What Comes After Rich Baby Boomers? Kids With a Big Inheritance | Hacker News Reader

What Comes After Rich Baby Boomers? Kids With a Big Inheritance

nytimes.com

19 pointsapplecore25 comments

This is one of the more whiny-er pieces I've read from the NYT.

There's going to be rich people out there. Get over it and stop acting like the cards are always stacked against you. Yeah, it sucks not being loaded. Yeah, I wish I were rich. Sure, things would be easier. Do I spin my wheels thinking about the inheritance baby boomer kids will get from their rich parents? No. I'll spend my time thinking how I'll build my own 'empire'.

I think it's time to talk about intergenerational wealth transfer as one of the key factors inhibiting social mobility in the US (which is lower than most other industrialized countries, and in fact the single greatest predictor in your wealth during your lifetime is your parents' wealth) (1)

It seems from an equity standpoint /and/ from a meritocracy standpoint we would do better as a country to inhibit intergenerational wealth transfer much more than it currently is to provide for a pot where kids inherit from society as a whole (whether that looks like investment into services like free education or whether it looks like a basic savings account releasable to all children on tehir 18th birthday is left up to discussion)

(1) http://www.brookings.edu/research/reports/2013/06/13-facts-h...

One of the reasons people continue to work long after they have enough money for the rest of their life is the promise that they can give their children the excess. I bet there are a bunch of unintended consequences in changing this incentive.

Kids with a big inheritance spend and invest far more than the people who made it. These are your future customers. These are your future investors.

They may also donate more and spread their wealth more effectively than the government, which funnels tax money into the military-industrial complex.

Are there facts behind this? Because my anecdotal experience is the complete opposite.

Do you have any numbers on that? It seems a lot more common for very wealthy families to tie up their money in trusts that their children can't access, both to avoid taxes and to ensure there will always be a giant pile of money generating low amounts of interest. Plus, don't the kids lose an incentive to innovate? Where does that cost factor in? If you already have one private jet, the marginal benefit of another isn't that big.

not sure why somebody downvoted this. All of the very wealthy people I've met who got that way through inheritance don't have piles of gold in a vault. They have a guaranteed income, and access to all kinds of assets like houses, vehicles, memberships, etc. They don't have millions to invest.

FYI an easy way to get around the nytimes paywall is to open the link in an incognito/private window (no cookies).

I got more useful information from this comment than from the article itself.

or disable javascript

I right-clicked and selected "view source". Got me the content, no images, but it didn't seem like the sort of article that needed them.

The article doesn't do much to offer a solution (if you believe there's a problem). Inheritance taxes? Gift taxes? The article points out that most wealth disappears in 3 generations. Look at the Vanderbilts as an odd example. Cornelius knew the 3 generation rule, and left his entire fortune to his oldest son, leaving his daughter and other (mentally questionable) son out of his will. His son is considered a great business man, who expanded the empire. But even that vast wealth still disappeared 2 generations later, on Newport mansions and the "lifestyle".

Also, I'm amazed every time I read the stat that the top 1% owns 35% of the wealth, more than the bottom 90% owns. (Does that imply that the 9% upper class own up to 30% of the wealth?).

As to the question of wealth ownership, this pie chart from wikipedia may be helpful: https://en.wikipedia.org/wiki/File:U.S._Distribution_of_Weal...

    The Top  1% owns 34.6% of the wealth
    The Top  5% owns 61.9% == 27.3% + 34.6%
    The Top 10% owns 73.1% == 11.2% + 61.9%
    The Top 20% owns 85.1% == 12.0% + 73.1%
    The Top 40% owns 96.0% == 10.9% + 85.1%

> Also, I'm amazed every time I read the stat that the top 1% owns 35% of the wealth, more than the bottom 90% owns. (Does that imply that the 9% upper class own up to 30% of the wealth?).

Yes [1]. And the falloff rate is staggerring as you move further down from the top wealth-holders.

[1] http://en.wikipedia.org/wiki/Wealth_in_the_United_States#Wea...

I don't think the title of the article ever implied they would be offering a solution. It's vaguely informative and speculative, as with most news articles. There's nowhere in there that they claim it's a thesis on how to solve inequality.

It's just the 80:20 rule as applied to income/wealth recursively (20% of 20% of the population has 80% of 80% of the money), as you can see (almost exactly) from the wiki chart quoted below.

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