It doesn't take much research to see this especially in the continental states.
The UK and some of the Nordic countries do have some new money in the UK it's mostly in the financial sector and rich individuals from the colonies moving into the UK.
And as far as the Nordics go historically the wealth was more limited than in the richer states, so the post war economy had greater impact on the wealth of those nations.
If you discount the wealth redistribution following WW1 and especially WW2 (like it or not Nazi gold is part of the economy today, as well as many other wartime confiscations) it would probably have worse wealth distribution than the US since it still has lower mobility and maybe even worse than some emerging and developing markets.
> it would probably have worse wealth distribution than the US since it still has lower mobility and maybe even worse than some emerging and developing markets.
But higher taxes for the rich and more redistributive social policies. So I'm not convinced.
Taxes are higher but not for the rich, the majority of the tax burden in Europe falls on employers ("payroll" style tax) and on the middle class.
The US has one of the highest capital gains and corporate tax rates in the developed world and higher than pretty much every country in Europe.
When you add all the indirect and direct taxes on EU workers you get a pretty much horrible system where the majority of the poor in the US have a similar or higher purchasing power than what the median salary workers see in the EU after taxes.
Accumulating wealth in the EU is considerably harder because of just how harshly you are taxed the joke about being paid half and have double the tax is kinda silly but it's kinda true even in tech.
Yes many EU countries do offer things like healthcare and education for free but it's far from free and I'm not sure if locking their middle class into a loop that prevents it from accumulating wealth is really worth it.
Also since employing individuals in the EU is so expensive especially compared to the US you get to the point where recovering from any economic crises is much harder and leaves the workers at a considerable disadvantage to both being replaced by automation and poached by high paying countries and emerging economies.
When you get to the point where your tax income is half your GDP I think you are doing something seriously wrong as you are playing a nearly zero sum game because overall your citizens are not gaining much wealth and you are just shoveling it from one pocket into the other.
And worse when most of that tax burden falls on the individuals through VAT and social insurance and income taxes, while capital gains taxes are just a rounding error
Why do they switch the units they use in the same sentence, except to obfuscate the fact that the two values are very close to each other? If they said 31 percent of italy and 29 percent of us, the case might seem weaker.
Interestingly, I can't think of a single self-made entrepreneur out of continental Europe -- think Germany, France, Italy, and their neighboring countries -- who in recent history has become immensely wealthy by creating new products or services that have changed the world.
In continental Europe, there is no Jeff Bezos, no Sergei Brin, no Bill Gates, no Steve Jobs, no Elon Musk, no Larry Page, no Mark Zuckerberg... one could keep going.
I don't think it's a coincidence.
--
PS. In response to comments below, note that the founders of Skype, Spotify, Ikea, are not from continental Europe; they are from the Scandinavian Peninsula. Note also that I'm talking about NEW kinds of products and services that have changed the world.
The problem on HN is a very American centric view with startups. While I cannot profess to Europe having a large number of startup founders it is a long way off to put of a entrepreneurship in Europe in its entirety.
There's the founders of Skype (also TransferWise and their other endeavours), the founders of Spotify too, SAP, Richard Branson (not tech), Ikea, Inditex, Ferrero, Wirecard, LVMH... but there are lot in their own categories. The list is actually quite long, albeit lacking in the tech sector.
Culture in Europe is not to be overly audacious with being a 'one man' business. The leaders of businesses don't take centre stage, the business itself does. This is probably why their businesses are known far better than they are personally.
It is at opposites with American businesses where older, inherited business tend to have this trait, for instance one cannot even find a picture of anyone who runs the Mars company easily. Young ones on the other hand put their founders at centre stage.
Your description or thoughts of European entrepreneurs are somewhat extreme.
Yes this is true, with LVMH the businesses were combined & acquired more recently by B Arnault even though the original businesses are very old.
I would hardly say Inditex hasn't changed the world. Apple mimics their JIT inventory technique.. There used to be a time when it took a few years to get phones out to the public.
I think the thing that makes these particular entrepreneurs stand out is they keep a relatively higher profile. The cultural tendency in Europe is more socialist and not to show off and keep out of the news - This is what my point was more on. The startups and founders are there, but they don't let themselves be known.
Do we know who was responsible for the Raspberry Pi for example? or who built up ARM Holdings (the designers of the arm chips on everyones phones and tablets)? or who made Nokia do what it did? Who made the device that drilled the channel tunnel?
Surely they changed the world, its just they don't 'get out there' as much as American entrepreneurs.
I'm a bit confused by your definitions. Continental Europe concerns Scandinavia, and the article refers to Europe as a whole including the UK, so the relevance of the continental part of Europe of any form is mute.
Inditex has made tremendous changes in how fashion is made and delivered: It's a logistics marvel. Other companies selling clothes are either stealing large percentages of that model or dying. If you look at how often a store turned inventory and changed styles in the 80s, and look at how it's done now, it's like a different industry.
You might as well claim that Walmart, Amazon or the Sears catalog, didn't change the world. They all just sold stuff, right?
I'm excluding the Scandinavian Peninsula, which historically has been excluded due to its near physical detachment from the rest of the continent: https://en.wikipedia.org/wiki/Continental_Europe
Very rich people in Europe tend to keep a fairly low profile, self-made and inherited. You may not be familiar with them as they don't tend to be covered in TechCrunch
keep editing your original post until you get the result you want. alternatively like you have done with the other suggestions provided, keep on narrowing "new products and services" until you can dismiss them all ;)
Changing the world is a great way of making sure your statement is always true: You can define what the world is, and apparently your definition is computers and electronics. Even then, I'd argue that most of the ones you listed just won in existing markets.
If you are looking for immensely wealthy, self made entrepreneurs, they exist. Just from Spain, we have Emilio Botin, who built one of the biggest banks in the world out of nothing, and Amancio Ortega, who owned a single, small store called Zara, and now owns a conglomerate worth 100b: Not quite Amazon, but in the same ballpark.
There's also this company called SAP. I hear they are big and not American.
The difference in number of ultra-wealthy entrepreneurs has little to do with inherited wealth IMO, and I am no fond of inherited wealth. Instead, there are two far better reasons: It's harder to raise capital, and the size of the markets that you can get to without becoming a multilingual, multi jurisdiction company are far smaller. The EU's inroads towards unified regulation are noticeable, but far too slow in comparison to the US.
How big would Amazon be if all it could sell to for the first few years was just Seattle? How do I build a huge social network if you are hard pressed to find more than 80 million people speaking the same language, and people often live very close to their birthplace? How many text advertisers can I find if my search engine is looking at content written in a country of 40m people, instead of 400m?
You might as well ask why there are so few Japanese playing in the NBA.
Not technical and the "creating new products or services that have changed the world" is hugely debatable, but how about Amancio Ortega[0]?
A spaniard, son of a railroad worker. Started working as a shop hand at age 14 and it's now, at least according to Forbes[1], the richest man in Europe and the wealthiest retailer in the world. You can't be more self-made than that.
On the other hand, some of the people you mention were already well-off to begin with, even if not really rich.
Once said that, I agree with you at some level: The mindset in Europe is (or was, maybe it's changing?) different from the US and, generally speaking, more risk-averse. Also, the feeling among most of the european entrepreneurs I've met is that the US is the place to go if you really want to succeed: Funding, market fit, know-how... all that is perceived to be better/easier to get in the US.
Anyway, just my 2 cents and my very personal, very subjective, anecdote-based perception of it.
I agree: Amancio Ortega is self-made and his accomplishments are incredible, but like you, I don't see Zara as a "world-changing" product or service. By the way, I realize that "world-changing" is a rather imprecise moniker, but I still find it useful: no one would deny that the iPhone and Google, for example, were new world-changing products.
I also agree with your perception that the mindset in Europe is (or was?) different from the US and, generally speaking, more risk-averse. I don't think this is unrelated to the greater prevalence of inherited wealth.
The apparel industry provides one of three basic needs. The two others are food and shelter. A company that goes beyond providing bare necessities to also make products that fulfill psychological and social functions by offering different types of aesthetics that can be used for signaling, for everyone almost regardless of class and income, is providing a very valuable service.
A company like Zara faces similar challenges in regards to distribution as does Amazon. But it also does more, it designs and produces the products it sells, something that Amazon is completely incapable of doing. Furthermore, they own and operate something like 30-50% of the production capacity they need. These are hard problems that very few companies are able to understand and solve.
Sergey Brin is from continental Europe :). Still I don't understand why you would exclude Scandinavia. It's like excluding Florida when talking about the USA.
Also Dieter Schwarz of Lidl, Michel Ferrero etc. - what exactly do you mean with 'new'?
However it is definitely not a coincidence, American companies usually win because the American market is big and unified, the European market much less so, and there are many other differences.
The USA's social mobility is much worse than the EU's, though. If you're born in the bottom 20% by household income your chance of making it to the top 20% is lower. The proportion of billionaires who inherited their wealth doesn't make any odds to the economic mobility of an ordinary person. It is ridiculous to go from "Overall, heirs and heiresses make up about half of Western Europe's billionaires" to claim "The lack of social mobility is more of a concern" in Europe.
> The study confirms previous findings that America’s social mobility is low compared with many European countries. (In Denmark, a poor child has twice as much chance of making it to the top quintile as in America.)
The spread is also larger. The difference between the bottom 20% and the top 20% in the USA is higher than in Europe. So measuring by that is useless, since, in general, a 40%er in the USA is better off than a 40%er in Europe. Thanks for the propaganda though!
Yet you're arguing that mobilities can't be compared, in response to my post, not to the original article claiming Europe's mobility is worse... :-)
It seems a little like special pleading. The ease of transition from bottom to top quintile is an accepted index of how mobile or stratified a society is, not how wealthy individuals are. Of course different nations will be better or worse off, or will have different Gini indices as a result of social policy, but that doesn't mean we can't meaningfully compare their mobilities. Pointing out the figures isn't "propaganda".
> a 40%er in the USA is better off than a 40%er in Europe
Generalizing about "Europe" doesn't make much sense. Between (say) the UK and Albania, there's a vast economic gap (about 10 fold lower GDP/capita). If you're talking about Western Europe, what do you mean by "is better off"?
The mobility between quintiles is not particularly interesting; it is far too coarse a measure. The changes in inequality that we see in the US, Canada, and the UK affect the relative earning capacity of the bottom 90% vs. the top 10%, with the 90th percentile being an inflection point at our levels of inequality.
The relevant reduction in mobility would primarily be within the top 10% tail of the Pareto distribution for income, the dynamics of the bottom 90% are quite different -- although their absolute share vs. the top 10% has certainly declined.
It's a silly conclusion. If you are born in the bottom 20% of household income you in the US you are probably from a different ethnicity than the top 20%. Meanwhile in Denmark they're all ... Danish!
So essentially that study discovers that if you are born into ethnicity X you will unlikely end up as ethnicity Y.
About 10% of Danes are non-Danish migrants. I don't know the composition of the lowest 20% of the US, but I doubt they are entirely from ethnic minorities.
Even if we take your claim as true, the fact that different ethnic groups are highly stratified and mobility is restricted, like a caste system, is just as significant. Maybe even more so, because it implies a racist society.
Claiming, in effect, that we should discount a lack of social mobility for those born into certain ethnic groups, seems like racism.
1. The 10% of Danes that are migrants are all recent arrivals and hence I doubt there are generations to study inter-generational mobility on. When they will have been in the country for generations, I would be extremely surprised to find them having higher social mobility than in the US.
2. Re racism - I'm sorry but that's typical liberal nonsense. Discounting all differences between groups of people, assuming equal distribution of intelligence & culture and then ascribing resulting group differences to 'racism'.
What's rather interesting is that educational results among various US sub-groups map rather closely to their old-world kin. Ie US whites/blacks/asians correlate fairly well to the countries where they originally came from (hispanics obviously not having an old world mapping). Hence the hang-wringing "Our kids are failing vs X" is actually misplaced as they're comparing apples and multi-fruit juice.
Because they won't be admitted to the SWPL heaven?
Your ideas actually remind me of the barely literate from the middle ages who believed that the world was sitting on 3 whales or something like that.
Preponderance of evidence to the contrary was dismissed with 'That's not what it says in the Bible!'.
You've got same religion ("all people are equal") that goes against ALL real-world observations. But just like they waved everything off with 'Because G-d wills it', you've got 'Because racism!'.
But I'm enough of a realist to see first generation asians / indians operating laundromats or chinese restaurants and their children becoming doctors or lawyers. So to my mind US is the land of high social mobility - for people who are intelligent and are willing to work.
I don't think that just the color of your skin have unique characteristics for each race. However, I do think that the culture you are raised in does instill different values that contribute to your success in society.
A driven person will have the power to change their community, no matter their skin color. But one culture over another may be more effective at establishing the preconditions that driven people arise from. Evaluating people based on the cultural enviornment seems effective but I'm not entirely convinced that the fault lines are strictly related to race. I think people get confused when they see a group of people associated with a specific economic outcome and erroneous attribute that to race instead of culture.
Those conversations seem valuable, but it seems easy to misinterpret such a conversation as either racist or classist. Definitely these things should be talked about behind closed doors to avoid character assassination attempts.
The numbers of billionaires, and especially percentages of those, are a worthless metric. Billionaires are about as rare unicorns, especially here in the Netherlands (pop. 17 million) where we only have 9 billionaires in total. Due to the high taxes here in Europe it's incredibly difficult to become very rich, so it's not strange that a lot of our billionaires have inherited their wealth. We also lack the tech scene which created a lot of self-made billionaires in the US.
> Due to the high taxes here in Europe it's incredibly difficult to become very rich
With all due respect, but you don't understand what "getting very rich" means. You don't get money and place it in a bank. The money is the firm or firms that you control, and that is where it remains. If you reinvest and expand your business you don't pay a lot of taxes. The personal tax rate has nothing to do with becoming a billionaire.
When it is harder to become a billionaire it shows that there is less of a "winner takes all" system, which has advantages and disadvantages. The US is much more "winner takes all" than Europe. That Europe still is a lot of countries, the EU did not change that, is part of why that is so, but I would not go so far to say it's the major part, even if Europe was "one" I think we would still not be the same. That's from some business observations I made while living in the US for a decade (I'm from Europe).
For an example what that means (winner takes all), when I worked for a tech startup we found it pretty easy to get initial customers in Europe, Germany to be exact. However, scaling was hard, getting a few customers helped with the next ones but not all that much. It was very different in the US: It was very hard to get even medium-sized companies interested, but when it started it was like an avalanche. And most of those companies purchased from the market leader (our competitor unfortunately), even as #2 we were far, far behind. That obviously helps with wealth concentration. I'll leave it to you to decide if you think that's a good thing, or to find a nuanced view.
> We also lack the tech scene which created a lot of self-made billionaires in the US.
Food for (your) thought(s): Secret History of Silicon Valley - https://www.youtube.com/watch?v=ZTC_RxWN_xo
A truly remarkable lecture form the Computer History Museum in Mountain View, CA. TL;DR Silicon Valley was made possible by huge amounts of money spent by the US government during WWII on R&D. The "billionaires" happened on that basis. Also, and since I saw this first hand on both continents I feel very comfortable making that claim, much of the current-time explanation for this lies in what I wrote above - "winner takes all" plus "one market" sure helps to concentrate wealth and more quickly too.
IMHO the US does have something important: They have people and networks of people who understand scale and what is important and what isn't for business success. More so than others, although I can only compare with Germany. I completely reject your "analysis" though, well with that one sentence that makes a statement about a reason (taxes).
America cares about the number of billionaires, here in (Northern/Western) Europe we care about the size of the middle class.
Edit: This post is an (intentional) overgeneralization, but I do think it holds some truth, I do think people in the US care more about billionaires than people in Europe do.
Thank you for your overgeneralization of America. I am sure that it holds 100% up against any further discussion. I am glad that our Western European betters can teach us so much!
I'm fully aware that my comment is worthless, but a worthless article warrants a worthless response. The article, which was written by an American website, overgeneralizes about wealth (ie only billionaires matter), so I will overgeneralize about America. I fully understand that there are people in the USA who care about the health of the middle class, but it seems to me that US cares a whole lot more about billionaires than we do here in Europe (at least more than we do here in the Netherlands).
And how's that working out for you over there, with double digit unemployment rates in Spain, Italy, France?
As someone who's not American nor European (but lived for a while in both) this self-satisfied approach always amazes me. Are you guys realizing where you're heading?
Agreed. It's like:
America: "Kid's here have a better chance of becoming super-rich or super-powerful - maybe even President.. Forget about health care and income equality"
Europe: "Whatever, everyone here is middle class, self-fulfilled and happy... Forget about balanced budgets, unemployment and negative interest rates..."
Rest-Of-World: "Dammit, I just want to survive..."
I always considered the USA's rule on who can become president is really unfair. Legally, if you weren't born in the USA, you are a second class citizen. Contrary to what's commonly claimed, immigrants can never become 'fully American'.
> I always considered the USA's rule on who can become president is really unfair.
It made sense in the late 1800s, when foreign potentates exporting friends and family members and sponsoring their efforts to become rulers abroad was more of a thing, and the US was a young and not well-established country that might be particularly vulnerable to that.
Its arguably outlived any reasonable need, but at the same time the US has developed enough cultural nativism that, combined with the by-design difficulty of amending the Constitution, its difficult to change.
> And, at least it's probably saved us from having President Schwarzenegger...
Schwarzenegger's lack of a strong political base is a bigger factor there, which is why his only route to getting in office in the first place was exploiting celebrity in a way that would not work in a normal election in the Gray Davis recall that was largely funded by Darryl Issa as a way to get Darryl Issa into the Governor's mansion (California's recall system combines a majority vote to remove with a simultaneous plurality vote on the replacement-to-be-installed-if-the-removal-succeeds, and has no primary election to narrow the field of candidates -- this makes celebrity name recognition a bigger factor than in regular elections, and allows [as in the Davis recall] a replacement candidate to "win" with less votes than were cast to retain the incumbent.)
He did manage to get reelected, but the calculus of a party turning on their own incumbent is different than that of getting behind a candidate that isn't an incumbent.
Even if an unusual thing happened in national politics that enabled that approach to work again (there's no equivalent "Presidential recall", but the 2016 Republican Primary shows that even with a regular primary, sometimes forces align in unusual ways), the "celebrity political outsider" thing really only works for one major office, and Arnold had already used his shot on that. After that, he was a veteran politician that still lacked a strong base even in his own party.
You can forget about balanced budgets. If you print a currency you borrow in, you never have to worry about insolvency. Ever.
Unless you're one of those kooky economists who predicted Japan would experience full on hyperinflation in the 90s. Then again in the 2000s. Then again in the 2010s...
Most European countries can't print their own currency directly. As such, they certainly have to worry about insolvency (PIGS). Therefore, in the European context, balancing the budget or at least managing it well is definitely something you can't "forget" about.
Imagine being unemployed and you have your answer. Also we're not really gaining in productivity anymore (or we do but it has not much of an economically measurable effect) and haven't for a while now.
Wow, a lot of the expected arguments here, but consider that some "multigenerational" wealthy families are more like businesses than what some would consider family.
The winery example is a good one, if they stopped producing wine the family "fortune" would dwindle and evaporate. How is that different than a corporation which fails if it stops producing product? Not a whole lot. The big difference is the governance, the family chooses the person to "lead" the business, and other family members either learn the business or move on to something else.
I would be interested in research that followed up on heirs and heiresses that chose to do something other than work in the family business, to see how many of them created new wealth in the form of the their own business or endeavor. As opposed to lived a wealthy lifestyle and then died without leaving less than they started with to their progeny.
How does receiving the assets of your parents after their death affect social mobility? By the time your parents die you are usually 50 years old which means your social environment is a far bigger factor. During the time the parents are alive the children benefit from their support directly, no inheritance needed. Even a 100% inheritance tax is not going to solve that.
What a lot of people seem to think is that an inheritance is undeserved because the person receiving it didn't do anything to earn it. Obviously the parents earned this through their income and decided to not spend everything and give what remained of their wealth to their children. Even if the parents merely received their wealth from another inheritance they still had to decide to not spend more than they add to the inheritance, otherwise it would dry up over multiple generations.
Why do we even care about billionaires anyway? Why should I care e.g. that Bill Gates' networth is $78 billion? Why not care about the people at the bottom? Why not give them the things they truly need like financial security instead of letting them worry that if they earn too much their income drops. Either you're poor and heavily depend on welfare or you earn enough to not need welfare in the first place. There is no middle ground and the gap between the two is very large.
The problem with inherited wealth in general is that you end up with aristocracies. I mean, that's literally how aristocracies formed in the first place. Wealth begets wealth, so the fixed point of a society without confiscatory inheritance tax is feudalism.
> Why do we even care about billionaires anyway?
For one thing, money is power. It's undemocratic to allow some people to be worth millions of times others. If you allow some individuals to become infinitely wealthy, they will eventually buy your political system and bend it to benefit them. In principle, that's bad. In practice, it's happened.
For another, the way the wealthy got rich constitutes a wholesale transfer of wealth from the nation. Bill Gates is a rich man because he benefited from government spending and welfare for the rich. Specifically from a form of welfare for the rich known as 'intellectual property law', which means people have to pay a large fee to Microsoft, enforced by the US government, to copy some 1's and 0's. He got rich from government spending on education, infrastructure and defense, which built a stable middle class that could buy computers. He also got rich from the defense and research spending that built the internet and gave the technology freely to the people. Finally, he got even richer from monopolistic anti-competitive behavior, and tax evasion which put Microsoft's tax address in Nevada, and from the political lobbying that allowed this theft to happen.
Bill Gates, like all billionaires, is a welfare queen, and the wealth he's sitting on should be returned to the nation he took it from.
> How does receiving the assets of your parents after their death affect social mobility
The article doesn't only address inheriting your parents' assets. It is also about people who inherit directly from grandparents and great grandparents. And actually it's even about people who grow up in families that have been wealthy for hundreds of years and remain so today and seem likely to remain so for hundreds of years more.
> undeserved
You seem to focus on whether it's fair that some people have unearned power, but another sense in which some people are concerned about undeserved inheritance is that there's no reason to think that those who win the Ovarian Lottery are particularly able to allocate society's resources. Those who have earned a fortune have demonstrated some ability to put resources to economically good effect, so there's a purely selfish & pragmatic reason to celebrate earned wealth that does not exist for unearned wealth.
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[ 2.8 ms ] story [ 149 ms ] threadThe UK and some of the Nordic countries do have some new money in the UK it's mostly in the financial sector and rich individuals from the colonies moving into the UK.
And as far as the Nordics go historically the wealth was more limited than in the richer states, so the post war economy had greater impact on the wealth of those nations.
If you discount the wealth redistribution following WW1 and especially WW2 (like it or not Nazi gold is part of the economy today, as well as many other wartime confiscations) it would probably have worse wealth distribution than the US since it still has lower mobility and maybe even worse than some emerging and developing markets.
But higher taxes for the rich and more redistributive social policies. So I'm not convinced.
https://mises.org/blog/poor-us-are-richer-middle-class-much-... http://www.institutmolinari.org/IMG/pdf/tax-burden-eu-2015.p...
Taxes are higher but not for the rich, the majority of the tax burden in Europe falls on employers ("payroll" style tax) and on the middle class. The US has one of the highest capital gains and corporate tax rates in the developed world and higher than pretty much every country in Europe.
When you add all the indirect and direct taxes on EU workers you get a pretty much horrible system where the majority of the poor in the US have a similar or higher purchasing power than what the median salary workers see in the EU after taxes.
Accumulating wealth in the EU is considerably harder because of just how harshly you are taxed the joke about being paid half and have double the tax is kinda silly but it's kinda true even in tech. Yes many EU countries do offer things like healthcare and education for free but it's far from free and I'm not sure if locking their middle class into a loop that prevents it from accumulating wealth is really worth it.
Also since employing individuals in the EU is so expensive especially compared to the US you get to the point where recovering from any economic crises is much harder and leaves the workers at a considerable disadvantage to both being replaced by automation and poached by high paying countries and emerging economies.
When you get to the point where your tax income is half your GDP I think you are doing something seriously wrong as you are playing a nearly zero sum game because overall your citizens are not gaining much wealth and you are just shoveling it from one pocket into the other.
https://en.wikipedia.org/wiki/List_of_countries_by_tax_reven...
And worse when most of that tax burden falls on the individuals through VAT and social insurance and income taxes, while capital gains taxes are just a rounding error
http://ec.europa.eu/eurostat/statistics-explained/images/0/0...
Garbage article
Germany: 65%
Italy: 37%
USA: 29%
China: 2%
Also, this statistic is about billionaires, not just ordinary very-wealthy people.
In continental Europe, there is no Jeff Bezos, no Sergei Brin, no Bill Gates, no Steve Jobs, no Elon Musk, no Larry Page, no Mark Zuckerberg... one could keep going.
I don't think it's a coincidence.
--
PS. In response to comments below, note that the founders of Skype, Spotify, Ikea, are not from continental Europe; they are from the Scandinavian Peninsula. Note also that I'm talking about NEW kinds of products and services that have changed the world.
But he ain't continental.
http://fortune.com/2013/07/21/inside-rolling-stones-inc-fort...
http://www.wsj.com/articles/the-rolling-stones-guide-to-busi...
There's the founders of Skype (also TransferWise and their other endeavours), the founders of Spotify too, SAP, Richard Branson (not tech), Ikea, Inditex, Ferrero, Wirecard, LVMH... but there are lot in their own categories. The list is actually quite long, albeit lacking in the tech sector.
Culture in Europe is not to be overly audacious with being a 'one man' business. The leaders of businesses don't take centre stage, the business itself does. This is probably why their businesses are known far better than they are personally.
It is at opposites with American businesses where older, inherited business tend to have this trait, for instance one cannot even find a picture of anyone who runs the Mars company easily. Young ones on the other hand put their founders at centre stage.
Your description or thoughts of European entrepreneurs are somewhat extreme.
LVMH's roots go back centuries (Louis Vuitton was founded in 1854; Moet was founded in 1743; Hennesy was founded in 1765).
Amancio Ortega of Inditex is self-made, but he has not changed the world with new products and services.
I would hardly say Inditex hasn't changed the world. Apple mimics their JIT inventory technique.. There used to be a time when it took a few years to get phones out to the public.
I think the thing that makes these particular entrepreneurs stand out is they keep a relatively higher profile. The cultural tendency in Europe is more socialist and not to show off and keep out of the news - This is what my point was more on. The startups and founders are there, but they don't let themselves be known.
Do we know who was responsible for the Raspberry Pi for example? or who built up ARM Holdings (the designers of the arm chips on everyones phones and tablets)? or who made Nokia do what it did? Who made the device that drilled the channel tunnel?
Surely they changed the world, its just they don't 'get out there' as much as American entrepreneurs.
By the way, Raspberry Pi's and ARM's roots are English: https://en.wikipedia.org/wiki/Raspberry_Pi#History | https://en.wikipedia.org/wiki/ARM_Holdings
You might as well claim that Walmart, Amazon or the Sears catalog, didn't change the world. They all just sold stuff, right?
Liliale Bennencourt: heiress.
https://en.wikipedia.org/wiki/Ruben_Rausing https://en.wikipedia.org/wiki/Ingvar_Kamprad https://en.wikipedia.org/wiki/Amancio_Ortega https://en.wikipedia.org/wiki/Karl_Albrecht https://en.wikipedia.org/wiki/John_Fredriksen https://en.wikipedia.org/wiki/Markus_Persson https://en.wikipedia.org/wiki/Georg_F._W._Schaeffler
etc. etc.
Very rich people in Europe tend to keep a fairly low profile, self-made and inherited. You may not be familiar with them as they don't tend to be covered in TechCrunch
Ingvar Kamprad: not in continental Europe.
Amancio Ortega: what new kind of product/service did his company create?
Karl Albrecht: what new kind of product/service did his company create?
John Fredriksen: what new kind of product/service did his company create?
Markus Persson: not from continental Europe.
Georg Schaeffler: the roots of that company go back to 1883: https://en.wikipedia.org/wiki/Schaeffler_Group
Also Scandinavia is in continental Europe. Just the UK and the islands in the Med are excluded.
If you are looking for immensely wealthy, self made entrepreneurs, they exist. Just from Spain, we have Emilio Botin, who built one of the biggest banks in the world out of nothing, and Amancio Ortega, who owned a single, small store called Zara, and now owns a conglomerate worth 100b: Not quite Amazon, but in the same ballpark.
There's also this company called SAP. I hear they are big and not American.
The difference in number of ultra-wealthy entrepreneurs has little to do with inherited wealth IMO, and I am no fond of inherited wealth. Instead, there are two far better reasons: It's harder to raise capital, and the size of the markets that you can get to without becoming a multilingual, multi jurisdiction company are far smaller. The EU's inroads towards unified regulation are noticeable, but far too slow in comparison to the US.
How big would Amazon be if all it could sell to for the first few years was just Seattle? How do I build a huge social network if you are hard pressed to find more than 80 million people speaking the same language, and people often live very close to their birthplace? How many text advertisers can I find if my search engine is looking at content written in a country of 40m people, instead of 400m?
You might as well ask why there are so few Japanese playing in the NBA.
A spaniard, son of a railroad worker. Started working as a shop hand at age 14 and it's now, at least according to Forbes[1], the richest man in Europe and the wealthiest retailer in the world. You can't be more self-made than that.
On the other hand, some of the people you mention were already well-off to begin with, even if not really rich.
Once said that, I agree with you at some level: The mindset in Europe is (or was, maybe it's changing?) different from the US and, generally speaking, more risk-averse. Also, the feeling among most of the european entrepreneurs I've met is that the US is the place to go if you really want to succeed: Funding, market fit, know-how... all that is perceived to be better/easier to get in the US.
Anyway, just my 2 cents and my very personal, very subjective, anecdote-based perception of it.
[0] https://en.wikipedia.org/wiki/Amancio_Ortega [1] http://www.forbes.com/profile/amancio-ortega
I also agree with your perception that the mindset in Europe is (or was?) different from the US and, generally speaking, more risk-averse. I don't think this is unrelated to the greater prevalence of inherited wealth.
A company like Zara faces similar challenges in regards to distribution as does Amazon. But it also does more, it designs and produces the products it sells, something that Amazon is completely incapable of doing. Furthermore, they own and operate something like 30-50% of the production capacity they need. These are hard problems that very few companies are able to understand and solve.
Also Dieter Schwarz of Lidl, Michel Ferrero etc. - what exactly do you mean with 'new'?
However it is definitely not a coincidence, American companies usually win because the American market is big and unified, the European market much less so, and there are many other differences.
http://www.economist.com/news/united-states/21595437-america...
> The study confirms previous findings that America’s social mobility is low compared with many European countries. (In Denmark, a poor child has twice as much chance of making it to the top quintile as in America.)
It seems a little like special pleading. The ease of transition from bottom to top quintile is an accepted index of how mobile or stratified a society is, not how wealthy individuals are. Of course different nations will be better or worse off, or will have different Gini indices as a result of social policy, but that doesn't mean we can't meaningfully compare their mobilities. Pointing out the figures isn't "propaganda".
> a 40%er in the USA is better off than a 40%er in Europe
Generalizing about "Europe" doesn't make much sense. Between (say) the UK and Albania, there's a vast economic gap (about 10 fold lower GDP/capita). If you're talking about Western Europe, what do you mean by "is better off"?
The relevant reduction in mobility would primarily be within the top 10% tail of the Pareto distribution for income, the dynamics of the bottom 90% are quite different -- although their absolute share vs. the top 10% has certainly declined.
So essentially that study discovers that if you are born into ethnicity X you will unlikely end up as ethnicity Y.
Even if we take your claim as true, the fact that different ethnic groups are highly stratified and mobility is restricted, like a caste system, is just as significant. Maybe even more so, because it implies a racist society.
Claiming, in effect, that we should discount a lack of social mobility for those born into certain ethnic groups, seems like racism.
2. Re racism - I'm sorry but that's typical liberal nonsense. Discounting all differences between groups of people, assuming equal distribution of intelligence & culture and then ascribing resulting group differences to 'racism'.
What's rather interesting is that educational results among various US sub-groups map rather closely to their old-world kin. Ie US whites/blacks/asians correlate fairly well to the countries where they originally came from (hispanics obviously not having an old world mapping). Hence the hang-wringing "Our kids are failing vs X" is actually misplaced as they're comparing apples and multi-fruit juice.
Your ideas actually remind me of the barely literate from the middle ages who believed that the world was sitting on 3 whales or something like that.
Preponderance of evidence to the contrary was dismissed with 'That's not what it says in the Bible!'.
You've got same religion ("all people are equal") that goes against ALL real-world observations. But just like they waved everything off with 'Because G-d wills it', you've got 'Because racism!'.
Could you share with me the table of STR/INT/WIS/DEX/CON/CHA for Blacks, Whites and Asians? Oh, and Jews, of course.
Do we get skill and attack bonuses or special saving throws?
But I'm enough of a realist to see first generation asians / indians operating laundromats or chinese restaurants and their children becoming doctors or lawyers. So to my mind US is the land of high social mobility - for people who are intelligent and are willing to work.
A driven person will have the power to change their community, no matter their skin color. But one culture over another may be more effective at establishing the preconditions that driven people arise from. Evaluating people based on the cultural enviornment seems effective but I'm not entirely convinced that the fault lines are strictly related to race. I think people get confused when they see a group of people associated with a specific economic outcome and erroneous attribute that to race instead of culture.
Those conversations seem valuable, but it seems easy to misinterpret such a conversation as either racist or classist. Definitely these things should be talked about behind closed doors to avoid character assassination attempts.
The numbers of billionaires, and especially percentages of those, are a worthless metric. Billionaires are about as rare unicorns, especially here in the Netherlands (pop. 17 million) where we only have 9 billionaires in total. Due to the high taxes here in Europe it's incredibly difficult to become very rich, so it's not strange that a lot of our billionaires have inherited their wealth. We also lack the tech scene which created a lot of self-made billionaires in the US.
When it is harder to become a billionaire it shows that there is less of a "winner takes all" system, which has advantages and disadvantages. The US is much more "winner takes all" than Europe. That Europe still is a lot of countries, the EU did not change that, is part of why that is so, but I would not go so far to say it's the major part, even if Europe was "one" I think we would still not be the same. That's from some business observations I made while living in the US for a decade (I'm from Europe).
For an example what that means (winner takes all), when I worked for a tech startup we found it pretty easy to get initial customers in Europe, Germany to be exact. However, scaling was hard, getting a few customers helped with the next ones but not all that much. It was very different in the US: It was very hard to get even medium-sized companies interested, but when it started it was like an avalanche. And most of those companies purchased from the market leader (our competitor unfortunately), even as #2 we were far, far behind. That obviously helps with wealth concentration. I'll leave it to you to decide if you think that's a good thing, or to find a nuanced view.
Food for (your) thought(s): Secret History of Silicon Valley - https://www.youtube.com/watch?v=ZTC_RxWN_xo A truly remarkable lecture form the Computer History Museum in Mountain View, CA. TL;DR Silicon Valley was made possible by huge amounts of money spent by the US government during WWII on R&D. The "billionaires" happened on that basis. Also, and since I saw this first hand on both continents I feel very comfortable making that claim, much of the current-time explanation for this lies in what I wrote above - "winner takes all" plus "one market" sure helps to concentrate wealth and more quickly too.IMHO the US does have something important: They have people and networks of people who understand scale and what is important and what isn't for business success. More so than others, although I can only compare with Germany. I completely reject your "analysis" though, well with that one sentence that makes a statement about a reason (taxes).
Edit: This post is an (intentional) overgeneralization, but I do think it holds some truth, I do think people in the US care more about billionaires than people in Europe do.
As someone who's not American nor European (but lived for a while in both) this self-satisfied approach always amazes me. Are you guys realizing where you're heading?
Europe: "Whatever, everyone here is middle class, self-fulfilled and happy... Forget about balanced budgets, unemployment and negative interest rates..."
Rest-Of-World: "Dammit, I just want to survive..."
It made sense in the late 1800s, when foreign potentates exporting friends and family members and sponsoring their efforts to become rulers abroad was more of a thing, and the US was a young and not well-established country that might be particularly vulnerable to that.
Its arguably outlived any reasonable need, but at the same time the US has developed enough cultural nativism that, combined with the by-design difficulty of amending the Constitution, its difficult to change.
Schwarzenegger's lack of a strong political base is a bigger factor there, which is why his only route to getting in office in the first place was exploiting celebrity in a way that would not work in a normal election in the Gray Davis recall that was largely funded by Darryl Issa as a way to get Darryl Issa into the Governor's mansion (California's recall system combines a majority vote to remove with a simultaneous plurality vote on the replacement-to-be-installed-if-the-removal-succeeds, and has no primary election to narrow the field of candidates -- this makes celebrity name recognition a bigger factor than in regular elections, and allows [as in the Davis recall] a replacement candidate to "win" with less votes than were cast to retain the incumbent.)
He did manage to get reelected, but the calculus of a party turning on their own incumbent is different than that of getting behind a candidate that isn't an incumbent.
Even if an unusual thing happened in national politics that enabled that approach to work again (there's no equivalent "Presidential recall", but the 2016 Republican Primary shows that even with a regular primary, sometimes forces align in unusual ways), the "celebrity political outsider" thing really only works for one major office, and Arnold had already used his shot on that. After that, he was a veteran politician that still lacked a strong base even in his own party.
You can forget about balanced budgets. If you print a currency you borrow in, you never have to worry about insolvency. Ever.
Unless you're one of those kooky economists who predicted Japan would experience full on hyperinflation in the 90s. Then again in the 2000s. Then again in the 2010s...
This sweeping generalization is not backed by fact and has the effect of inflaming emotions without contributing to the conversation.
We detached this subthread from https://news.ycombinator.com/item?id=12354177 and marked it off-topic.
The winery example is a good one, if they stopped producing wine the family "fortune" would dwindle and evaporate. How is that different than a corporation which fails if it stops producing product? Not a whole lot. The big difference is the governance, the family chooses the person to "lead" the business, and other family members either learn the business or move on to something else.
I would be interested in research that followed up on heirs and heiresses that chose to do something other than work in the family business, to see how many of them created new wealth in the form of the their own business or endeavor. As opposed to lived a wealthy lifestyle and then died without leaving less than they started with to their progeny.
What a lot of people seem to think is that an inheritance is undeserved because the person receiving it didn't do anything to earn it. Obviously the parents earned this through their income and decided to not spend everything and give what remained of their wealth to their children. Even if the parents merely received their wealth from another inheritance they still had to decide to not spend more than they add to the inheritance, otherwise it would dry up over multiple generations.
Why do we even care about billionaires anyway? Why should I care e.g. that Bill Gates' networth is $78 billion? Why not care about the people at the bottom? Why not give them the things they truly need like financial security instead of letting them worry that if they earn too much their income drops. Either you're poor and heavily depend on welfare or you earn enough to not need welfare in the first place. There is no middle ground and the gap between the two is very large.
> Why do we even care about billionaires anyway?
For one thing, money is power. It's undemocratic to allow some people to be worth millions of times others. If you allow some individuals to become infinitely wealthy, they will eventually buy your political system and bend it to benefit them. In principle, that's bad. In practice, it's happened.
For another, the way the wealthy got rich constitutes a wholesale transfer of wealth from the nation. Bill Gates is a rich man because he benefited from government spending and welfare for the rich. Specifically from a form of welfare for the rich known as 'intellectual property law', which means people have to pay a large fee to Microsoft, enforced by the US government, to copy some 1's and 0's. He got rich from government spending on education, infrastructure and defense, which built a stable middle class that could buy computers. He also got rich from the defense and research spending that built the internet and gave the technology freely to the people. Finally, he got even richer from monopolistic anti-competitive behavior, and tax evasion which put Microsoft's tax address in Nevada, and from the political lobbying that allowed this theft to happen.
Bill Gates, like all billionaires, is a welfare queen, and the wealth he's sitting on should be returned to the nation he took it from.
Largely parasitic income - rent, capital gains, interest on loans - things that don't actually require you to, y'know, work.
You can be brain damaged and still 'earn' these things.
>Why not care about the people at the bottom?
I guess you care about the people at the bottom by letting the parasites do their thing?
The article doesn't only address inheriting your parents' assets. It is also about people who inherit directly from grandparents and great grandparents. And actually it's even about people who grow up in families that have been wealthy for hundreds of years and remain so today and seem likely to remain so for hundreds of years more.
> undeserved
You seem to focus on whether it's fair that some people have unearned power, but another sense in which some people are concerned about undeserved inheritance is that there's no reason to think that those who win the Ovarian Lottery are particularly able to allocate society's resources. Those who have earned a fortune have demonstrated some ability to put resources to economically good effect, so there's a purely selfish & pragmatic reason to celebrate earned wealth that does not exist for unearned wealth.