The Mechanics of Abundance

The number of billionaires around the world has nearly tripled since 2011. In 2026, Forbes tallied 3,428 billionaires, up from 1,210 in 2011. This growth hides a striking split between the United States and Europe. In the United States, new fortunes have become more common. A study of the Forbes 400 showed that the share of wealth creators among billionaires rose from 41.5 percent in 1982 to 67.2 percent in 2013. The Forbes-based dataset of all current billionaires Sam Fox and I used for this newsletter points in the same direction more recently. Among all U.S. billionaires, the self-made share rose from 68.9 percent in 2011 to 72.5 percent in 2026. Europe moved in the opposite direction. Within the European Union, the self-made share declined from 49.3 percent to 39.9 percent. Across Europe, excluding Belarus, Moldova, Russia, and Ukraine, it fell from 55.0 percent to 44.6 percent.

Two economies can exhibit similar levels of wealth inequality yet have very different economic architectures. In one, the wealthiest owe their status largely to inherited assets; in another, many have built their fortunes within their lifetimes. A billion dollars inherited from a great-grandfather and a billion dollars earned by creating a new company look identical in the numbers. Economically, they tell very different stories.

That distinction matters because a large portion of American political debate assumes that vast fortunes come at others’ expense. Senator Bernie Sanders has argued that billionaires should not exist. Representative Alexandria Ocasio-Cortez put the idea more bluntly when she said, “No one ever makes a billion dollars. You take a billion dollars.” Nobel laureate Joseph Stiglitz has argued that some large fortunes reflect monopoly power, political influence, and other forms of rent-seeking, a notion he developed in his 2012 book The Price of Inequality.

As Stiglitz correctly notes, some fortunes do arise from political privilege, monopoly protection, fraud, or other forms of extraction. Yet, particularly in the United States, fortunes earned in competitive markets often come about differently. A founder builds a company offering a product, service, or process that customers value more than the alternatives. If the firm succeeds on a large scale—as with Bill Gates’ software innovations or Jeff Bezos’ logistics networks—the founder may amass enormous wealth while customers capture most of the gains.

William Nordhaus, a Nobel laureate, attempted to quantify how much of the gains from innovation accrue to producers versus consumers. In a study of U.S. nonfarm business from 1948 to 2001, he estimated that producers captured roughly 2.2 percent of the total gains from innovation. The majority of the gains flowed to consumers through lower prices, improved products, and new capabilities.

That point is easy to miss because the founder’s fortune is conspicuous while the gains enjoyed by millions of others are dispersed. A $50 billion fortune makes the list; the billions of dollars’ worth of time saved by better software, cheaper deliveries enabled by improved logistics, or the extra computing power from better chips do not appear in a single place. Yet those scattered gains are frequently far larger than the fortune that commands public attention.

The deeper issue is growth. Progressives like Sanders and Ocasio-Cortez who view billionaires as takers often prefer redistribution as a remedy to perceived or real deprivation in the United States. That approach can alter who gets a given amount of income today, but it comes at the cost of growth, which in turn changes how much income, knowledge, technology, and productive capacity exist tomorrow.

Robert Lucas, another Nobel Prize–winning economist, argued that economists have focused far too much on redistribution and far too little on growth. He described the emphasis on wealth distribution as “the most seductive, and in my opinion the most poisonous” tendency in economics. Reflecting on the Industrial Revolution, Lucas noted that “virtually none” of the dramatic improvement in human welfare came from direct redistribution. The potential benefits of reallocating current production, he wrote, were “nothing compared to the apparently limitless potential of increasing production.”

The divergence becomes enormous over time. A transfer alters someone’s position only once. But higher productivity compounds year after year. Over decades, that process yields higher wages, better housing, safer workplaces, cheaper food, longer lives, and technologies that earlier generations could not obtain at any price.

Europe’s recent pattern thus deserves attention. On the Forbes-based classification used here, 60.1 percent of the EU’s billionaire fortunes were not self-made in 2026.

Many of Europe’s largest fortunes remain tied to family-controlled fashion houses, luxury brands, retailers, industrial conglomerates, and automakers that were built generations ago. Bloomberg’s ranking of the world’s wealthiest families includes Europe’s Hermès, Albrecht, Ferrero, and other long-established dynasties. Europe still gives rise to successful new companies, but comparatively few grow large enough to displace the old giants. The IMF notes that European firms tend to be smaller, older, and slower-growing than American firms. Mario Draghi, the former head of the European Central Bank and former Italian prime minister, highlighted the discrepancy in his 2024 assessment of Europe’s competitiveness: no EU firm with market value above 100 billion euros had been created from scratch in the previous half-century, while all six U.S. companies valued above 1 trillion euros had originated in that period.

Finance helps explain part of the story. An IMF study describes the European financial system as bank-dominated and notes that U.S. equity markets play a much larger role in American corporate finance. Banks work well for lending against homes, factories, machines, and other assets that can serve as collateral. A young company with unproven technology often has little collateral and a high risk of failure. It needs investors willing to bear losses on many bets in exchange for the chance that a few will become very large firms.

Redistribution policies also matter. The heavier tax burdens necessary to sustain Europe’s generous welfare states directly affect capital formation. Higher corporate and personal taxes leave less private wealth available to flow into risk-tolerant venture funds needed to scale new businesses, while diminishing the ultimate financial rewards for founders and investors who take those outsized risks.

That leaves Europe with smaller pools of such risk capital. The IMF estimates that U.S. venture funds hold roughly 930 billion euros ($1.04 trillion), about six times the 150 billion euros ($168 billion) held by EU venture funds. The gap is especially wide at later stages when successful startups require substantial sums to expand. Europe can generate good ideas and still struggle to finance them all the way to global scale.

Regulation adds another hurdle. European rules often pursue legitimate aims—privacy, safety, worker protection, and consumer protection. But costs of regulation are not evenly borne. A large, established firm can hire lawyers and compliance staff, whereas a 20-employee startup has far fewer resources to absorb the same burden. The European Commission now concedes that businesses face high compliance costs and, in some cases, legal uncertainty, and that inconsistent or restrictive rules can hinder innovative firms from scaling. Its current agenda includes reducing regulatory burdens and making EU rules more conducive to innovation.

The result can be counterproductive. Rules meant to restrain large firms can end up shielding them. The incumbent already knows how to operate under the rules. The startup must learn and survive at the same time. Regulation can thus end up protecting the very companies policymakers hoped to curb by making it harder and more expensive for new competitors to enter the market.

The American system also has vulnerabilities. Health spending per person remains the highest among OECD members, while competition and price transparency are weak in parts of the health sector. Private health-insurance markets are highly concentrated in most states. These weaknesses matter, but they are not exactly the same issue addressed here.

Nevertheless, the American economy continues to excel at letting new firms raise capital and grow rapidly. Deep stock markets provide an additional financing channel for successful companies after venture capital. Unsuccessful firms can fail, freeing workers and assets for other uses. A review of U.S. bankruptcy law describes bankruptcy as a collective process for resolving debts and distributing assets among creditors. That framework makes business failure easier to resolve and capital easier to redeploy.

The Austrian economist Joseph Schumpeter called this broader process “creative destruction.” He argued that capitalism “never is but never can be stationary.” Its core impulse comes from new goods, innovative production and transport methods, new markets, and fresh forms of business organization. That process relentlessly reshapes the economy from within, destroying the old and creating the new. He called creative destruction “the essential fact about capitalism.”

The destruction is easy to spot. A factory shuts down. A familiar company vanishes. An old technology becomes obsolete. The creative side is harder to notice. Workers, capital, and customers move toward firms that deliver more value with the same resources. Over time, this churn helps raise an economy’s productivity.

This perspective also complicates common discussions of economic mobility. Research on the so-called Great Gatsby Curve shows that countries with higher income inequality tend to have less intergenerational mobility. Practically, the curve asks how strongly a child’s eventual income tracks the income of his or her parents. A stronger link means family background matters more and mobility is lower. By this standard, the United States is less mobile than several northern European countries. Miles Corak, an economist, estimates that a 100 percent income gap between two fathers corresponds to roughly a 50 percent gap between their sons in the United States, compared with under 20 percent in Denmark, Norway, and Finland. The curve describes a cross-country association rather than proving that inequality itself causes low mobility.

Corak’s finding matters, but the very apex of the economy raises a different question. Who gets to launch the next great company and challenge the current elite? That issue matters for long-run growth because new firms can create new industries, technologies, and sources of productivity. Immigrant entrepreneurship provides one hint of openness: in 2023, 44.8 percent of Fortune 500 companies were founded by immigrants or their children.

Europe also loses some of the companies it launches. The ECB reports that nearly 30 percent of European unicorns founded from 2008 to 2021 moved their headquarters abroad, with the vast majority relocating to the United States. The cited reasons include better access to capital, a larger integrated market, and simpler regulation. That relocation can compound over time, as future hiring, supplier ties, and spin-offs may increasingly occur elsewhere.

The broader economic gap between the United States and Europe has widened as well. In 2010, IMF data put the United States and the European Union at roughly the same nominal economic size, about $15 trillion each. By 2026, U.S. GDP stood at about $32.4 trillion, versus roughly $23 trillion for the European Union. The gap exceeded $9 trillion, and the EU’s economy was about 71 percent as large as the American one in nominal terms.

The divergence goes beyond exchange-rate movements and nominal GDP. On the OECD’s purchasing-power-adjusted metric for 2025, GDP per person was about $90,000 in the United States and $64,600 in the European Union, a gap around 39 percent. OECD productivity data show output per hour worked in the EU fell from roughly 90 percent of the U.S. level in 2000 to 75 percent in 2024. U.S. labor productivity grew by an average of 1.8 percent a year from 1995 to 2024, compared with 1.1 percent in the EU.

Some European countries still outperform the United States on specific metrics. In 2024, Denmark produced about $92.20 of output per hour worked, compared with $84.10 in the United States on the OECD’s fixed-power measure. The EU-wide trend, however, runs the other way. Small annual differences in productivity growth compound into large gaps over time.

Household data align with the same picture. OECD figures for gross adjusted household disposable income, measured per person and adjusted for purchasing power, place the United States at about $71,300 in 2024. The corresponding figures were roughly $61,300 for Germany, $53,500 for France, $49,400 for the United Kingdom, $47,500 for Italy, and $44,600 for Spain. Americans therefore had about 16 percent more purchasing power than Germans, about 33 percent more than the French, and about 60 percent more than Spaniards on this measure.

The adjusted figure matters because it incorporates social transfers in kind—such as publicly funded health care and education—thereby capturing some of the value provided by Europe’s larger welfare states rather than ignoring those services altogether.

None of this suggests that every billionaire is virtuous or that every inheritance is harmful. A fortune rooted in political favoritism says something different from one earned by making a product cheaper or better. An inherited company can remain innovative. A self-made fortune can depend on monopoly power. The origin of wealth is a clue, not a verdict.

Yet the contrast is revealing. The Forbes-based data used here show more turnover at the top in the United States and more inherited wealth in Europe. The differences in venture finance, scale-up conditions, and productivity align with that pattern.

Large fortunes, by themselves, do not prove economic health or decay. Their origins illuminate the system more than their sheer existence. A market economy functions best when new firms challenge old ones and when failure frees up resources for better uses. The American advantage lies not in the mere presence of billionaires, but in the greater turnover that underlies them.

Correction, October 22: This piece has been updated to correct the total holdings of venture funds in the United States.

I hate mosquitoes. I know that hatred isn’t the deepest philosophical stance, but some creatures make nuance hard. Mosquitoes arrive uninvited, sample your blood without asking, and leave behind pain, irritation, and sometimes disease. I’ve even joked that they are the socialists of the insect world. So I was pleased to hear about Terratis, a French startup whose business model is basically to ruin the sex lives of mosquitoes.

Founded in 2024 and based in Montpellier, Terratis breeds huge numbers of male tiger mosquitoes, Aedes albopictus. Workers then expose them to X-rays in batches of about 400,000, rendering the males sterile. The company releases the sterilized males into populated areas, where they compete with fertile males for females. The females mate, but lay eggs that do not hatch. There is an extra twist to the plan: male mosquitoes do not bite. Only females take blood meals.

Terratis currently produces roughly 1.5 million sterile mosquitoes per week and aims for 40 million per week within two years. Early results look promising. In Brive-la-Gaillarde, where the firm released 11 million sterile mosquitoes starting in May 2025, Terratis reported that about half of the eggs awaiting hatching in spring 2026 were sterile. The company anticipates the share to reach 90 percent by the end of the summer.

The objective is worthwhile. Tiger mosquitoes can transmit dengue, chikungunya, and Zika. France recorded 809 locally transmitted chikungunya cases and 30 dengue cases in 2025, a year of record activity. The mosquito, native to Southeast Asia, has spread globally and is now established across large parts of France.

Tiger mosquitoes do not transmit malaria. That burden belongs to infected female Anopheles mosquitoes. Yet the history of malaria offers a sense of what humanity has endured from mosquito-borne disease.

Historical figures are staggering. Some researchers estimate that malaria killed between 150 million and 300 million people during the 20th century, possibly accounting for 2% to 5% of all deaths in those hundred years. In the early part of the century, the disease may have represented as much as 10% of all deaths worldwide.

Modern medicine, vector control, bed nets, better housing, drainage, antimalarial drugs, and other innovations have yielded enormous progress. According to the World Health Organization’s 2025 World Malaria Report, interventions have averted an estimated 14 million deaths since 2000.

Yet malaria remains terrifyingly common. In 2024, the WHO estimated 282 million cases and 610,000 deaths globally. Africa accounted for 95 percent of malaria deaths, and about three-quarters of malaria deaths in the African region occurred among children under five.

Those figures explain why mosquito control deserves far more attention than the nuisance of being eaten alive on a patio. Mosquitoes remain extraordinarily efficient vectors of human misery.

Terratis now faces the hard part that separates clever ideas from consequential innovation: scaling up. Producing 1.5 million mosquitoes weekly sounds impressive until you consider the size of a city. Frederic Simard of France’s Institute of Research for Development describes the technology as being at the “iPhone 1.0 stage.” Terratis aims to push production into the tens of millions per week. Researchers can imagine an industry eventually producing billions. 

That will require automation, capital, experimentation, falling unit costs, and customers willing to pay. I wish Terratis all the best. For thousands of years humanity has fed mosquitoes with free meals. It seems only fair that capitalism should finally make their sex lives miserable.

Markets FTW, indeed.

My Cato Institute colleague Gale Pooley has a useful new example of why long-run price comparisons require more care than they usually receive. The average U.S. price of regular gasoline reached roughly $4.47 a gallon in late September. That figure sounds steep, but the dollar price alone tells us surprisingly little about affordability over time.

The first adjustment is to account for income. Using blue-collar hourly earnings, Pooley calculates that in 1929 an American worker had to work about 24 minutes to earn enough to buy a gallon of gasoline. Today, the same gallon costs about 6.5 minutes of work. The money price has risen substantially, but the time price has fallen by roughly 73 percent. In other words, the work needed to purchase one gallon in 1929 buys about 3.7 gallons today.

That distinction sits at the heart of the framework Gale and I developed in our 2022 book Superabundance: The Story of Population Growth, Innovation, and Human Flourishing on an Infinitely Bountiful Planet. We measure prices in terms of time rather than money. A time price is simply the money price divided by hourly income. This method captures something that standard price comparisons often miss. Innovation can lower the cost of producing goods while boosting worker productivity and earnings. Looking at the sticker price alone tells only part of the story.

Pooley’s gasoline example adds another essential adjustment. The usefulness of a product can change dramatically. A gallon of gasoline powered a popular Oldsmobile Cutlass about 20 miles in 1980, whereas a modern Toyota Camry Hybrid can travel roughly 50 miles on the same gallon. What ultimately matters to the consumer is transportation, not gasoline for its own sake. A gallon that transports you two and a half times as far provides far more transportation.

The same issue arises when comparing the cars themselves. A 1980 Cutlass cost about 738 hours of blue-collar compensation. A modern Camry costs about 753 hours. The time prices are similar, but the products differ substantially. Today’s car offers better fuel economy, safety, reliability, emissions control, electronics, comfort, and performance. When Pooley combines the price of the car with the gasoline needed to drive 100,000 miles, the time cost falls from about 1,209 hours in 1980 to 980 hours today, a decline of roughly 19 percent.

That broader lesson holds: nominal price comparisons over long horizons can be deeply misleading. Even inflation-adjusted prices do not fully capture shifts in earnings, product quality, and performance. Sound comparisons should ask how much work people must exchange for a good and what that good actually delivers. Over long periods, both sides of that equation can change in major ways.