comparators

This page considers some comparators for earnings by creators, looking at how much their wealthy peers were earning.

It covers -

• introduction
• issues
• rankings
• studies

     introduction

One way of making sense of figures in the preceding pages of this note is to compare estates or income with that of peers.

     issues

As noted in the discussion of what money (or other wealth) was worth in past periods a fundamental challenge in compiling and interpreting rankings is determining relativities. An annual income of £100 or US$2,000 looks handsome indeed if most contemporaries had an income of £5 or US$50 (or were themselves regarded as chattels that could be bought and sold).

The proliferation of 'Rich Lists' in recent years, driving the growth of publications such as Forbes, Fortune and BRW, has obscured problems with the measurement of wealth. They include -

• the difficulty in accurately valuing some assets (such as artworks, land and shares that are not on the market and that may indeed be held in trust) and in differentiating between assets and income
• challenges in identifying the ownership of assets, which are often cloaked from the view of a curious public or the avaricious tax man
• the disappearance of public probate valuations, use by the wealthy of pre-mortem gifts to avoid estate duty and reliance on tax exile
• debate about the validity of interview/survey-based estimates, with claims that such estimates are biased towards individuals who exaggerate their wealth
• challenges where wealth has been dispersed among widely-spread families over several generations.

     rankings

Those issues mean that much of the literature does not move much beyond a Who Weekly or Trivial Pursuit ogling of the rich & infamous.

Reuters thus announced in late 2008 that

The richest man in Britain's history is not a steel magnate, trader or football club owner, but a soldier. Alan Rufus, a French immigrant, who came over to Britain to help his uncle William the Conqueror in 1066, amassed a fortune worth an estimated 81.3 billion pounds (US$165 billion) in today's money. It dwarfs Chelsea football club owner Roman Abramovich's 10.8 billion pounds, and steel tycoon Lakshmi Mittal's 19.3 billion and is nearly three times the wealth of Microsoft co-founder Bill Gates.

The Richest of the Rich (Petersfield: Harriman House 2007) by Philip Beresford & William Rubinstein argues that Rufus' fortune of £11,000 represented more than 7% of the net national income of the time. The authors convert that into the same percentage of the UK national income in 2007 and hey presto, the slaughterer of Saxons would be worth £81.3 billion. Thomas á Becket, Archbishop of Canterbury (1120-1170) would be worth £24.6 billion and Hanoverian war profiteer James Craggs (1657-1721) a tidy £20 billion.

UK law reform in 1850 set the salary of High Court judges at of £5,000 pa (a level retained until 1953), with the annual salary of the Master of the Rolls at £7,000, Chief Justice of the Queen's Bench £10,000, Chief Justice of Common Pleas £8,000, Chief Baron of the Exchequer £7,000 and puisne judges of the Queen's Bench, Common Pleas and Exchequer at £5,000 each.

     studies

For economic elites see Men of Property: The Very Wealthy in Britain Since the Industrial Revolution (London: Social Affairs 2006) and The All-Time Australian 200 Rich List (Sydney: Allen and Unwin 2004) by William Rubinstein, complemented by Graeme Hunt's The Rich List: Wealth and Enterprise in New Zealand 1820-2003 (Auckland: Reed Books 2003) and 'How Did the Wealthiest Australians Get so Rich?' by John Siegfried & David Round in 40 Review of Income and Wealth (1994) 191-204. A perspective is provided by Harold Perkin's The Rise of Professional Society: England since 1880 (London: Routledge 1989), highlighted in the first page of this note, and the breathless The Richest of the Rich (Petersfield: Harriman House 2007) by Philip Beresford & William Rubinstein.

Interpretive work includes 'How Did the Wealthiest Americans Get So Rich?' by Rudolph Blitz & John Siegfried in 32 Quarterly Review of Economics and Finance (1992) 5-26 and their 'The Limited Role of Market Power in Generating Great Fortunes in Great Britain, the United States and Australia' in 43 Journal of Industrial Economics (1994) 277-86, 'Top Wealth Shares in the United States, 1916-2000: Evidence from Estate Tax Returns' by Wojciech Kopczuk & Emmanuel Saez in 57 National Tax Journal (2004) 445-87,

For Australia see in particular 'Superwealth in Australia: Entrepreneurs, Accumulation and the Capitalist Class' by Michael Gilding in 35(2) Journal of Sociology (1999) 169-182 and his 'Entrepreneurs, elites and the ruling class: the changing structure of power and wealth in Australian society' in 39(1) Australian Journal of Political Science (2004), 127-143 or 'Families and fortunes: Accumulation, management succession and inheritance in wealthy families' in 41(1) Journal of Sociology (2005) 29-45, complemented by 'How Did the Wealthiest New Zealanders Get So Rich?' by Tim Hazledine & John Siegfried in 31(1) New Zealand Economic Papers (1997) 35-47 and 'How Creative are the Super-Rich?' by Jason Potts in 13(4) Agenda (2006) 339-350.

Points of entry to the literature on inequality include Who Gets What? Analysing Economic Inequality in Australia (Cambridge: Cambridge Uni Press 2007) by Frank Stilwell & Kirrily Jordan, 'Income Inequality in France, 1901-1998' by Thomas Piketty in 111(5) Journal of Political Economy (2003) 1004-1042, Distribution of personal wealth in Britain (Cambridge: Cambridge Uni Press 1978) by Anthony Atkinson & Alan Harrison, The Share of Top Wealth-Holders in National Wealth, 1922-56 (Princeton: Princeton Uni Press 1962) by Robert Lampman, 'Income Inequality and the Incomes of Very High Income Taxpayers: Evidence from Tax Returns' by Daniel Feenberg & James Poterba in Tax Policy and the Economy v 7 (Cambridge: NBER/MIT Press 1993), 'Trends in Aggregate Household Wealth in the United States, 1900-1983' by Edward Wolff in 35(1) Review of Income and Wealth (1989) 1-29, 'Income Inequality in the United States, 1913-1998' by Thomas Piketty & Emmanuel Saez in 118(1) Quarterly Journal of Economics (2003) 1-39, and 'Uncovering the American Dream: Inequality and Mobility in Social Security Earnings Data Since 1937' (NBER Working Paper, 2007) by Wojciech Kopczuk, Emmanuel Saez & Jae Song.










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