Billionaires amass more through inheritance than wealth creation, says UBS | Hacker News Reader

Billionaires amass more through inheritance than wealth creation, says UBS

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305 pointsgumby341 comments

This is the conclusion of Thomas Picketty's 2013 book, "Capital in the 21st Century." Due to the historical averages of the rate of return on capital, he concluded empirically that wealth will continue to concentrate to the point to inheritors, to the extent that individuals become increasingly unable through labor to achieve parity to the inheritors.

The book was very provocative in economist circles, but even the critics mostly lauded the empirical work at collecting historical data. https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...

It's an interesting model and in my opinion, provides a much better model for the 'fourth turning' pattern than the mechanism put forward by the authors. The predictable return on capital Picketty points to after all only happens during times of stability, during times of instability wealth disparities actually decrease. If too much concentration of wealth leads to crisis and crisis is a 'distributing' mechanism this is basically a self-correcting dynamic.

>> If too much concentration of wealth leads to crisis and crisis is a 'distributing' mechanism this is basically a self-correcting dynamic.

Doesn't this imply that economic hardships lead to unrest and wars?

It certainly seems so and seems like a logical conclusion.

It may be primarily anecdotal, but the last 100 years or so seem to confirm it.

For the opposite (not quite converse logically!) argument that unrest and wars lead to economic equality, I recommend Walter Scheidel's "The Great Leveler".

https://press.princeton.edu/books/paperback/9780691183251/th...

Perhaps there is a better alternative to this. Rather than simply waiting for "times of instability," society at large could take a more proactive approach.

I believe this was true throughout almost all history, and 20th century was a fluke where a lot of people lost what they could inherit, and other lots of people made their capital from hard work.

We are devolving to the status quo from the nineteen century and before. A couple owners of inherited wealth and huge dispossessed masses.

This is true if you view the world from a zero-sum perspective. If the rich are winning, then the poor must be losing.

But I would argue the world is not zero-sum. Modern life for middle class or poor class people is a lot better than the vast majority of history (the 2 notable exceptions are post WWII USA and post Cold War USA, when America was punched through as an undisputed global superpower).

We are a looooonnng way away from 19th century standards. Like seriously, would you desire to go back in time to 1890? Okay, have fun if you're not white. Good luck with polio and leprosy. Hope you're not bored with reading (if you can read) because video barely exists.

There are two separate concerns here:

- increases in material standards of living

- decreases in class mobility and increased concentration of social power

It is perfectly coherent to appreciate one and condemn the other. The parent comment seems to focus on the latter.

> decreases in class mobility and increased concentration of social power

> The parent comment seems to focus on the latter

Okay but it's still not a very good argument. Like really? That's when you literally had to be _born_ noble, like your blood ancestry. That's why a bunch of people died in the French revolution, Russian revolution, etc

The Gilded Age, the stereotypical example of a time with high inequality (which we have, in fact, now surpassed by any reasonable measure) was in the 19th century in the USA.

We had no hereditary nobility (not in name, anyway). The robber barons were all (to the best of my knowledge) "new money"—their families made their fortunes right here in America by getting in on the ground floor of brand-new industries (very much in the same way that startup founders are trying to do today) as the Industrial Revolution was ramping up...and then becoming monopolists and extracting all the money they could (very much in the same way that startup founders are trying to do today).

You may need to review your history.

I don't think "class mobility" is a thing that we have to have. I don't think its a problem that needs fixing.

I also don't think its a problem that there is a big gap between rich and poor.

I _do_ think we need to make sure that our governments are well funded, and that it can afford to feed, house, and make safe all of its people, no matter how disabled, unlucky, or lazy.

I also think we need to have protections in place so that the wealthy can't use rent seeking behavior to feed on those with less money.

> I don't think "class mobility" is a thing that we have to have. I don't think its a problem that needs fixing.

Really? If there were zero class mobility, that would mean that no matter how hard someone works, no matter how good their business ideas are, they'll never become more wealthy than their parents were when they were born (at least, compared to someone who sat around doing nothing). And it would mean that no matter how inefficiently or stupidly a rich person blows their money, they'll never become less wealthy than they already are. Bloodline would become a better predictor or wealth and status than luck, charisma, investment opportunities, or hard work.

Even if we lived in a world where even there poorest of the poor were provided for, I wouldn't be okay with zero class mobility. It would basically be acceptance of inherited birthright privilege.

When I hear class mobility, I think moving categories, not moving up and down in your own category.

I believe strongly that people need to be rewarded for getting out of bed in the morning and doing something productive. I fear the UBI because I think its human nature to choose to do nothing. I think people who claim people will still work on a UBI are kidding themselves.

So in context, I believe it's important that everybody's material wealth is going up. We don't need laws that somehow make it easier for you to go from nothing to a billion dollars somehow.

The evidence people do not prefer to be lazy. UBI studies show this too. Where is your evidence?

that would be an interesting idea in the 2000s, when everyone wanted to be an entrepreneur.

This very forum is (ostensibly) about entrepreneurship. Since 10 years ago however, the common advice is to ditch the startup and go work for the bigtech behemoths instead.

I have no problem with existence of the rich per se. What I have a problem with is them using their money as 'speech' to buy politicians in order to erode regulations and rights that make life worse for everyone else.

I think you're confusing zero-sum between people at different economic levels and zero-sum between people at different points in time.

Yes, people at a given economic percentile today have many things better in absolute terms compared to poor people at that same economic percentile X years ago. (This is obviously true for large enough X. Everyone's got it better today than the Cro-Magnons did!)

That does not mean the present system is not zero-sum in its relative distribution of wealth among people today. Every dollar in a billionaire's bank account is a dollar that could be in someone else's instead.

> Every dollar in a billionaire's bank account is a dollar that could be in someone else's instead.

This is not an example. Today the government can print more dollars out of thin air. So no, dollars is not zero-sum.

Even then, dollars is only an approximation of value, the thing that really matters. And value is also not zero-sum because of technological innovation and the existence of waste. If we are smarter about how apply our resources, literally more people can have more, and no one has to lose. (One example is people in the US simultaneously being food insecure while the nation also has tremendous food waste).

> Every dollar in a billionaire's bank account is a dollar that could be in someone else's instead.

This is true, but billionaires don't just have a billion dollars sitting in bank accounts. The billions in wealth comes from ownership of property and companies. Some of this may be considered "zero sum" in the way you describe (e.g. a billionaire that owns and rents out single family homes).

However, I would guess the majority of that wealth is not "zero sum" in the way you describe, such as a warehouse robot (or the warehouse itself). What are you going to do with a warehouse robot? It has no value to you, or almost anyone else.

The biggest factor in whether people become rich is simply luck.

Why else would a small number of people who are by far not the most intelligent or capable among us, and who happen to live in a few select countries, be the ones who own 90+% of the world's resources?

Sadly, even Silicon valley tells a grim story. How many successful founders go on to repeat their success in another venture? How many don't even bother to try and instead become "philanthropists" or pundits of some kind, promoters of their personal brand, still trading off of that one burst of luck they had?

We all know that most people with big successes would absolutely never subject themselves to the "meritocracy" again, once they have already established financial dominance over others...

If the world were meritocratic we would not tolerate people living uneducated in slums and those with resources would invest heavily in human capital. Do they? Absolutely not, they build gates around their homes to protect themselves from the masses. The pass zoning laws to limit the density of dwellings so that the poor won't live nearby, etc.

> Like seriously, would you desire to go back in time to 1890?

This is a completely frivolous argument. We should all sit tight and be content because we're not being lynched or dying of dysentery?

We live in a world where a tiny number of people sit on mountains wealth that will last them a hundred lifetimes while the vast majority ration themselves what limited education, food, shelter and healthcare they can afford in a given month or year. A few have unfathomable plenty and most live in a world of constant scarcity. That's the world we live in today and that is the world we must grapple with. The 19th Century has jack all to do with it.

> This is a completely frivolous argument.

> The 19th Century has jack all to do with it.

Okay well why don't you tell that to the GP who posted the comment: "We are devolving to the status quo from the nineteen century and before."

I'm replying to the comment.

> But I would argue the world is not zero-sum. Modern life for middle class or poor class people is a lot better than the vast majority of history

Zero sum is not a binary. For things where we are able to increase output using technological progress to the point where supply sufficiently meets demand, sure, it doesn't feel zero sum. Nobody is arguing that we need to fix that -- the challenge is actually preserving the situation in these cases (it's bad to kill the reward signals that make the economic engine go).

For things where we cannot rapidly increase output, things that have unlimited demand but very limited supply, the rich are likely to monopolize. In those cases, it is zero sum. Public spaces (think of the beach access controversies with people like Vinod Khosla), farmland, housing, fresh water, college admissions. Housing and land in particular are really tough.

Strategies like wealth redistribution (but _also_ other related policies!!) are needed to mitigate the latter.

Wealth centralization is also anathema to democracy -- just ask proof of stake folks. When the wealthy get to make all the laws, you won't want to live in that society.

> Housing and land in particular are really tough.

Housing and land are not "tough". There's plenty of dirt cheap land even in highly developed countries; it just happens to be outside the most popular locations. But if we want housing to become both cheap and livable we must invest in those "unpopular" places, even as we also try to build more housing in the more high-demand locations. There's just no avoiding that.

I wonder if that's really true, I'm going to do some web searches latter because I think its interesting, but I doubt a young person who has an online only tech job, and can therefore live anywhere, could even afford an undeveloped parcel of land in the middle of nowhere.

Yes, they could - much of the land in the US sells for hundreds of dollars per acre.

I think the point is that humans need a lot of infrastructure to live. Reliable water/sewage, internet connectivity, schools / day cares if you have kids, access to healthy food (google "food deserts"), etc.

Ahh, no, I think there is an interesting question here, can a young person today go out west and build all that stuff from nothing. (Like people did a few hundred years ago)

Can you buy a small parcel of land, dig a well for water and a hole under the outhouse, plant veggies, have some chickens, pigs, perhaps a goat.

Can you do it in range of a cell tower for internet, do you need some satellite solution. How much solar and how big a battery do you really _need_. How would today's tech change the life of the settlers?

I did some web searches for here in Australia, and I didn't parcels of land much less than 10k, and they looked liked barren desert to me. More like 100k if you want nice looking forest in the middle of nowhere.

> can a young person today go out west and build all that stuff from nothing. (Like people did a few hundred years ago)

Maybe a specific young person with a lot of relevant experience and strong desire for this sort of life could, but it would be pretty hard and the initial costs are nothing to sniff at.

Water is especially prohibitive. The American West is going through massive aridification and the water table is overdepleted in many places. Gotta watch out for water rights too.

Electricity and internet are doable if you can afford the right systems.

Food is really hard unless you're willing to buy everything at dollar general. Modern farming is highly reliant on artificial sources of nitrogen. And it's just not a good use of your time if you have a tech job. Social needs of humans cannot be overlooked.

People even a couple hundred years ago would move whole communities. They had access to abundant natural resources and divided responsibilities differently.

Maybe you're just interested in van life but + farming? It's expensive and probably a bad investment overall, but makes more sense than owning random cheap but poorly situated land outright.

My point stands. Getting investment into those places is tough. Towns and cities don't construct themselves. Construction is especially sensitive to monetary policy.

Land by itself is not useful -- if you can't make a living what's the point of having land? Land is most useful when it's in proximity to opportunity, and opportunity-adjacent land is scarce and only getting scarcer.

> Modern life for middle class or poor class people is a lot better than the vast majority of history

I 100% agree with you.

I'm upper middle class and I live better than any king or any robber baron ever lived up until the early 20th century.

Better dental care, better surgical operations (which saved my life when I was 18 or so btw and which save my daughter the day she turned 7 years old btw), better car, better soundsystem, better clothes, etc.

We also know a more lot about what's healthy and what is not. Personal hygiene, including of those you have intimate relation with...

> Like seriously, would you desire to go back in time to 1890?

No. Not as a king. Not as the richest man on earth.

On the other hand, you have to work for a living, don't have a private cook, prostitutes/concubines if that's your thing etc.

I think I'd very much prefer to be a king in 1890 than McDonald's worker today. There's a risk I'd die of infection that's easily treated today, but, on the other hand, I'm not flipping burgers through majority of my waking hours.

I think you are straw manning their argument. I believe it's clear from context that they are referring to something different than material conditions.

> Like seriously, would you desire to go back in time to 1890? Okay, have fun if you're not white

The ancestors of the people living in Gaza were much better off than their descendants today, being bombed while the US Navy sits off shore to enable the massacre (coming via bombs made in the USA). Same is true of many in the world. Hunter gatherers in the Amazon were not being massacred by mining companies back then to the extent they are now.

> But I would argue the world is not zero-sum.

The world is complex. Some things are zero-sum (like land), some are not (like education).

While the low/middle class are certainly more comfortable these days, there is not yet enough evidence that this can be done sustainably in perpetuity. After all, if the entire world lived like the average US citizen, we'd quickly run out of resources (another zero-sum example, btw)

It’s true that we’ve come a long way as a society (in many places), but just because we’re better off, doesn’t mean we’re in a good place.

I hope we can look back 100 years from today and reflect on how bad things were in these times.

Global society is a zero sum game until we get to a place of over abundance. With such limited (often artificially limited) resources, when the rich are winning, the poor in fact are losing.

I think the feeling that this imbalance is accelerating is real. The ever widening technology gap enables the wealthy to leverage powerful tools that simply aren’t available to much of the world population. It’s far easier to game the system than it has ever been.

More specifically, the post-WWII era is ending and now we're reverting to the mean of most of human history, which was oligarchic wealth and authoritarianism. It's sort of a tragic irony that the largest generation thus far saw the 1945-1975 period as "normal" and how things should be, because it was actually a highly anomalous point in history generated by a perfect storm of factors (the demographic peak from previous medical advances, multiple huge agrarian economies rapidly industrializing, a huge war that resulted in massive downward wealth redistribution) which will not repeat, and now it's coming to an end.

I think it's more useful to think of "a huge war" as the effect of the cause of allowing nonsensical wealth concentration via allowing the individual wealth concentrators to use the media, the banks, and governments (the nation's militaries) to enforce hegemony at home and abroad through debt and the use of violence to collect. International trade (as it did in the early 20th century global wars) becomes a vice, as indebted nations are divided between the wealthy that seek to preserve the value of their currency by bone-grinding the locals, fascist forces that seek to become the next bone-grinders, and socialists and idealists whom would rather at the end of the day see debt restructured around social welfare. We've consistently only chosen the first two options throughout all human history.

Who is dispossessed?

In the US about 60% of people do not own land without debt. And the majority also struggle to pay for healthcare and education without incurring debt. Only around 25% of Americans are debt free. Various surveys show between 15-30% of Americans think they could cover 6 months of expenses with their assets.

The majority of the US.

I also think it's worth calling out that his follow-up, "Capital and Ideology" in its latter sections includes several suggestions for counteracting the trend to increasing inequality. One of these is basically that _every_ person should have a windfall inheritance when they're in their early adulthood, which would give them opportunities to pursue education, try starting a business, or whatever else. And naturally, this needs to be funded by taxes on the very wealthy.

People whine about "wealth distribution" day and night, but at the end of the day what alternative is there to combat the (continually increasing) concentration of wealth at the top? At some point there will have to be redistribution, in some form, and the sooner society comes around to that the better off we'll all be.

Death and taxes.

Apparently he improved the conclusion in his second book.

In the first one it was bittersweet as he only stuck to historical evidences and what he found was that the only periods of decreasing economic inequalities were wars.

Wealth redistribution and making it easier for new businesses to enter markets and compete. These often go hand-in-hand; safety nets allow people to take risks, and new competition prevents markets from colluding and ceasing competition.

Also letting legacy businesses die.

It is more often than not that family firms in particular collapse after one or two generations, if not propped up.

I prefer to call it wealth re-re-distribution.

The Walton family wealth, for example, is a capitalised stream of rents predicated on underpaying store staff and abusing market power with suppliers. That's a wealth transfer. That's redistribution.

The Duke of Westminster is worth $11 billion because his ancestor was besties with William the Conqueror (not william the earner).

These are wealth transfers and redistributions that, ideally, ought to be undone.

Distribution implies few to many, concentration implies many to few. We could call it semantics or we could call it using words correctly.

It might imply few to many to you, but to other people it implies not earned.

Implication is often a highly personal thing.

https://en.m.wiktionary.org/wiki/distribute

Roughly, literally, "to give apart", i.e., to break up a resource from fewer to more owners.

I'm a big fan of poststructuralism but social spaces generally require that people understand each other. We can't just go redefining words on personal whims unless the people you're communicating with have consented to be a part of that metatextual process. This isn't that kind of space.

Literally nothing in the definitions you're linking to mentions anything about owners. And the definitions given at points just re-enforce the ambiguity. Definition 5 is "To apportion (more or less evenly)." I think one could reasonably read "more or less evenly" to mean "either more evenly or less evenly" or "relatively evenly".

The definitions for "distribution" rather than "distribute" only weaken your narrow view further. https://en.m.wiktionary.org/wiki/distribution

Definitions include "An apportionment by law (of funds, property)" and critically "The apportionment of income or wealth in a population" with the example usage "The wealth distribution became extremely skewed in the kleptocracy." I.e. becoming extremely skewed didn't mean it was no longer a "distribution" in virtue of being concentrated.

And especially in a space where lots of people have a technical background, we're very likely to be thinking of the wealth distribution explicitly as a probability distribution (also listed as a separate definition), _especially_ we've already used the concept of quantiles on that distribution. Englishing flexibly, I think it's totally reasonable for "distribution" to refer to either the function assigning probability mass, _or_ to the act or process of making such a function true.

People in this thread are mostly using this word in a reasonable way. You're the one seeking to redefine words by insisting that only an entropy-increasing change is a "distribution".

That's a lot of contortion to attempt a defiance of etymology. And anyway the conversation was about redistribution, that prefix of course demanding an additional contextual layer on which the word is applied. Trying to imply that in general redistribution should be ambiguous enough to be synonymous to concentration is firstly just muddying language to make conversation harder and second taking us further from the point of the conversation anyway. Since when is it in the interest of any discussion that "words mean things" becomes controversial?

Words mean things. This word doesn't mean what you want it to mean, either according to the other people in the thread you're interacting with, or the source you decided to cite.

Etymology is not the sole determiner of meaning. We can call an area on the moon a "mare", and know this comes from the Latin for "sea", but "mare" in the context no longer means "sea".

This word does indeed mean exactly what I want it to mean, you're cherry picking other aspects of the definition to somehow overwrite the original rather than to acknowledge that we both can be right in certain ways. I'm right about what this word literally means, you're right that carelessness wins the day when it comes to language drift.

I don't have that connotation for the word and I'm not sure I can find support for it either.

If I have 5 objects and five people and I give one to each that's a distribution. If I give them all to one person, that's a distribution. If I start with the first distribution and concentrate all of the items to one person, creating the second distribution that's still the same distribution.

The alternative of last resort is always violent revolution[1]. Wealth redistribution is the olive branch.

There seems to be an open question among the wealthy and political class of how far inequality can go given the modern police state and effectiveness of technology in accomplishing the goal of maintaining or exacerbating the current political economy.

1. See historical populist grivences against aristocracy that result in social restructuring.

Overwhelmingly, violent revolution doesn't actually bring about the goals of the revolution. It just installs a new power structure with variations on all the old problems. Sometimes much worse.

So it isn't really a "last resort". It's more of a "well you didn't compromise, so now our choice is to burn the whole system down"

Wholeheartedly agree. For the peasants, revolutionary goals are rarely fulfilled. For the previous elite though, they rarely find continuity of power post revolution.

The sans-culottes didn't quite accomplish their goals(at least immediately), but Louis XVI among other elites didn't survive.

Toussaint Louverture et al didn't accomplish their goals, but the French no longer controlled Haiti.

Even Lenin and Trosky didn't accomplish their goals, but the Romanov didn't leave the Ipatiev House alive.

Like many conflicts, one side doesn't have to win for one to lose.

All true, which brings up the question how much better will the world be with a new elite. Also, maybe today’s generation of revolutionaries will do something different.

> Overwhelmingly, violent revolution doesn't actually bring about the goals of the revolution. It just installs a new power structure with variations on all the old problems. Sometimes much worse.

There are examples either way, and sadly you seem right.

I recently read but now can’t find a discussion around this that argued that extreme times promote extreme individuals. A violent revolution is clearly an extreme time and any leader that emerges is likely to have fought hard for their position.

This feels true to me. So my question is - and I don't know the answer yet, though I continue to seek such - when do we, as a humanity, break this cycle? When, and how, do we override the greed impulse, the impulse for power and control and domination of others? When do we begin to leverage a superior cognitive capacity enough to gain true enlightenment and break free from the bonds of behaviour which, while necessary as we evolved, is no longer required, and replace it with an egalitarian perspective and an accompanying stewardship model of life on earth?

We are pretty much there already. The average person in a developed Western country is pretty much a billionaire when compared to the living conditions of even the wealthiest people in ancient history. It's only the impulse of greed and envy towards others that leads us to believe otherwise.

I'm always reminded of the video where one monkey is rewarded with a cucumber and one with a grape[1]. Certainly getting a cucumber is infinitely better than not having a cucumber, and yet the monkey protests.

Despite having higher cognitive functions, that impulse still exists and can only be suppressed for so long and so far. No one has infinite capacity to maintain what they see as unfairness indefinitely, especially when it seems that humans make their own rules.

1. Capuchin monkey fairness experiment, total duration: 57s, https://www.youtube.com/watch?v=-KSryJXDpZo

Not quite. Some things are fundamentally restricted in supply - for example and most pertinently, decent housing where people need to live. It is hard to feel like a billionaire when you have to share cramped living spaces that take most of your income.

Traditional responses see that as either good (which I think is your implication) or terrible, a la "bread and circuses" where people are too complacent to demand any real changes. I would say that the "average person" is a tricky model, here in the US there are people sleeping on the sidewalk, but they have smartphones in their pockets. Are they better off than a Roman emperor? I would say no.

Thanks for pointing this out. It helped me contextualize the argument.

It is a combination of "Other People Have It Worse Than You Do" but uses the past as a point of reference.

We could just as easy compare ourselves to our presumably better off future and say that we have it worse off than them so we deserve to improve things now.

You don't. Biology is a weird and wonderful thing and all these behaviours are ingrained deep. You arent changing anythibg without likely making it way worse through unforeseen outcomes. What we have to do instead is harness these emotions for financially wiping out the weak wealth inheritors mich more effectively so that it is rare to get more than 3 or 4 generations of these people with no skill growing the pot. One generation of imbecile/useless person needs to be likely to wipe out the pot.This would take the form of such things as (but not limited to) drastically limiting the controls one can keep on inheritances through time so more money ends up in inheritors hands with no restrictions sooner, finding a way to make private equity mich riskier/more evemly allocated so that the expected return for rich people is lower (but skilled rich can still earn high returns), more effectibely limiting corporate market power abuse by more effectively breaking up oligopolies (dont have to go back to prerehnquist levels of trust breaking but need to jead back in that direction some), etc.

Good luck with that in USA.

I'd rather die some billionaires minimum wage security squad protecting his gold plated yacht than let some violent freeloaders take my shit and install some cuban-tier communist hell-hole where there's no incentive to produce even basic grain stocks.

If you are minimum wage security guard, nobody is taking your shit.

What incentive would this guard have to keep working?

So are you arguing we _should_ make rich people poor so they have motivation to work; that only poor people can be motivated to work?

The solution is simple: Don't be that rich. If you can manage that, then you'll be fine. You're probably not a temporarily embarrassed millionaire.

There won't be any incentive to produce even basic grain stocks if the large majority of the population can't afford to eat. See the Great Depression.

Life expectancy rose to a multi decade (all time at that time?) record peak during the great depression in US and starvation was exceedingly rare. Even at one of its worst the outcome was remarkably robust against starvation.

There is an argument that Karl Marx provided a guide for the aristocracy to work out the point that inequality would provoke a revolution then back off slightly from it.

Like yes, but also no? The aristocracy no easier to organize than the peasantry. They, through individual self-interest, graze on the commons of wealth and power and are subject to its tragedies just the same.

How about we start with the largest wealth holding: property.

One individual can own an entire town and charge people to live there indefinitely. This gets passed via inheritance and no longer equates to the initial building value.

On a micro scale, the timeframe for owning investment properties should be limited. They provide a service, but over a long period of time the owner is simply a leech.

For people against the wealth redistribution as a concept (whether it's UBI, better welfare programs, increased minimum wage, etc), what do you think the end-game looks like for continued growth in wealth inequality?

The only answer I can see is that your customer base shrinks as fewer people are able to buy.

Or you get violent revolution as the poor are sick and tired of being priced out of even being able to afford housing and they decide they have nothing left to lose.

So he supports education vouchers and healthcare vouchers for everyone? Because that's what "wealth you can spend down for some specific purposes" is, in a practical sense. That's a welcome attitude, given that these things are often dismissed ideologically.

(Also, we generally want people to have some retirement income in their old age when they can't work, and the goal of letting young folks spend down their "inheritance" seems to be in tension with that.)

I think that muddies the water as much as saying that someone who supports UBI also must support foodstamps and housing vouchers. The point is pursuing greater _equality_. We are all heirs to a society that has produced enormous value; why should a small minority of kids get a huge extra unearned boost?

Purpose-constrained assistance is not _equal_ to inheritance, in that heirs to private wealth aren't generally subject to those constraints. Money that the recipient can choose how to spend gives greater freedom than assistance in that dollar amount. E.g. my understanding is a perennial issue with housing vouchers is that landlords often don't want to accept vouchers, so they are less effective than their face-value in dollars would be.

> why should a small minority of kids get a huge extra unearned boost?

That unearned boost is already available to anyone who manages to bequeath sufficient amounts of wealth to the next generation, and conversely becomes unavailable to those who squander that wealth instead. That doesn't really change all that much if you introduce redistribution: either way, there will always be plenty of kids who will spend the money foolishy, and forfeit that "extra boost".

It's a very hard problem to solve because it involves people's culturally ingrained attitudes; but being bequeathed a sizeable inheritance in the first place at least implies that one's attitude to managing wealth has already stood the test of time.

> being bequeathed a sizeable inheritance in the first place at least implies that one's attitude to managing wealth has already stood the test of time.

I don't believe so. At best it means perhaps your parents knew how to manage wealth. It doesn't imply the child inheritors will manage it well, or better than anyone else. At worst, it might simply mean the parents had so much wealth they were unable to spend it all before dying, and so some of it went to their offspring.

The USA tax code potentiates this. First $12m tax free, step up basis allow tremendous wealth to be bequeathed without financial penalty.

Trusts, when set up correctly, can do so as well.

Once inherited, the first $90,000 (married couple) of qualified dividend income is tax free. Plus, standard $29,000 (married couple) deduction means that the first $119,000 of investment income can be tax free. You will see the wealthy either try and start a company or not work. Why work a job where about 30% of your income is taxed when you can stay home and not work. If you inherit your parents' home, you can easily live without working.

Current safe dividend yields are about 6% so all it takes is inheriting $1.5m. There are 24 million millionaires in the USA so there may be quite a few that take advantage of this. When the wealthy start giving their children their inheritance while they are still alive ........

Currently, you can give your children up to a total of $12m combined in your lifetime, before taxes have to be taken out.

> That unearned boost is already available to anyone who manages to bequeath sufficient amounts of wealth to the next generation

> but being bequeathed a sizeable inheritance in the first place at least implies that one's attitude to managing wealth has already stood the test of time

I think twice in two paragraphs you managed to conflate the person leaving the inheritance and the person receiving it. The "unearned" part of the unearned boost is clearly only available to person receiving an inheritance, rather than the person who bequeaths anything to the next generation. A person being bequeathed an inheritance does not imply anything about that person's attitude or aptitude.

> why should a small minority of kids get a huge extra unearned boost?

This is what gives incentive. You do your best, next generation of your genes lives better. If you muddy that connection too much, you got 2 problems on your hands. Some leachers will try to freeride. And some people will stop earlier than they code since they don't see incentive to work more for little gain for their direct descendants.

IMO USSR was a great case study for this. Building wealth was very limited, especially in allowed ways. Thus many people just stopped caring. Do as little as you can to pass by. Drink your days aways. The state will take care of your and your kids basic needs anyway. If you work your ass off - there will be very little change to you and your kids. Unless everybody works their asses off. But turns out in such cases mass apathy wins. And society crumbles.

For the record, I do support free education. And it must be as high quality as possible. You don't want to waste talent because it was born in a poor family. But there needs to be plenty of incentive for that talent to do their best. And inheritance-heavy wealth structure doesn't ensure that either.

I didn't need education vouchers, I had a full ride off of my academic achievement. Money for effective therapy and stable housing, however...

The point of currency is the fungibility. Everyone has different needs, that (I'm told) no bureaucracy is equipped to manage. So, no, not vouchers. Cash. And then we focus on the social and communal aspects of people being equipped to make smart decisions with it.

This technique is referred to as "baby bonds" in policy circles and has a number of advocates, lots of names you'd recognize.

... yes and no. E.g. some baby bonds proposals with backing from recognizable names would:

- have benefits which scale inversely with family income, rather than being 'universal'

- be accessible for specified purposes, like education, buying a home, etc

https://socialequity.duke.edu/portfolio-item/baby-bonds-a-un...

> And naturally, this needs to be funded by taxes on the very wealthy.

This is the part where the math never works out.

If you look at the richest people, they have something like tens to low hundreds of billions of dollars. Which is less than the amount of money the federal government already spends every week. If you taxed the top 100 billionaires at a rate of 100%, it would fund the existing federal government (and no new programs) for about a year, and then there would be nothing left for next year.

The funding for programs like that never comes from the "very wealthy" because there just aren't enough of them for that. It comes from the upper-middle class. Which is fine, but let's not delude ourselves that we can get there by only taxing Bill Gates and not your local cardiologist.

Except that they already pay kind of high taxes. These are the people who make six figures but don't have a personal full-time tax accountant to engage in international tax avoidance shenanigans. They're how the state and federal governments in the US together spend around 50% of US GDP.

So the problem isn't that we don't have enough tax revenue -- holy crap does the government have a large budget -- the problem is what we're spending it on. We should be spending less on the military and means-tested assistance programs and instead use the money for a UBI.

Note also that Bill Gates is giving away a vast majority of his wealth for philanthropic purposes. So if you tax Bill Gates, it turns out you're actually taking mostly every cent of that money from starving kids in Africa and elsewhere. That's something to think about for sure.

> This is the part where the math never works out.

I think this is a bit naive because you're considering money to be fixed and treating the system as a zero sum game. In terms of revenue, the US government gets ~55% from individual income tax and 12% from corporate, with a total revenue of 403B/yr. But also turning the "dial" on tax doesn't only affect the revenue. Every "dial" turn turns other "dials" but this doesn't result in a constant value across the system, even in a fixed instance of time. There are dial configurations which dominate other dial configurations but the system is insanely coupled. Neither this argument nor the "just increase taxes" argument is great because they do not capture the nuance necessary for an effective strategy. What that is? I'm not an economist, but I can tell you the system is rather complex and there's good reason we're all talking past one another and that's because we're solving different optimization problems and even when we recognize that we generally don't recognize that we're not agreeing on coefficients of terms nor what variables are at play. I think we need to first recognize the complexity of these issues and most of he time should kinda just shut up unless we're being clear that we're discussing to learn rather than teach.

[0] https://fiscaldata.treasury.gov/americas-finance-guide/gover...

Of the criticisms to Piketty, not having done the math isn't really one of them.

I don't have Capital and Ideology close at hand, so I can't check how he worked it out, but consulting some other sources:

- the top 1% in the US apparently have around $45.7T in wealth [1]

- there are around 22M people in the 20-24 age bracket and 23 in the 25-29 age bracket [2]

So suppose there are 5.5M people turning 21 every year. Giving them each $100k (yes, less than the Piketty proposal for the EU, but in the ballpark, and gives us round numbers) would cost $550B/yr at present. If this were funded as a flat wealth tax only on the top 1%, it would amount to around a 1.2% wealth tax, not accounting for evasion etc. So literally, 99% of the population could pay more in taxes, the 1% would be taking a hit, but honestly so long as long-term average returns are more than 1.2% above inflation, you could still have inter-generational wealth that gets bigger over time.

Of course, many would naturally prefer for a wealth tax to be progressive; the ultra-rich should pay a larger share than the pretty-rich. This would have the impact of shrinking long term dynastic piles of wealth, but not fully eliminating them, and reducing the impact on people at the low end of the 1%.

[1] https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...

[2] https://www.neilsberg.com/research/datasets/5fd2b2bb-3d85-11...

The top 1% of households in the US starts around $10M. That sounds like a lot, but consider it includes retirement accounts, value of a home etc.

For a couple in that bracket at about retirement age (and who might own their home and be expecting to retire on their savings), those people might be looking at a household income of $300-400K per year.

I don't know, but it seems pretty unreasonable to start hitting them with an extra $120K tax bill annually.

This is again the basic point that the other poster was making.

$10M sounds like a lot, because it is a lot.

It's so much that if you make the median US income, you have to make it for ~300 years -tax free- to save up $10M.

It's 50 years, tax free, on a good developer salary.

It's so much that with 5% interest rate you can pay those $120k in tax and still get $380k a year, placing you among the top 5% wage earners in the US, while doing nothing more than own.

Is so much, that when I dream about becoming independently wealthy, the amount I dream of is half of it.

For people in retirement age it's even more obvious that it's a lof of money. Like, how do you even spend that much money before you die?

As you probably understand by now, I definitely don't think it's unreasonable to hit them with an extra $120K bill a year, because $10M is a lot of money for any individual, or couple, to own.

I mean, sure if you completely ignore investment returns; otherwise your numbers are bogus.

The “safe” rate of retirement drawdown is generally accepted as 4% because inflation, bad years in the markets etc.

In case it isn’t obvious, taxing wealth is basically taxing the older people in society, because they had more of a chance to accumulate wealth.

Hitting people at retirement with a 25% marginal tax increase is just wrong and an unworkable policy proposal.

Piketty’s proposal may work in countries with functional pension schemes, but not in the U.S. where personal wealth accumulation is necessary to extent a solid middle class lifestyle into retirement.

Use 4% then. You're left with 280k (400-120) a year. That's 9 times the median US income, and very close to being in the top 5% income. Not to mention that capital tax is usually lower than income tax.

Even ignoring investment returns completely, $10M is enough for anyone to live extremely comfortable the rest of their life, just using this money!

Taxing the very rich (as the top 1% is) is reasonable, also when they are retired.

You speak as if the money itself can't be used, only the returns. As if it's somehow 'not a lot of money' if it's not possible to live indefinitely on the capital gains alone.

But I agree that it's unworkable, but only because this is a powerfull group (wealth is power after all). I think it's completely unrealistic for that reason alone. But it's a good idea, and $10M is a lot of money.

Would the crudest flat rate scheme be unappealing to people just above the threshold to which it applies? Sure. I don't think anyone's seriously advocating for Bezos and the successful small business owner to be paying the same rate.

AnthonyMouse created a strawman to fight; getting from "very wealthy" to "only the top 100 billionaires" is kinda crazy. To use that to assert that the math just doesn't work on using a wealth tax to fund universal inheritance is kinda untenable.

I think "wealthier than 99% of people in a rich country" is fair to call "very wealthy" but I can see how others would differ. I also hope you can see how the person with >10M in net worth would not be happy to pay 1.2% but can likely swing it (and under this crude hypothetical, stops paying it if they fall to merely being richer than 98.9% of their peers), but that the 100k would be life-changing and transformative for young people.

Piketty's proposals for a wealth tax have varied over the years, but have at points in the past included 1% above 1M euros, 2% above 5M euros, 5-10% above 1B euros. He's trying to re-imagine a more equal society; the redistribution can't be small.

> the top 1% in the US apparently have around $45.7T in wealth

"The top 1%" mostly isn't billionaires, it's cardiologists and lawyers and programmers. It's people who labor for money, not people who inherited it. Most of that wealth is their homes and retirement accounts.

This is the problem I have with these proposals: They get sold as applying to dynastic wealth but in actual fact end up applying to many people who sacrificed years of their lives to go to school or start a business.

> So literally, 99% of the population could pay more in taxes, the 1% would be taking a hit, but honestly so long as long-term average returns are more than 1.2% above inflation, you could still have inter-generational wealth that gets bigger over time.

That's the point. There is no reason to use a wealth tax instead of the existing taxes that we already have unless you're going to use a confiscatory rate.

Existing taxes could -- and already do -- generate enough revenue to fund that kind of program, if we would stop wasting the money on less efficient existing expenditures.

But a confiscatory wealth tax would be self-defeating. It would generate less money, because it would give the wealthy a perverse incentive to spend rather than invest, depriving the government of all the future tax revenue on their investment activity -- which long-term exceeds the amount of the principal.

You have to get at the problem from the other end. What you want isn't to make it harder for wealthy people to make money, it's to make it easier for ordinary people to make money. Reduce barriers to entry so anyone can start a business -- and that business can compete with dynastic incumbents, and dethrone them. Increase competitiveness of markets so capital gets lower margins and more of the surplus goes to customers and workers.

Just taking the money doesn't fix it. You have to address the structural economic conditions that led to that result to begin with.

But even if professionals have studied, inordinate wealth ought not be an entitlement, since it is a gateway to dynastic wealth via inheritance.

The math doesn't work out by design due to favorably shaped policies. A sizable amount of wealth is hidden away extra-jurisdictionally or consists of intentionally undervalued assets or isn't captured in statistics.

Lots of very wealthy people keep wealth in tax shelters, but that reduces their tax burden, not their net worth. Bill Gates doesn't secretly have a trillion dollars.

> If you taxed the top 100 billionaires at a rate of 100%, it would fund the existing federal government (and no new programs) for about a year, and then there would be nothing left for next year.

The point to taxing billionaires is not that "the government needs their money to spend". The government will spend the money anyway regardless of whether it has it. The point to taxing billionaires is to even things out and nudge society to be more equal counter to market forces continuously concentrating wealth. I'd fully support a tax on billionaires where the money just gets burned in a furnace.

> The point to taxing billionaires is to even things out and nudge society to be more equal counter to market forces continuously concentrating wealth. I'd fully support a tax on billionaires where the money just gets burned in a furnace.

Then you're going about it the wrong way.

The main thing having billions of dollars gets you is the ability to choose who runs a large corporation. If you take away the money but not the corporation, all you're doing is transferring the power to run that corporation to some Wall St assholes instead of the founders. The corporation is still just as big and whoever is put in charge of it still has just as much power.

The thing that actually concentrates wealth is large corporations. The solution, then, isn't taxes, it's antitrust and fighting against regulatory capture. It's to make corporations smaller and more numerous, so they each have less power.

Which would not only solve the actual problem, it would also solve the nominal problem of billionaires having too much money, because the way you get billionaires is by having corporations that are too big. It causes the people who got in when they were small to have "too much money". Don't let them get that big and that doesn't happen anymore.

Taxing the very wealthy heavily isn’t intended to fund the state. That argument is a red herring. It should be done to reduce the concentration of power that comes with dynastic wealth, which corrupts society. Arguments to maintain our status quo are typically ideological.

It feels like we're slowly slipping back to palace economies but instead of violence it's through capital (which some might still call violence).

He must surely be an embedded character with such a prestigious background, promoted in the media, talks at the WEF, etc. Whatever he is proposing will be milk toast to the billionaires - a lighting rod to direct peoples' frustration to somewhere that won't cause any harm to those billionaires.

Institutions: Paris School of Economics School for Advanced Studies in the Social Sciences London School of Economics Massachusetts Institute of Technology

Are you referring to Piketty's work and folks like Krugman going on interviews to talk about it?

I'm making the point that the way legislation etc is drafted, the clauses that are allowed - the whole captured system really, that allows the very rich to be able to increase their wealth through inheritance, is problematic if it is seen to be unfair. People will get angry, as inflation, carbon taxes, etc start to bite. The billionaires will feel some heat.

In order to manage that tension, you need certain people who appear to be against you, but are actually in your pocket. Picketty is surely one of those. He will say contentious things, that appear to be critical of billionaires, but his real job is to help manage popular discontent, by sucking up the air from others whose response that would be more problematic to those billionaires.

Low interest rates decade made this pattern seemingly no longer hold, but I think we are getting right back to the old pattern for sure.

The next question is what to do about it. Wealth tax is controversial and hard to implement. It seems to me that simplifying the tax code such that capital gains and various forms of non-salary income didn't have preferential treatment would be an important first step. Further, an actual meaningful inheritance tax that isn't easily avoided by various trust schemes.

What happens when the masses get fed up with the inequality and 400+ million guns in the U.S.?

Fascism, apparently.

I see people joking about this all up and down this thread, but rich peoples wealth is not sting around in gold bars waiting to be stolen by poor people.

All that will happen in a violent uprising is a lot of people will die, and peoples houses will burn down, but nothing will happen to those numbers in a spreadsheet.

well, there will be a lot of inheritance and spreading of wealth (thru theft et al) as a result of that uprising!

You missed my point, a looter might get a new car or tv, but that's not wealth. A looter is can't take ownership of television network, or a social media website, or a coal mine, or a rail way, or like anything actually worth anything.

Now instead of a violent uprising we talk about electing a democratic government that's prepared nationalize our nations infrastructure we'd be talking real wealth redistribution.

> Due to the historical averages of the rate of return on capital, he concluded empirically that wealth will continue to concentrate to the point to inheritors, to the extent that individuals become increasingly unable through labor to achieve parity to the inheritors.

You're obviously incredibly unlikely to become a billionaire.

If someone inherits billions - you're not going to out-labor them to become richer. Only luck will help there.

So where is the cutoff?

You can easily out-labor someone who inherits $2M at 50. >10% of people in the US amass >$1M (without counting their home equity) by around 50...

How many people are inheriting more than $2M? 0.5% of people?

You're never going to out-labor luck. It's always going to be better to be lucky than work hard. But luck doesn't scale, and hope isn't a great strategy.

I'm in favor of inheritance taxes. But this doesn't seem like the main driver of inequality....

>I'm in favor of inheritance taxes. But this doesn't seem like the main driver of inequality....

I mean, Piketty's work shows that it is...

I'd like to see a scandi style tax system and social safety net. Inheritance taxes at the point where 90% of small business and farms won't be affected. Progressive carbon taxes. Massively increased social safety net that includes paid education, healthcare, and unemployment generous enough that one won't be destitute if they try to start their own business and fail (look at the rate of small business formation in the scandi countries!)

There's a common refrain in conservative circles that they're more in favor of 'equality of opportunity over outcome'. Right now we clearly have neither.

> I mean, Piketty's work shows that it is...

He shows that - currently - R > G. I'm not convinced this "proves" inheritance is the main problem.

It shows that you can't work your way to the top - only invest and get lucky (of which inheritance is one of many ways to get lucky).

And by the way - it shows that this was true for all of human history except a brief window after WW2.

Piketty's claim seems empirically obvious, but also virtually obvious to anyone who has created a gaming economy. The rich get richer faster than anyone can catch up, so you have to introduce artificial constraints like increasing prices for rich people.

As I said in a different comment in this thread, Piketty's claim does not hold for all capital, it only holds for land. This is perfectly in line with theoretical predictions by David Ricardo[1]. The solution to this is a Land Value Tax as proposed by Henry George[2].

[1]: https://en.wikipedia.org/wiki/Law_of_rent [2]: https://en.wikipedia.org/wiki/Land_value_tax

Hardly empirical. The data shows the opposite.

~80% of current billionaires in the U.S. are self-made first generation.

And another large chunk are first generation inherited. Like self made mom or dad just kicked the bucket. This myth of multi-generational, dynastic absurd wealth is.... nonsense with few exceptions.

Source?

Are we calling them "self-made" now for strapping some http requests to old, purposefully gate-kept banking systems? Or is it the ones that we allowed to horizontally expand with zero regulatory system to stop them? Or is it the ones who ruined housing the world over? So many useful people.

You don't have to inherit billions from your parents to have a huge leg up on everyone else. There are examples all over the place from something as extravagant 'a small loan of a million dollars' to 'an introduction to a vp at ibm', to paying their kids tuition to the best private schools. I am extremely suspicious of any wealthy person who claims to be 'self made' when in reality they had a paved path to success.

The article is saying that the inherited wealth of the remaining 20% of today's billionaires is greater than the wealth of those new-made billionaires, there's no contradiction there at all. And obviously you'd expect most new billionaires to have a net wealth close to the $1bn mark, so all it would take is each of the 20% to inherit four times as much on average.

This page lists nine people who inherited over $50bn each, and another 23 who inherited between $4bn and $50bn, totalling just over $1.1tn of inherited wealth. Easy to see how that would outweigh the wealth of a larger number of new billionaires.

https://www.madisontrust.com/information-center/visualizatio...

And that list doesn't include any of the inherited wealth of the various royal, noble and other old money families around the world...

> ~80% of current billionaires in the U.S. are self-made first generation.

I see conflicting evidence to the claim[0,1,2]

I'd argue that you also got to be really careful with these studies. Defining "self-made" is not a straight forward issue. In some sense, no person is self made as we're all products of our environments and the opportunities presented to us. If it were consistent you wouldn't see these numbers swing between studies, so don't just pick the highest one. Metrics are deceptive because their subtleties and you need to carefully consider their alignment.

[0] https://finance.yahoo.com/news/79-millionaires-self-made-les...

[1] https://www.businessnewsdaily.com/2871-how-most-millionaires...

[2] https://www.fool.com/the-ascent/personal-finance/articles/st...

>> Defining "self-made" is not a straight forward issue

Forbes has an interesting (to me at least) self-made score that assigns ten categories from "Inherited fortune but not working to increase it" to "Self-made who not only grew up poor but also overcame significant obstacles", https://www.forbes.com/sites/gigizamora/2023/10/03/the-2023-....

Yeah this is the major issue and I think there's a big difference in how people internalize the notion of "self-made" vs how others actually utilize the terminology. Definitely part of this is due to human psyche where we (generally) place importance on our actions rather than our environment (which makes sense due to this is what we have (more) direct control over). There is also a significant number of people who have high incentives to weaken the definition and many do become true believers.

1/10 = Inherited fortune but not working to increase it

10/10 = Self-made who not only grew up poor but also overcame significant obstacles

Here's some clearer example of what may lead to confusion.

- Forbes gives Elon a self made score of 8/10. That's high, for this list considering what 10 means but 8 also is large with "middle-class or upper-middle-class background" (including Zuck and Bezos). Certainly Elon is significantly self-made (his family certainly weren't billionaires) but there is ambiguity about what class he grew up in. According to his dad[0], he paid for Elon's trip to Canada and his education (also discussing the sale of a private aircraft) while Elon claims he grew up poor and came to the Americas with only with $2.5k to his name and ended with $100k in student debt ($100k 1987 = $187k 2023). Certainly there is animosity between father and son and I'm willing to believe Elon believes he's telling the truth (not synonymous with being the truth). But Elon claims a 10/10 self-made score while the dad is saying something closer to a 7 (which is still quite privileged by the average person's standards: "got head start from wealthy family"). Elon's net worth is (Forbes) estimated $245bn and rank #1.

- Forbes equally ranks Bezos and the wiki page is kinda wild[1]. At birth his mom was a high school senior and father was a uni-cyclist but he also attended a Montessori school at age 2. At 4 his mom remarried and his step dad (Mark Bezos) worked for Exxon as an engineer. But Jeff also says Amazon was a family effort and it looks like his parents loaned him $245k ($480k 2023) and they're also billionaires now due to "early investment." I think it is safe to say most will consider Bezos much more self-made than Musk especially considering his dad (Mike) was a Cuban refuge refuge and still a student when his parents married. Without a doubt the average person would call Bezos self made and even believe he struggled and his success is highly conditioned on his work and ability to take advantage of ample opportunities at the time. Bezos's net worth is estimated $170bn and rank 3.

- Now one spot up (9/10) we have Sergei Brin[2] (link for history, you're on HN, you know who Sergei is...). Born in Soviet Russia to a math professor father and engineer mother. The wiki article discusses job loss, troubles getting out of Poland, and let's be honest, professors and NASA engineers are not the wealthiest of people, but neither are they poor (he also attended a Montessori School. I'm not shilling, I'm mentioning because private schools are expensive so puts some objective signal on family wealth). I think the average person would without a doubt not just think Sergei is self made but went through significant struggle, no matter where on the spectrum of "middle class" he grew up on (prof + engineer is reasonably upper middle). Sergei's estimated net worth is $110bn and rank 10.

- At 10/10 is George Soros[3], born in 1930 Budapest to (non-observing) Jewish parents I think we all know what happened. They didn't leave Hungry till post war (1947). There is mention that his family was themselves a bit antisemitic at the time and in 1944 were able to pose as Christians. No matter the personal beliefs I think it would be __difficult__ to claim that Soros is highly self-made and __without a doubt__ had struggles that few others can relate to in terms of severity (this history likely explains his passion for politics). Soros's net worth is estimated $6.7bn and ranked 396

Assuming all this is reasonably true, there's a crazy amount of difference between ranks 7 and 10. I honestly think most people would think a Forbes 7 is a 2 or 3 out of 10 and would interpret a 7 as vastly self made.

Edit: also kind crazy we live in a time where this can all be found and compiled in ~30 minutes. That's definitely a privileged environment, at least to my personal belief.

[0] https://www.the-sun.com/news/8014711/elon-musk-dad-errol-cha...

[1] https://en.wikipedia.org/wiki/Jeff_Bezos

[2] https://en.wikipedia.org/wiki/Sergey_Brin

[3] https://en.wikipedia.org/wiki/George_Soros

>> Assuming all this is reasonably true, there's a crazy amount of difference between ranks 7 and 10

For me the ranks are ordinal, not cardinal, so if they are represented as cardinal somewhere I wouldn't agree with that.

I assume that "I think it would be __difficult__ to claim that Soros is highly self-made" has a missing not somewhere?

> if they are represented as cardinal somewhere I wouldn't agree with that.

I'd disagree. While in a well defined ordinal metric you can always map to a cardinal system by means of grouping (losing precision), but that well defined condition is a bit of a killer. Certainly in language it is not true and I'm suspicious that one could find well defined metrics with global optima that account for all reasonable variables. This is why cardinal systems are highly effective for voting systems (social choice) as it is accepting that the conditions that one is ranking preference on is not universally agreed upon and thus is baking in a noise term to the model. Not to mention is far more computationally efficient (fuck man, we gotta rebuild the entire self-made graph every time someone enters or leaves the list and an entire recompute when metrics/variables change (and they will)).

> I assume that "I think it would be __difficult__ to claim that Soros is highly self-made" has a missing not somewhere?

Ops, yeah, that is correct. Soros is one of the clearer examples of someone being self made. But we can see the other examples are far less clear and understand how someone my place significantly different weightings on the various variables at play. But I think with the exception for holocaust deniers, people are going to generally agree that "Jew during Nazi occupation" trumps almost anything else.

On the Musk/Bezos stuff, I think one read of any comments or interviews with Elon's estranged father (who amongst various acts, has fathered a child with his own step-daughter) indicates pretty quickly that the guy is a bit off, at best. This [1] is the article Wiki chose to cite to justify the claim that Elon grew up in wealth. Here are the combined comments from his father from the article:

"We went to this guy’s prefab and he opened his safe and there was just stacks of money and he paid me out, £80,000, it was a huge amount of money. He then gave me the opportunity to spend £40,000 on an emerald mine. I said, ‘Oh, all right’. So I became a half owner of the mine, and we got emeralds for the next six years. We were very wealthy. We had so much money at times we couldn’t even close our safe. One person would have to hold the money in place with another closing the door. And then there’d still be all these notes sticking out and we’d sort of pull them out and put them in our pockets."

In a normal world, this is about the time you turn off the recorder and thank the guy for coming in, not citing it as established fact. Of course we don't live in anything like a normal world though.

[1] - https://www.independent.co.uk/space/elon-musk-made-money-ric...

It's such a bad assumption that historical returns on capital will persist. Capital is subject to supply/demand just like other things. The more of it there is, the lower the returns are. Anyone who works in finance/investing will tell you (including old Warren Buffett), it's a lot harder to generate returns these days than 50 years ago. There is just so much capital sloshing around.

It turns out the thing that Picketty missed was that he grouped land with Capital. Land should be treated differently as it can not be created or destroyed. If you seperate out the data into land and capital (w/o the land) then all of the outsized returns come from rich people hoarding land[1]. This is in line with the observations of Riccardo[2].

[1]: https://www.salon.com/2015/01/02/joseph_stiglitz_thomas_pike...

[2]: https://en.wikipedia.org/wiki/Law_of_rent

Sorry if this is nitpicking, but valuable land absolutely can be created (Boston) and destroyed (climate change) on human timescales.

I'm sure the amount of land that can realistically be created and destroyed within a few lifetimes is negligible compared to the amount of land in existence, but compared to valuable inhabited land it might actually be significant. Coastal land tends to be pretty valuable, and that's where (almost) all the creation and destruction occurs.

Edit: Actually, the interview you reference is not even really talking about land.

> When you say “land,” you’re not talking about land in the Jane Austen sense, that is, agricultural land under the ownership of the lord of the manor, right?

> It’s not agricultural land, it’s the value of urban land.

Obviously urban land can be created and destroyed as cities expand and contract.

The Netherlands has also created quite a bit of land. Chernobyl is an example of land that was effectively destroyed by becoming uninhabitable.

It's not nitpicking, it's central to the issue. One could consider that, as far as Western civilization is concerned, colonialism was an exercise in "land creation" - and the various wars of the 20th century, temporarily in the case of bombings and permanently in the case of mine-setting, a type of "land destruction".

Picketty doesn't miss.

Yeah, I'm talking about land in the Henry George sense. Maybe a better word would be "natural resources". In this framework you don't just have Labor and Capital, but you have Labor, Capital and Land. Labor uses Land to create wealth, and Capital gives Labor the tools to be more effective in wealth creation.

> "Capital in the 21st Century."

It's weird because prior to the 21st Century this used to be almost entirely how wealth was generated.

But I think the argument of inheritance being a major wealth driver should be simple to understand from a few base principles. This is invariant of money and is related to capital in the broader sense (i.e. resources) which is also going to be invariant to many economic systems. One of the most important ones is momentum.

Momentum seems to often not be considered in these discussions but makes discussions of trickle down economics rather insane. Let's look at a more realistic discussions. Your stock portfolio should not be bounds, full of bonds, and nothing but bonds. You have to diversify and actually even include some risky investments. We usually talk about this in percentages of investments but this doesn't actually make any sense because it's actually percentage of risk vulnerability. E.g. Elon can lose 244B of his 245B and still gave essentially the same quality of life (similarly doubling his wealth won't change anything in a meaningful way). But let's also look deeper at percentages. Let's say I make an investment of $10k (a nice size for someone early on in their career) and I'm about to do really well and get 500% return on that (killer value!), I now have $60k to play with. Now let's say another person puts a $10M investment and only gets a measly 1% return. They gained $100k so have $10.1M to play with.[0] The other problem with percentages is that you can "increase your luck" by taking on far more risk. If we both take our 10{k,M} and diversity into 1k pots and each pot has a x% chance of returning 500%, which person do you think ends up with more winners? Or if we do a fixed number of pots but divide by percent of money, you're going to find a very different expected return value.

Consider this factor when you're also considering cost of living arguments. I'll take that SV software job at $300k/yr where I can only invest 10% of my income (30k) per year over a $100k/yr job in middle America where I can invest 20% of my income (20k). COL calculators are always based on percentages and so not taking this into account (as well as a lot more abstract things) and it doesn't matter of in SV I'm spending 70% of my income on housing but 30% elsewhere if this is the end result (only focusing on building wealth for a clearer argument. Other factors matter and wealth isn't everything. But employers, you can't just use COL adjustments, it's a bad deal for the employees and they know it)

Now I said it is invariant of money, because capital is capital. Land, factories, gold, potatoes, whatever, that's all capital. It can't ever be evenly distributed, even with all good faith actors, because the value of those changes wildly and fast (value != money, its more abstract). Throw in how non-homogeneous everything is (e.g. land, housing, location are not fungible resources) and you got a crazy fucking mess. It's no wonder you can't make a successful 5 year plan, the world is chaos and the models need to be exceptionally complex. You have to embrace the chaos in some way.

TLDR: math isn't always intuitive because neither percentages nor raw values exclusively tell the whole story (don't get me started on mean, median, and variance). People love to (often unintentionally) lie by using whichever fits a better narrative. A holistic approach is needed (i.e. context) with clear definitions of objective functions and more importantly clear understandings of the metrics (a whole other can of worms that people think is far simpler than they actually are).

[0] To put it another way, if you're retiring with $10M in investments you're retiring with a passive income north of an L3 at Google. This is why John Bogle is happy with only $50m (which grew) because he understood that there's very little more money can do for him and that a simple 2% a year on that gets him a million every year and so the value is not a high score but being human. This isn't really a philosophical argument because literally capital generally follows an S curve in its utility, not linear and usually not exponential (though S looks exponential at some points).

>> wealth will continue to concentrate to the point to inheritors, to the extent that individuals become increasingly unable through labor to achieve parity to the inheritors

Adjusted for inflation, John D. Rockefeller had 340 billion dollars of wealth in 1918. What has that fortune grown to? It hasn't. It is gone. He gave it away.

Adjusted for inflation, Andrew Carnegie had 370 billion dollars of wealth in 1901. What has that fortune grown to? It hasn't. It is gone. He gave it away.

John Jacob Astor's fortune? Gone. Vanderbilt's? Gone.

Looking at a few different lists, those are the 4 wealthiest people in US history. They either gave the money away or their heirs spent it all.

If wealth was going to automatically concentrate, it would have. It didn't. Rockefeller's 340 billion invested in the stock market from 1918 to today would roughly equal the entire net wealth of the US. That didn't happen for the Rockefellers and it didn't happen for any of the other many fortunes in the past.

What Picketty "concludes empirically" does not in fact happen. If it did in fact happen, all the wealth of the US would be in the hands of one person.

To figure out if wealth will concentrate in the hands of inheritors, you need to know many different things.

Will people give their wealth to their children or will they give it away? Zuckerberg, Gates, Buffet, Ellison, all giving their money away.

Will people give their wealth to a single child? Elon Musk has 10 kids. If he gave away money to each child, his wealth would not be concentrated. (Oops, 11 children. Even less concentrated.) If those children went on to have multiple children, the inheritance gets diluted even more.

Some rich people, believe it or not, actually spend money. People who inherit wealth rather than earning it seem to be particularly good at spending wealth faster than it grows.

There is at least one exception to this, which is that as technology improves, it necessitates the creation of new capital to utilize that technology commercially, and the people involved in creating it (whether as founders or wage workers) stand to capture a lot of the value in delivering it.

Case in point, see how valuable it is these days to be an AI scientist or software engineer. Both are involved in the creation of capital in the form of AI models and software, both are paid a lot and able to adequately catch up in wealth to old money.

Here's a direct link to the UBS report: https://www.ubs.com/global/en/media/display-page-ndp/en-2023...

This title is pure clickbait. The article says that out of the last 9 years, the statement has been true for 1 and false for 8. Flagged.

Hah, I've seen this title all over. Pretty easy to miss that it was just this past year, contrary to the prior eight years.

I don't find that to be clickbait at all. It wasn't just any one year in the past nine, it was the most recent.

Heck, the title could have been "For the first time in recent history, billionaires amass more through inheritance than wealth creation." That would perhaps have been more accurate, but that's also a "stronger draw" in my opinion than the actual title. It doesn't make sense to call something "clickbait" that is less intended to incite than a more detailed headline.

I wasn't the one who called it clickbait but I do think it's misleading. The one year could easily be an outlier. It might be by accident, or it could be that the writer was more interested in pushing a political view than getting clicks.

> it could be that the writer was more interested in pushing a political view than getting clicks.

The report comes from the Union Bank of Switzerland. https://www.ubs.com/global/en/media/display-page-ndp/en-2023...

"UBS manages the largest amount of private wealth in the world, counting approximately half of the world's billionaires among its clients." https://en.wikipedia.org/wiki/UBS

Also keep in mind that some of the world's wealthiest people are getting older. Inheritance of their wealth is inevitable. Warren Buffett is 93, and Charlie Munger just died. Bill Gates is 68, Steve Balmer 67, and Paul Allen already died. Larry Ellison is 79. Bernard Arnault is 74. Michael Bloomberg is 81. Carlos Slim is 83. I suspect the share of inherited wealth is only going to accelerate in the near future.

Buffet has said he is giving most of his money away. Same with Gates, Ellison and Bloomberg. Carlos Slim has also been donating huge amounts to philanthropies.

We'll see what happens when they actually die. In any case, they're giving their money "away" to "foundations" controlled by billionaire families. The money is still inherited, and these foundations can be seen as tax shelters.

I've spent some time googling how foundations work and while there are various structures, a common theme is that it's not that cushy. The bulk of the money has to actually go to charity, otherwise you pay the normal taxes. And they keep an eye out for tricks like having the foundation pay absurd salaries to your relatives.

The foundation doesn't have to be cushy in itself. The family members already inherit enough money to satisfy all of their material desires. You don't even need to be a billionaire to satisfy all of your material desires. Beyond a certain point, wealth is simply power, and the foundations give power to the families.

What I see from the billionaires is a desire to undermine democratically elected governments, starving them of funding by cutting taxes, and making them dysfunctional by financing the campaigns of dysfunctional politicians. When the masses lose faith in democratically elected governments, the so-called "charitable" foundations swoop in to become the trusted providers of social services to the masses. The ultimate result is the elimination of democracy and the restoration of hereditary aristocracy, with the foundations ruling the world as undemocratic governments.

I would be more impressed if billionaires gave away 99% of their wealth to somewhere that is completely out of the control of themselves and their families.

The world's wealthiest people aren't looking to buy more stuff. There are only so many mansions and yachts you can buy before you'd had enough with that and get bored. For the purposes of buying stuff, wealth has diminishing returns. What they're looking for in accumulating unlimited wealth is to increase their power relative to everyone else, to perpetuate social inequality. Power is a kind of zero sum game, because if we all accumulate the same amount, we're still all equal.

>> I would be more impressed if billionaires gave away 99% of their wealth to somewhere that is completely out of the control of themselves and their families

Warren Buffett has already given away stock worth more than his current net worth, and the main beneficiary has been the Bill & Melinda Gates Foundation. His will gives more than 99% of his remaining net worth to philanthropy.

> the main beneficiary has been the Bill & Melinda Gates Foundation

In other words, a billionaire-controlled foundation.

But also: "Warren Buffett is donating about $870 million to four family-run foundations" "the Susan Thompson Buffett Foundation, which is named after his wife" "three charities run by his children" "Last year, he donated about $750 million to the same foundations. He’s been making the same donations yearly since 2006." https://www.cnn.com/2023/11/22/business/warren-buffett-thank...

What is your evidence for this grand conspiracy theory?

That's kind of a strange question. It would be a confirmed theory rather than a conspiracy theory if there were empirical evidence. I would say, though, in support of the theory: (1) this is how the ultra-wealthy have always behaved throughout history, to advance the interests of their own social class, to preserve and enhance their social inequality, and (2) I have a hard time trusting the motives of the people who have set up these foundations, because they've always been ruthless and greedy throughout their lives. Gates has never stopped accumulating personal wealth; his net worth is higher now than when he "retired" and claimed he was going to give most of his wealth away! Buffett has never stopped accumulating personal wealth either. It's a cop-out to claim that you're going to give everything away to charity, but only after you're dead. Moreover, your pledges are worthless when your dead, because your children who now control your money via the foundations may behave in ways that you didn't intend (which is often the way with children).

If you're going to give most of your wealth away to charity, and by that I mean to actual people who need the money, not to a "foundation", then give it away now, before you die. I do not trust Bill Gates one bit, not even one tiny bit. I don't even trust the foundations to do good. https://en.wikipedia.org/wiki/Bill_%26_Melinda_Gates_Foundat...

So you can say that my conspiracy theory is the most cynical interpretation of the situation, due to my cynicism about the billionaires themselves.

In other words... you made it up to confirm your bias?

No. I'm not even sure what you mean by "confirm".

Did I make up the theory? Yes, of course, by definition. All theories are made up.

Am I cynical about the motives of billionaires? Yes.

Was my theory inspired by my cynicism? Yes.

Did my theory "confirm" anything? No, I don't know what it would confirm.

The purpose of the theory is to explain the existence of all these family-run "charitable" foundations that every ultra-wealthy person seems to be setting up nowadays, regardless of how terrible that person might have been in the past or continues to be in the present. Don't you think that's a bit suspicious?

Honestly, I have a hard time believing that these foundations could do any more good than simply writing $10k checks to millions of poor people. That would immediately and dramatically improve their lives.

I don't dispute the content of the report, but the report doesn't have the misleading title we were talking about; in fact, the first line says "For the first time in nine editions of the report..." My only complaint is that the title at FT makes it sound like it's always this way.

I dispute that the title is misleading. People seem to expect too much from an article title. You can't get all of the nuance in just a few words.

The subtitle is "A survey of the global elite shows the ‘great transfer’ between generations has overtaken entrepreneurship", and the first sentence of the article is "New members of the global super-rich gained more of their assets through inheritance than through wealth creation this year — the first time that this has been recorded by Swiss bank UBS in its nine years of surveying global billionaires."

Nobody is getting misled.

It's also an extremely misleading, if not stupid, measurement of what they are claiming. They take the earnings of new self-made billionaires, and contrast that against the amount passed down to heirs, in a given year.

You're looking at the earnings of brand new billionaires, contrasted against the lifetime earnings of recently deceased billionaires, and seeing which is bigger. There is no way that this will not trend towards always favoring the lifetime earnings, especially as the ratio of total_billionaires : new_billionaires continues to increase.

The whole point is that this year is different, pehaps due to the changes in interest rates.

What's shocking as someone who is well know to rant about the inevitability of capital accumulation, and the acceleration of that process once wealth captures governance—something that happened many many decades ago in the US—is that this would surprise anyone.

For the 1%, or if you prefer, for those classes which have seized and all but exclusively retain control over not just wealth but power, this is of course "bug not feature."

The social ills and crises of contemporary democracy are entirely, directly, obviously even, traceable to the consequences of this tendancy and its execution.

Lest anyone in the 1% (or, more likely for the readership here, the precariate 10%) take solace in being in the narrow pool of "winners" of this system,

we are now experiencing the all but inevitable dis-equilibrium resulting from the fact that this accumulation has no check, no retarding feedback.

The end state is single-state autocratic kleptocracy,

troubled be deep and permanent social unrest and all but ubiquitious disaffectation and dis-ease and hence violence, mostly incorrectly targeted at fellow victims of the system.

This is a hell-state and hell-scape we do not deserve.

Yet here we are.

Billionaires and their corporate proxies should be ALIGNED.

There are more secret billionaires, who don't appear on the billionaires list. I know of two such billionaires. One is super, super secretive, who passes off as a multi millionaire.

There are special trusts that billionaires make use of. Treat a trust like a corporation, with its own independent existence. Such trusts can be set up for multiple generations: these trusts (corporations) are run by professionals, while the offspring gets monthly paychecks (that's why they are called trust fund babies).

Assuming we're not talking "I have a retirement plan and a house so my net-worth is over a million" type of millionaire, isn't passing oneself off as a multi-millionaire instead of a billionaire a distinction without a difference? I guess I don't run in those circles, but it's still fabulous wealth either way.

It's the difference between someone having $2k and $1 million dollars.

I think with the "distinction without a difference" bit they meant that if you look like you have $2k instead of looking like you have $1m, what is the difference in your life than just having $2k?

The answer to that is: you have $1m of peace of mind to live your comfortable lifestyle of someone with $2k. Now living the lifestyle of someone woth $2k might not be particularly desirable to most, but living the life of a multi-millionaire with that relatively same level of peace of mind sounds like a crazy nice way to live.

Yes, exactly. If you live like you're making minimum wage as a millionaire that's obvious, but if you're living like a multi-millionaire instead of a billionaire how could you even tell?

Depends on how many multis you're talking about. A billionaire who wants them can have a large yacht, private jet, multiple large homes, staff for everything. Someone with $10 million will be living an upper-middle-class lifestyle, but without needing to work. Maybe a second house or a boat or plane they pilot themselves, but no full-time staff. $100 million could start having the billionaire stuff but at a smaller scale.

Vast difference in political influence, too.

You could tell by the 1000x difference in spending.

But the differences there are material - rent, food, utilities, these all function on a scale of thousands. Millions to billions? You don't need to care about any of those. You've very much left the mundane monetary worries behind.

Being worth 50 million puts you in the ultra high net worth category (>30M$) and you live an incredible lifestyle obviously.

But your entire net worth is 5% yearly interest on a billion dollars.

It's hard to imagine for regular people just how far a billion dollars is, you're essentially royalty at that point as far access to anything in life is concerned.

Yes, by the numbers million vs billion is massive, yes, but for quality of life and for worrying about monetary things? You no longer need to be concerned about food or any type of shelter. It's a matter of the size of yacht you can buy.

As someone in my 20s, I couldn't even retire with $1m. On the other hand, I could live off the interest alone in a savings account with $1b.

(Obviously putting $1b entirely into a savings account is a terrible idea, just making a point)

And that's why I drew a distinction between the "owning a home and having a retirement plan" millionaire and the truly wealthy multimillionaire sort.

> I could live off the interest alone in a savings account with $1b.

I mean, you could live off the interest alone in a savings account with $5m (you can easily get 2.5% at the moment.)

Or more realistically, the matter of the politicians and media narratives you can buy.

For $50 million a year you can run a good few think tanks and make a good few campaign donations.

But that won't be apparent in how you pass yourself off.

50 million is still not an 'I have staff and a house in every major city' kind of thing. But once you get to the billions you have an 'I can make significant changes to the world' button. Want to redevelop North St Louis? Get 1:1 time with any politician I want to influence them about any hobby project? Make a university build a dorm without windows, because I pay them?

It's very different than just caring for food and shelter, but at those levels, personal luxury isn't really the most important thing. And really, for many things, even a billion isn't enough. Imagine you wanted to personally make high speed train happen between two US cities. A billion doesn't even begin to fund your real life Sim City project.

> It's hard to imagine for regular people just how far a billion dollars is

I heard it put this way once before and it really stuck with me: the difference between a million dollars and a billion dollars is a billion dollars. If that doesn't make sense, consider how that is proportionally the same as saying: the difference between one dollar and a thousand dollars is a thousand dollars. One dollar is literally nothing next to a thousand dollars.

If you bought something for $1k and you were overcharged $1, lots of people wouldn't even notice. Of course, someone greedy enough to be a billionaire would probably notice though :P

You might not have to worry about your or your kids getting kidnapped if you're "only" a millionaire. There are probably other security considerations, too.

If you are "only" a millionaire in a HCOL area, you might still have to worry about crimes against your children. However, they will be random crimes that occur within the city you live rather than targeted crimes.

I have a friend living overseas. His children go to school with a Russian oligarchs kids. Visiting the oligarch's home for a birthday party was wild.

It's probably a easier to target a low multi-millionaire than to mess with a billionaire.

Statistically, many "average" upper middle class people are very able to become low tier multimillionaires through a well educated upbringing and a good job, and good financial decisions over a long period of time.

But many of those people take their entire lives to go from "pretty well off" to "technically a multi millionaire, after many years of hard work, and planning" and got there from very reasonable expectations.

Now a billionaire is literally about a thousand* times richer than any of those people. We're talking "I literally make a difference in elections without anyone knowing my name" rich.

Maybe this is a good example of how rich billionaires don't need to be. The mere fact some people can't even imagine the difference between a factor of a literal thousand* (how ironic of me).

In the US a billion is 1,000 million, not one million million.

Is it different in other countries?

https://en.wikipedia.org/wiki/Long_and_short_scales#Current_...

"A billion dollars isn't cool. You know what is? A billion dollars."

Historically, in the UK, Australia, and other countries, "one billion" meant "one million million" (i.e. 1,000,000,000,000). Officially, at least in the UK, it now means the same as the US (i.e. 1,000,000,000)

Note that 'billion' and 'trillion' themselves have multiple meanings [1] [2], even though most people use only the short scale.

[1] https://en.wikipedia.org/wiki/Billion

[2] https://en.wikipedia.org/wiki/Trillion

Yeah. It's called the long and short scale:

https://en.wikipedia.org/wiki/Long_and_short_scales

literally a thousand…

1000.

> Statistically, many "average" upper middle class people are very able to become low tier multimillionaires through a well educated upbringing and a good job, and good financial decisions over a long period of time.

That's why I addressed that. Retirement savings and home is a different sort of millionaire than someone with 50 million in the bank. What lifestyle choices are going to be visible in someone with 50 million vs a billion? The number of private jets they own?

Yes, there is a psychological difference. Super wealthy have hard time trusting people including their family, friends, etc. Some of them even suffer from paranoia. Just a couple of bad experiences are enough for them to become like that. For ordinary mortals like us, we just write off our bad experiences with other people as natural, not some extraordinary. Being lied to, being backstabbed, lying, backstabbing, colluding, etc are all part of human existence: either one directly experience it or heard through others' experience. That is a cost to pay to live among people.

In other words, the experience of one whose wealth is $2B is not same as the experience of one whose wealthy is $50M plus $1.955B. What one experiences in the world depends on how much weight one puts on everything one is involved in. Poor people give different weightage than rich people. Same event doesn't give the same experience to everyone.

But you said: "One is super, super secretive, who passes off as a multi millionaire."

To say they "pass themselves off as" means there is a visible difference in either what they own or how they act. What does that look like? Are you saying they pretend to trust? How is that apparent? I can't figure out what the obvious visible difference would be.

If a millionaire passes themselves off as someone with much less wealth they'll drive an old Corolla instead of a Mercedes. What's that equivalent here?

In some actions, yes, he wants to appear as successful multi millionaires. In some other actions, he sounds like a billionaire. That's why he is seen as a weird multi-millionaire. He is not cheap either, but doesn't trust anyone: he feeds you information, to see whether you share that with other people; he says, he trusts you, later he can send a private detective to see what you are up to.

I think, the root cause is this: just as FAANG engineers's social circle is fellow people working from FAANG, it is the same for wealthy, super, uber wealthy. You don't see a FAANG guy living in a mobile home surrounded by people who work in the blue collar folks.

Some folks don't want to involve in many social activities of the class they belong to, but want to be part of the lower classes. That's what I mean by 'pass themselves off as'.

If you think about it in terms of what kind of income you would make off interest of ~3% of the principal it’s easier to understand the difference between someone with 5 million vs say 50 and 500 million.

It’s the difference between $150k, $1.5 million, and $15 million dollars in yearly income. At 5 million you can decide to not work but you are only really able to afford an upper middle class lifestyle. Depending on where you lived that might be a working class income these days. So there is a massive difference across the spectrum of multi-millionaires.

You think $5 million a year only gets up upper middle class lifestyle? I don't think we share definitions...

That’s 5 million in assets from which you can derive a yearly income of $150k per year adjusted for inflation as time goes on.

Yes I consider 150k per year upper middle class.

Ah, I see. I misread your previous comment.

The wealthiest and most secretive are probably the members of the Rothschild family.

   Today, the family's total net worth is estimated at an eye-watering $400 billion, with some estimates ranging to an astonishing $1 trillion.

Ref: https://www.msn.com/en-us/money/personalfinance/the-richest-...

Archive: https://archive.is/pMypx

Anders Aslund, a Swedish economist and author, estimated this year that Putin has somewhere between $100 billion and $130 billion in assets—a calculation based on the wealth of Putin’s oligarch confidants, which could be between $500 million and $2 billion each.

Ref: https://time.com/6151695/vladimir-putin-wealth-assets-freeze...

That reads like something out of a tabloid in the checkout aisle of a grocery store.

It links to a website called “celebritynetworth”, which just based on the URL, has no credibility.

It seems like you stopped after the first paragraph.

Why should I? It even claims the richest family member is worth $10B, which is nowhere near the top of the list these days. It says $1T in the headline, how big is this family?

More likely is that this is a garbage clickbait article with no credible source.

> which just based on the URL, has no credibility.

It seems like you're proudly flaunting your own ignorance? The site has been around for more than a decade. What about a web site such as "Hacker News"? Sounds like I might get a virus if I visit that page!

What does the length of time the site is around have to do anything? The subject of the website, unverifiable information that they certainly do not have access to, is what makes it uncredible.

https://en.wikipedia.org/wiki/CelebrityNetWorth

If it was a .gov URL where the government is using tax returns and property data to estimate net worth, then it might be credible.

Discrediting a website just because of the name is not a valid argument against the content. Even though most hackers worship the government as a god, I can assure you that tax returns or property data won't even be close to accurate for getting the net worth of billionaires. They have funds and shell companies where the US government can't touch them.

The nature of this information is that it will always be unverifiable, but unless you have any sustainable criticism against the numbers on that website, you shouldn't disregard it completely.

> Even though most hackers worship the government as a god, I can assure you that tax returns or property data won't even be close to accurate for getting the net worth of billionaires.

I know, that is why I wrote “might” be credible, but most celebrities are not at that level, so tax returns and property ownership information might work.

> The nature of this information is that it will always be unverifiable,

>you shouldn't disregard it completely.

How you are squaring the above 2 thoughts is beyond me. I am going to continue disregarding it completely, because as you wrote, it is unverifiable, therefore the website is pulling the numbers out of their ass.

> How you are squaring the above 2 thoughts is beyond me.

A late reply so might not be seen, but that is what we as humans have to do every day. If you're in highly competitive business or if you're investing, it is just a fact that information you get will be unverifiable. You just have to act on the information you have, to your best judgement. It's even worse in politics and in war, where you have to expect active disinformation from every angle.

Well, can't be the most secretive given how everyone knows that they are "secretive". I'd ascribe them more to being private.

The secretive are the ones that we don't even know exist (i.e. a google search would give very little), let alone that they are billionaires.

Super interesting and not very well known history. Here’s a decently well done YouTube documentary about the family: https://youtu.be/IbWl40xgw0A

It's very funny to see Rothschild described as "secretive"; I thought they were one of the most well-known families in the world or at least in Europe.

How many of them an average person can name? And how many of those are still alive?

Name is known, but I don't think they are as individuals known very much at all.

There are multiple Rothschilds on the Forbes and Bloomberg billionaire lists. The family name is attached to many endowments, scholarships, museums, think tanks, hospitals, etc.

Virtually everyone who cares to look knows they're wealthy, but some conspiracy theorists prefer to act like they're a secretive cabal controlling the world, lol

Almost by definition billionaies are the cabal if nothing else due to their purchasing power.

The ones in the four comma club rule entire nations and fund wars and stay wealthy by obtaining ownership rights of conquered territories for a relatively low cost.

I don't know any of their first names but I also can't name the first names of any other well known wealthy families (off the top of my head walton, koch (I just know they are "Brothers"), dupont, bush)... I don't need to know the first names to know the families are billionaires

Dictators don't have wealth, they only have power. As soon as dictator dies all this "wealth" will disappear in a moment in thousands of hands.

For more on this, which I really don't recommend, google "South Dakota Dynasty Trust."

Why don't you recommend it?

Because it's depressing.

But what about it a Trust is depressing exactly? It's just a legal agreement for how wealth can be spent.

0 taxation on assets or income and it's available to people living outside of the state.

So rich people can avoid paying taxes.

It’s for avoiding federal taxes. The federal government can fix the situation anytime it wants, and it won’t matter where in the US people live.

Specifically for avoiding tranfer/inheritance taxes.

Any money actually paid out of the trust to a beneficiary is subject to that individuals federal income taxes.

> [A functioning federal government could] fix the situation anytime it wants

Money is a social construct, and it seems you are starting from the base assumption that wealth can be transferred infinitely and unrestricted between generations. Not everyone holds that view of money.

Isn't that the idea behind a nation or any other governance structure? The wealth built within the entity can be transferred infinitely and unrestricted between generations?

What's the difference if the structure is a government, religion, guild, corporation, cartel, mafia, family or Mars colony?

> Money is a social construct

Money and wealth, though often used interchangeably, are very different things. Money is one form of wealth. So whilst you are correct, it’s not the point you’re trying to make.

Wealth is absolutely not a social construct and never has been.

I’m not sure you actually read up about South Dakota Dynasty trusts nor the general context from these comments/post.

Instead, you appear to be asking a “simplistic” question feigning ignorance, rather than a serious attempt at understanding the problem.

You weren't lying.

> When Citibank based its credit card business in Sioux Falls, it could charge borrowers any interest rate it liked, and credit cards could become profitable. Thanks to Janklow, Citibank and other major companies came to South Dakota to dodge the restrictions imposed by the other 49 states. And so followed the explosion in consumer finance that has transformed the US and the world. Thanks to Janklow, South Dakota has a financial services industry, and the US has a trillion-dollar credit card debt.

> Fresh from having freed wealthy corporations from onerous regulations, Janklow looked around for a way to free wealthy individuals too, and thus came to the decision that would eventually turn South Dakota into a Switzerland for the 21st century. He decided to deregulate trusts.

> A Dynasty Trust can be free of estate taxes and protect the assets from potential creditors.

> Further, Dynasty Trusts can take the greatest possible advantage of a grantor’s gift tax exemption

> currently $12.92 million per taxpayer and $25.84 million per married couple in 2023

> and generation-skipping transfer tax exemption

> $12.92 million per taxpayer and $25.84 million per married couple in 2023

You weren't kidding... So how much wealth does one need to have in order to get one of these things?

> "Dynasty trusts can be created in South Dakota for families who do not live in the state. South Dakota allows trusts to continue in perpetuity, avoiding federal transfer taxes for generations. The state does not impose any form of taxation (income, dividend interest, capital gains) on these trust assets."

Can it be created by non-resident e.g. EU citizen?

Aren't there federal taxes?

What is the point for South Dakota if they don't collect taxes? Just being conservative assholes against the other states? Being ideological jerks?

There are still high-paying jobs for those maintaining this infrastructure as well as income for law and accounting firms serving them. Cashflow is always good even without taxes to collect.

Yes, there are many such cases.

Many billionaires out there that people do not know are billionaires. Not all wealth accumulated has been broadcasted out in the public for everyone to know, only the broadcasted has been broadcasted.

I liked the trust funds where you only get the monthly paycheck when you have a job. No matter just a 35 hours work week otherwise no pay. E.g. only get like $8-10k/mo when you work.

I like this model too, except it should function (maybe pro-rated?) at lower number of hours/week--not everyone should work "full-time"--and also include volunteering. Maybe also other unpaid labor like child-rearing and open source software development.

This still won't keep people from "calling J.G. Wentworth", blowing all their net worth on methamphetamines and then crashing into the hospital ER of the USA support systems:

https://www.youtube.com/watch?v=pdPM6j1Q4sg

The great American tax haven: why the super-rich love South Dakota: https://www.theguardian.com/world/2019/nov/14/the-great-amer...

>who passes off as a multi millionaire.

What does this look like?

Has a nice house, a second beach house, and drives a Lexus. Doesn't own any super-cars and flys business class rather than in a private jet. People think he's worth $3 million, not $1.3 billion. (I just made all that up.)

They don't appear on the lists because their companies are usually private and hard to value because Forbes and Bloomberg et al don't even know who owns what.

Take, for example, Jeff Yass, who didn't appear on Forbes until 2021. Well, according to the ProPublica tax leaks, he was not just a billionaire but someone who made over $1 billion in annual income(!) from 2012 upwards [1]

1 - https://www.propublica.org/article/jeff-yass-susquehanna-tik...

Can you go into a little bit more depth about what life is like for these people? What do they do? How do they keep it so secret? Etc.

I’m fascinated you can have so much wealth and benefit from it in proportion to its scale without giving the game away

And yet 70% of generational wealth is gone by the 2nd generation.

I was wondering the same thing. I've heard conflicting things and I'm not sure how to make sense of that.

I would imagine it has a lot to do with how wealthy the family was. It's easier for a single generation to waste 50 million than it will be for them to waste 50 billion.

Family sizes are also much smaller so the split of the inheritance will result in larger starting wealth for each generation.

One could blow through $50 million in a month and probably not even draw much attention. Wasting $50 billion is going to take a lot of dedication and hard work to achieve, especially if any of those assets are generating income.

I have no data, but I would hypothesize that the generational advantages do not disappear easily, even if a large chunk of the monetary value does.

Even just looking at from a purely monetary angle: maybe generation two manages to "lose" 70% of a $50 million inheritance. They've still got $15 million to start over with. Even if they lost 95% of the inheritance, they're still on a better financial footing than most with $2.5 million of capital laying around to rebuild themselves from. That's not enough to live like a king and never work, but if you're even remotely smart in managing that amount from somewhere in early to middle adulthood, that's still enough to at least never have a mortgage or worry about college for yourself or your kids. It's enough to start a successful small business or three as well.

But I think there's another angle on this. Even if the kids stupidly lose a lot of the cash, they're still riding on a ton of benefits from their enriched childhood: far better health thanks to a virtually limitless diet of high quality food and great medical care, the best schools and tutors, connection networks to all the other rich kids from their rich neighborhoods and schools, and learning (through osmosis if not explicitly) all about their parents and grandparents lessons of being in executive positions and how to invest wisely and preserve capital, what kinds of lawyers and insurances you should have, etc. Bottom line is they could literally set 100% of the inherited cash on fire and they'd still have a much higher chance of re-becoming wealthy than most.

Do you have a source for that? It's off quoted but I can't find how people arrived at that number.

Here's a counterpoint:

https://qz.com/694340/the-richest-families-in-florence-in-14...

How is generational wealth defined in that statistic? I know many people who had parents whom I would consider wealthy, but the kids don't make as much and the family are taken down a notch as the kids reach middle age. However, these "wealthy" people were doctors or lawyers, they did well and probably were in the top 2% of earners in their prime, but they were never worth many tens of millions. On the other hand, I think a billionaire's wealth can last for generations if set up properly in trusts, etc.

This is a stat that is never sourced and is mostly cited by the wealth planning industry that have an ulterior motive for making people believe it.

I’d love to see a rigorous backing of this stat.

That's because it's just not true in any meaningful sense. What happens is that the wealth is often transformed and split between separating couples, but it mostly stays in the same class.

The idea that generational wealth is lost is a great story though. It's part of the "American Dream". Anyone can do it. The "self-made" man. Rags to riches. If you spend any real time with the wealthy people—almost anywhere in the US—you know this isn't true. It happens, sometimes, sure. What you DO see is plenty of "millionaires" who saved 50% of their income for 45 years and get to retire at 65 with >2 million in the bank. There are tons of these people. This is what the wealth planning industry creates and it's what skews the statistics about these sorts of things. Poor for a lifetime for a taste of wealth at the end.

But man, the idea that, "70% of generational wealth is gone by the 2nd generation" is literally a joke. I can imagine it as the punchline to a joke where management is trying to convince to labor to work harder.

It's so easy to be wealthy when you grow up with money. And it's easy to stay there as long as you don't fall into a serious addiction of some sort. And even when you lose a bit it's easy to get back because the connections you have basically guarantee you income. Being born into wealth is damn near a safety net that lasts a lifetime. If you can earn the respect of a just 5 or 6 people in wealthy families you never really have to worry about money. And truth is, once you know 2 or 3 you end up with a dozen contacts. Your next venture is a phone call away. There is always a job for "talented people". That's the reality that people really don't talk about because why would they. It just pisses anyone off who isn't at that level.

When I see people talk about how most generational wealth is lost by the second generation what I have to assume they are talking about is someone who inherited $2 million or so when their parents died. Not because their parents were wealthy, but because they spent their entire life relatively poor (despite having some assets), saving for a day that never came, and then died at 70. So their kids grew up relatively poor, and suddenly at 40 they have a few million that they quickly piss away. That's a scenario that happens all the time that people are familiar with. That's technically generational wealth. But when I think about generational wealth I think about families that own land, businesses, assets. Families that own city blocks.

Truth is, if you show up at the elite country club for the first time at 65 no one is going to consider you wealthy, especially if you don't have the stories. The real wealthy people have been there since they were 15. Wealthy people have a lifetime of wealthy people stories that they like to tell each other. Real generational wealth is its own society.

My favorite factoid article about the concept of wealth sticking around in specific families:

https://www.vox.com/2016/5/18/11691818/barone-mocetti-floren...

As would I, but I think there's some pretty straight forward logic in favor of it. The richest of the rich tend to have a healthy number of children, both in the past and in the present. Bezos has 4, Musk has 11, Sam Walton had 4, Vanderbilt had 13, and so on. When people die they are going to be distributing their wealth not only to their children, but also their grand children, and perhaps even further along. And then this happens over and over again, each generation. If your children fail to have children, the fortune is gone. If your children don't grow the fortune, it's gone. If your children spend the fortune, it's gone.

Another issue is that I think we take living modestly for granted. Somebody born to the super-rich probably has a very different perspective on money and costs. It has to be quite the lesson to try to teach somebody the value of something when they have what likely seems like a practically unlimited amount of it, and but one life to live. So I think we can add another one to the above - if your values don't successfully transfer, it's gone.

A study of British surnames found that those families descended from Norman nobility (e.g. D'Urberville) from the 11th century Domesday Book are wealthier than those with common names (e.g. Darbyfield) today, almost 1000 years later.

https://www.theguardian.com/society/2011/apr/03/social-mobil...

Yes, the aristocracy is very much still alive and well in England.

Since America's founding, she's has had a bit more success pushing back against the concept, but our new aristocracy has definitely been grabbing a greater share of societal power as of late.

Also true in Italy: Today's rich families in Florence, Italy, were rich 700 years ago: https://www.vox.com/2016/5/18/11691818/barone-mocetti-floren...

Personally I'm leaving nothing to my kids. They benefited (or not!) enough from growing up with me.

That is not quite what your article says. The researcher found that if you look at the period of time after 1850, people with rich surnames earn about 10% more than people without, although the differences narrow rapidly each generation.

He then observed that if you go back to the Mid-ages and before, such convergence to the mean took a comparable amount of time. The example he uses is "Smith", which tended to be the last name of blacksmiths from simple villages in the 14th century. Yet by 1450 the share of "Smiths" at Oxford University was equal to their proportion across the general population (suggestive of upward mobility). And by 1650, there were as many Smiths in the top 1% of wealth holders as in the general population.

So his big discovery is that social mobility in modern times is, more or less, comparable to social mobility in ancient times, which most people would not guess. Personally I view this discovery as framing the past in a more positive light, rather than framing the present in a more negative light.

well you can read the study directly, the Guardian summary seems to be pretty poor if it's giving you the sense that differences narrow rapidly each generation — the study found social status is as heritable as height and can persist for 20 generation or more: https://eprints.lse.ac.uk/54515/1/WP181%20revised.pdf

It's intuitive. 1st generation, 3 children. They each marry and have 3 kids each. Those are now 15 people with a direct "right" to the wealth. Third generation all marry and have 3 kids each as well, now you have 51 people with a direct claim to the wealth. The family has grown from 2-51 in one lifetime, that's a 25x growth rate. But the trust money is probably in safe, boring investments that grow at modest rates, so the growth rate of the family simply outpaces that of the money over time to the point where it becomes trivial for the family members to piss it away

The thing about accumulated wealth is that the moment you spend it down, that chunk of it is gone forever and not coming back - it's very different from having a high income, which can support continued levels of spending over time. So it takes very cautious, culturally-ingrained attitudes to pass down such wealth for many generations. It becomes more of a cultural symbol or totem than anything really tangible at that point.

Oh, it's very much tangible. If you inherit 10M from your parents you can spend ~ 2% of it per year for the rest of your life and still hand down a larger nest egg to your children.

https://jamesgrubman.com/wp-content/uploads/2022/06/2022-06-...

It seems that the 70% "rule" is on very wobbly legs. I wonder if there are any actual studies - well, now I know what I'm doing this afternoon ;)

https://archive.is/cESKh

The affects of this are being proved out at a macro scale already with big tech. 5 companies now have so much cash on hand they can buy their way out of any issue that would disrupt them.

It means labor in any form is disincentivized to create as they will always been on not just the loser, by the hyper-loser side of the equation where their work is stolen and they get nothing in return.

Choose your parents wisely.

> Choose your parents wisely.

Or accept that your parents are your parents and they decided to have you.

From the point of view of the parents, suddenly things change: I fully knew I'd have the money to all least raise my kid well. Do all parents even think about that?

Mike Judge's Idiocracy movie is always a good watch.

Yet on the billionaire leaderboard the top-10 are: Musk, Arnault, Bezos, Ellison, Buffet, Gates, Zuckerberg, Balmer, Page, Bin.

Not one of them through inheritance. Sure, you have the waltons a little lower on the list.

As a person who started in the bottom decile of wealth I want to hate inheritance at least as much as the next person. But at first glance it sure doesn't look good for these "researchers".

boy, i wonder if these researchers maybe did more research than casually glancing at at top 10 list on the internet?

> boy, i wonder if these researchers maybe did more research than casually glancing at at top 10 list on the internet?

The "researchers" were the Union Bank of Switzerland. "UBS manages the largest amount of private wealth in the world, counting approximately half of the world's billionaires among its clients." https://en.wikipedia.org/wiki/UBS

I think though that most of the people on that list had their net worths decrease last year. To my understanding this article is pointing to a pretty short-term trend, though maybe an important one.

people have fewer children today, that concentrates any inheritance, including among people of modest means. depending on the statistics analyzed, people of modest net worth with one child could contribute to an overall upward skew.

> Yet on the billionaire leaderboard the top-10 are: Musk, Arnault, Bezos, Ellison, Buffet, Gates, Zuckerberg, Balmer, Page, Bin.

According to Forbes there are 2,6k+ billionaires, so the top 10 is 0.3% of that.

Weighted by wealth?

Musk: Rich father, emerald mine money?

Arnault: "In 1971, he graduated from the École Polytechnique, France's leading engineering school, and began work for his father's company. Three years later, after he convinced his father to shift the focus of the company to real estate"

Gates: "His father was a prominent lawyer" "At age 13, he enrolled in the private Lakeside prep school, where he wrote his first software program" "Microsoft co-founders Bill Gates and Paul Allen first met as teenagers in the late 1960s at Lakeside School in Seattle"

Zuckerberg: "My dad, funny enough, right before each of us went to college offered us the options of going to college or like investing in a franchise and running it,” sister Randi Zuckerberg told CNN Business’ Laurie Segall of her dad’s offer to his son and each of his three daughters.

They may not have literally handed their kids a sack full of money, but you can't argue that people like Arnault, Gates, Zuckerberg are not largely where they are today due to their parents wealth.

It's disguisting how we praise these people and consider them "just like us".

Yeah, they all came from families that gave them a significant advantage over their peers. They could all afford to fail at entrepreneurship, and not have their life turned upside down by it.

oh, and according to https://en.wikipedia.org/wiki/Lakeside_School_(Seattle)

> Annual tuition $40,080

Does your parents spending $160,000 to send you to high school not count as inheriting wealth ?

largely lol, this is class warfare silliness. Zuck is largely a billionaire because his father offered to pay for college? Have you read up on the so called "emerald mine"?. And how many lawyer's kids do you know that are billionaires?

When you have the casino stake you for $1000 before you even sit down to the table, you can afford to take more risk than if you sit down with $100 of your grocery money. That doesn't guarantee you'll win but it's much easier to take a shot. Does that make more sense?

> Not one of them through inheritance

Gates grandfather was president of a bank. Gates left his prep school for Harvard with a million dollar trust fund. His mother was on a board with the chairman of IBM which helped launch Microsoft into the big time.

Buffett's father was a congressman. His grandparents owned a chain of grocery stores.

Zuckerberg's high school was Phillips Exeter Academy. Currently tuition is over $50,000 a year - for high school.

I genuinely find it absolutely infuriating that so many people actually think any of those people are self-made.

They all had rich parents that provided a massive safety net in case their ventures failed.

For over 90% of the country, if they quit their day jobs to try out some business venture, they'd be bankrupt within a few months just from living expenses, let alone business expenses. Half the country would probably be out on the street within weeks as they wouldn't be able to pay the rent.

57% of Americans can't afford a $1,000 emergency expense [0]. For these people, even if they didn't quit their day jobs, they'd have an extremely difficult time getting a business off the ground.

[0] https://fortune.com/recommends/banking/57-percent-of-america...

> But at first glance it sure doesn't look good for these "researchers".

If this surprises anyone, I have a waterfront property to sell them in Reno

I think the change is interesting. Perhaps the fact that there was a recent period in which this was not the case is more interesting.

FWIW, there IS a river that passes through Reno, not to mention a couple tiny lakes, so it could be possible to have waterfront property.

You can list it at https://www.nevadarealestategroup.com/reno/riverfront-homes-....

When you have the assurance that you'll get wealth handed down to you, it opens up the possibility to explore things you're good at and take on more risk to amass greater wealth.

So really, it's a push and pull situation. Billionaires do indeed know how to get rich but they're from stable backgrounds which permits them to do so.

Meanwhile, most of us are stuck at 9-to-5 jobs and worried about making good on our interest payments.

You can also explore things you're terrible at. Just being able to afford to do them and promote yourself gives you a huge advantage over other people in those fields.

There are a lot of these people in the arts. Some are quite well known.

This kind of inherited wealth is hugely distorting emotionally and psychologically. In fact any significant fame is, because you lose touch with ordinary concerns. You're more likely to surround yourself with yes people - not just because they fluff you, but because they feel like a known and (somewhat) trustworthy quantity.

When there are huge numbers involved you can only really spend time with people who have similar resources.

This complete disconnect is incredibly corrosive.

I mean, you'd hope so but if you look around at the offspring.. mostly not. Trust fund kids end up in nepobaby jobs in media/acting/modeling/music/politics, in senior roles in family businesses, or getting really into things like equestrian riding.

Ever look at what for example.. Gates/Jobs/etc kids do for a living?

That's partially true, but I've very much seen the flip side as well. I know a few people that had trust funds, and for them it was absolutely the worst thing that could have been given to them. It basically stunted their growth to the point that they never really escaped the orbit of their parents because their parents always had the "leash" of paying for their lifestyle.

Obviously that experience isn't universal - there are plenty of wealthy families that grow their wealth over generations, but I think it's more the case that these families cultivate their social standing, relationships, and businesses, so it's not like they're just burdened with wealth alone.

Wealth is a multiplier. If the kid is a bump on the log, they’ll be even more of one with more money. If they’re driven to succeed, they’ll be able to accomplish much much more with money that can fuel their endeavors.

Look at the the old rich families that own retailers (Aldi and Lidl) or car makers (Porsche and BMW) or equipment manufacturers (Liebherr). And the new online millionaires. They all look like school pupils compared to old riches.

Wealth creation is a modern carrot. The wealth creation barely works in old economies with established power networks.

There really should not be any reason at all for billionaires to exist, if you can find one then that alone means your government is not good enough and needs improvement, NOT that billionaires need to exist.

Alright, I’ll bite. Pick a billionaire and tell me what should have happened such that they wouldn’t be a billionaire.

Here's a chrome extension I wrote to bypass the ft.com paywall if folks are interested: https://github.com/arkadiyt/free-ft

Since this is paywalled, here's the start of the article:

New members of the global super-rich gained more of their assets through inheritance than through wealth creation this year — the first time that this has been recorded by Swiss bank UBS in its nine years of surveying global billionaires.

Old billionaires are dying faster than new billionaires are being created (by things other than inheritance). Or more precisely, the total wealth of the billionaires who have died is bigger than the total wealth of billionaires who became billionaires by something other than inheritance.

But this wasn't true a decade ago. So wealth creation (at billionaire scale) is slowing down?

I suspect that wealth creation peaked generations ago, and now the richest generation is dying.

Also could be that tax "avoidance" is at an all-time high is a contributing factor.

Or a lot of billionaires are dying right now (Charlie Munger comes to mind)

A whole 9 years? Maybe this has more to do with the end of ZIRP monetary scheme than the already established fact that we live in an oligarchy.

That possibility is explicitly made in the article

Don‘t work hard, inherit hard!

This is not a meaningful statement if we assume that on average each billionaire has more than a single child.

Why should one even try anything at all?

There's still money to be made everywhere. It's just hard to compete in the markets against the entrenched giants that have been around since the 1800's. I feel there's more a shift towards making money "entertaining" than there is to made through the standard business model.

At what point in history do you think it has been easier to compete against giants?

Since the money is literally created out of thin air by your rulers, you will never be able to beat them at their own game, or even have half a chance of a fair fight.

Everybody around you worships until death this money that is created by the rulers, even though they can see with their own eyes that it's made of worthless paper. So strong is the spell.

This doesn’t appear to breakout by country. This isn’t surprising for more socialist countries like in the EU where it is harder to start and build businesses (wealth) in general. I’d be surprised if it was the same in the US where studies have shown that the majority of wealth is not inherited.

This is a common sentiment, but surprisingly it's quite easy to start a business in a country with a more developed social net because the failure consequences are much less severe.

It’s not a sentiment it’s statistics. Look at the number of successful businesses that result in wealth creation.

Feel free to show statistics.

Here's one that shows that Sweden has indeed been more entrepreneurial then the US (2019), see sources at the bottom: https://cepr.org/voxeu/columns/how-sweden-became-more-entrep...

That's how it looks in theory, but in reality, the countries with lesser social safety nets are where people start businesses most (look at the US compared to Europe).

I think it has more to do with a culture that encourages and glorifies entrepreneurship than the safety net.

Which is why the FAANG and Microsoft and all the tech really comes from France right?

"Easy to start a business" does not mean "produce FAANG level".

You got it wrong. It is easier to start a business in the "socialist" scandinavian countries than it is in the US.

https://archive.doingbusiness.org/en/rankings

Your link shows the United States out ranking Norway, Sweden, and Finland on their ease of doing business score which appears subjective compared or hard numbers of successful businesses. Are you sure you read that page right?

The discussion was about "starting a business" which is also a metric on that site.

The US ranks 55th in that category.

It was about building wealth through starting a business.

>It is easier to start a business in the "socialist" scandinavian countries than it is in the US.

If you can't keep track of your own words, there is no reason to pester other with them.

Socialist is really not the word I would use. "Less egalitarian", "more classist" are better descriptors. Access to capital is more restricted in countries like Germany compared to the US. This is both due to more conservative financial regulations, but also because the wealthy classes who own the capital are more of an insular group who are less keen to invest in members who are not already part of the club.

Economic class mobility is higher in most of those socialist countries. Maybe new business wealth specifically is more difficult, but I'd rather people have multiple routes to building wealth and more success overall than to solely focus on risky entrepreneurship.

something something bootstraps.

It’s funny reading all of the confabulatory responses generated by this article, with sparing if any skepticism.

Doubly so given that the article itself points out that the interest rate environment may have simply made it harder to generate new wealth and so necessarily biases transfers vs creation.

How's amassing through inheritance instead of squandering is a bad thing?

I know a lot of people who are poor because of lack of skill or bad habits.

That's a false dichotomy. Redistributing =/= squandering.

How is it different? Squandering typically means spending, which means the money is re-entering the economy, typically to people at lower rungs of the wealth ladder, and is not much different than other forms of redistribution.

Unless you mean the squandered billions was through literal setting piles of money ablaze or losing it all in a poker game to bigger billionaires, it seems if redistribution was the goal then squandering should be encouraged.

To me, the true horror is when its spent on worthless or awful things, wasting limited resources, and the better part of peoples lives

> Squandering typically means spending

Squander means to spend thoughtlessly or foolishly or wastefully. It's not a synonym of "spend".

in terms of usage, if I say "people should buy what they need and on top of that they should not spend (lest they find themselves spent)" you know exactly what i mean. Especially expensive items are spendy. Spend carries a connotation of waste and exhaustion. Save and invest your surplus, don't spend it, don't spend your savings.

Concentrated inheritance is investing in one person's (or a small number of people's) success.

Taxing inherited wealth, and using the revenue to support infrastructure, education and research, is investing in many people's success.

If the bar for being successful is to inherit a pile of money that means you never have to worry about anything ever without losing it all, then boy is that a low bar.

Plenty of people with a stupid amount of money lack skills and have bad habits. The difference is if you’re born poor you’re at a disadvantage from the jump. It is harder to climb out of poverty than to lose hundreds of millions of dollars of your inherited wealth. Give me a break. Good grief.

Obtaining skills costs money and time. People in poverty are less likely to have the money needed and the free time to do so because they’re working a ton of hours at a low pay rate. Someone born into extravagant wealth doesn’t have to worry about survival and can do whatever the hell they want, even if it is to work hard and obtain skills via education, they have the time and resources to invest.

I’m not going to claim everyone with money didn’t earn it, but many don’t and the generational transfer of wealth is a problematic at the scale it has gotten to.

> Plenty of people with a stupid amount of money lack skills and have bad habits. The difference is if you’re born poor you’re at a disadvantage from the jump.

the glaring error here is to bring up people's lack of skills and good habits, and to conclude that the main disadvantage of being poor is the lack of money. It's a bit of an assumption that abolishing the rich is going to lift people from poverty to the middle class.

Are you kidding? How does someone go about obtaining skills? Education is expensive, even trade school. Not having to worry about living expenses or being one unforeseen major expense sinking you gives you huge leg up on obtaining skills.

Sure you can work from an entry-level job all the up to the top. How many people can do this? Meanwhile if your parents pay for you Ivy League education you walk your way in to a well-paying job.

Being poor is a disadvantage and to pretend like it isn’t is to literally deny reality. It impacts literally every aspect of your life in negative ways. Terrible food is cheaper. Healthcare is expensive. Meeting your basic needs as a human is an incredibly taxing process when you’re living paycheck to paycheck and trying to support yourself.

I’m not saying “Abolish the rich” even. But the kind of transfer of generational wealth we have now is a detriment to society.

We let the rich have and keep more of their money than ever before. The wealth gap isn’t a gap anymore, it’s an abyss that you couldn’t ever hope to see the bottom of.

Your edited comment brings to light the concept of survivorship bias.

It’s important to recognize that there could have been farmers with superior skills and work ethic who, due to factors beyond their control like luck or chance events, still find themselves in poverty. To attribute financial success or failure solely to personal habits or skills is an oversimplification that ignores the multifaceted nature of wealth and poverty.

I grew up with a lot of people who lack skills and have bad habits because they were poor.

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