The economy has bottomed out—at least for the Forbes 400, whose fortunes are rising again. Randall Lane, author of The Zeroes: My Misadventures in the Decade Wall Street Went Insane on why prosperity among America’s billionaires no longer helps the rest of us.
The Forbes 400 is a billionaires club once again. Last year, you could eke out a spot at the bottom of the list with a mere $950 million in net worth, but in 2010, it’s takes a full $1 billion to rank among the 400 richest Americans. In the past, I would read the spike as a strong signal that things are getting better for all of us. But delving deeper into this year’s list—and comparing it with the precedent I saw as a recession-era Forbes billionaire-hunter—I’m decidedly skeptical.
More than stock indexes or GDP forecasts, the “Rich List,” as it’s known inside the Forbes building, has always presented the most accurate snapshot of U.S. capitalism. Amalgamated one-by-one by a full-time crew of money sleuths, the list provides a perennial testimony to America’s greatness: the large majority of our wealthiest are self-made, rather than trust-fund heirs.
Better yet, this group constantly churns: In 1982, when the Forbes 400 debuted, Texas oilmen dominated the list. Over the ensuing years, Hollywood moguls carved out their spot, and then tech entrepreneurs. You could see wealth migrate from industry to industry, region to region, past the sole purview of white men. The top 400 served a proxy for wealth creation at all levels, a healthy process that created prosperity for millions.
Over the past few years, however, Wall Street titans began to dominate the Forbes 400. This year’s list boasts a staggering 109 financiers—more than a quarter of the total. From $750 million in 2004, the Forbes 400 minimum hit $1 billion for the first time in 2006, and then $1.3 billion in 2008. For most of that stretch, as we overleveraged ourselves into false prosperity, that seemed fine. (Why do so many average Americans oppose tax hikes on the very rich? They hope to be among them someday.) And when the entry level plummeted to $950 million in 2009, that seemed pretty fair, too. Win together, lose together—it’s why America doesn’t have social revolution.
So now that the rich, led by Wall Street, are getting collectively richer again, shouldn’t we all feel a bounce in our step?
History provides a guide. I was a full-time Forbes 400 reporter in 1992, another election year (albeit a full-on presidential race) held amid either a recession or something that still felt like one. For 10 months, my job was to track down rich people, figure out what they were worth—ever-mindful of debt, partners, taxes and the like—and then profile them. I plowed through a couple hundred suspects, throwing back mere centimillionaires the way pro bass fishermen discard sunfish.
For a 24-year-old, it was heady stuff. Despite their public nonchalance, most on the Rich List care deeply about the Forbes net worth estimate. Half want to be higher, half lower—and all have an angle to spin. Ross Perot, running as a third-party candidate for president, called me from the campaign trail. Donald Trump blathered endlessly. And a Houston strip mall developer named Jerry J. Moore, discovering that I made $27,000, offered me a $100,000 public relations job with “lots of golf,” provided, wink-wink, that I adjusted his ranking higher (he used the Rich List valuation to browbeat better terms out of banks).
The 109 Wall Street fat cats on this year’s list don’t spawn innovation or jobs, other than what they spend buying themselves toys.
On “ranking day,” when the calculations are finalized and collated, we discovered that, for the first time (repeated in 2009), the minimum had declined. Over 10 months, we had only created a Forbes 397. The rest of the afternoon was spent sifting through the rejects to find the final three. (I found it surprisingly gratifying yesterday to discover that the guy I had yoked on that afternoon over the furrowed eyebrows of some of my peers, a Tulsa tycoon named George Kaiser, is now the 29th richest man in America.)
Then in 1993, as with this year, the rich began getting richer again. For the rest of the decade, so did the majority of Americans. The tech boom took full force. Our digital infrastructure blossomed. Jobs were created. The new names on the Forbes 400—Amazon’s Bezos, eBay’s Omidyar, Michael Dell—all reflected collective prosperity, rather than individual greed.
And that’s what makes me pessimistic. By and large, the 109 Wall Street fat cats on this year’s list don’t spawn innovation or jobs, other than what they spend buying themselves toys. They just move around other people’s money. Combine that throng with the ranking’s 100-plus heirs, and suddenly the innovative entrepreneur who represents the Forbes 400 ideal—the American economic ideal, really—stands as a Rich List minority.
It’s those job-creating entrepreneurs who will dig us out of this hole. So I’ll hope for their comeback in next year’s Forbes 400 before declaring the economy on the right track again.
Randall Lane is editor at large at The Daily Beast. The former editor in chief of Trader Monthly, Dealmaker and P.O.V. magazines, and the former Washington bureau chief of Forbes, he is the author of The Zeroes: My Misadventures in the Decade Wall Street Went Insane.