Wealth and real estate are concentrated in a shrinking share of the population. The gap between increased production and income growth has been widening for decades. The owners of these resources benefit from this. And this wealth tends to stay in the same families for centuries in Europe, as MIT professor Alex Pentland has noted. Whether we stay in Germany, Austria, Switzerland, or look to France, Italy, or England, if we go through the list of wealthiest families, we find a significant proportion of names whose ancestors accumulated their wealth and had political influence centuries ago.
In this respect, the United States differs from Europe. There, such a system of wealth inheritance and class works less well. If you had a lucky hand there, you and your own children were well off, but your grandchildren very likely had to earn their own living again.
This is precisely what is reflected in a graph from HowMuch.net (a financial literacy website), which lists the origin of billionaires’ wealth for a number of countries. It distinguishes whether billionaires earned their wealth through inheritance, as company founders, as board members or in the financial sector, or through political connections and access to resources.
We see that in European countries the majority of billionaires ‘earned’ their wealth through inheritance. In Germany, no less than two-thirds came to wealth by choosing the ‘right family’. In Switzerland and France, too, the proportion is more than 50 percent. In the USA, the figure is less than one-third.
In the USA, however, the wealth generated by the financial sector stands out. As many as 26.8 percent of billionaires earned their wealth there. The largest share, 32.1 percent, is accounted for by company founders. France even trumps the USA in this area.
Distortions exist due to where there had been no inheritable wealth for a long time due to the firm hand of the communist party. In this respect, the share of company founders in billionaires is hardly surprising. In Russia, the origin of billionaires’ wealth is dominated by the state sector with 64 percent and the resource sector with 21.6 percent. These are clear signs of corruption rather than merit.
What do the figures mean for Europe? We have some catching up to do in terms of wealth distribution. Alex Pentland was right when he pointed this out. In Europe, it still depends less on one’s own performance and merit than on the grace of birth.