Billionaires can be fascinating, and not just because of the fortunes they amass. They buy islands and media organizations, experiment with space travel, and have larger-than-life personalities. They also become proxies in national political debates about economic growth, inequality, taxes and fairness. Misconceptions abound about their beliefs, businesses and influence. Let's explore five of the most common myths.
1. Billionaires can buy elections and change public policy.
Billionaires get a lot of attention for their outsize campaign contributions: According to ProPublica,
But money doesn't always equal political power. Recent elections have been littered with failures on the part of billionaires. Conservative financiers didn't defeat President
Despite all the coverage of national political and policy advocacy, some of the most successful billionaire efforts have taken place at the state and local levels. Peter Lewis invested millions in lobbying to legalize marijuana in Colorado and Washington. Paul Singer, Seth Klarman, Bill and Melinda Gates, and
2. Most billionaires are conservative anti-tax and small-government advocates.
A number of prominent billionaires are free-market conservatives who want to limit the government's role in the economy. Yet my analysis of Forbes magazine data shows that the 492 billionaires in the United States have varied interests. For example,
3. Most billionaires inherited their wealth.
According to Wealth-X and UBS Financial Services, which track high-net-worth individuals, about 65 percent of billionaires are self-made. A surprising number, including
This is one reason many of them were upset when Obama talked about all the help business people get from the government in his 2012 "You didn't build that" campaign speech, in which he declared that "if you've been successful, you didn't get there on your own." Self-made individuals in the United States take pride in their initiative and hard work and don't like being characterized as getting government help through tax policy, investments in education and infrastructure expenditures, even though many of them have benefited from public policies. For instance, tax rates on capital gains from long-term financial assets tend to be lower than those on ordinary income, and estate taxes have been slashed over the past decade. These policy decisions have helped wealthy individuals grow and keep their fortunes.
4. All they care about is making money.
There is little doubt that money is a major motivator, yet many billionaires also have nonmaterial goals. People like
Unlike previous generations of wealthy individuals who did the bulk of their philanthropy upon their deaths, a number of the current billionaires are engaging in serious philanthropy through foundations or nonprofit organizations. Nearly 10 percent including
5. The best way to become a billionaire is to work on Wall Street.
Graduating college seniors line up at Wall Street firms hoping to land lucrative positions in finance. Many people think this sector holds the best chance for generating wealth. However, my tabulation of the Forbes billionaire list shows that only 9 percent of billionaires made their fortunes through finance and banking. The more common avenues for wealth are diversified companies (18 percent of all billionaires); real estate, construction and hotels (15 percent); and retail and consumer goods (14 percent).
Based on my analysis of young billionaires, 42 percent earned their wealth through technology firms. This has spawned what Wealth-X chief executive Mykolas Rambus calls "technopreneurs." Tech billionaires such as Mark Zuckerberg,