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If everyone started from the same place in life, ie, rich parents were not allowed to pass everything to the kids, but rather had to surrender their estates to the government, we’d go a long way towards fixing this problem.
As wealth gets more concentrated in fewer and fewer hands, I think some form of this will be inevitable.
In principle I'd be okay with limiting inheritance. Instead of the estate tax we have today, inheritance could be limited to (for example) some fraction of GDP. In practice I doubt it could be effectively enforced because people would just hide assets overseas to avoid the tax man.
I have read a few studies on 'trust fund kids'. Very few of them ever manage to build any further wealth. The wealth usually dissipates with each generation.
Very true. Warren Buffett realized this, and as I recall he gave each of his kids a relatively modest (for him) sum of money when they were young adults, with the understanding they shouldn't expect any more. Plenty of money to get an education, start a business, etc. But not enough to just sit on their butts forever.
Now as to what's actually in his will today, we don't know and may never know. But the point is that he tried to motivate his kids to do something with their lives.
I have read a few studies on 'trust fund kids'. Very few of them ever manage to build any further wealth. The wealth usually dissipates with each generation.
There are a few empire builders that show up every generation. The majority of 'Millionaires' in America are people who gained that wealth on their own, within their generation. They did not inherit it, I think the statistics show that on average they inherited less than $10,000.
Large estates are taxed, and when an estate is divided out among heirs, most of those heirs will spend it, just as lottery winners spend their winnings.
...70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third, according to the Williams Group wealth consultancy.
Chinese Proverb: "Wealth does not pass 3 generations". Hmmmm.
I would aver, that the new (or perhaps eternal?) class distinction is less one of pecuniary ranking, than of taste and background. People who have extensive formal education, who are widely-read, fluent in multiple languages, etc., are in one class; while those who consume an unvariegated diet of pop-culture, are in the other. The owner of a landscaping-company, who doesn’t know the difference between a gerund and an infinitive, but who clears $500K/year, is in the latter class. The philosophy major working as adjunct lecturer at the local community college, is in the former class. For lack of a better term, we’ll call these the “heartland” and “coastal” classes.
In most societies, there is a cohort that’s recently been called “the clerisy”. This is people who aren’t necessarily themselves wealthy, but who serve the wealthy in a professional capacity… architects, lawyers, administrators of various kind. These servants tend to be better educated than their masters. By cultural affinity they’re in the coastal class, even if quite often their masters are in the heartland class.
The coastal class is always a small minority, but in the more successful nations, it enjoys outsized influence. The disturbing trend in modern America is the waning of this class, the reduction of its formal and informal influence, the marginalization of its role in pacing the culture. And this is deeply unfortunate.
I find this paragraph fascinating. Can you cite any the terms (e.g. clerisy, coastal and heartland classes)? Someone else, another articulate poster, described a similar class as the clerisy, but labeled it as the techno-something or another.. maybe it was "technocrat", but I don't think so. It definitely contained the same sort of upper middle class professionals that you are describing. The Bourgeoisie class.
I get it that a lot of people are up in arms about this topic.
How is it "negatively affecting" you?
...
I really want to wrap my mind around the protest.
It's a matter of relative standards, and perception of different outcomes for the same effort.
Suppose that you and I both buy lottery tickets, at the same time, at the same gas station. I get lucky, and win $500. You get even luckier, and win the Powerball jackpot. Your winnings haven't diminished my winnings in absolute terms; we both won. Yet compared to you, I've done enormously worse, and I'm going to grumble, that it's woefully unfair, that you've done so much better than me.
Likewise, suppose that you and I both get fined, for some minor transgression. I get fined $10, whereas you get fined $100. We both lose, but your loss is greater - and thus, relatively speaking, I've done well.
Up and down the socioeconomic scale, what matters is relative progress. If in relative terms others do better, but we've all done well, then in effect, I have lost. My standing is diminished. But if we all suffer and sustain decline, yet other have suffered more than me, my standing is elevated.
Writ large, "globalism" irritates Americans, because all of those Bangladeshi and Brazilian peasants, who were formerly dirt-poor, are now only half-poor. They have seen 7% annual growth, whereas Americans have seen only 2% annual growth. This makes globalization a raw deal, even if on the whole, the entire world is richer.
In principle I'd be okay with limiting inheritance. Instead of the estate tax we have today, inheritance could be limited to (for example) some fraction of GDP. In practice I doubt it could be effectively enforced because people would just hide assets overseas to avoid the tax man.
It is a very tiny percentage of estates that are large enough to be taxed, currently.
Anyone who 'hides' their money overseas, is taxed on that money when they try to bring it back into the US.
I have read a few studies on 'trust fund kids'. Very few of them ever manage to build any further wealth. The wealth usually dissipates with each generation.
There are a few empire builders that show up every generation. The majority of 'Millionaires' in America are people who gained that wealth on their own, within their generation. They did not inherit it, I think the statistics show that on average they inherited less than $10,000.
Large estates are taxed, and when an estate is divided out among heirs, most of those heirs will spend it, just as lottery winners spend their winnings.
I’m thinking more about the doctor and lawyer that pass money on to the kids and enable their kids to have a head start on the teacher’s kid. Their kids can afford their first home and are on their way. Not so much for the teachers kid.
This will never happen, but I can assure you if it did NO ONE with a lick of sense would have a dime to their names when they died. I'd give everything away or throw my money in a fire rather than give any more to the government to waste.
Very true. Warren Buffett realized this, and as I recall he gave each of his kids a relatively modest (for him) sum of money when they were young adults, with the understanding they shouldn't expect any more. Plenty of money to get an education, start a business, etc. But not enough to just sit on their butts forever.
Now as to what's actually in his will today, we don't know and may never know. But the point is that he tried to motivate his kids to do something with their lives.
Yes, warren is smart. Giving his kids just enough to assure if they make good decisions, they’ll stay ahead - but not so much that the kids don’t have to make good decisions.
This is the type of head start we should eliminate. But it won’t happen.
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