How career limiting is NZ for would-be billionaires? Some thoughts on the Forbes rich list

BigCake is not sure where this post will take him, but he’s gone through the list of the top 500 billionaires in the 2010 Forbes billionaires rankings to see how small countries like New Zealand fare in terms of numbers and wealth of their most deep-pocketed citizens.

(There are actually 1000 people on the full Forbes list).

So…
• New Zealand (population 4.4 million) has two billionaires ranked in the top 500 – 144th and 307th
• Lebanon (4.2m): two – both ranked 374th
• Ireland (4.6m): one - 421st
• Norway (4.8m): one – 437th
• Israel (7.5 million): five – 109th, 277th, 287th, 463rd, 488th
• Switzerland (7.8m): two – 197th, 232nd
• Austria (8.4m) two – 189th, 307th
• Sweden (9.3m): six – 11th, 13th, 40th, 123rd, 316th, 488th
• Australia (22.2m): five – 208th, 316th, 400th, 437th, 488th

BigCake may be playing quick and dirty with these numbers, but a few things stand out:
1. New Zealand does okay (1 billionaire in top 500 list for every 2.2m people).
2. We do better than countries that are a lot richer than us in terms of total national wealth, for example Ireland, Norway, Switzerland and Austria.
3. We do better than Australia (1 billionaire per 4.4m people)
4. Meanwhile, Israel (1 per 1.5m) and Sweden (1 per 1.55m) are over achievers.

As I say, these numbers may ignore issues like total country wealth, the wealth of the individuals on the list, and others things I‘m probably not even aware of.

When I approached this exercise I thought New Zealand would do badly, at least worse than Australia.

We don’t have (Fonterra aside) any international scale businesses. There are no Microsofts, Berkshire Hathaways, Reliances, Mittals or Oracles that drove the wealth of Bill Gates, Warren Buffet and others at the top of the Forbes list.

If you look at our top 10 companies, there are:
• Four oil companies (all overseas owned)
• Two co-operatives
• One Australian-owned supermarket
• One company majority (76%) government owned (Air New Zealand)
• Two listed companies.

Some only have total assets of around $NZ1 billion. [Source: Deloittes Top 200]

It appears our our small market is career limiting for would-be billionaires.

If you look at where our two Forbes entries made their money, you’ll see it was overseas, Graeme Hart through his global packaging empire and Richard Chandler, who according to Forbes, made his fortune in Brazil, Japan, Russia and India.

BigCake also wonders, looking at the Israel and Sweden results, how big a role culture plays in wealth creation.

Resorting to google, he found this by Francis X. Hezel on the Micsem website:

“Why do some countries do very well, while others fail to develop, even when all the requisite economic factors seem to be in place?” Hezel asks.

And BigCake would also ask: Why do some countries do very well and others just ummm, do well?

Hezel says the usual explanation is the need for a stable political system, clear laws, no corruption, foreign investment and appropriate business procedures.

“There may be something to be said for this list, but it still doesn’t deal with the more fundamental issue of how culture impacts on development. Why do some ethnic groups do so well in business that they leave others in the dust…”

Gregory Clark in his book Farewell to Alms maintains the usual list of things needed for strong growth (laws that work etc) “were the necessary but not sufficient conditions for the economic take off Britain experienced when new sources of power were harnessed,” Hezel writes.

“They did, however, lead to the gradual development of precisely that set of deep cultural changes, especially a sense of competitiveness and a strong work ethic, that was required if sudden technological breakthroughs were have to have any real impact on the society.

[Looking at industrial mills] “it was people and the values they had absorbed over the years, not the power-driven mills or any other form of advanced technology, that had made the difference.”

Hezel was writing about differences between developed and under developed countries, but BigCake believes the same argument applies at the margins for developed countries.

Some peoples, and people, are just more competitive and have a stronger work ethic than others.

There’s probably not much that can be done about this.

What we can do something about is how we react to those among us who have these traits . Do we encourage and foster our would-be, and actual, billionaires?

Or, as BigCake suspects, is the tall poppy syndrome still going strong?