New Billionaires Emerge, No Longer Primarily Through Inheritance
When house prices become increasingly unaffordable, education costs continue to rise, and incomes feel quickly depleted by daily necessities, the wealth of the super-rich, commonly known as billionaires, easily invites questions. How can someone accumulate wealth of thousands of trillions of rupiah while many people still struggle to meet basic needs? This disparity often leads to billionaires being seen as proof that the economic system only benefits certain groups. They are accused of profiting from monopolies, paying too little tax, and using their wealth to influence politics.
However, an analysis cited by The Economist indicates that the origin of the world’s billionaires’ wealth is undergoing a change. Nowadays, more people are entering the super-rich group after building companies and selling goods or services that are actually used by the public, rather than receiving a fortune through inheritance or having special connections to a government. For the first time, about half of the world’s billionaire wealth is considered to have been acquired in a relatively fair manner. The proportion of wealth originating from inheritance, oligarchy, and sectors dependent on political access is actually shrinking.
Negative sentiment towards billionaires has increased after high inflation squeezed living standards in recent years. Billionaires are perceived as using market power to raise the prices of various necessities, from housing to groceries. The profits they earn are then considered not to be taxed proportionately. Politicians have also increasingly used billionaires as a symbol of an unfair economic system. In the United States, the phrase ‘every billionaire is a policy failure’ has become a common rallying cry for the left. According to Andrew Hall from Stanford University, Democratic Party fundraising emails mentioned billionaires three times more often in 2024 than before, with almost all mentions being negative in tone.
Suspicion towards the super-rich has a historical basis. Much great wealth was indeed born from weak competition rules, the takeover of state assets, or closeness to power. John D. Rockefeller built Standard Oil when US competition rules were still weak. After the collapse of the Soviet Union, several Russian oligarchs also acquired state assets in chaotic political and economic conditions. However, not all billionaires obtained their wealth through such means. Oprah Winfrey has a fortune of around US$3.4 billion because millions of people want to watch and listen to her. Tadashi Yanai became one of the world’s richest people after building Fast Retailing, the parent company of Uniqlo. Both became rich by attracting consumers and building businesses that compete with other companies.
Data gathered by The Economist on around 7,000 billionaires over the last 25 years, sourced from Forbes, the Hurun research institute, and the Swedish foundation Gapminder, shows a change in the source of their wealth. Wealth was categorised as ‘uncompetitive’ if it largely came from sectors such as gambling, construction, defence, and raw materials. These sectors are considered more dependent on permits, contracts, or government relations. Inherited wealth was also included in this group. Heirs may not necessarily break the law or harm consumers, but they acquired enormous wealth by being born or marrying into a certain family. From 2001 to 2014, the share of uncompetitive wealth had increased. The direction of movement then changed. In the last decade, the share of wealth owned by self-made entrepreneurs in competitive sectors has jumped to its highest level since records began. For the first time, about 50% of the world’s billionaire wealth is considered to have been acquired in a relatively fair manner. The total wealth originating from uncompetitive sectors has also been declining since 2021.
The decline is visible among the oligarchs who emerged after the collapse of the Soviet Union. Their total wealth once reached around US$500 billion in 2008, but now stands at around US$400 billion. Roman Abramovich, the Russian businessman and former owner of Chelsea Football Club, is estimated to have lost around US$5 billion since 2021. His wealth was pressured after Western countries imposed sanctions on individuals deemed close to Russian President Vladimir Putin. Property billionaires are also experiencing pressure. Their total wealth has fallen by about a third since 2018 due to rising interest rates, the Chinese property crisis, and reduced demand for office space after the Covid-19 pandemic. Wang Jianlin, the founder of Dalian Wanda Group, now has a fortune of around US$4.4 billion, far below his wealth of US$31 billion in 2017. Inherited wealth remains substantial. The family of Sam Walton, the founder of Walmart who died in 1992, is estimated to have a total fortune of around US$500 billion. However, the dominance of old money continues to decline. At the beginning of the 2000s, almost half of billionaire wealth came from inheritance. Now, its share is only about a quarter.
New billionaires are not only emerging from the technology sector. While the development of technology and artificial intelligence has indeed increased the wealth of some entrepreneurs, the rise in the number of super-rich individuals also comes from the financial, food, manufacturing, consumer goods, and retail industries. In the last decade, Bernard Arnault’s wealth grew by about US$100 billion after building LVMH into a global luxury goods giant. Robin Zeng, who founded the Chinese battery manufacturer CATL, also joined the ranks of new billionaires.