How to Succeed in Business

Soros on Soros: Staying Ahead of the Curve

by George Soros and Byron Wien and Krisztina Koenen
John Wiley, 326 pp., $19.95 (paper)

Soros: The Life, Times, and Trading Secrets of the World's Greatest Investor

by Robert Slater
Irwin, 269 pp., $25.00

Citizen Turner: The Wild Rise of an American Tycoon

by Robert Goldberg and Gerald Jay Goldberg
Harcourt Brace, 525 pp., $27.00

It Ain't As Easy As It Looks (out of print)

by Porter Bibb
Crown, 468 pp.

Warren Buffett
Warren Buffett; drawing by David Levine

During the past fifteen or twenty years, after several decades in which the distance between America’s rich and poor was relatively narrow, the distribution of wealth has again skewed dramatically in favor of the rich. One percent of Americans today account for some 40 percent of the nation’s personal wealth, about the same proportion as at the end of the Roaring Twenties. (In the early 1970s, the top 1 percent had only half that share.) Wealth in the US is now the most unevenly distributed in the advanced world.1 When Forbes magazine first published its list of the 400 richest Americans in 1982, one needed a mere $100 million to qualify. Last year, the poorest of the 400 was worth more than $340 million. Consumer prices on average rose by only about 60 percent over this period, so inflation has accounted for only a small portion of this increase in individual wealth.

Unlike earlier periods of great wealth accumulation, however, these years saw the American economy grow unusually slowly. The moguls of the 1970s and 1980s became extraordinarily rich while productivity, or output per hour of work, which is the foundation of economic growth, rose at less than half the rate it had risen on average since 1870. Revised data show that it will have risen in the 1990s only marginally faster than it did in the 1970s and 1980s. Productivity has never risen so slowly over a twenty-year period since the Civil War. In addition, average real wages paid to American workers (discounted for inflation) have stagnated since the early 1970s and have fallen sharply by some measures, especially for those workers with only high-school educations. In the past, average real wages for all US workers had always risen during times of great wealth accumulation, if not so fast as the incomes of the wealthiest.

Before the 1970s, America’s greatest fortunes were rarely made by investing in financial markets. J.P. Morgan, who was not only an investor but built a large bank as well, accumulated a net worth of less than $1 billion in today’s dollars. Andrew Carnegie reportedly said on Morgan’s death that he hadn’t known Morgan wasn’t a rich man. 2 Instead, America’s richest people typically drew their wealth from owning natural resources or real estate, or from having started companies that eventually became giants. These tycoons made autos, steel, paper, food products, cigarettes, machinery, and, later, computers, and created the great oil companies, department-store chains, banks and insurance companies, railroads, airlines, and the print and electronic media. They typically hired thousands of workers, and their companies or property holdings long survived most of them.

Many of America’s greatest fortunes over the last two decades of exceptionally slow economic growth have been made not by builders of companies but, for the first time on such a scale, by professional investors. Rarely have these men and women…

This is exclusive content for subscribers only.
Get unlimited access to The New York Review for just $1 an issue!

View Offer

Continue reading this article, and thousands more from our archive, for the low introductory rate of just $1 an issue. Choose a Print, Digital, or All Access subscription.

If you are already a subscriber, please be sure you are logged in to your account.