My current understanding from reading books like The Millionaire Next Door is that great wealth is currently lost in three generations. I was wondering if this old tradition in Britain used to escape that trend?
There's a Guardian review from 2019 [1] that covers the gist of the subject.
Here's a sample paragraph:
When once asked how young entrepreneurs might succeed in Britain, the late Duke of Westminster, Gerald Grosvenor (owner of 131,000 acres, including much of London’s Belgravia and central Liverpool), observed, drily, that they should “make sure they have an ancestor who was a very close friend of William the Conqueror”. Though Shrubsole estimates that the recent sell-off of ancestral lands to the “new money” of hedge-funders and oligarchs accounts for perhaps 17% of the total in England, 30% rests in the hands of the feudal Norman “cousinhood”, whose offspring have until recently preserved their birthright with a Downton-esque doggedness.
[1] https://www.theguardian.com/books/2019/apr/28/who-owns-engla...
- peers didn’t pay taxes
- inheritance tax (aka death duties) didn’t exist
- owning a lot of land was a great source of income
So while intermarrying helped stop the distribution, the industrial revolution (making various businesses return better than land) and very high inheritance (and other) taxes also lead to redistribution.
Yet to be seen, but spending has already commenced. Thankfully I think I’ve drilled into my wife’s head the seriousness of psychologically acclimating to having a large sum of money dumped in her lap and to not spend any of it.
The Cultural Revolution couldn’t equalize outcomes in China. The same families are on top in Florence today as in the 1400s, more or less. Gregory Clark’s research oeuvre is all about the persistence of social class. The UK is not unusual.
> Persistence Despite Revolutions
> Can efforts to eradicate inequality in wealth and education eliminate intergenerational persis- tence of socioeconomic status? The Chinese Communist Revolution and Cultural Revolution aimed to do exactly that. Using newly digitized archival records and contemporary census and household survey data, we show that the revolutions were effective in homogenizing the pop- ulation economically in the short run. However, the pattern of inequality that characterized the pre-revolution generation re-emerges almost half a century after the revolutions. Individu- als whose grandparents belonged to the pre-revolution elite earn 12 percent more income and have completed more than 11 percent additional years of schooling than those from the rest of the population. We find evidence that human capital (such as knowledge, skills, and values) has been transmitted within the elite families. Moreover, the pre-revolution elite either move to opportunities or stay to benefit from the social capital embodied in kinship networks that have survived the revolutions. These channels allow the pre-revolution elite to rebound af- ter the revolutions, and their socioeconomic status persists despite one of the most aggressive attempts to eliminate differences in the population.
http://davidyyang.com/pdfs/revolutions_draft.pdf
> Intergenerational mobility in the very long run: Florence 1427-2011
> The paper examines intergenerational mobility in the very long run, across generations that are six centuries apart. We exploit a unique dataset containing detailed information at the individual level for all people living in Florence in 1427. These individuals have been associated, using the surnames, to their pseudo-descendants living in Florence in 2011. We find that earnings elasticity is about 0.04, much higher than that predicted by traditional models of intergenerational mobility. We also find evidence of strong real wealth inheritance. These findings are confirmed when we test the robustness of the pseudo-links and address the potential selectivity
https://www.eui.eu/Documents/DepartmentsCentres/Economics/Se...