Wednesday, May 11, 2005

The Rich

Professor Williams tells us about the rich in our country.
Farrah Gray was raised in a predominantly black Chicago neighborhood. At age 8, he started a lemonade stand business, later a venture capital business, a food business and a magazine. By age 17, Farrah Gray was a millionaire, had been chief executive of four companies, and had offices on Wall Street, and in Las Vegas and Los Angeles.

While becoming a millionaire by age 17 is rare, eventually becoming a millionaire isn't. According to TNS Financial Services' 2004 Affluent Market Research survey, there are an estimated 8.2 million American households with assets, excluding primary residences, worth over $1 million. That's a 33 percent increase over the 6.2 million millionaire households in 2003.

. . . .80 percent of today's American millionaires are first-generation rich. . . .fewer than 20 percent inherited 10 percent or more of their wealth. More than half never received as much as a dollar in inheritance. Fewer than 25 percent received "an act of kindness" from a relative greater than $10,000, and 91 percent never received, as a gift, as much as $1 from the ownership of a family business.

This points to one of the most unique features of our nation. Just because you know where a person ended up in life is no guarantee that you can tell where he started. In other words, there is so much economic mobility in our society that starting out with modest means or even being dirt poor does not prevent one from ending up at the top.

In Justice as Fairness: A Restatement John Rawls argues that one of the conditions for justice is that "social and economic inequalities . . . are to be attached to offices and positions open to all under conditions of fair equality of opportunity." It seems to me that what Professor Williams tells us about the rich in our system of political economy is a pretty good illustration of what "fair equality of opportunity" would mean in any real economy.

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