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Billionaires amass more through inheritance than wealth creation, says UBS
- gumby 3y agoSince 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.
- AnimalMuppet 3y agoOld 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?
- cowpig 3y agoI 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.
- suoduandao3 3y agoOr a lot of billionaires are dying right now (Charlie Munger comes to mind)
- r00fus 3y agoA 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.
- gumby 3y agoThat possibility is explicitly made in the article
- raincom 3y agohttps://archive.is/cESKh https://archive.is/cESKh
- lapcat 3y agoHere's a direct link to the UBS report: https://www.ubs.com/global/en/media/display-page-ndp/en-20231130-the-great-wealth-transfer.html https://www.ubs.com/global/en/media/display-page-ndp/en-2023...
- raincom 3y agoThere 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).
- SketchySeaBeast 3y agoAssuming 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.
- tylersmith 3y agoIt's the difference between someone having $2k and $1 million dollars.
- Zambyte 3y agoI 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.
- SketchySeaBeast 3y agoYes, 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?
- lnsru 3y agoLook 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.
- mushufasa 3y agoThis 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_Century https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
- suoduandao3 3y agoIt'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.
- thesuperbigfrog 3y ago>> 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.
- lainga 3y agoFor 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/the-great-leveler https://press.princeton.edu/books/paperback/9780691183251/th...
- Fauntleroy 3y ago
- gsky 3y agoHow'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.
- digging 3y agoThat's a false dichotomy. Redistributing =/= squandering.
- deleted 3y ago[deleted]
- bertjk 3y agoHow 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.
- spencerflem 3y agoTo me, the true horror is when its spent on worthless or awful things, wasting limited resources, and the better part of peoples lives
- digging 3y ago> Squandering typically means spending Squander means to spend thoughtlessly or foolishly or wastefully. It's not a synonym of "spend".
- fsckboy 3y agoin 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.
- aaomidi 3y agoIf this surprises anyone, I have a waterfront property to sell them in Reno
- gumby 3y agoI think the change is interesting. Perhaps the fact that there was a recent period in which this was not the case is more interesting.
- deleted 3y ago[deleted]
- Sohcahtoa82 3y agoFWIW, there IS a river that passes through Reno, not to mention a couple tiny lakes, so it could be possible to have waterfront property.
- rufus_foreman 3y agoYou can list it at https://www.nevadarealestategroup.com/reno/riverfront-homes-for-sale/ https://www.nevadarealestategroup.com/reno/riverfront-homes-....
- GreedClarifies 3y agoYet 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".
- beardicus 3y agoboy, i wonder if these researchers maybe did more research than casually glancing at at top 10 list on the internet?
- lapcat 3y ago> 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 https://en.wikipedia.org/wiki/UBS
- suoduandao3 3y agoI 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.
- fsckboy 3y agopeople 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.
- hk__2 3y ago> 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.
- IAmNotACellist 3y agoAnd yet 70% of generational wealth is gone by the 2nd generation.
- jshen 3y agoI was wondering the same thing. I've heard conflicting things and I'm not sure how to make sense of that.
- Clent 3y agoI 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.
- brewdad 3y agoOne 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.
- ff317 3y agoI 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.
- 1-6 3y agoWhen 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.
- TheOtherHobbes 3y agoYou 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.
- steveBK123 3y agoI 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?
- hn_throwaway_99 3y agoThat'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.
- arkadiyt 3y agoHere's a chrome extension I wrote to bypass the ft.com paywall if folks are interested: https://github.com/arkadiyt/free-ft https://github.com/arkadiyt/free-ft
- pmorici 3y agoThis 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.
- lawn 3y agoThis 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.
- pmorici 3y agoIt’s not a sentiment it’s statistics. Look at the number of successful businesses that result in wealth creation.
- lawn 3y agoFeel 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-entrepreneurial-us https://cepr.org/voxeu/columns/how-sweden-became-more-entrep...
- boeingUH60 3y agoThat'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.
- TacticalCoder 3y agoWhich is why the FAANG and Microsoft and all the tech really comes from France right?
- 3y ago
- lifestyleguru 3y agoWhy should one even try anything at all?
- rabuse 3y agoThere'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.
- qeternity 3y agoAt what point in history do you think it has been easier to compete against giants?
- carlosjobim 3y agoSince 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.
- gcheong 3y agoChoose your parents wisely.
- TacticalCoder 3y ago> 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.
- pkkm 3y agoThis 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.
- DennisP 3y agoHah, I've seen this title all over. Pretty easy to miss that it was just this past year, contrary to the prior eight years.
- hn_throwaway_99 3y agoI 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.
- DennisP 3y agoI 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.
- lapcat 3y ago> 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-20231130-the-great-wealth-transfer.html 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 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.
- comboy 3y agoThis is not a meaningful statement if we assume that on average each billionaire has more than a single child.
- anonuser123456 3y agoIt’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.
- darklycan51 3y agoThere 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.
- qeternity 3y agoAlright, I’ll bite. Pick a billionaire and tell me what should have happened such that they wouldn’t be a billionaire.
- tsunamifury 3y agoThe 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.
- deleted 3y ago[deleted]
- JohnMakin 3y agosomething something bootstraps.
- aaroninsf 3y agoWhat'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.
- amai 3y agoDon‘t work hard, inherit hard!