Going over the Forbes 400 Richest People list after an earlier Addicting Info article discussed how six of them paid $0 for income taxes for 2010, we decided to examine who these people are, how did they make their money, and are they “self-made-men” as the objectivists would have us believe or did they use the public commons, regulated and ensured by the government, to make it happen? This is what we found.
The single largest group of members made their money either inheritance or from the financial markets. They gained their wealth without producing a good or service, only by either being born, or by facilitating transactions as a middleman. The few who did gain their fortune through development of a business did not do so in a vacuüm. Let us look at the top-10:
- Bill Gates — The big cheese, numero uno, richest man in America. Built Microsoft after dropping out of college. You’d think he would be a clear case of someone who did it without government help, correct? If you think so, you’d be wrong. Microsoft got its start thanks to the MITS Altair 8800, developed by two Air Force mechanics in their spare time using skills they’d learned while working for the US Government. To win the software contract with MITS, Microsoft co-founder Paul Allen flew to New Mexico to meet with the founders of MITS, using the US Government regulated air travel to make sure he got to his destination safely and on time. The Altair itself ran on an Intel processor, derived from an older design developed initially to fill a NASA contract. All this is just what got Microsoft going. Taking into account the tax incentives, the government contracts, etc, Bill Gates owes a great deal to the role the US Government played in giving him the opportunity to make Microsoft what it is today, and with it, his fortune.
- Warren Buffet — The Oracle of Omaha did have some small ventures as an entrepreneur, operating a pinball machine and working in his grandfathers store, but he made his fortune in the stock market, buying his first investment, in the company today called Citgo, at the age of 11 after a visit to the New York Stock Exchange the year prior. He is a middleman, who uses money to make money. As a result, he is more beholden to the government than most, as the very stock with which he makes money only exist due to the laws of the land.
- Larry Ellison — Computer programmer, made his fortune thanks to being at the right place at the right time. His database product, Oracle, began life as a project begun for the CIA with a company he’d previously worked for, Ampex Corporation. He and the rest of the development team for that product eventually left and founded their own company, now called the Oracle Corporation. Without that team, and their experiences with the CIA, combined with the work of Edgar Codd from IBM’s San Jose Research Lab, Larry Ellison would not be where he is today.
- Charles Koch — Son of Fred Koch, and grandson of Harry Koch, Charles Koch is old money, third generation inherited wealth. His family’s fortune came from access to the federal government-run postal roads used to deliver his grandfathers newspaper, and from the federal government gained land grants and a charter which enabled his grandfathers investment into the Quanah, Acme and Pacific Railway to become the success it eventually became. The railroad was given these due to the strategic interest the US Government had in securing the supply of Gypsum found in East Texas for its use in cement, needed for the large public works projects such as the Panama Canal.
- David Koch — Another son of Fred Koch. Inherited his fortune from his grandfather’s investments as well, which means also owes a great deal of his wealth to what the government enabled.
- Christy Walton — Widow of John Walton, son of Walmart founder Sam Walton. The basis for entire Walton family fortune comes from government assistance since its inception. The root of Walmart began with Sam and his brother Bud opening up their first store, using money from his time in the US Army to open up a branch of the Butler Brothers store, then when their lease ran out, starting off on their own thanks to assistance from Sam’s father in law in securing a retail site for him. For his stores to work, young Sam Walton did something his older competitors had not thought of, to leverage the new highway system to enable a new form of logistics, enabling the growth of the company. Without the almost half-trillion invested into the US Interstate Highway System, Walmart would have remained little more than Walton’s 5 and Dime in Bentonville, Arkansas.
- George Soros — Easily the right’s favorite boogeyman, this son of Holocaust victims, made his fortune after graduating from the London School of Economics. A stock trader, he made his money through being a financial middleman and a capital source, much as Buffet did above. He made a large part of it through currency deals, and due to that is often times called “The Man Who Broke The Bank Of England.” The government, both in the UK and here, secure his transactions. Without them, he would literally have nothing.
- Sheldon Adelson — Began his career as a mortgage broker, investment adviser and financial consultant. He made his fortune by using his career to steer investment into COMDEX, a computer expo in Las Vegas which operated for several decades. He then used the money he had generated from being the financial middleman as well as his own investing in the expo to begin the purchase of casino properties, starting with the Sands in Las Vegas. As with Buffet and Soros before him, Adelson depended on both Federal and State Governments to guarantee his ability to engage in financial transactions through contract enforcement as well as judicial services. But again, as with Buffet and Soros, he built his fortune as a financial middleman and by using his money to make more money.
- Jim Walton — Youngest son of Walmart founder Sam Walton, we told the story of his finances in his sister-in-law above. He is the current head of Arvest Bank, a financial services company in Bentonville, Arkansas. Jim also is notable for having attended the University of Alabama, a government financed and operated university in his home state.
- Alice Walton — Also inherited her fortune from her father, Sam Walton, but she is also a skilled money manager who founded the investment group Llama Company. Over and above her inheritance, Alice earned a sizable fortune in the same way as Buffet, Soros and Adelson, being the middlewoman for financial deals as well as heavily using her existing capital to generate more.
So, of the top 10, 3 are “self-made” in the classic tradition, thanks in part to there being a strong underlying infrastructure for them to use, as well as through more direct government help and training. 5 are the result of inheritance from a previous generation, which had benefited from the government infrastructure and services provided to build their fortune. 2 are self-made but through being financial middlemen and investors, not through industrial means or through service generation. Checking down the list, you find a similar story for the “self-made” super-rich, from Jeff Bezos (#13) making his fortune thanks to the investment by the federal government in the underlying technologies of the Internet and computers, to Gary Burrell (#375) who made his fortune by developing affordable readers for the new Global Positioning System developed and deployed by the US Government.
Does this diminish what these men and women have accomplished? Absolutely not. Do we cry foul when the Lady of the Lake hands Excalibur to King Arthur? Do we cry foul when Q hands 007 some incredible new gadget? Absolutely not. If Arthur was not skilled in battle as well as civility and diplomacy, he would have wound up dead on the battlefield instead of King of the Britons. If 007 was not so skilled at his job, the best gadgets in the world would have not mattered one bit. They are but tools, it is the person who makes use of them. The services and infrastructure our government provides for us are there for all of us to benefit from, to give us the tools to make with, whatever we are capable of. But there are those who consider tools the enemy, like luddites throwing their sabots into the gears of the machines in order to stop the gears from turning. They would dismantle our infrastructure, and would inevitably end the great American experiment itself through their actions.
Remember people, 6 of the 400 paid nothing in taxes, legally, failing to pay forward to ensure the opportunity for the next Bill Gates or Larry Ellison.