Mark Twain and Charles Dudley Warner wrote The Gilded Age: A Tale of Today in the 1870s, to protest an incipient era of “wasteful and ridiculous excess.” The American aristocracy inhabited luxurious palaces in Boston, New York, Chicago and San Francisco. Short lists like the New York Four Hundred enumerated the elite families who mattered, such as the Astors, Vanderbilts, van Rensselaers. Social reformers decried the poverty and want among the Four Million at the other end of the economic scale.
Both fans of free markets and populist “progressives” pay close attention to wealthy elites. The former group regards individual economic success as a reassuring sign that entrepreneurship and enterprise is being rewarded. The latter favour a zero-sum model, where wealth occurs at the expense of others, and unequal income therefore offers an index of the evils of capitalism. During the first Gilded Age, outrage about the enormous disparities of wealth were triggered by a firm belief in this tradeoff. However, as C. D. Wright found in 1897, “It is true that the rich are growing richer,” but at the same time “the poor are growing better off.” The benefits of unparalleled productivity and economic growth did not accrue just to the the Astors and Vanderbilts, but also enhanced the standard of living of the vast majority of the population.
The Gilded Age: a Tale of 2021
Are we currently living in a new Gilded Age embodied by the multi-billionaires of the Forbes 400, with their excesses of utopian cities and space tourism? Inclusion on 2021 The Forbes 400 list for the United States requires net worth of at least $2.9 billion. It’s worth emphasizing that the Forbes 400 entrants were drawn from a field of 22 million millionaires in the United States.
The vast majority of men on this list (79.1 percent) earned their wealth from individual initiative, risk-taking, and successful business enterprises. The youngest newcomer, Sam Bankman-Fried is worth over $22 billion at age 29, owing to his creation of an exchange for crypto derivatives. Of the 56 women on the Forbes list, just 17.8 percent earned their wealth themselves. However, the wealthiest 400 out of a population of 333,479,557 people are unlikely to be representative. These data underestimate women’s achievements, and conceal an underlying pattern of increasing entrepreneurial opportunities and socioeconomic mobility.
Self-Made Women Millionaires
The top 100 “self-made”women in the United States made the cutoff if they earned at least $225 million. The notion of self-made riches captures the difference between passive income (inheritance or marriage) and returns to active entrepreneurial risk-taking and innovation. For those who are concerned about unwarranted transmission of riches through inheritance, it should be reassuring that a significant number of wealthy women earned upward mobility through their own efforts. Two thirds were founders or cofounders of firms. Whitney Wolfe Herd, a billionaire at age 32, was one of the founders of a corporation for online dating apps. Anne Wojcicki is the cofounder and CEO of 23andMe, a DNA testing firm. Jessica Iclisoy’s fortune of $260 million arose from the creation of a firm that offers organic baby products.
These entrepreneurial women are disproportionately from minority and immigrant backgrounds. Twenty percent were born overseas, in countries such as Barbados, Burma, Romania, China, and India. Moreover, twenty two percent of these successful entrepreneurs comprised racial/ethnic minorities, including 14 percent Asian, 7 percent Black, and 1 percent Hispanic. Thai Lee, an immigrant from South Korea, became the successful CEO of an innovative IT company. Neha Narkhede, who earned a self-made score of 80 percent, is 37 years of age, and was born in India. She worked at LinkedIn as a software engineer, and founded a cloud computing software company with two colleagues, which recently went public, making Narkhede a billionaire.
The Globalization of the Gilded Age
The number of wealthy individuals beyond the United States is increasing significantly, amounting to a world total of 2755 billionaires. Twelve percent, or 328 women, appeared on the Forbes list of billionaires in 2021, relative to 241 a year before. The richest women, Françoise Bettencourt Meyers (granddaughter of the founder of L’Oréal), and Alice Walton (daughter of Sam Walton of Wal-Mart), passively inherited their assets. However, among these women billionaires, 66 were actively involved in managing and increasing their inherited assets. Miuccia Prada and her husband are joint CEOs of the Prada family business, which grew to earn sales of $2.9 billion in 2020.
Moreover, a total of 108 of the world’s richest women billionaires were self-made entrepreneurs, many of them from China. Zhou Qunfei worked as a migrant worker in the special economic zone of Shenzhen, and at the age of 22 used her savings to start a small family business. Lens Technology quickly grew and scaled up to become the dominant firm in the industry. The firm provided touch screens for leading mobile-phone makers including Samsung and the Apple iPhone, and currently employs some 200,000 workers. Zhong Huijuan is the chief executive of Hansoh Pharmaceutical, which produces treatments for cancer, diabetes and cardiovascular disease, among other health problems.
The American Model of Private Philanthropy
In the nineteenth century, James Bryce noted that “in works of active benevolence, no country has surpassed, and perhaps none has equalled, the United States.” The supposed “robber barons” and baronesses directed enormous sums to worthy causes, including aid for women, blacks and other minorities. Both Rockefeller Sr and Jr donated over $500 million to Hampton and Tuskegee Institutes. Spelman College owed its existence to the generosity of John D. Rockefeller, in honour of his wife Laura Spelman, and she too left the majority of her fortune to the college and other charitable institutions. Russell Sage bequeathed his entire fortune of $66 million to his wife, because he felt that she would be more adept at philanthropy.
The Giving Pledge, “a commitment by the world’s wealthiest individuals and families to dedicate the majority of their wealth to giving back,” reflects a globalization of the American model of entrepreneurial altruism. In general, decisions about charitable giving are jointly made within the household. As women gain more independent control over large fortunes, support for women, though still a minor share of philanthropic giving, has been increasing. Melinda Gates has pledged $1 billion for women’s causes. Dagman Dolby’s charitable foundation promised to “place special emphasis on equality and support for women and girls.” MacKenzie Scott has donated $6 billion, with “a specific focus on empowering women and girls.” Sarah Blakely emphasized that “we would all be in a much better place if half the human race (women) were empowered to prosper,” so directing resources towards women therefore “offers one of the greatest returns on investment.”