11 ms·

The richest families in Florence in 1427 are still the richest (2016)

338 points by SQL2219 10y ago

tristanj 10y ago
Article is from 2016, and had extensive discussion last year https://news.ycombinator.com/item?id=11731890 https://news.ycombinator.com/item?id=11731890
true_religion 10y ago
This only feels surprising to me because in England, aristocratic houses tend to last only 100-200 years before losing their name by being subsumed into another, renaming due to politics, or vanishing in some other way. The House of Windsor only formally dates back to 1910. However if you trace it via the Mountbatten line, it'll rate as being as old as 1567, since it comes from a branch of the House of Hesse-Darmstadt in the Holy Roman Empire. I think there's 3 things that might cause this: - I am thinking that Florencian plutocratic houses simply never rename themselves. The Medici family for example continues to exist today, holding some minor titles. - I think it also helps that Italian aristocrats were heavily involved in trade, and other mercantile professions so could continue to hold wealth and power after being deposed from statutory privilege. English aristocrats on the other hand, often only hold value in land. - The English have historically allowed women to inherit, so family names are lost due to inheritance, enriching others with the same bloodline but different names.
- caf 10y ago
  Holding value in land typically means involvement in agriculture, though.
  - AnimalMuppet 10y ago
    Yes, but agriculture became less a source of great wealth during the industrial revolution. Trade probably continued to be quite profitable, though.
    - MagnumOpus 10y ago
      Agriculture isn't the way to riches anymore, but holding all the former farmland is. Say your ancestor Rich Grosvenor owned the village of Belgrave near Westminster Cathedral and the farmland around it - then just by holding on to it, watching it as it becomes prime urban real estate and living off the million-pound rents you and your children can't avoid becoming billionaires a dozen times over. Then you can proceed to buy and sell the British government and media at your pleasure, having been made a duke and a lord of the realm...
      - pcrh 10y ago
        This phenomenon is exacerbated by selling leases rather than freehold rights. A leasehold may expire after 99 years, at which point it reverts to the original freeholders and can be sold again. In this manner the same land can be sold repeatedly, generation after generation, and is how the Grovenor family acquired such huge wealth.
      - joshuaheard 10y ago
        In America, we call a version of this "redneck retirement" where a rural landowner is able to sell his property to a real estate developer when it is subsumed by urban sprawl.
      - AnimalMuppet 10y ago
        That only works if your land is located in the right place, though. I suspect it didn't work as well in, say, the Midlands.
- deleted 10y ago
  [deleted]
- bootload 10y ago
  "The House of Windsor only formally dates back to 1910." House of Wetten (1030) -> House of Hanover (1710) -> House of House of Saxe-Coburg and Goth (1826) -> House of Windsor. There is a long lineage for the Windsors. Note the name change in 1918 from Saxe-Coburg to Windor to avoid diplomatic incidents by association. To get an idea of the breakdown of English aristocracy and estates, read this insightful article by Charles Spencer, "Enemy of the Estate" ~ http://www.vanityfair.com/news/2010/01/english-aristocracy-201001 http://www.vanityfair.com/news/2010/01/english-aristocracy-2... "I am thinking that Florencian plutocratic houses simply never rename themselves." Yes, that's what it looks like.
- cannonpr 10y ago
  Your comment about the Medici line confused me a bit since I believed them to have ended quite a while back, however there do appear to be two cadet lines still around. When do you generally consider a line over for the purposes of the study ?
- cannonpr 10y ago
  Your comment about the Medici line confused me a bit since I believed them to have ended quite a while back, however there do appear to be two cadet lines still around. When do you generally consider a line over for the purposes of the study ?
irrational 10y ago
"While it comes as little surprise that families pass on their wealth to their children, it’s still somewhat remarkable that these families were able to maintain their wealth through various sieges of Florence, Napoleon’s campaign in Italy, Benito Mussolini’s dictatorship, and two world wars." When you are a part of the Illuminati, anything is possible!
- analognoise 10y ago
  Username checks out.
  - irrational 10y ago
    Oh cmon! That was funny!
at-fates-hands 10y ago
I wonder if at some point inheritance of the family wealth was dependent on having a viable offspring to pass the wealth onto. The article does not mention this, but in the 14 and 1500's, I can only assume at some point it was.
rwinn 10y ago
This is purely anecdotal, but I live in Florence and know a couple of people from the "old-money" families and they are not rich by todays standard. They make a modest living renting out and managing the properties handed down through the generations and have to be frugal to make it work. Also, you should be very sceptical of any study made using Italian tax records as a data source :D
- stefantalpalaru 10y ago
  > They make a modest living renting out and managing the properties handed down through the generations and have to be frugal to make it work. Those rich real estate owners are not frugal because they need to. They are frugal because they are smart. Don't judge their wealth before seeing their tax haven bank accounts.
- kobeya 10y ago
  That describes everyone who is from old money. Those who aren't frugal and cost conscious see wealth exit their family within a few generations.
mavelikara 10y ago
From before: https://news.ycombinator.com/item?id=11731890 https://news.ycombinator.com/item?id=11731890
conistonwater 10y ago
> taxpayers data in 1427 was digitized and made available online Wow, the Renaissance was really ahead of its time.
- motoboi 10y ago
  If I recall correctly, they invented banking. So, yes, they were really advanced.
  - vixen99 10y ago
    Yes, indeed because it allowed wealth creation (=businesses) to flourish. Lending is an act of faith in the future.
ChuckMcM 10y ago
This makes for a great headline but fails to capture the entire picture which would include "families that are rich now and weren't before" and "families that were rich then and aren't now". Another interesting statistic has families that were made wealthy in a short time by circumstance (lottery, judgement, IPO, etc) and are still rich, vs those that lost all of their wealth again. It seems the best way to have the family wealth hang around is to create an institution with it that has as its mission to manage that wealth. Too much control by family members is strongly correlated with losing it all (which isn't too surprising when you think about it). Wars and conflicts are the large redistributors of wealth. Not that it's a fun way to do so.
- brudgers 10y ago
  I don't disagree. On the other hand, if I had to pick a strategy for being rich in year n+1, I'd choose being rich in year n.
- xenadu02 10y ago
  The Freakonomics podcast covered this. There have been small-scale examples of this sort of thing but the best researched one is from Georgia. The tl;dr is that the government stole a huge chunk of land from the Cherokee but the white public got really angry because the politicians intended to split up the land among themselves. To avoid being tossed out of office they setup a lottery and distributed the land randomly. About 20% of Georgia's white population at the time got a huge chunk of land for free. The study shows it didn't have much of an impact on families over the long-term. The paper: http://www.nber.org/papers/w19348 http://www.nber.org/papers/w19348 The podcast: http://freakonomics.com/podcast/would-a-big-bucket-of-cash-really-change-your-life-a-new-freakonomics-radio-podcast/ http://freakonomics.com/podcast/would-a-big-bucket-of-cash-r...
mjfl 10y ago
I don't understand this. Assuming no inbreeding, families that consistently have 2 kids roughly double in size every generation - a 600-year-old family would have 1 billion unique descendants by now. Of course, there is a ton of inbreeding - in the technical sense - but I still have a hard time imagining a 600 year continuous family line that isn't a pretty arbitrary chart of certain descendants here and there. It's very probable that some of them became poor too!
- dsymonds 10y ago
  Your maths seems off. 600 years at, say, 25 years per generation, yields 24 generations. Doubling each generation gives a factor of 2^24, or around 16 million, not 1 billion.
  - smallnamespace 10y ago
    He just got to 2^30, which implies a 20 year generation time. Pretty reasonable before the 20th century.
    - trapperkeeper79 10y ago
      This is hilarious. Given that the world's population is 7 billion today, we started with (7x2) people 600 years ago? LOL. Doesn't check out.
      - nom 10y ago
        Hilarious indeed. Are you aware that people die? :D
        vitaminbandit 10y ago
        Clearly just a rounding error... ;)
        OscarCunningham 10y ago
        It's not forgetting death that's the error; it's forgetting that people have 2^30 ancestors from 30 generations ago rather than just one. Everyone's family tree grows exponentially, but they all overlap.
acomjean 10y ago
One of the reasons Bill Gate's father among others were campaigning against the repeal of "Estate Taxes" was so we wouldn't have a permanent wealthy class in the US. (Estate taxes are taxes paid on your money when you pass away before being distributed. Right now I think its only on holdings over 5million) http://billmoyers.com/2015/04/18/william-gates-sr/ http://billmoyers.com/2015/04/18/william-gates-sr/
- wahern 10y ago
  Unfortunately, several states have repealed the common law rule against perpetuities entirely. Long story short, rich people can create trusts that pay a steady income to their families for as long as they want, including for hundreds of years. There's no estate tax upon your death because the assets were already transferred. The assets aren't taxed on transfer, either, but only as they're paid out to the beneficiaries. The effect is as if the original grantor (your great Uncle Gates) was immortal, giving out stipends to his descendants. You don't hear about this much because the state laws are only a few decades old, but the repercussions play out over generations. It'll become a thing in another 100 years or so when people finally realize what's happening. Before this the trick was to use corporations. Maybe nominally non-profit, but mostly existing to employ the descendants. That's still a good idea depending on what you're trying to accomplish. Like with trusts you create it in a state with friendly legislation. It sucks that conservatives are so hell-bent on repealing the estate tax, but it's really not a battle worth fighting over. The war was lost long ago. What nominal revenue the estate tax brings in has been shrinking for awhile, and it'll eventually shrink to nothing. At this point people are just fighting for an idea. And I literally mean _just_ an idea. Retaining the estate tax won't stop anything, and it might give people a false sense of comfort. Maybe better to let it get repealed, then hope that in a few generations there's enough backlash to not only restore the estate tax, but to foreclose the alternatives as well.
  - walterbell 10y ago
    Do you have a reference on the states and trusts which need to be foreclosed?
BurningFrog 10y ago
Fun anecdote, but to say something universal about families and wealth over centuries, you'd have to look at vastly more regions. Especially since this is talked about for being so different from the norm.
Nomentatus 10y ago
No article last year held me in such horror as this one. I haven't dared even discuss it with anyone until now. It still takes my breath away. Especially because the U.S. now has less class mobility than most of Europe does. Automation is likely to be a "Yuuge" force multiplier for societal stratification; certainly modest minimum annual income grants aren't going to change that. All my life I've wanted to believe everything this study disproves. My parents and grandparents worked very hard for their kids because they didn't thing this was really the way the world worked. But it certainly is. If I want to become damned depressed all I have to do is think about it. There's no reason not to enjoy the day 'cause of it, but it is more than a little demotivating.
- JumpCrisscross 10y ago
  > the U.S. now has less class mobility than most of Europe does Europe is big. I don't think the United States is less mobile than Italia.
  - refurb 10y ago
    You also have to account for the "spread" in classes. If income equality is lower, there is a greater spread in income from the bottom to the top. And the inverse if income equality is higher. Thus, you could have someone in the US start out making $30K, then make $200K over their lifetime. Due to the spread in "classes", they might have only jumped up on class even though their income went up 6x. In Europe, where the classes have less spread, someone could have gone from $30K to $100K and gone from the bottom to the top class. Yes, mobility across classes is greater in Europe, but the American has the bigger increase in income.
- kriro 10y ago
  I have had heated debates over inheritance taxes. I'm strongly against them because I don't like the signaling effect (if you work really hard, the government will take half of it) and it's a strange form of multi-taxation which is also questionable from my POV. I'm very family driven and I think "working hard to make the life of your children better" is a very strong motivator that should not be underestimated. The counterargument is usually "well let's set the cap at X million" which I find very problematic because I don't see an ethically sound way of defining these lines in the sand. Additionally in the age of webscale(tm) it's reasonably possible to start a "new dynasty" from scratch. Unfortunately most of these debates tend to boil down to "the rich are evil" which is usually when I use interest in them. I've only roughly browsed the study but the effects aren't that big compared to compound interest from 1427 to now. If anything I'd argue the rich are still rich but not as rich as expected is the take away message.
forkandwait 10y ago
"the history of all hitherto existing society is the history of class struggles" -- Karl Marx, Communist Manifesto.
- valuearb 10y ago
  To a man with a hammer, every problem is a nail. To a man with a hammer and sickle, every problem is a class struggle.
  - piaste 10y ago
    That is a brilliant aphorism. I shall make good use of it.
  - realusername 10y ago
    To a liberal, every problem is a market problem
Proven 10y ago
To a normal person the title is an argument against taxation. To a socialist it's the proof that taxes ought to be higher.
- trome 10y ago
  Anything but, the title literally states that social mobility in Florence is very low, and that capital is more valuable than labor. Bring back the death tax at 90%!
  - geon 10y ago
    He is calling you a socialist, and implying that you are not normal.
    - trome 10y ago
      I know and get that, he is an extremist that believes that the landed gentry deserve to rule over the landless serfs. I oppose that destructive policy, as it is a great way to stifle society as a whole and ensure we slide back towards the dark age.
      - eigenmeister 10y ago
        Don't straw man his argument like that. I take it we both consider social mobility good for society. In that frame, defend the estate tax - does it improve social mobility? More than it costs? More efficiently than, say, a Georgist tax, or a basic income?
BuffaloBagel 10y ago
Makes a good argument for the inheritance tax
- TomMarius 10y ago
  Why is this so bad it needs to be taxed?
sologoub 10y ago
From the original source: "Stated differently, being the descendants of the Bernardi family (at the 90th percentile of earnings distribution in 1427) instead of the Grasso family (10th percentile of the same distribution) would entail a 5% increase in earnings among current taxpayers (after adjusting for age and gender)." http://voxeu.org/article/what-s-your-surname-intergenerational-mobility-over-six-centuries http://voxeu.org/article/what-s-your-surname-intergeneration... So 5% extra as the result of being related to a wealthier family 600 years ago. While definitely remarkable when considering how much happened during that time that should have destroyed wealth, it's far from apocalyptic. There seems to be no implication that the descendants do not have to work either, just that they earn slightly more.
- MagnumOpus 10y ago
  On the contrary, it is staggering that a result is still present after 30 generations of splitting the family wealth. Even on the assumption that the rich only have 2-3 children, a billion-dollar inheritance should be diluted to nearly nothing after 15 generations. And with the 4-8 children that were usual back in the day, in less than 10 generations. Having such a massive difference that it can be traced by very low-powered population statistics after 600 years means that the effect on having a head start in terms of wealth is enormous on your potential to stay wealthy.
  - rconti 10y ago
    But it's earnings, not wealth. 5% isn't that much. 5% might be name recognition leading to more favorable outcomes when searching for employment. Hell, it might be genetic -- 5% might be from merely being TALLER.
  - Mvandenbergh 10y ago
    >Even on the assumption that the rich only have 2-3 children, a billion-dollar inheritance should be diluted to nearly nothing after 15 generations Not if your children exclusively marry other wealthy people. Then the rate of dilution depends primarily on the growth in the overall population of the wealthy in each generation. The Italian population overall has quintupled since the 1400s, even if we make an allowance for the wealthy having more living children who reproduced, the wealth will not have diluted away completely.
dimitar 10y ago
http://www.aiel.it/cms/cms-files/submission/all20150614183657.pdf http://www.aiel.it/cms/cms-files/submission/all2015061418365... - link to the actual paper
randyrand 10y ago
This is hard to believe. Over 600 years, a family of 4 becomes a family of thousands. Take any reasonable sum of money and divide it by 20,000 and its not that big of a sum of money anymore.
- FooBarWidget 10y ago
  I don't think money works that way? Think of the family wealth as starting capital that gives decendants better education, an environment that simulates growth, etc. They take a piece of the family wealth and grow it bigger through good jobs, investments, companies, etc.
- pjc50 10y ago
  Not in a patriarchal society: only the male inheritance counts as "family" there.
gmunu 10y ago
Not surprisingly, the qz.com article distorts the meaning of the original paper and looking at the comments, they seem to follow the false, but suggested interpretation of the paper that qz gives. It's useful to note the title of the paper: What’s your (sur)name? Intergenerational mobility over six centuries. This paper is not tracking wealth, it's tracking income via tax records. It notes things like people who are lawyers or bankers now were more likely to share surnames with people in similar professions in the 15th century. It is not tracking inter-generation transfers of wealth. In fact, qz even drops the most interesting conclusion in the article, which is their measurement of changing intergenerational income mobility overtime. They measure inelasticity at > .8 in Renaissance Florence and a generally static society until the industrial revolution, with inelasticity coming down starting in the 20th century. The article isn't about secret trusts set up by the Medici, but the more prosaic fact that if you father and grandfather were lawyers, you're more likely to be one too. Still interesting, but it's not evidence that families were "able to maintain their wealth" through revolutions at all.
- yummyfajitas 10y ago
  This also looks like it's more work in the same direction as the "The Son Also Rises" ( http://amzn.to/2jFnUmZ http://amzn.to/2jFnUmZ ). There are actually a lot of studies of this nature, across Europe, Asia and the Americas. This result is not unique to Florence - you get much the same result everywhere in the world. Furthermore, this result seems primarily driven by factors intrinsic to the people/families themselves and not to the society they live in. There are a number of invisible subgroups (e.g. "New France", or people with names like Bauchau) which underperform or overperform across the generations. And when people shift from one society to another (e.g. West Bengal to America), the effects persist.
- cableshaft 10y ago
  But, but... the Medici rule the entire planet from their throne in outer space, Assassin's Creed told me so! (I didn't play much of the series, this is probably not legit). How dare your facts get in the way of my supernaturally attracted perception?
TXV 10y ago
>It’s a trait shared by elite families in China, whose high status has persisted since the Mao years. Well, but that's just about 60 years...
deleted 10y ago
[deleted]
OscarCunningham 10y ago
I think that this effect will have ended with modern gender equality. Each family has on average only one male child per generation, so if you consistently pass the money down to your son (the child with the same surname as you) then it will last a long time. But these days it's more common to give money to all your children, so it's halved at every generation.

338 points by SQL2219 10y ago

Article is from 2016, and had extensive discussion last year https://news.ycombinator.com/item?id=11731890 https://news.ycombinator.com/item?id=11731890

true_religion 10y ago

This only feels surprising to me because in England, aristocratic houses tend to last only 100-200 years before losing their name by being subsumed into another, renaming due to politics, or vanishing in some other way. The House of Windsor only formally dates back to 1910. However if you trace it via the Mountbatten line, it'll rate as being as old as 1567, since it comes from a branch of the House of Hesse-Darmstadt in the Holy Roman Empire. I think there's 3 things that might cause this: - I am thinking that Florencian plutocratic houses simply never rename themselves. The Medici family for example continues to exist today, holding some minor titles. - I think it also helps that Italian aristocrats were heavily involved in trade, and other mercantile professions so could continue to hold wealth and power after being deposed from statutory privilege. English aristocrats on the other hand, often only hold value in land. - The English have historically allowed women to inherit, so family names are lost due to inheritance, enriching others with the same bloodline but different names.

caf 10y ago
Holding value in land typically means involvement in agriculture, though.
- AnimalMuppet 10y ago
  Yes, but agriculture became less a source of great wealth during the industrial revolution. Trade probably continued to be quite profitable, though.
  - MagnumOpus 10y ago
    Agriculture isn't the way to riches anymore, but holding all the former farmland is. Say your ancestor Rich Grosvenor owned the village of Belgrave near Westminster Cathedral and the farmland around it - then just by holding on to it, watching it as it becomes prime urban real estate and living off the million-pound rents you and your children can't avoid becoming billionaires a dozen times over. Then you can proceed to buy and sell the British government and media at your pleasure, having been made a duke and a lord of the realm...
    - pcrh 10y ago
      This phenomenon is exacerbated by selling leases rather than freehold rights. A leasehold may expire after 99 years, at which point it reverts to the original freeholders and can be sold again. In this manner the same land can be sold repeatedly, generation after generation, and is how the Grovenor family acquired such huge wealth.
    - joshuaheard 10y ago
      In America, we call a version of this "redneck retirement" where a rural landowner is able to sell his property to a real estate developer when it is subsumed by urban sprawl.
    - AnimalMuppet 10y ago
      That only works if your land is located in the right place, though. I suspect it didn't work as well in, say, the Midlands.
deleted 10y ago
[deleted]
bootload 10y ago
"The House of Windsor only formally dates back to 1910." House of Wetten (1030) -> House of Hanover (1710) -> House of House of Saxe-Coburg and Goth (1826) -> House of Windsor. There is a long lineage for the Windsors. Note the name change in 1918 from Saxe-Coburg to Windor to avoid diplomatic incidents by association. To get an idea of the breakdown of English aristocracy and estates, read this insightful article by Charles Spencer, "Enemy of the Estate" ~ http://www.vanityfair.com/news/2010/01/english-aristocracy-201001 http://www.vanityfair.com/news/2010/01/english-aristocracy-2... "I am thinking that Florencian plutocratic houses simply never rename themselves." Yes, that's what it looks like.
cannonpr 10y ago
Your comment about the Medici line confused me a bit since I believed them to have ended quite a while back, however there do appear to be two cadet lines still around. When do you generally consider a line over for the purposes of the study ?
cannonpr 10y ago
Your comment about the Medici line confused me a bit since I believed them to have ended quite a while back, however there do appear to be two cadet lines still around. When do you generally consider a line over for the purposes of the study ?

irrational 10y ago

"While it comes as little surprise that families pass on their wealth to their children, it’s still somewhat remarkable that these families were able to maintain their wealth through various sieges of Florence, Napoleon’s campaign in Italy, Benito Mussolini’s dictatorship, and two world wars." When you are a part of the Illuminati, anything is possible!

analognoise 10y ago
Username checks out.
- irrational 10y ago
  Oh cmon! That was funny!

at-fates-hands 10y ago

I wonder if at some point inheritance of the family wealth was dependent on having a viable offspring to pass the wealth onto. The article does not mention this, but in the 14 and 1500's, I can only assume at some point it was.

rwinn 10y ago

This is purely anecdotal, but I live in Florence and know a couple of people from the "old-money" families and they are not rich by todays standard. They make a modest living renting out and managing the properties handed down through the generations and have to be frugal to make it work. Also, you should be very sceptical of any study made using Italian tax records as a data source :D

stefantalpalaru 10y ago
> They make a modest living renting out and managing the properties handed down through the generations and have to be frugal to make it work. Those rich real estate owners are not frugal because they need to. They are frugal because they are smart. Don't judge their wealth before seeing their tax haven bank accounts.
kobeya 10y ago
That describes everyone who is from old money. Those who aren't frugal and cost conscious see wealth exit their family within a few generations.

mavelikara 10y ago

From before: https://news.ycombinator.com/item?id=11731890 https://news.ycombinator.com/item?id=11731890

conistonwater 10y ago

> taxpayers data in 1427 was digitized and made available online Wow, the Renaissance was really ahead of its time.

motoboi 10y ago
If I recall correctly, they invented banking. So, yes, they were really advanced.
- vixen99 10y ago
  Yes, indeed because it allowed wealth creation (=businesses) to flourish. Lending is an act of faith in the future.

ChuckMcM 10y ago

This makes for a great headline but fails to capture the entire picture which would include "families that are rich now and weren't before" and "families that were rich then and aren't now". Another interesting statistic has families that were made wealthy in a short time by circumstance (lottery, judgement, IPO, etc) and are still rich, vs those that lost all of their wealth again. It seems the best way to have the family wealth hang around is to create an institution with it that has as its mission to manage that wealth. Too much control by family members is strongly correlated with losing it all (which isn't too surprising when you think about it). Wars and conflicts are the large redistributors of wealth. Not that it's a fun way to do so.

brudgers 10y ago
I don't disagree. On the other hand, if I had to pick a strategy for being rich in year n+1, I'd choose being rich in year n.
xenadu02 10y ago
The Freakonomics podcast covered this. There have been small-scale examples of this sort of thing but the best researched one is from Georgia. The tl;dr is that the government stole a huge chunk of land from the Cherokee but the white public got really angry because the politicians intended to split up the land among themselves. To avoid being tossed out of office they setup a lottery and distributed the land randomly. About 20% of Georgia's white population at the time got a huge chunk of land for free. The study shows it didn't have much of an impact on families over the long-term. The paper: http://www.nber.org/papers/w19348 http://www.nber.org/papers/w19348 The podcast: http://freakonomics.com/podcast/would-a-big-bucket-of-cash-really-change-your-life-a-new-freakonomics-radio-podcast/ http://freakonomics.com/podcast/would-a-big-bucket-of-cash-r...

mjfl 10y ago

I don't understand this. Assuming no inbreeding, families that consistently have 2 kids roughly double in size every generation - a 600-year-old family would have 1 billion unique descendants by now. Of course, there is a ton of inbreeding - in the technical sense - but I still have a hard time imagining a 600 year continuous family line that isn't a pretty arbitrary chart of certain descendants here and there. It's very probable that some of them became poor too!

dsymonds 10y ago
Your maths seems off. 600 years at, say, 25 years per generation, yields 24 generations. Doubling each generation gives a factor of 2^24, or around 16 million, not 1 billion.
- smallnamespace 10y ago
  He just got to 2^30, which implies a 20 year generation time. Pretty reasonable before the 20th century.
  - trapperkeeper79 10y ago
    This is hilarious. Given that the world's population is 7 billion today, we started with (7x2) people 600 years ago? LOL. Doesn't check out.
    - nom 10y ago
      Hilarious indeed. Are you aware that people die? :D
      - vitaminbandit 10y ago
        Clearly just a rounding error... ;)
      - OscarCunningham 10y ago
        It's not forgetting death that's the error; it's forgetting that people have 2^30 ancestors from 30 generations ago rather than just one. Everyone's family tree grows exponentially, but they all overlap.

acomjean 10y ago

One of the reasons Bill Gate's father among others were campaigning against the repeal of "Estate Taxes" was so we wouldn't have a permanent wealthy class in the US. (Estate taxes are taxes paid on your money when you pass away before being distributed. Right now I think its only on holdings over 5million) http://billmoyers.com/2015/04/18/william-gates-sr/ http://billmoyers.com/2015/04/18/william-gates-sr/

wahern 10y ago
Unfortunately, several states have repealed the common law rule against perpetuities entirely. Long story short, rich people can create trusts that pay a steady income to their families for as long as they want, including for hundreds of years. There's no estate tax upon your death because the assets were already transferred. The assets aren't taxed on transfer, either, but only as they're paid out to the beneficiaries. The effect is as if the original grantor (your great Uncle Gates) was immortal, giving out stipends to his descendants. You don't hear about this much because the state laws are only a few decades old, but the repercussions play out over generations. It'll become a thing in another 100 years or so when people finally realize what's happening. Before this the trick was to use corporations. Maybe nominally non-profit, but mostly existing to employ the descendants. That's still a good idea depending on what you're trying to accomplish. Like with trusts you create it in a state with friendly legislation. It sucks that conservatives are so hell-bent on repealing the estate tax, but it's really not a battle worth fighting over. The war was lost long ago. What nominal revenue the estate tax brings in has been shrinking for awhile, and it'll eventually shrink to nothing. At this point people are just fighting for an idea. And I literally mean _just_ an idea. Retaining the estate tax won't stop anything, and it might give people a false sense of comfort. Maybe better to let it get repealed, then hope that in a few generations there's enough backlash to not only restore the estate tax, but to foreclose the alternatives as well.
- walterbell 10y ago
  Do you have a reference on the states and trusts which need to be foreclosed?

BurningFrog 10y ago

Fun anecdote, but to say something universal about families and wealth over centuries, you'd have to look at vastly more regions. Especially since this is talked about for being so different from the norm.

Nomentatus 10y ago

No article last year held me in such horror as this one. I haven't dared even discuss it with anyone until now. It still takes my breath away. Especially because the U.S. now has less class mobility than most of Europe does. Automation is likely to be a "Yuuge" force multiplier for societal stratification; certainly modest minimum annual income grants aren't going to change that. All my life I've wanted to believe everything this study disproves. My parents and grandparents worked very hard for their kids because they didn't thing this was really the way the world worked. But it certainly is. If I want to become damned depressed all I have to do is think about it. There's no reason not to enjoy the day 'cause of it, but it is more than a little demotivating.

JumpCrisscross 10y ago
> the U.S. now has less class mobility than most of Europe does Europe is big. I don't think the United States is less mobile than Italia.
- refurb 10y ago
  You also have to account for the "spread" in classes. If income equality is lower, there is a greater spread in income from the bottom to the top. And the inverse if income equality is higher. Thus, you could have someone in the US start out making $30K, then make $200K over their lifetime. Due to the spread in "classes", they might have only jumped up on class even though their income went up 6x. In Europe, where the classes have less spread, someone could have gone from $30K to $100K and gone from the bottom to the top class. Yes, mobility across classes is greater in Europe, but the American has the bigger increase in income.
kriro 10y ago
I have had heated debates over inheritance taxes. I'm strongly against them because I don't like the signaling effect (if you work really hard, the government will take half of it) and it's a strange form of multi-taxation which is also questionable from my POV. I'm very family driven and I think "working hard to make the life of your children better" is a very strong motivator that should not be underestimated. The counterargument is usually "well let's set the cap at X million" which I find very problematic because I don't see an ethically sound way of defining these lines in the sand. Additionally in the age of webscale(tm) it's reasonably possible to start a "new dynasty" from scratch. Unfortunately most of these debates tend to boil down to "the rich are evil" which is usually when I use interest in them. I've only roughly browsed the study but the effects aren't that big compared to compound interest from 1427 to now. If anything I'd argue the rich are still rich but not as rich as expected is the take away message.

forkandwait 10y ago

"the history of all hitherto existing society is the history of class struggles" -- Karl Marx, Communist Manifesto.

valuearb 10y ago
To a man with a hammer, every problem is a nail. To a man with a hammer and sickle, every problem is a class struggle.
- piaste 10y ago
  That is a brilliant aphorism. I shall make good use of it.
- realusername 10y ago
  To a liberal, every problem is a market problem

Proven 10y ago

To a normal person the title is an argument against taxation. To a socialist it's the proof that taxes ought to be higher.

trome 10y ago
Anything but, the title literally states that social mobility in Florence is very low, and that capital is more valuable than labor. Bring back the death tax at 90%!
- geon 10y ago
  He is calling you a socialist, and implying that you are not normal.
  - trome 10y ago
    I know and get that, he is an extremist that believes that the landed gentry deserve to rule over the landless serfs. I oppose that destructive policy, as it is a great way to stifle society as a whole and ensure we slide back towards the dark age.
    - eigenmeister 10y ago
      Don't straw man his argument like that. I take it we both consider social mobility good for society. In that frame, defend the estate tax - does it improve social mobility? More than it costs? More efficiently than, say, a Georgist tax, or a basic income?

BuffaloBagel 10y ago

Makes a good argument for the inheritance tax

TomMarius 10y ago
Why is this so bad it needs to be taxed?

sologoub 10y ago

From the original source: "Stated differently, being the descendants of the Bernardi family (at the 90th percentile of earnings distribution in 1427) instead of the Grasso family (10th percentile of the same distribution) would entail a 5% increase in earnings among current taxpayers (after adjusting for age and gender)." http://voxeu.org/article/what-s-your-surname-intergenerational-mobility-over-six-centuries http://voxeu.org/article/what-s-your-surname-intergeneration... So 5% extra as the result of being related to a wealthier family 600 years ago. While definitely remarkable when considering how much happened during that time that should have destroyed wealth, it's far from apocalyptic. There seems to be no implication that the descendants do not have to work either, just that they earn slightly more.

MagnumOpus 10y ago
On the contrary, it is staggering that a result is still present after 30 generations of splitting the family wealth. Even on the assumption that the rich only have 2-3 children, a billion-dollar inheritance should be diluted to nearly nothing after 15 generations. And with the 4-8 children that were usual back in the day, in less than 10 generations. Having such a massive difference that it can be traced by very low-powered population statistics after 600 years means that the effect on having a head start in terms of wealth is enormous on your potential to stay wealthy.
- rconti 10y ago
  But it's earnings, not wealth. 5% isn't that much. 5% might be name recognition leading to more favorable outcomes when searching for employment. Hell, it might be genetic -- 5% might be from merely being TALLER.
- Mvandenbergh 10y ago
  >Even on the assumption that the rich only have 2-3 children, a billion-dollar inheritance should be diluted to nearly nothing after 15 generations Not if your children exclusively marry other wealthy people. Then the rate of dilution depends primarily on the growth in the overall population of the wealthy in each generation. The Italian population overall has quintupled since the 1400s, even if we make an allowance for the wealthy having more living children who reproduced, the wealth will not have diluted away completely.

dimitar 10y ago

http://www.aiel.it/cms/cms-files/submission/all20150614183657.pdf http://www.aiel.it/cms/cms-files/submission/all2015061418365... - link to the actual paper

randyrand 10y ago

This is hard to believe. Over 600 years, a family of 4 becomes a family of thousands. Take any reasonable sum of money and divide it by 20,000 and its not that big of a sum of money anymore.

FooBarWidget 10y ago
I don't think money works that way? Think of the family wealth as starting capital that gives decendants better education, an environment that simulates growth, etc. They take a piece of the family wealth and grow it bigger through good jobs, investments, companies, etc.
pjc50 10y ago
Not in a patriarchal society: only the male inheritance counts as "family" there.

gmunu 10y ago

Not surprisingly, the qz.com article distorts the meaning of the original paper and looking at the comments, they seem to follow the false, but suggested interpretation of the paper that qz gives. It's useful to note the title of the paper: What’s your (sur)name? Intergenerational mobility over six centuries. This paper is not tracking wealth, it's tracking income via tax records. It notes things like people who are lawyers or bankers now were more likely to share surnames with people in similar professions in the 15th century. It is not tracking inter-generation transfers of wealth. In fact, qz even drops the most interesting conclusion in the article, which is their measurement of changing intergenerational income mobility overtime. They measure inelasticity at > .8 in Renaissance Florence and a generally static society until the industrial revolution, with inelasticity coming down starting in the 20th century. The article isn't about secret trusts set up by the Medici, but the more prosaic fact that if you father and grandfather were lawyers, you're more likely to be one too. Still interesting, but it's not evidence that families were "able to maintain their wealth" through revolutions at all.

yummyfajitas 10y ago
This also looks like it's more work in the same direction as the "The Son Also Rises" ( http://amzn.to/2jFnUmZ http://amzn.to/2jFnUmZ ). There are actually a lot of studies of this nature, across Europe, Asia and the Americas. This result is not unique to Florence - you get much the same result everywhere in the world. Furthermore, this result seems primarily driven by factors intrinsic to the people/families themselves and not to the society they live in. There are a number of invisible subgroups (e.g. "New France", or people with names like Bauchau) which underperform or overperform across the generations. And when people shift from one society to another (e.g. West Bengal to America), the effects persist.
cableshaft 10y ago
But, but... the Medici rule the entire planet from their throne in outer space, Assassin's Creed told me so! (I didn't play much of the series, this is probably not legit). How dare your facts get in the way of my supernaturally attracted perception?

TXV 10y ago

>It’s a trait shared by elite families in China, whose high status has persisted since the Mao years. Well, but that's just about 60 years...

deleted 10y ago

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OscarCunningham 10y ago

I think that this effect will have ended with modern gender equality. Each family has on average only one male child per generation, so if you consistently pass the money down to your son (the child with the same surname as you) then it will last a long time. But these days it's more common to give money to all your children, so it's halved at every generation.