12 ms·

I would love to know a bit more about mechanism. Is it through family holdings, individual wealth management, sons of well-to-dos becoming proverbial doctors a

by netcan 8y ago

I would love to know a bit more about mechanism. Is it through family holdings, individual wealth management, sons of well-to-dos becoming proverbial doctors and lawyers. Florence is especially interesting. 15th century Italy had a relatively modern (similar/ancestral to our own) economic-political system. Wealth wasn't all about land-and-title aristocracy. "Merchant" families were the rich powerful instead. Generally speaking, I'm curious about how all thia works on the individual level. Thomas Picketty's ideas about how wealth dynamics work in the long term are convincing, but, on simple interpretation, it isn't obvious how Bill Gates fits into the picture (other than as an outlier).

credit_guy 8y ago
Here's a few things that produce such a phenomenon, pretty much universally: 1. Everyone alive has a lot of ancestors who lived 600 years ago. Let's say there are about 4 generations per century, so 24 in 600 years. In the extreme you could find about 2^24 = 16 million ancestors from those times. In reality there's some recombination, but you could easily have tens of thousands of (24 times grand)-parents. Some of those were beggars, some were princes. 2. Some societies had mechanisms to preserve wealth concentration within "the family", such as primogeniture [1]. With this arrangement, the majority of the wealth of a family was transferred to only one descended. The outcome was that if you were rich, a few generations down the line one single descendant would be rich, and pretty much all your others will be poor. Just look at Prince Charles in the UK who will one day inherit the crown, and Prince Harry who will be a nobody. Sure, they both have royal weddings, and people follow their various affairs in tabloids, but at the end of the day, Harry's grandsons will have inherited from their queen grand-grand-grand-grand-mother something around zilch compared to one of Charles's grand-sons who will be king. [1] https://en.wikipedia.org/wiki/Primogeniture https://en.wikipedia.org/wiki/Primogeniture
- iguy 8y ago
  These points are true. And note that 2^24 is larger than the population of Italy at that time. But you should be extremely cautious about presuming that these 2^24-minus-duplications ancestors were anything like uniformly distributed. Top-10% Florentines today may easily have a majority of their descent from top-10% ones 600 years ago. Because the rich had more kids, in a time of very slow overall population growth.
  - credit_guy 8y ago
    Well, my guess is that 100% of the Florentines today have easily a majority of their ancestors in the top 10% of the Florentines 600 years ago. Survival of the fittest and stuff ...
    - iguy 8y ago
      Could be, I was trying to be cautious! But many, many, people are extremely surprised to think that survival of the fittest has any relevance within historical time. Let alone between us and Dante.
- mprovost 8y ago
  That reminds me of the story when a reporter asked Gerald Cavendish Grosvenor (the Duke of Westminster) if he had any advice for young entrepreneurs and he replied “Make sure they have an ancestor who was a very close friend of William the Conqueror.”
  - paganel 8y ago
    In a similar vein, I remember reading Proust’s novels some time ago and one of the protagonists was explaining to some other protagonist that you could be seen as a very respected member of the society of that time (think France of the 1800s - the 1900s) only if some of your ancestors had taken part in the crusades as noted (meaning non-anonymous) individuals, ~700-800 years before.
lordnacho 8y ago
Assortative mating perhaps? I'm sure the rich kids would have hung out with each other, known who each other were, and so on. Similar mechanisms keep the business opportunities within certain spheres. Everyone's going to know who has money to help your new startup, and those people get the chance to invest.
bayesian_horse 8y ago
Another mechanism may be that rich families tend to attract richer-than-average persons to marry into them. The biggest problem is that wealth means power and power means you take wealth from less powerful people.
- tomp 8y ago
  This just means that the average spousal wealth doesn't change with marriage (assuming sharing of all assets). It doesn't explain why wealth stays the same over longer periods of time / over generations.
  - bayesian_horse 8y ago
    My point is that the family name will be preferentially handed down the more affluent "blood lines".
lmm 8y ago
> it isn't obvious how Bill Gates fits into the picture (other than as an outlier). Gates came from a wealthy family, which put him in a much better position to do high-risk, high-reward things (e.g. he could drop out of Harvard to work on his business, knowing that if the company failed his family could afford to send him through again).
- icebraining 8y ago
  His mother also (probably) helped very directly, since she was in the same committee as the chairman and president of IBM when Bill was just starting Microsoft: https://www.nytimes.com/1994/06/11/obituaries/mary-gates-64-helped-her-son-start-microsoft.html https://www.nytimes.com/1994/06/11/obituaries/mary-gates-64-...
- masklinn 8y ago
  > Gates came from a wealthy family Not just wealthy, but extremely well connected through his mother, who sat on several University of Washington, corporate and charity boards, including the United Way boards through which she knew John Opel (CEO and Chairman of IBM… right around the IBM PC's development).
  - onetimemanytime 8y ago
    Let's give some credit to Bill, ok? How many Vanderbilts, Rockefellers, Astors, Rothchilds, Waltons etc etc did what Bill Gates did? Combined, they have thousands of offsprings and had way more money that Gates' father had. So yeah, Bill cam from a well to-do family but he also was extremely {insert here}...
    - whatshisface 8y ago
      The group that spawned Bill Gates was smaller than the entire human population; it means he was one in maybe a thousand as opposed to one in seven billion. If anything that should be encouraging to the average person in society because it indicates that there isn't an uncrossable intelligence or otherwise biological gulch between the average person and success (which would be even harder to change than a social one).
iguy 8y ago
> family holdings, individual wealth management, sons of well-to-dos becoming proverbial doctors and lawyers The last. The article wants to make it sound like this is inherited wealth (alla Picketty) but this isn't really supported. For example, you find much the same pattern even across say the cultural revolution, which I hear was rather rough on inherited nest eggs. The rec. book on this (as in one of the old comment threads below) is Clark, "The Son Also Rises" ( http://amzn.to/2jFnUmZ http://amzn.to/2jFnUmZ ).
- lultimouomo 8y ago
  I'd say that family holdings are definitely a factor, specifically vineyards and olive groves, at least for the very richest. TBH, I can only provide anecdata, but most of the wine and olive producing country around Florence is owned by a few families that have owned it for centuries.
  - iguy 8y ago
    I don't doubt that the rich own nice things (and that their rich ancestors did too) but the question is whether this is causal, and I'm highly dubious, over these long time-scales. Clark has evidence from lots of countries, and I'm still surprised just how uniform the numbers are. Even in places where private property was all-but-outlawed for 2-3 generations in the middle.
    - taneq 8y ago
      Regarding the first case, the rich don't just own nice things, the rich own assets, which means they get richer. Once you get past a certain level of wealth, you have to try pretty hard to become poor again. As for the second, the rich have the resources to dodge or mitigate that kind of state action in all but the swiftest and most brutal of cases.
      - charlesdm 8y ago
        Bad investments, if you are wealthy, is the most obvious cause of going poor again.
osullivj 8y ago
They created modern banking. The Medici Bank [1] extended credit across Europe to finance trade. [1] https://en.wikipedia.org/wiki/Medici_Bank https://en.wikipedia.org/wiki/Medici_Bank
- rurban 8y ago
  and they were followed by the Fuggers, the Welsers, and finally the Rothschilds. Interestingly the Medici fall down was caused by the exact same terms of the success of the others: Financing wars. The Medici had just bad luck that their king (of England) lost his war, and the Tories never paid them back (of course). The Germans and then the Rothschilds were more clever, they've won their important wars.
  - eunoia 8y ago
    Isn’t the real lesson behind the Rothschild’s generational success that your king is inevitably going to lose a war or two and therefore to diversify beyond a single kingdom?
jopsen 8y ago
The morality of accumulating massive wealth have also changed since the 14th century.. Also Bill Gates is an individual who read history and decided to do good.

by netcan 8y ago

credit_guy 8y ago

Here's a few things that produce such a phenomenon, pretty much universally: 1. Everyone alive has a lot of ancestors who lived 600 years ago. Let's say there are about 4 generations per century, so 24 in 600 years. In the extreme you could find about 2^24 = 16 million ancestors from those times. In reality there's some recombination, but you could easily have tens of thousands of (24 times grand)-parents. Some of those were beggars, some were princes. 2. Some societies had mechanisms to preserve wealth concentration within "the family", such as primogeniture [1]. With this arrangement, the majority of the wealth of a family was transferred to only one descended. The outcome was that if you were rich, a few generations down the line one single descendant would be rich, and pretty much all your others will be poor. Just look at Prince Charles in the UK who will one day inherit the crown, and Prince Harry who will be a nobody. Sure, they both have royal weddings, and people follow their various affairs in tabloids, but at the end of the day, Harry's grandsons will have inherited from their queen grand-grand-grand-grand-mother something around zilch compared to one of Charles's grand-sons who will be king. [1] https://en.wikipedia.org/wiki/Primogeniture https://en.wikipedia.org/wiki/Primogeniture

iguy 8y ago
These points are true. And note that 2^24 is larger than the population of Italy at that time. But you should be extremely cautious about presuming that these 2^24-minus-duplications ancestors were anything like uniformly distributed. Top-10% Florentines today may easily have a majority of their descent from top-10% ones 600 years ago. Because the rich had more kids, in a time of very slow overall population growth.
- credit_guy 8y ago
  Well, my guess is that 100% of the Florentines today have easily a majority of their ancestors in the top 10% of the Florentines 600 years ago. Survival of the fittest and stuff ...
  - iguy 8y ago
    Could be, I was trying to be cautious! But many, many, people are extremely surprised to think that survival of the fittest has any relevance within historical time. Let alone between us and Dante.
mprovost 8y ago
That reminds me of the story when a reporter asked Gerald Cavendish Grosvenor (the Duke of Westminster) if he had any advice for young entrepreneurs and he replied “Make sure they have an ancestor who was a very close friend of William the Conqueror.”
- paganel 8y ago
  In a similar vein, I remember reading Proust’s novels some time ago and one of the protagonists was explaining to some other protagonist that you could be seen as a very respected member of the society of that time (think France of the 1800s - the 1900s) only if some of your ancestors had taken part in the crusades as noted (meaning non-anonymous) individuals, ~700-800 years before.

lordnacho 8y ago

Assortative mating perhaps? I'm sure the rich kids would have hung out with each other, known who each other were, and so on. Similar mechanisms keep the business opportunities within certain spheres. Everyone's going to know who has money to help your new startup, and those people get the chance to invest.

bayesian_horse 8y ago

Another mechanism may be that rich families tend to attract richer-than-average persons to marry into them. The biggest problem is that wealth means power and power means you take wealth from less powerful people.

tomp 8y ago
This just means that the average spousal wealth doesn't change with marriage (assuming sharing of all assets). It doesn't explain why wealth stays the same over longer periods of time / over generations.
- bayesian_horse 8y ago
  My point is that the family name will be preferentially handed down the more affluent "blood lines".

lmm 8y ago

> it isn't obvious how Bill Gates fits into the picture (other than as an outlier). Gates came from a wealthy family, which put him in a much better position to do high-risk, high-reward things (e.g. he could drop out of Harvard to work on his business, knowing that if the company failed his family could afford to send him through again).

icebraining 8y ago
His mother also (probably) helped very directly, since she was in the same committee as the chairman and president of IBM when Bill was just starting Microsoft: https://www.nytimes.com/1994/06/11/obituaries/mary-gates-64-helped-her-son-start-microsoft.html https://www.nytimes.com/1994/06/11/obituaries/mary-gates-64-...
masklinn 8y ago
> Gates came from a wealthy family Not just wealthy, but extremely well connected through his mother, who sat on several University of Washington, corporate and charity boards, including the United Way boards through which she knew John Opel (CEO and Chairman of IBM… right around the IBM PC's development).
- onetimemanytime 8y ago
  Let's give some credit to Bill, ok? How many Vanderbilts, Rockefellers, Astors, Rothchilds, Waltons etc etc did what Bill Gates did? Combined, they have thousands of offsprings and had way more money that Gates' father had. So yeah, Bill cam from a well to-do family but he also was extremely {insert here}...
  - whatshisface 8y ago
    The group that spawned Bill Gates was smaller than the entire human population; it means he was one in maybe a thousand as opposed to one in seven billion. If anything that should be encouraging to the average person in society because it indicates that there isn't an uncrossable intelligence or otherwise biological gulch between the average person and success (which would be even harder to change than a social one).

iguy 8y ago

> family holdings, individual wealth management, sons of well-to-dos becoming proverbial doctors and lawyers The last. The article wants to make it sound like this is inherited wealth (alla Picketty) but this isn't really supported. For example, you find much the same pattern even across say the cultural revolution, which I hear was rather rough on inherited nest eggs. The rec. book on this (as in one of the old comment threads below) is Clark, "The Son Also Rises" ( http://amzn.to/2jFnUmZ http://amzn.to/2jFnUmZ ).

lultimouomo 8y ago
I'd say that family holdings are definitely a factor, specifically vineyards and olive groves, at least for the very richest. TBH, I can only provide anecdata, but most of the wine and olive producing country around Florence is owned by a few families that have owned it for centuries.
- iguy 8y ago
  I don't doubt that the rich own nice things (and that their rich ancestors did too) but the question is whether this is causal, and I'm highly dubious, over these long time-scales. Clark has evidence from lots of countries, and I'm still surprised just how uniform the numbers are. Even in places where private property was all-but-outlawed for 2-3 generations in the middle.
  - taneq 8y ago
    Regarding the first case, the rich don't just own nice things, the rich own assets, which means they get richer. Once you get past a certain level of wealth, you have to try pretty hard to become poor again. As for the second, the rich have the resources to dodge or mitigate that kind of state action in all but the swiftest and most brutal of cases.
    - charlesdm 8y ago
      Bad investments, if you are wealthy, is the most obvious cause of going poor again.

osullivj 8y ago

They created modern banking. The Medici Bank [1] extended credit across Europe to finance trade. [1] https://en.wikipedia.org/wiki/Medici_Bank https://en.wikipedia.org/wiki/Medici_Bank

rurban 8y ago
and they were followed by the Fuggers, the Welsers, and finally the Rothschilds. Interestingly the Medici fall down was caused by the exact same terms of the success of the others: Financing wars. The Medici had just bad luck that their king (of England) lost his war, and the Tories never paid them back (of course). The Germans and then the Rothschilds were more clever, they've won their important wars.
- eunoia 8y ago
  Isn’t the real lesson behind the Rothschild’s generational success that your king is inevitably going to lose a war or two and therefore to diversify beyond a single kingdom?

jopsen 8y ago

The morality of accumulating massive wealth have also changed since the 14th century.. Also Bill Gates is an individual who read history and decided to do good.