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It actually does come about ”naturally”. You just need compound interest and bit of randomness. See https://journals.plos.org/plosone/article?id=10.1371/journal

It actually does come about ”naturally”. You just need compound interest and bit of randomness. See https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0020728 https://journals.plos.org/plosone/article?id=10.1371/journal... This does not mean it’s good. The source even presents some methods of avoiding it. But the key point is that it doesn’t need some sort of conspiracy of the rich to happen. It will happen inevitably without being anyones fault if steps are not taken to address it.

hannasanarion 7y ago
What you also need is self-multiplying investments and a lack of wealth, income, and capital gains taxes. The current financial system didn't happen by accident. It was intentionally built in the 1980s by the Reagan administration, at the behest of rich Republican donors. It was not inevitable, it was engineered.
- sharpneli 7y ago
  It will just slow it a bit. A non progressive capital gains tax even at 99.999% will still lead to power law distribution. And I don’t think anyone would say a tax that high is exactly done at behest of the rich. (EDIT: compound interest literally is self multiplying investment) One has to rather specifically design a progressive taxation system to avoid a power law. Read the paper. The conditions for power law are very simple. I live in Finland. A place one hardly can say is friendly to the rich. Yet we too have a power law, just with different constants than what US has.
  - peteradio 7y ago
    Nobody cares that its a power law, its the particular constants that lead to the incredible disparity no?
  - deleted 7y ago
    [deleted]
geofft 7y ago
So get rid of indefinite compound interest. Generational wealth has always struck me as fundamentally unjust, for the basic reason that you don't get to pick your parents. I see the argument that a man is entitled to the sweat of his brow; we can debate just how to define what is his sweat vs. infrastructural sweat, but the underlying point seems fair enough. I do not see the argument that a man is entitled to the sweat of his father's brow. The principle that you are entitled to what your parents or grandparents earned is behind all sorts of injustice in the world, from hereditary monarchies and wars of succession to wealth gaps between majority and minority ethnic groups long after formal discrimination has been outlawed. Even when the inheritance doesn't happen, you still have evils like abusive rich parents having leverage over their closeted college-age children because the financial aid system (in the US, at least) assumes that children have access to their parents' money. There's a lot of possible ways to implement the system, but it is not inevitable that wealth, once concentrated, does not dissolve, and even leaving wealth inequality aside, there are good reasons to get rid of it. I hadn't even read the abstract of the article you posted when I clicked "reply," but in fact, that article advocates for the same thing: > We show that a tax on large inherited fortunes, applied to a small portion of the most fortunate in the population, can efficiently arrest the concentration of wealth at intermediate levels.
- jlokier 7y ago
  > I do not see the argument that a man is entitled to the sweat of his father's brow. I expect most people would agree. However, views change drastically when you turn it around. A great many people feel entitled to use the sweat of their own brow to provide for their own children. This includes providing an inheritance, especially a house. Few people are happy to provide from their own work equally for everyone's children without any special benefit to their own.
  - geofft 7y ago
    Nobody's saying you have to benefit other people's children. You can work for your own benefit. As soon as you start providing for your children, you start breaking the fundamental premise of a pre-scarcity society; they now get to live off of something they didn't work for. (This isn't merely a capitalist principle - everyone from St. Paul to the Jamestown colonists to Vladimir Lenin said, "He who does not work, neither shall he eat.") That said, if you just care about wealth inequality, it's totally fine to buy your child a modest house, or even buy them an expensive house at a large marginal tax rate. As the paper points out, you don't need to stop all intergenerational wealth transfers, you only need to stop a portion of the wealth transfers of the richest people at the far end of the RNG. The trick about "a house," in particular, is it means two things - a place to live and an investment vehicle. I agree that many people will be sympathetic to the argument that you should be able to provide your kids with a place to live. (I am myself somewhat sympathetic to it.) But as long as there are people on the streets with not even a bed, it's immoral to twist this sympathy into a right to transfer millions of dollars in wealth to your kids in the form of an expensive house on expensive land. So, put a cap on the inheritable amount that makes it quite sufficient for reasonable living quarters, and heavily tax transfers beyond that.

hannasanarion 7y ago

What you also need is self-multiplying investments and a lack of wealth, income, and capital gains taxes. The current financial system didn't happen by accident. It was intentionally built in the 1980s by the Reagan administration, at the behest of rich Republican donors. It was not inevitable, it was engineered.

sharpneli 7y ago
It will just slow it a bit. A non progressive capital gains tax even at 99.999% will still lead to power law distribution. And I don’t think anyone would say a tax that high is exactly done at behest of the rich. (EDIT: compound interest literally is self multiplying investment) One has to rather specifically design a progressive taxation system to avoid a power law. Read the paper. The conditions for power law are very simple. I live in Finland. A place one hardly can say is friendly to the rich. Yet we too have a power law, just with different constants than what US has.
- peteradio 7y ago
  Nobody cares that its a power law, its the particular constants that lead to the incredible disparity no?
- deleted 7y ago
  [deleted]

geofft 7y ago

So get rid of indefinite compound interest. Generational wealth has always struck me as fundamentally unjust, for the basic reason that you don't get to pick your parents. I see the argument that a man is entitled to the sweat of his brow; we can debate just how to define what is his sweat vs. infrastructural sweat, but the underlying point seems fair enough. I do not see the argument that a man is entitled to the sweat of his father's brow. The principle that you are entitled to what your parents or grandparents earned is behind all sorts of injustice in the world, from hereditary monarchies and wars of succession to wealth gaps between majority and minority ethnic groups long after formal discrimination has been outlawed. Even when the inheritance doesn't happen, you still have evils like abusive rich parents having leverage over their closeted college-age children because the financial aid system (in the US, at least) assumes that children have access to their parents' money. There's a lot of possible ways to implement the system, but it is not inevitable that wealth, once concentrated, does not dissolve, and even leaving wealth inequality aside, there are good reasons to get rid of it. I hadn't even read the abstract of the article you posted when I clicked "reply," but in fact, that article advocates for the same thing: > We show that a tax on large inherited fortunes, applied to a small portion of the most fortunate in the population, can efficiently arrest the concentration of wealth at intermediate levels.

jlokier 7y ago
> I do not see the argument that a man is entitled to the sweat of his father's brow. I expect most people would agree. However, views change drastically when you turn it around. A great many people feel entitled to use the sweat of their own brow to provide for their own children. This includes providing an inheritance, especially a house. Few people are happy to provide from their own work equally for everyone's children without any special benefit to their own.
- geofft 7y ago
  Nobody's saying you have to benefit other people's children. You can work for your own benefit. As soon as you start providing for your children, you start breaking the fundamental premise of a pre-scarcity society; they now get to live off of something they didn't work for. (This isn't merely a capitalist principle - everyone from St. Paul to the Jamestown colonists to Vladimir Lenin said, "He who does not work, neither shall he eat.") That said, if you just care about wealth inequality, it's totally fine to buy your child a modest house, or even buy them an expensive house at a large marginal tax rate. As the paper points out, you don't need to stop all intergenerational wealth transfers, you only need to stop a portion of the wealth transfers of the richest people at the far end of the RNG. The trick about "a house," in particular, is it means two things - a place to live and an investment vehicle. I agree that many people will be sympathetic to the argument that you should be able to provide your kids with a place to live. (I am myself somewhat sympathetic to it.) But as long as there are people on the streets with not even a bed, it's immoral to twist this sympathy into a right to transfer millions of dollars in wealth to your kids in the form of an expensive house on expensive land. So, put a cap on the inheritable amount that makes it quite sufficient for reasonable living quarters, and heavily tax transfers beyond that.