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Comment by solatic | Hacker News Reader

Unequal distribution of rewards (i.e. according to merit) is fine and desirable (as a motivating force). The problem's roots are when the distribution of rewards becomes hereditary, that the children of the wealthy have near-guaranteed access to the best educational and social institutions, have near-guaranteed access to startup capital (i.e. from their parents), are usually provided with necessities (food, housing, clothing, incidentals) at no out-of-pocket cost by their parents for a considerable portion of their early adult lives, etc. It is the hereditary nature of wealth which is the largest contributor to long-term inequality.

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> It is the hereditary nature of wealth which is the largest contributor to long-term inequality.

Hereditary wealth is a specific form of rent-seeking which is something liberal economics has no explanation for. It's like one of those things that never left the feudal era whilst everything else did. But I wonder why some who follow this type of economics think this is the sole and most important issue? There are many examples of rent-seeking and this is far from the biggest contributor towards inequality.

> Unequal distribution of rewards (i.e. according to merit) is fine and desirable (as a motivating force).

This assumption sounds nice but isn't backed by psychology research. Extrinsic rewards can motivate and demotivate - and in general contribute to anxiety.

Then add in a tax system which aggressively taxes labor while leaving capital and inheritance untaxed, if we stopped taxing labor that might be enough to pull a whole chunk of labor out of poverty, just having work is no escape from poverty in a world of high rent and high income tax.

There is some truth to what you're saying, but also inheritance is massively taxed in most developed countries, especially in the US.

Estates are taxed at 0% up to $11 million dollars in the US. Moreover, that upper bound is indexed to inflation, unlike the minimum wage. I wonder why that is...

this is true, and 11 million dollars is a LOT of money. Id retire tomorrow if I had that kind of money.

But inheritance tax is 40% above that.

Agreed -- it is certainly inheritance that mostly takes the blame here, since it allows massive advantages to accrue, unchecked. However, I do think that there's something to be said against even inner-lifetime accruement of obscene wealth, as that can warp merit as well. Where's the sweet spot? - the level at which there are sufficient rewards required to motivate the gathering of wealth without the risk of accruing such an advantage that would unbalance the playing board.

Which is culturally solvable, but would require require people to give up their children to be raised by the state and never be allowed to know who they are. That sounds horrible, but I submit that said horror is largely driven largely by a culture of possession and selfishness, i.e. people want to raise their own children because they want to shape who they are and ensure their genes have good survival odds. Assuredly there is a biological component that drives us to take an interest in our lineage, but we know that this can be directed towards similar goals via adoption and pets, so it is conceivable that a society could direct it not towards one's individual children but children in general. Of course, the whole 'raised by the state' thing is also a pretty uncomfortable thought to any society that has enshrined "freedom" and most people who lived through the soviet union, however I think it is possible that without the concept of genetically-bound inheritance of property and status that the corruption of such structures might be less likely.

Not that I suggest any of this in serious mind you, it's just the kind of thought experiment day-dream that gets me through my workday. What this one has taught me is this: nobody actually wants a meritocracy.

I'm reading this chain of responses and still haven't seen anybody saying the obvious: that poverty is not the same thing as not being rich. Instead, you keep digging in the misunderstanding, reaching absurd conclusions.

In most first world countries, there is basic free education and children can study for a job with enough pay to provide for a decent life style. That's not to say that there're no problems. There are. Often accomodating immigrants from poor countries. Also because declining population and pensions and all that.

But do you want to go full socialist because only rich family children get to the most expensive colleges? O_o

You should watch the documentary Children of the Sun, which describes attempts by early kibbutz movements in Israel to raise children communally and not directly by their parents. There were upsides (the children grew up with characteristics that we would think of as strong and independent) and downsides (clear early-childhood trauma, with unclear consequences).

It is natural to pass resources onto your children. You can’t expect people to just see their children as individuals who must go fend for themselves. A stranger might just regard your children as mere “people”, but a parent see’s their children as extensions of themselves, and have a vested interest in ensuring their happiness and well-being.

You can’t expect people to just see their children as individuals who must go fend for themselves

Why not? There's plenty of people arguing for exactly that mechanism when it's not about their own children. A 100% inheritance tax (with no loopholes through business or legal constructs) might force a lot of people to rethink how they vote -- because then, they can't use their wealth to shield their children from how society functions any more.

Basic r/K selection. We're a K-selection species: we have a few offspring and we invest our resources in them quite heavily, like most mammals, and the higher the mammal, the bigger the investiture.

As such, your suggestion is quite literally against human nature. We're not insects. This is the usual trap for people with Big Ideologies: they assume that we're all these tabula rasa entities onto which anything might be written (and should be).

Because there is a bias that cannot be shaken. Look its easy to not give a shit about other peoples kids. Let other people's dirty nasty misbehaved little shits get nothing free in this world. When it's their own children though, people begin to apply exceptions. And that's why we end up with hereditary based transfers of wealth, rather than say donating all your money to all of society upon death. Your own child that you raised from birth deserves your wealth more than the wretched society (basically other people's kids).

If someone else's child was run over and killed in a road, a person may pause to reflect on how sad and unfortunate the event was, but will quickly move on with their life and continue as they were. If their own child though was run over and killed though, they would be shattered, may not even be able to function well for quite some time.

> You can’t expect people to just see their children as individuals who must go fend for themselves.

Literally the whole premise on which the plot of Inception rests was to convince the child progeny of wealth to forgo it so as to prove that he could make a name for himself on his own merit and not by riding his father's coattails.

There's a very big difference between leaving a child to fend for himself (so to speak) and attempting to help a child develop his own sense of agency, including restricting access to a smaller-than-naturally-limited set of resources.

"Making a name for yourself" is overrated. No one really gives a fuck. And you can still make a name for yourself with any amount of resources anyway, probably even easier to do when you already start with a lot of wealth.

Distributing rewards according to merit may be beneficial, but the problems with unequal distribution go far beyond hereditary rewards. Consider the income distribution according to jobs. Some jobs are assigned greater monetary rewards than others even if they are essential to the functioning of society. Much of that comes from our notions of status. I would argue that distributing wealth according to merit only works as a motivating factor when one is being compared to their occupational peers, which is something rarely seen in lower income occupations.

Are you sure? I believe that rather than notions of status the main factor that determines salaries is supply and demand of workers.

How many nurses have seen their salary increase due to the shortage of nursing staff due to Covid?

https://edition.cnn.com/2020/11/24/health/covid-nurses-big-m...

https://work.chron.com/salaries-changed-nurses-23316.html

I don't understand your skepticism.

edit: corrected wrong second link

> Some jobs are assigned greater monetary rewards than others even if they are essential to the functioning of society. Much of that comes from our notions of status.

It does not. It comes from supply and demand, and how important that job is to the cash flow that will end up paying for it.

Do you have any sources on what percentage of wealthy that inherit their wealth? From what I've gathered it's quite small and doesn't necessarily last more than a few generations.

In Europe, most of the wealthy are descendants from 400 years ago. There's a paper that comes up in the US media regularly.

What's fascinating is that most of the German name-brand companies that thrived under the Nazis are still owned by the same families.

I don't have an answer off the top of my head, but I did some searching for you.

A short article from inequality.org [1] suggests that most of the richest people in the world (Forbes 400) were born with significant financial advantages, if they weren't already wealthy.

Since there are many more rich people than the Forbes 400, that doesn't seem too representative of the usual rich person. It's hard to find anything conclusive - there are a few research memos put out by what seem to be wealth management firms claiming that most rich people are actually self-made. There's a clear conflict of interest here, so I'm not sure we can trust those results.

It seems understudied, and will take a lot more than 10 minutes of searching for relevant results.

1. https://inequality.org/research/selfmade-myth-hallucinating-...

Those “born on first base” — in upper-class families, with inheritances up to $1 million — make up 22 percent of the 400.[1]

I wouldn’t call 22% of the richest 400 people in the world having inherited more than $1M to be evidence inheritance dominates the causes of inequity.

I mean, another way to put it is “80% of the richest people in the world DID NOT inherit their wealth.”

[1] https://ips-dc.org/the_self-made_hallucination_of_americas_r...

That's not actually the only claim/result in that briefing; but yes, I agree that it doesn't seem representative for the question you're asking. Do you have any better citations? It doesn't seem like there's a conclusive answer from the academic community.

Not to mention that thanks to the government, $1M is a one bedroom apartment in SF. So these people want to give them more power over our resources?! crazy.

You've totally misread this. First base is the lowest category of wealth that the article describes.

22% received support and inherited up to a million, and a further 40% inherited at least a million - more than a lifetime's worth of income.

People outside these categories included those whose parents ran a successful business.

"It is the hereditary nature of wealth which is the largest contributor to long-term inequality."

This is not true, because when you don't have hereditary nature of wealth, there is no wealth. Why would you be motivated to accumulate wealth?

Economically you want people to save money and invest, when there is no target to have wealth, people will over spend.

Spending means economically staying at same level as population, not improving.

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