White House hopeful Bernie Sanders has been doing his best lately to place America’s “billionaire class” right at the center of the nation’s political discourse. But Phoenix-based attorney Bob Lord would like to see the nation start contemplating the next chapter in the ongoing concentration of America’s wealth: the emergence of our first trillionaires.
Lord doesn’t stand alone. Other observers also see trillionaires — billionaires a thousand times over — in our future. Last year, for instance, CNBC explored whether America’s first trillionaire might arrive in time for that network’s 2039 50th anniversary.
But Lord may be doing more than any other analyst to track the trends bringing trillionaires ever closer. As both an estate planner and an engaged political activist, he has sat front-row to those trends, and his thoughts on them have appeared in the Los Angeles Times, the Arizona Republic, and a wide variety of other media outlets.
Lord currently serves as an associate fellow at the Institute for Policy Studies in Washington, D.C. I've just interviewed him on our trillionaire future for Too Much, the Institute’s monthly on excess and inequality.
Too Much: So why do you spend time thinking about trillionaires? We don’t seem particularly close to actually having one.
Bob Lord: I’ll readily admit that I have had kind of a morbid curiosity about whether and when America will see its first trillionaire. But I actually do see a point to trillionaire speculation.
I find the possibility that one single person or family might control $1 trillion in wealth deeply repugnant, and I think most Americans would feel the same way if trillion-dollar fortunes actually started materializing. Maybe if we openly talk about that possibility, we’ll all collectively end up saying “enough” — and do what needs to be done to prevent those first trillionaires from emerging.
And maybe years ago, if we had done that sort of talking before billionaires started appearing, we wouldn’t have the incredibly unequal United States we have today.
Too Much: Who has the best shot at becoming America’s first trillionaire?
Lord: One simple approach to answering that question would be to identify a billionaire young enough to invest his way to a trillion-dollar net worth during his lifetime. Mark Zuckerberg would be a prime candidate under this approach.
Zuckerberg, the Facebook founder, just turned 30. Last September, Forbes put his net worth at $34 billion, up from $19 billion the year before. The Bloomberg Billionaires database puts his current net worth at about $60 billion.
Another approach would be to focus on corporate market capitalizations. If you do that, trillionaire status at first appears unachievable. You would have to be the founder of five companies as giant as Microsoft to reach a trillion. That doesn’t seem particularly likely.
But what if we see larger and larger Microsofts in the years ahead? We already have the space entrepreneur Peter Diamandis talking about near-Earth asteroids as “trillion-dollar assets” just waiting to be mined and exploited. He’s predicting the first trillionaire will come from that mining.
Too Much: But you’re not looking into the stars to calculate the chances that we’re going to see a trillionaire.
Lord: No, I’m looking at something far more pedestrian, the increase in the share of America’s total wealth controlled by the Forbes 400.
I started down this road by comparing the overall wealth of America with the combined wealth of the 400 Forbes richest Americans. Let’s assume, I figured, that we have about $300 trillion in national wealth around 2040 and that the Forbes 400 hold 8 percent of that wealth, not unreasonable assumptions given the trends of the last three decades.
Let’s also assume that the richest American on the 2040 Forbes 400 list has the same share of the combined Forbes 400 fortune as Bill Gates, America’s richest individual, has now.
All those assumptions would put the fortune of the richest American in 2040 at about $846 billion, not all that far from $1 trillion.
Too Much: Hard to remain trillionaire-skeptic when you see those numbers.
Lord: But I think we can draw from the Forbes data an even more compelling reason to see a trillionaire in our future. I’ve noticed a fairly consistent pattern as I’ve studied the Forbes and other data on wealth concentration, and that’s this: The concentration of wealth within America’s richest 10 percent tends to repeat itself at each level within the top 10 percent.
So, for example, if the top 1 percent holds 40 percent of the wealth held by the top 10 percent, then the top one-tenth of 1 percent will control about 40 percent of the wealth controlled by the top 1 percent, and the top one-hundredth of 1 percent will control about 40 percent of the wealth controlled by the top tenth of 1 percent, and so on.
Now the relationships here don’t turn out to be perfect, but they do appear to be really strong.
Too Much: How much have these numbers changed over time?
Lord: Over the last three-plus decades, the share of America’s wealth that our richest 10 percent hold has increased from about 65 percent to around 77 percent today. And within the top 10 percent the top tenth share at each level has gone from 40 percent in the early 1980s to around 50 percent today.
But here’s what I failed to appreciate fully the first time I went through the wealth data. Inequality within the Forbes 400 tends to track the inequality in American wealth overall. The wealth of America’s 40 wealthiest last year totaled about 46 percent of the wealth of the entire Forbes 400.
This means that the share of our aggregate national wealth held by deep pockets at the Forbes 400 summit has increased even faster than the overall Forbes 400 share of our wealth.
To be a bit more specific: The share of America’s wealth held by the 14 wealthiest Americans today equals six times the share of America’s wealth held by America’s 10 wealthiest in 1982. I’m comparing 10 to 14 to take into account the increase in the total U.S. population since 1982, to create an apples-to-apples comparison.
Now within that top dozen or so fortunes on the Forbes list, the distributional patterns we’ve seen break down. That makes sense. The share of America’s wealth held by a few people of massive wealth depends on too many random factors to fit any precise pattern.
Bill Gates, for instance, easily could be worth well in excess of $100 billion today, not just his current $84 billion, if he felt driven to reach that level and had chosen to give away less of his fortune.
This randomness makes it hard to predict the arrival date of our first trillionaire.
Too Much: What’s your best guess for that date?
Lord: I don’t want to play that game. But I can lay out a scenario that would deliver unto us America’s first trillionaire.
First, distributional patterns within the top 10 percent would need to continue to tilt toward the top tenth. The top 1 percent holds about 50 percent of top 10 percent wealth today, up from about 40 percent in my younger days. Let’s say this share moves to 60 percent, and this same 60 percent rule repeats itself within the top 1 percent, the top tenth of 1 percent, and so on.
Now if the total share of American wealth that our richest 10 percent hold increases only slightly, then the wealthiest 15 to 17 Americans a quarter-century from now would likely hold 2.5 percent of our national wealth.
The second piece of our trillionaire-creation scenario: An obsessively wealth-driven individual would have to emerge as the wealthiest American, someone who combines talent, luck, and a single-minded devotion to accumulating ever more wealth.
No individual worth hundreds of billions could, of course, have a rational reason for wanting to continue accumulating. But once the concentration of our national wealth puts a $1 trillion fortune in sight, the drive to be the first person to reach that level will take over.
Too Much: So your bottom line?
Lord: Pay attention to how the wealth within the top 10 percent is distributed, particularly the shares of wealth the top 1 percent and top tenth of 1 percent hold. If the share held by the top tenth of 1 percent approaches 60 percent of the share held by the top 1 percent, the arrival of the first American trillionaire likely won’t be too far away.
And if current trends continue, that share will hit 60 percent.
Too Much: Do you believe current trends will continue?
Lord: Only if we let them.
Too Much: And how do we stop them?
Lord: A whole other discussion. But we could start that discussion here. We need to stop thinking about income tax rates on the rich just in terms of the revenue they raise. We need to set tax rates — on income over $1 million and higher — at rates high enough to limit the concentration of wealth at the top.
Sam Pizzigati edits "Too Much," the Institute for Policy Studies online monthly on excess and inequality. His latest book: "The Rich Don't Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970" (Seven Stories Press).