Billionaires have never been popular, but today they are hated. Politicians in the US Congress talk about them more than ever, usually to decry their ill-gotten gains or their malign influence on politics, or to insist that their wealth needs to be taxed (see Chart 1). According to Stanford University’s Andrew Hall, Democrats are three times more likely to mention billionaires in fundraising emails — and almost always negatively — as they were in 2024. “Every billionaire is a policy failure” is a common cry of the left, linking members of the ten-figure club to the rigged economy and social decay.
Yet just as politicians think they have delivered a winning message, something unexpected happens. More and more billionaires acquire their wealth not by accidents of birth or by gaming the system, but by providing useful goods and services and employing thousands of people. Perhaps billionaires are still policy failures – but to a lesser extent than before.
Many billionaires are undeniably weak. John D. Rockefeller, possibly the first person in history whose net worth surpassed $1 billion (and in early 20th century prices), was a genius. But his company, Standard Oil, also took advantage of weak competition laws and probably paid bribes to stack the deck in its favor. The oligarchs who emerged in Russia in the 1990s seized state assets during a period of violent anarchy. And dubious wealth is a satirist’s dream: C. Montgomery Burns, in “The Simpsons,” skimps on safety at his nuclear plant to cut costs.
The surge in anti-billionaire sentiment reflects several forces. After living standards have taken a hit due to high inflation in a few years, people are looking for someone to blame. The idea is that billionaires use their market power and buy political influence to charge higher prices for everything from housing to groceries, and then pay lower taxes on the profits. Thus the “power crisis” and powerful billionaires are two sides of the same coin. And political strategists, primarily but not exclusively on the left, have realized that billionaires are the absolute enemy. Taxing their wealth would almost certainly not affect any voter the voter has never met.
Yet many billionaires make their money without any indication that they enjoy dubious monopolies or political backing. Oprah Winfrey, who is worth $3.4 billion today, has become rich because millions of people want to see and hear her. Cristiano Ronaldo’s nine-nil fortune hinges on scoring wonder goals. Others are less famous, but equally influential. Panda Express co-founder Peggy Cherng is worth perhaps $6.5 billion, having built a restaurant chain that serves affordable meals to millions of people. Yanai Tadashi, with a net worth of tens of billions, created Fast Retailing, the parent company of Uniqlo. Can you really be angry at someone who makes such great t-shirts?
The Economist has quantified the better (Ms. Winfrey, Mr. Yanai) and worse (Mr. Burns) types of billionaires’ wealth. Based on data from Forbes, a magazine, Hurun, a research firm, and Gapminder, a Swedish foundation, we have compiled a list of nearly 7,000 billionaires of the last 25 years. We call a billionaire’s wealth “unrealized” when it comes primarily from industries such as gambling, construction, defense, and raw materials. These areas often depend on political access. For example, it is difficult to open a mine or casino without friends in the government.
We count successors in the “non-compete” category. Heirs are usually not oligarchs. They generally have not violated or violated any laws, or pressured customers; They were simply born in the right family or married well. Yet they also represent policy failures on the grounds that their immense wealth is undeserved.
From 2001, when our data began, to 2014, the disproportionate share of billionaires’ wealth increased slightly. Yet over the past decade the share of self-made entrepreneurs in competitive sectors has reached an all-time high (see Chart 2). For the first time, half of the wealth of the world’s billionaires has been earned formally. And the total wealth derived from uncompetitive sectors has declined since 2021.
The last few years have been bad for outside oligarchs. The combined wealth of post-Soviet billionaires reached $500 billion or so in 2008, a “policy failure” of enormous proportions. Today they are worth about $400 billion—still a lot, but much less. The war has devastated the industrial base that gave Ukraine’s richest man, Rinat Akhmetov, his wealth. Former Russian owner of Chelsea Football Club Roman Abramovich is probably $5 billion poorer than he was in 2021 as Western sanctions hit people considered close to Vladimir Putin.
Many subscriber list industries have struggled. The wealth of property billionaires has fallen by a third since 2018. Higher interest rates, China’s asset decline and falling demand for office space during the COVID-19 pandemic have hurt. Wang Jianlin, founder of Dalian Wanda Group, a Chinese developer, is now worth $4.4 billion, down from $31 billion in 2017. Some casino moguls have also lost out due to the crackdown on gambling in Macau.
Inheritance remains an important way for people to become extremely wealthy. The family of Sam Walton, co-founder of America’s largest retailer Walmart, who died in 1992, is worth perhaps $500 billion. The descendants of William Wallace Cargill, who founded the food company named after him in 1865, still feature on the rich list. Yet the old money is rapidly losing relative power. Nearly half of the wealth of billionaires in the early 2000s came from inheritance. Since then it has fallen to about a quarter.
You might think that the artificial-intelligence boom explains the rise in self-made wealth. The fortunes of some founders, including Nvidia’s Jensen Huang, have indeed exploded. Elon Musk briefly became the world’s first trillionaire this summer, but a decline in SpaceX’s share price pushed him below the 13-figure threshold. Yet even excluding tech, the share of self-made billionaires is growing.
This is because people in all kinds of industries, including finance, food, and manufacturing, are earning gold. Over the past decade the wealth of Bernard Arnault, who built LVMH into a global luxury titan, has grown by nearly $100 billion. Robin Zeng, who founded CATL, a Chinese battery maker, only 15 years ago is worth $60 billion. Russia’s first female self-made billionaire, Tatyana Kim, founded Wildberries, the country’s largest online retailer, in 2004. (In recent days Ukraine has attacked some of the company’s warehouses, accusing it of supplying the Russian military.)
The increase in self-generated wealth is the result of three trends. One is a bull market lasting more than a decade, in which global equities have returned an average of more than 13% per year. Low interest rates first pushed investors toward riskier assets; Techno-optimism persisted even as rates rose. This has worked very well for founders, whose wealth is often tied up in stocks, as well as enriched some hedge-fund managers.
The second is Chinese economic development. At first glance it presents a puzzle – and not just because the decline in its wealth has dethroned some billionaires. China’s economy has grown more slowly in the past decade than in the 2000s. Yet the number of Chinese billionaires has increased from about 200 to nearly 800. A paper by Koen Tulvings of Utrecht University and Simon Toussaint of Leiden University may provide the answer. Billionaire-making is not linear. Even at low levels of income, rapid growth could push most wealth away from the billion-dollar threshold. But once a country becomes richer, many others sit just below it. China’s subsequent slow growth may nevertheless be enough to push many billionaires over the threshold.
The third factor is mobile-first Internet, which began in the mid-2010s – just as the self-built share began to increase. Mobile made payments and messaging ubiquitous, and allowed companies to reach consumers instantly hundreds of times a day. This enabled entirely new types of firms to grow at extraordinary speed, from ByteDance (short-form video) to Spotify (streaming) to Stripe (payments), as well as delivery and ride-hailing apps. Getting super rich super fast has never been easier.
Does the rise of the self-made billionaire strengthen or weaken the arguments for wealth taxation? It doesn’t matter to some of them. Democracy doesn’t work well if a small group of people can buy influence – and that’s really how they got rich. Mr Musk is self-made, which is all well and good, but he has made no secret of his desire to influence elections both in the US and abroad. Democracy can function better without such influence.
Yet if billionaires have too much political power, the solution might be to change the rules on donations rather than changing the tax system. This is because the rise of the self-made billionaire greatly weakens the other arguments for wealth taxation. It is now more difficult to say, as many propagandists still do, that the billionaire’s wealth was “never actually earned”. It might seem fair to tax Mr Abramovich in full – but Lionel Messi? And because a large share of today’s billionaires drive employment growth and productivity gains, this increases the economic cost of losing them if they decide to move away, or work less, to avoid taxation. Billionaires may be less popular, but the proposed measures look weaker than ever.
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