Cracks In The Facade

Ferdinand Lundberg said that industrialist families tend to work in combination, and I would say that's generally true, but Lundberg at the time he published The Rich and the Super-Rich in 1968 was still living in a culture dominated by the post-Civil War robber barons' desendants. The major industries of the late 19th and early 20th centuries, lumber, mining, steel, railroads, oil, and automobiles were still staples of the economy, with air transport on the rise. Computers still used punch cards.

One of Lundberg's main theses, in fact, was that more recent fortunes made from the 1920s onward were mostly hype, and few new industrialists of the 1950s and 60s started from scratch -- their opportunities arose because their families were already wealthy, and a closer look would show that modern fortunes were often smoke and mirrors. This was before the rise of authentic new multibillionaires like Warren Buffett, Steve Jobs, and Bill Gates.

While the super-rich do often work in concert when it suits them, and some of the great fortunes have had staying power, this doesn't cancel out the fact that some multibillionaires are more successful than others, and some are phony products of PR. Rockefeller Sr is reported to have said, on learning the actual value of Pierpont Morgan's estate, "And to think he wasn't a wealthy man". This is likely the case with the current group of arrivistes.

This brings me to Jack Dorsey. He's best known as CEO of Twitter and most recently for banning Trump from the platform while he was still in office. The problem is that both Twitter and its much larger companion app Facebook basically sell advertising over the internet, which neither controls. They folllow the old broadcast model, in which access is "free" or at fairly low cost to individual users, who select their own programming.

The advantage for Twitter, Facebook, and the many similar products is that, unlike newspapers or traditional television, markets are much more clearly identifiable, since the apps can gain much more information about individual consumer preferences, which makes it possible for advertisers to target them much more granularly.

The difficulty for this business model is that, unlike traditional broadcast, there are few barriers for new competitors to come into the market. TV and radio need government licenses to operate, which are few and expensive to get. A new clone for Facebook or Twitter needs far, far less. And when the magnates behind them, like Dorsey and Zuckerberg, become tone-deaf and ill-tempered, it's easy for their customers to switch to just another "free" app.

This is why the traditional big fortunes were made in fields like railroads, lumber, steel, old media, and mining, where barriers to entry could be erected. Dorsey and Zuckerberg need to play whack-a-mole with each new competitor.

So there are smart multibillionaires and dumb ones. I think this is something Lundberg only partly understood: he was in an age when, by the early 20h century, the robber barons had come to understand the value of public relations, and the advertising and PR fields were working effectively in a stable environment. Traditionl print and broadcst media had well-established markets with well-developed public stereotypes and high barriers to entry.

The current environment is nothing like that. This is probably another component of the social tensions behind the current global panic.