTECT MY INTEREST
I GOT YOUR ADDRESS OUT OF DESPERATION AND THROUGH MY PERSONAL RESEARCH. TO CLARIFY YOU FURTHER ON THE PROPOSAL, THERE IS NO RISK INVOLVED AS THIS TRANSFER OF US$6,000,000 (SIX MILLION DOLLARS) AND ITS ARRANGEMENTS WILL DIRECTLY HANDLED BY MY OFFICE TOGETHER WITH TOP OFFICIALS OF THE COOPERATION, FIRST BANK OF NIGERIA PLC AND THE FEDERAL JUSTICE OF LAGOS STATE.
I HAVE THEREFORE RESOLVED AND DECIDED TO SEEK YOUR ACTIVE COLLABORATION AND ASSISTANCE IN EXECUTING THIS DEAL AND THE TERMS ARE AS FOLLOWS:

1: 90% OF THE MONEY WILL BE FOR ME WHICH BIS US$5,400,00

2: 10% OF THE MONEY WILL BE LEFT IN YOUR ACCOUNT AS YOUR BENEFICIARY WHICH IS US$600,000

THE PROCESSING OF THIS WILL NOT LAST BEYOND TWENTY BANK WORKING DAYS FOR SECURITY REASONS. IF YOU CONSENT TO THIS PROPOSAL, YOU ARE THEREFORE REQUIRED TO SEND DOWN THE FOLLOWING DOCUMENTS.

1: COMPLETE PARTICULARS OF THE BANK WHERE YOU WISH THAT THE FUNDS BE TRANSFER TO

2: A COPY OF YOUR INTERNATIONAL PASSPORT TO BE SURE OF WHOM WE ARE DEALING WITH

3: YOUR COMPANY’S ID CARD

4: YOUR HOUSE ADDRESS

5: YOUR OWN PRIVATE FAX/TELEPHONE NUMBER FOR EASIER COMMUNICATION WITH YOU


PLEASE, DO NOT CONSIDER THESE REQUESTS OF DOCUMENTS AS A BURDEN OR BARRIER.KNOW IT WELL THAT THIS IS THE FIRST BUT NOT THE LAST BUSINESS I WILL BE DOING WITH YOU, IT IS WELL KNOW IN MOST PARTS OF THE WORLD THAT NIGERIA DOES NOT HAVE A GOOD REFINERY.THE GOVERNMENT HAS SIGNED THE CONTRACT PAPERS FOR THIS PROJECT TO COMMENCE NEXT YEAR OF WHICH I AM SURE THAT WE WILL STILL BENEFIT FROM IT.WHEN YOU SEND THE REQUIRED DOCUMENTS,I WILL FORWARD IT TO THE CHIEF ACCOUNT OFFICER OF FIRST BANK THEN THE MONEY WILL BE TRANSFERRED TO YOUR ACCOUNT
THANK YOU.

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