This book will therefore be of great interest to those who think the rich have it rigged. These bosses certainly benefit from some of America’s more egregious tax rules, such as the “stepped-up basis”, which ignores historical capital gains when shares are passed on to heirs. (That said, an earlier paper by the authors and their collaborators found that the widely cited decline in the share of income going to workers rather than capital was less pronounced once pass-through firms were properly accounted for.) The book will appeal even more to those who hope to join their ranks. The desire to get moderately rich slowly is less remarked upon than the impulse to get rich quick. But for every prediction-market gambler there is a “FIRE” fanatic (financial independence, retire early) salivating over the accumulation of moderate riches. This is especially true at America’s top business schools, where employment through acquisition, which involves buying a small firm of the blue-collar kind rather than getting a job at a white-collar one, has grown in popularity in recent years. A slightly awkward finding for capitalists hoping to rely on their wits alone is that lawyers—the apex predators of credentialism—earn the largest share of top pass-through incomes. Better news is that much of the private economy is in a state of permanent revolution. Death does the hard work. Messrs Zidar and Zwick found that in the four years after the unexpected death of a millionaire owner, profits at their firm typically fell by four-fifths compared with similar businesses, because it either shrank or went out of business. Disappointing children are a gift to capitalist reinvention. Being exposed to business while young increases the likelihood of being good at making money in adulthood, but many firms learn the hard way that grit is not heritable. The easiest way to cheat nature is to sell up, and the easiest way to sell up is to a private-equity fund. The private-equity investor is the risk-adjusted cousin of the entrepreneur. He, too, is primarily an American creature, though he bears a diversified portfolio and little of his own money. His role is vital: one man’s extractive villain is another’s exit liquidity. And if things go wrong, as they often do, another entrepreneur can step in. Wannabe millionaires leafing through “The Everywhere Millionaire” may sometimes feel like they are preparing for drone warfare by studying the
Battle of Waterloo. One tale of industrial espionage involves a hot-dog tycoon checking a rival’s relish before being booted out of the kitchen. A row of pale cheerleaders’ legs inspires a strategic pivot from selling sun beds to waxes. All this might look parochial compared with the civilisational struggles under way in Silicon Valley. Yet that is exactly the point. Much of the spoils of capitalism are still won by those who roll their sleeves up. That is a great thing. ■ Subscribers to The Economist can sign up to our Opinion newsletter, which brings together the best of our leaders, columns, guest essays and reader correspondence. This article was downloaded by zlibrary from https://www.economist.com//business/2026/06/10/american-capitalism-is-run-by- millionaires-not-billionaires
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Finance & economics | A game of two halves China is innovative. Its economy is a mess. Which matters more? A question that will define the 21st century June 11th 2026 IN YINGTAN, a city in the south-eastern province of Jiangxi, China’s high- tech future is spilling into its economically backward past. Old-fashioned open-air markets and street-side eateries make it feel like any other rural town in the Chinese interior. An industrial park to the south of the city, packed with companies working on technologies for industrial digitisation, gives off a techie vibe. A national communications laboratory has set up a state-of-the-art research centre nearby. Over the past decade local officials have helped transform an antiquated copper industry into one that produces high-end components for its new tech denizens. Yingtan’s technological wagers are starting to pay off. In 2025 its
GDP per person surpassed that of the provincial capital, having been a quarter smaller a decade earlier. Yet its economy is still weighed down by a property slump and big debts accrued by the local government since the early 2010s. These old and new worlds seem distant. But they live side by side in many places across China—and in the economy as a whole. Goldman Sachs, a bank, forecasts that high-end manufacturing will reliably contribute about one percentage point of annual real GDP growth until 2029. Yet the drag caused by the collapse of the property sector, which shaved two percentage points off growth in 2024 and 2025, will also persist for another few years. The Chinese economy has slowed considerably in recent years, never fully recovering from the unpredictable and disruptive lockdowns of the covid-19 pandemic. A three-year bout of producer-price deflation ended in March only after an oil shock caused by America’s war in Iran raised domestic energy prices. Factories are churning out whizzy electric vehicles for export while Chinese consumers, scarred by memories of the pandemic and the property bust—and exposed by a threadbare social safety-net—are reluctant to spend. At no time in modern history has a large country gone all in on investment in high-end technology while also navigating a slowing economy and a local-government debt crisis, notes Yuen Yuen Ang of Johns Hopkins University. Although the drag from the property crash will lessen over the next few years, and eventually disappear, it would not take much to choke the new growth engine. It is already being stress-tested by weakening demand for Chinese EVs, a prolonged trade war and an energy crisis. China’s paramount leader, Xi Jinping, is nevertheless betting that the new model of growth kicks in faster than the old one, driven by land sales and construction, collapses. It is a high-stakes gamble. The old model of growth took shape on China’s coasts before spreading to the interior. Factories in the wealthy east employed poor migrant labourers from the hinterland. Those migrants in turn, unable to obtain residency in metropolises, often used their earnings to invest in property back home. Towering apartment blocks erected during the two-decade property boom have sprung up in the smallest towns, employing tens of millions of
construction workers each year and hoovering up low-end manufactures. High-speed rail has penetrated the poorest counties. All this investment was fuelled by local-government borrowing. One tally puts these debts at around 60trn yuan ($9trn), or 43% of GDP. The comparable figure in America is 12%. The poorest regions often relied the most on debt-fuelled construction of houses, roads and bridges. This has left some places, such as Guizhou province in the south-west, with dazzling infrastructure (including a bridge 626 metres high, the world’s tallest) along with insurmountable debts. Few of these costly public works have so far come close to generating the revenues needed to pay back creditors. Now investment is going into a narrower range of faster-growing, innovative sectors. The moment Mr Xi announces his technology goals—to lead the world in artificial intelligence, robotics, fusion power and so on—hundreds of cities across the country respond by backing related projects. A national semiconductor fund has raised roughly 687bn yuan over the past 12 years. Government-backed fund managers watched their coffers swell to nearly 400bn yuan last year, an increase of 75% from 2024. In December the state launched a 100bn-yuan national venture fund with a mandate to invest in aerospace, semiconductors, brain-linked machines and quantum technology. Many local governments, including in small cities, are creating similar vehicles using tax revenues and capital from local state companies. They are setting up “high-tech zones” and “AI parks” to lure innovative companies with tax breaks and other perks. These new tech businesses are meant to generate tax revenue and help local governments grow out of their debts, says Jean Oi of Stanford University. While officials wait for their homespun DeepSeek, the AI lab that stunned the world last year with its powerful model, the central government relaxes the rules to give them more time to repay their debts. Sometimes local authorities have some success. Rich metropolises such as Beijing, Hangzhou, Shanghai and Shenzhen can draw talent and capital (the four cities are together expected to receive around 70% of AI investment). This in turn may fuel demand for housing and localised recovery in the property sector, observes Lu Ting of Nomura, a bank. A few other cities may have similar luck. Hefei, in sleepy Anhui province, has cultivated several
champions. It hosts factories of BOE Technology (a giant of LCD displays) and NIO (a luxury EV-maker). Its university spun out a voice-recognition-AI darling, iFlyTek, and its local government co-founded CXTM, China’s leading maker of advanced memory chips. To see how such projects go wrong, travel an hour by high-speed rail from Yingtan to Yichun, where a botched attempt to jump up the manufacturing value chain has backfired. In 2021 the city government invested 2.3bn yuan to help build an EV factory in a sprawling National High-tech Development Zone. But in contrast to successful EV clusters like those in Shenzhen and Hefei, the facility was isolated from suppliers and expertise required to build cars efficiently. It has since halted production. The rest of the industrial zone looks just as lifeless. Even projects that get off the ground may do little for local industry. A decade ago a fund with local- and central-government money poured around 150bn yuan into Guizhou, a mountainous province in central China, mostly into data storage and cloud-computing. But these ventures could not be integrated with local industry, points out Ms Ang. The companies building the data centres are based on the coasts, the server parts are made elsewhere and local demand for the data capacity is scarce. “It is hard for cutting-edge technology to integrate into traditional economies and generate jobs for local populations,” says Ms Ang.