People who don’t look any deeper than the Gini coefficient look back on the world of 1982 as the good old days, because those who got rich then didn’t get as rich. But if you dig into how they got rich, the old days don’t look so good. In 1982, 84% of the richest 100 people got rich by inheritance, extracting natural resources, or doing real estate deals. Is that really better than a world in which the richest people get rich by starting tech companies? Why are people starting so many more new companies than they used to, and why are they getting so rich from it? The answer to the first question, curiously enough, is that it’s misphrased. We shouldn’t be asking why people are starting companies, but why they’re starting companies again. In 1892, the New York Herald Tribune compiled a list of all the millionaires in America. They found 4047 of them. How many had inherited their wealth then? Only @20% — less than the proportion of heirs today. And when you investigate the sources of the new fortunes, 1892 looks even more like today. Hugh Rockoff found that “many of the richest … gained their initial edge from the new technology of mass production.”

See also income inequality

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