In the Haves and the Have Nots: A Brief and Idiosyncratic History of Global Inequality World Bank economist Branko Milanovic compares the wealthiest people of all time to determine who was the richest of them all. Milanovic does this by measuring their hiring power which he calculates to be the total number of workers that could be hired with one year's interest from each titan's total wealth. In 1901, the interest (at 6 percent) on Andrew Carnegie's $225 million fortune could have supported 48,000 of his countrymen at $282 each, which was the GDP per person that year. In 2005, Bill Gates could have hired 75,000 at $40,000 per year with his $50 billion wealth. But John D. Rockefeller had them both beat, in 1937 he could have paid an amazing 116,000 American salaries with a year's interest on his $1.4 billion.
However, the author leaves out the Walton family from his book. The six heirs to the Wal-Mart fortune together had a net worth of $115 billion in 2012. If we factor in that 2012 dollars were inflated from their 2005 level, that puts the Waltons' net worth at $97.8 billion in 2005 dollars. At near twice the riches of Bill Gates that would have allowed the Wal-Mart heirs to hire more than 146,734 Americans. That places the Walton family as by far the richest family in the history of mankind.
Is it necessarily good or bad that our nation produced the wealthiest family in human history? Milanovic mostly avoids focusing on these avenues of inquiry. He does lay the 2008 financial collapse on income inequality while stressing that it wasn't necessarily due to crony capitalism or derivatives. Instead he posits that this catastrophe was bound to happen.
The root cause of the crisis is not to be found in hedge funds and bankers who simply behaved with the greed to which they are accustomed (and for which economists used to praise them). The real cause of the crisis lies in huge inequalities in income distribution that generated much larger investable funds than could be profitably employed. The political problem of insufficient economic growth of the middle class was then 'solved' by opening the floodgates of cheap credit.I found that chapter to be unconvincing and unlike the rest of the book. For the most part the Haves and the Have Nots ignores equity arguments and historical factors that crafted current US inequality. Instead it focuses on how inequality varies across the World and throughout time. This works out to be an easy lift of 215 pages that still manages to demonstrate the author's broad experience and insight. He does that by taking the reader to the economics of; Pride and Prejudice, to 13th century Paris, and then to income inequality between member nations of the E.U. and how that effects European club soccer. It all works together and left me itching to discuss the inequity and malfunction that the author chose to avoid.
The first thing that jumped out at me when I compared the Waltons with Carnegie and Rockefeller is that the latter two were self-made men. Carnegie was born in a one bedroom in Scotland and Rockefeller's dad was a lumberman. But the Waltons opened their eyes for the first time destined to inherit one of the largest corporations on the planet. The same goes for our current 2nd richest family, David and Charles Koch. They were passed down the oil conglomerate Koch Industries and they now rank as the 3rd and 4th richest Americans with $62 billion between them. This speaks to the economic mobility of the modern age, how hard it is to become rich if you aren't and if born rich the likelihood of falling out of prosperity. Wouldn't you know it, the Waltons like it this way, and have been working on locking in top Forbes status for their children, by lobbying to slash the estate tax. This leaves me wondering, who's doing more damage to our nation? Is it the Walton's big box store, our nation's largest employer which fails to pay much of their staff a living wage and uses it's advantage to drive independent stores out of business? Or are the Kochs doing worse deeds by perverting democracy? I can hardly imagine either doing more to press their outsized power to most of our detriment, but that's likely coming as both familys' wealth and power continues to grow.
UPDATED: The first version of this had that last paragraph edited out for no good reason.