Where are Britain's big hitters?

AS IF WE needed more evidence of American supremacy as the curtain starts to fall on the 20th century, now we find that no other nation outside the USA can do wealth properly. That includes Britain - exploding the myth that the land of Thatcher and Blair is a newly dynamic and entrepreneurial place, a nourishing environment for those who want to get filthy rich.

The latest global rich list, this one from Forbes magazine, reports that 12 of the world's top 20 "working" wealthy and 70 of the top 200 are US citizens. The first Briton - merchant banker Bruno Schroder and his family - crawls in at number 111, followed by Richard Branson at number 173.

For the first time, the magazine has excluded from its list anybody who rests on the laurels of inherited money, concentrating instead on the wealth-creators. Yet for all the fanfare about how much Britain's entrepreneurial culture has flourished, there are embarrassingly few of us making serious money out of it. Our fat cats are, well, fluffy, cuddly creatures like Mr Branson rather than sleek and fierce lords of the business jungle such as Bill Gates, his Microsoft co-founder Paul Allen, and super-investor Warren Buffett. The British rich want to be popular, the Americans just want to be rich. The arithmetic is savagely simple: Bill Gates equals 27 Richard Bransons.

This is not the worst of it. The magazine's reporters single out from the richest 200 some 10 people who stand out as the "smartest" billionaires, those who have got furthest on their own efforts and are likeliest to go further still. It's no surprise to find the ubiquitous Bill top of the chart again, but the other nine include not a single Briton. It has three Americans, and one each from Germany, France, Japan, Russia, Mexico, Saudi Arabia and Malaysia. The German Hasso Plattner, founder of software company SAP, is worth three-and-a-half Mr Bransons.

We may be more entrepreneur-friendly than we used to be on this side of the Atlantic, but that isn't saying very much. We still don't really like wealth created through trade; nothing has changed since the Victorians looked down on the creation of muck and brass. Today's muck is different. It might be the past efforts of Goldman Sachs partners, castigated for cashing in on their creation of one of the world's most successful financial institutions ever. Or it could be the head of a profitable television company like Waheed Alli, whose chief attribute, according to almost every report, is his youth rather than his business acumen and talent. The Government's efforts to improve the climate for entrepreneurs in the new media and computer industries was dismissively laughed away as "Cool Britannia".

And, after all, Alan Clark, the Conservative MP for Kensington and Chelsea and newly self-appointed voice of patriotism, in his diaries gleefully recorded a put-down describing Michael Heseltine, a well-off self-made businessman amongst other things, as somebody who had to buy his own furniture. Nothing to inherit, d'you see.

We even fare badly in comparison to the Continent, where the supposed despairs of Eurosclerosis have not destroyed a flourishing tradition of family businesses, many created in the 1950s after the war had destroyed much of the earlier industrial base.

Britain is a small country with a dismal post-war record of wealth creation. The entrepreneurial miracle has not happened yet, and there will be no proof of it until more Britons join the world's rich lists. The odds are stacked against our would-be business plutocrats. It is next to impossible to raise finance for a small, new high-technology business. In contrast to US financiers, their British equivalents would rather invest in something safe, like a restaurant chain being bought by its existing managers. The tax system discourages entrepreneurs from making themselves wealthy by generous share options in their own company, although the Chancellor is considering how to tackle this. Yet there have been undoubted improvements in the British economy over the past decade, and Britain does lead Continental economies in terms of deregulation, venture capital and sheer enthusiasm for self-made millionaires. Are we really such a slovenly lot, more likely to get rich buying a National Lottery ticket than creating a business?

There is a partial excuse. A clue can be found in Microserfs, Douglas Coupland's novel about life inside and outside Bill Gates's Microsoft. The hero, a programme de-bugger, checks the company's share price several times a day. "The stock closed up $1.75 on Friday. Bill has 78,000,000 shares so that means he's now $136.5 million richer. I have almost no stock, and this means I'm a loser."

The wealth measured by any rich list includes the value of shares, and it gives the Americans a head start. Prices on Wall Street have climbed to giddy heights since the 1987 crash -- an event that now looks like a tiny downward blip on the financial charts. Share prices in the US in general have multiplied two-and-a-half times over the past five years, and high-tech share prices have gained another 50 per cent on top of the average. UK share prices have, more modestly, doubled, and the high-tech sector is too new to compare.

This alone goes a long way to explaining the preponderance of American software tycoons at the top of the wealth league. Software, telecommunications and media are the oil, gas and railroads of the modern economy, and thanks to its sheer size and diversity the US is as resource-rich in the new dominant industries as it was in the old.

Many other stockmarkets have also done extremely well, but Wall Street puts them in the shade. Entrepreneurs like Mr Branson, whose business is not publicly listed on a stockmarket, don't have any of this kind of paper wealth at all.

Sadly, this does not add up to a complete vindication for the non-Americans. That astonishing share price performance on Wall Street reflects something like two-parts froth and bubble to three-parts real wealth creation, although the exact ratio is the subject of fierce dispute. While many pundits are predicting the next crash, others insist that the extreme heights high- technology shares have reached relative to any mundane measure of worth - such as company profits - are more than justified.

For example, Microsoft's stockmarket value is a staggering $233bn. This is why Bill is a multi-billionaire. Yet its revenues last year amounted to just $11bn, and its profits $5bn. It looks like pure madness to value a company at so much more than its contribution in sales and profits.

However, as Charles Goldfinger, a Brussels-based management consultant specialising in the increasingly intangible parts of modern business, points out, accounting standards mean Microsoft writes off its employees' salaries and its software development expenses as a cost each year, rather than treating them as an asset. If the measurement of how much companies are worth had kept up with the importance of assets like people and knowledge, rocketing share prices would look far more reasonable.

Even so, the heap of American wealth at the top of the Forbes list cannot be dismissed as a house of cards. Which takes us back to the less- than-comforting conclusion that Britain is still putting on a poor show in the wealth-creation stakes.