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… and the Poor Get Poorer??

Posted By Don Boudreaux On October 19, 2004 @ 10:47 am In Myths and Fallacies | Comments Disabled

NPR’s Marketplace [1] yesterday ran a story on the widening income gap between Hispanics and whites in the United States. (I unsuccessfully tried to find a specific link to this story on Marketplace’s website.) One of the persons interviewed remarked that it’s a classic case of “the rich getting richer and the poor getting poorer” (or words very, very close to that effect).

This is an old and familiar saw – but one that doesn’t cut it.

Review the history of Americans who’ve become rich as entrepreneurs. A large percentage – my guess is a great majority of them – began life in modest circumstances.

Perhaps the most famous fabulously rich American of all time is John D. Rockefeller [2], founder of Standard Oil. He hailed from a poor, hard-scrabble farm in upstate New York, then moved with his family as a young boy to Ohio. He began his career at the age of 16 in Cleveland as a bookkeeper. He was quite the opposite of wealthy.

Or Andrew Carnegie [3]. The son of a Scottish weaver, he immigrated to America, with nearly nothing, at the age of 13. Almost immediately he began his career – as a bobbin boy in a cotton mill. No riches here that launched Carnegie.

Or Aaron Montgomery Ward [4]. He began his career working in a barrel factory at the age of 14; later he advanced to laboring in a brick yard. Even later, he earned his living as a traveling salesman. No riches here that launched Montgomery Ward.

Going back a few generations, consider John Jacob Astor [5]. (See also here [6].) He was born in Germany, the son of a butcher, and worked in his brother’s factory making musical instruments. He did not amass any fortune until he came to the U.S. and started his fur-trading business.

Likewise for Cornelius Vanderbilt [7], descended from Dutch indentured servants and a man who quit school at the age of 11 to work on ferries. His family was of only modest means.

Or Gustavus Swift [8]. He was the son of a farmer; he began his career as a butcher’s apprentice.

J.P. Morgan [9] is something of an exception to the above cast of entrepreneurs. His father was a partner in a London investment firm.

More recently, Steve Jobs [10] hails from a modest background. (Bill Gates is more like Morgan on this front; his father is a partner is the well-known law firm of Preston Gates & Ellis.)

I could go on, listing famous rich business people. I’m quite certain – without having yet done a detailed study – that the history of these people thoroughly disproves the tired adage that “the rich get richer and the poor get poorer.”

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URL to article: http://cafehayek.com/2004/10/_and_the_poor_g.html

URLs in this post:

[1] Marketplace: http://marketplace.publicradio.org/

[2] John D. Rockefeller: http://en.wikipedia.org/wiki/John_D._Rockefeller

[3] Andrew Carnegie: http://www.carnegie.org/sub/about/biography-low.html

[4] Aaron Montgomery Ward: http://www.bookrags.com/biography/aaron-montgomery-ward/

[5] John Jacob Astor: http://en.wikipedia.org/wiki/John_Jacob_Astor

[6] here: http://www.fee.org/vnews.php?nid=3784

[7] Cornelius Vanderbilt: http://www.brainyencyclopedia.com/encyclopedia/c/co/cornelius_vanderbilt.html

[8] Gustavus Swift: http://www.learner.org/biographyofamerica/prog14/transcript/page03.html

[9] J.P. Morgan: http://en.wikipedia.org/wiki/J._P._Morgan

[10] Steve Jobs: http://mbhs.bergtraum.k12.ny.us/user/a7473/bio.html


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