23 ms·

Inheriting is becoming nearly as important as working

• pseudolus 2y ago
  https://archive.ph/kAVoo https://archive.ph/kAVoo
• kleton 2y ago
  Becoming? This may sound like a trope and a canard, but indeed this very publication, The Economist is partially owned and controlled by the Rothschild dynasty.
  • TZubiri 2y ago
    Yeah wealthy families exist. But also there is a lot of upwards mobility. And they do not need to be correlated even. What if rich families maintain their wealth, and meanwhile other families create wealth and become rich. How is this incompatible?
    • iamshs 2y ago
      So why do rich families need to own all the media? All the think firms? Why do they lobby? Avenues to upward mobility are blocked by these rich people through various methods.
    • deleted 2y ago
      [deleted]
    • Judgmentality 2y ago
      > But also there is a lot of upwards mobility. There's increasingly less in the USA. In fact, most people today will end up worse off than their parents. https://www.weforum.org/stories/2020/09/social-mobility-upwards-decline-usa-us-america-economics/ https://www.weforum.org/stories/2020/09/social-mobility-upwa...
      • TZubiri 2y ago
        I think this is a statistics and definitions question There can be a lot of upwards mobility (say 10%), and there can be a lot of statics (say 90%) The datapoint I remembered is that a huge fraction of billionaires wer3 first generation billionaires. But that may not mean much for the greater part of the population. So we may be saying things that sound contradictory, but are congruent.
        • deflat3d 2y ago
          [dead]
        • Judgmentality 2y ago
          Your evidence is that there are more billionaires when arguing there is upward mobility? We are talking about completely different things. Many of those people started out as multimillionaires and then became billionaires - almost none of them started out poor. And you're focusing on a tiny percent of the population and extrapolating that to everyone as though it's representative of anything meaningful.
          • TZubiri 2y ago
            https://youtube.com/shorts/MqA-hUeYvb0 https://youtube.com/shorts/MqA-hUeYvb0 Millionaires too. The last bit is sus though. "Only inherited after making a million". Sounds like it would include born rich, high education, basic necessities covered, can work on startups without worrying about earning a salary, many such cases.
    • svnt 2y ago
      Because as wealthy families produce offspring who do not need to work or earn income in order to compete for finite resources with those who do, the cost of those resources increases, while the burden of labor and stress falls increasingly on the employed. Eventually the man dying while making an income and spending no time with his child will grow to resent the one making the same income through family wealth who has enough time for that and more.
      • TZubiri 2y ago
        Might you be conflating finite for static? Or more charitably, implying and assuming the growth rate is smaller or equal to consumption. I'm not saying it is or isn't, but that would need to be the case for your argument. Also the ratio of wealthy to non wealthy needs to be quite high. Also wealth needs to be transferred and maintained, and not spoiled or lost. I think those are the assumptions. But yeah, under those conditions, the competition for resources would mean in order to move upwards someone needs to come down. But it would need to be a zero sum economy
        • svnt 2y ago
          Thank you for passive-aggressively outlining the infinite growth mindset. Falsely equating economic growth with cost of living metrics, and assuming that with more money everything can just continue happily. It’s been a very successful evolutionary niche for a handful of centuries.
      • dingnuts 2y ago
        when wealthy people have kids their wealth is diluted. Truly, one of the best parts of Elon Musk having so many fucking kids is that at least his fortune will be greatly divided and spread the second he dies Generational wealth rarely lasts more than a generation or two. Families like the Rothschilds seem to be more the exception than the rule. Though I am not wealthy so perhaps I truly don't know what it's like in the big club I'm not in
        • TZubiri 2y ago
  • gruez 2y ago
    If you read the second paragraph the authors explain what they mean by "becoming". >People in advanced economies stand to inherit around $6trn this year—about 10% of GDP, up from around 5% on average in a selection of rich countries during the middle of the 20th century. As a share of output, annual inheritance flows have doubled in France since the 1960s, and nearly trebled in Germany since the 1970s. Whether a young person can afford to buy a house and live in relative comfort is determined by inherited wealth nearly as much as it is by their own success at work. This shift has alarming economic and social consequences, because it imperils not just the meritocratic ideal, but capitalism itself.
    • wordpad25 2y ago
      average and median inheritance is tiny, few thousand dollars
      • gruez 2y ago
        The article specifially acknowldges this. >If you consider this as a whole, the growing importance of inheritance starts to become clear. In Britain one in six of those born in the 1960s is projected to receive an inheritance that exceeds ten years of average annual earnings for that generation. For those born in the 1980s, the ratio rises to one in three. The inequality of what people inherit, meanwhile, is startling. A fifth of 35- to 45-year-olds are expected to inherit less than £10,000 ($13,000), whereas a quarter are expected to inherit more than £280,000. Moreover, how does this fact disprove the article's thesis? Is the implication that because less than 50% of people are getting giant inheritances, everything's fine?
• andy_ppp 2y ago
  People really should look at the work of Gary Stevenson here: https://youtu.be/TflnQb9E6lw https://youtu.be/TflnQb9E6lw The truth is economic growth hasn’t been occurring in real terms for most people for a long time and the rich have been transferring money from the poor to themselves at a dramatic rate. I’m starting to think the entire system is corrupt and we are headed for a destroyed Europe and a civil war in the US. Maybe I’m very pessimistic but this moment in history feels like the end of the American empire, what comes after this is extremely uncertain but people only seem to demand a fair piece of the wealth after a world war.
  • mandmandam 2y ago
    Dude Gary Stevenson is so good, great to see him shouted out on these conversations. I've long wondered why so many economists get inequality so incredibly wrong without any hint of self-awareness whatsoever, and the answer (in part 3 of that series) was mind-blowing. So, so well put together. I won't give the spoilers here, but do watch it. It's an experience.
  • lorenzowood 2y ago
    +1 for @garyseconomics
  • simonbarker87 2y ago
    Perhaps my friends and I are outliers, none of us inherited any wealth or were given trust funds or lump sums when hitting adulthood but all of us are better off than our parents at the same age and their parents are better off than their parents (with one exception). All either studied hard in school and went on to get a degree or left school at 18 and apprenticed in a trade or got specific qualifications. I read so much about declining wealth and how each generation is worse off that I have to assume I’m in a lucky bubble because it’s not the case for me. None of us are rich but the system appears to be working from a sample of say 30 people aged 25 to 45 from different parts and backgrounds in the UK.
    • jibbit 2y ago
      did you buy a house? when?
• henning 2y ago
  The purpose of a system is what it does. The system is working as intended. This is not a problem for capitalism, this has always been the goal.
• the_gipsy 2y ago
  Inheriting is the root cause of all corruption. We can never, ever, have a just society based on the principle of giving our children wealth that they did not earn nor deserve.
  • polishdude20 2y ago
    It's almost a self fulfilling prophecy. Many people who have owned a house for the last 20 years got in at a lower price compared to their salaries. The only way younger people can get a house now is to inherit their parents wealth. Even if I work my ass off, I won't be able to afford a house the same as my parents did. My only hope is that I inherit their house when they pass.
    • James_K 2y ago
      What most people have yet to realise is that home ownership is a quite negative phenomenon. The dual of owning a home is the ability to deny others access to housing. People who are particularly attached to the capitalist system will suggest crazy solutions like a limit on the number of houses per person, but the real solution has always been government ownership of all land. There is no advantage to privately owned land except the ability to horde it and create waste, or rent it out and create inefficiency.
      • dgfitz 2y ago
        > The dual of owning a home is the ability to deny others access to housing. How do you figure? Are we out of land? I would argue we are not, at all.
        • James_K 2y ago
          What is owning a home? It is having the power to legally demand other people leave it. Hence owning a home requires the ability to rent out a home, and to to rent out many homes and drive up the price. Likewise we have much land, but it has not been developed because people own it. In a system of government ownership, they would eventually be outbid on the lease for their land and it would be developed into a larger amount of affordable and higher density housing. Instead people own that land and are able to keep it underdeveloped at the cost to everyone else, then use this leverage to enrich themselves through the increase in house prices. There is no positive argument for the private ownership of land over public ownership.
• bgun 2y ago
  The idea that an average person, working hard, can eventually own part of a nation's land and resources, setting up their family with generational wealth, is derived from the pioneer days when land was plentiful. This was never going to be able to last forever as long as the population keeps increasing. This is why settlers left Europe etc in the first place to seek fortune overseas. And since there is no un-owned land remaining, the market price for land will match or exceed regional population growth worldwide forever, unless a whole lot of people start dying. Working hard is necessary in its own right for many reasons, but promising everyone that if they "work" hard enough, they too can set up their heirs, is pure marketing. So is shaming anyone who fails to achieve it as "lazy", when it was never going to be possible for more than a fraction.
  • sc68cal 2y ago
    > the pioneer days when land was plentiful. I think you mean to say "When we could steal land from the people who were originally on that land"
    • echelon 2y ago
      > "When we could steal land from the people who were originally on that land" That's every single society ever. This has been the civilizational algorithm. It predates our species. That same tactic is alive and well today.
      • milicat 2y ago
        A gross oversimplification of anthropology.
      • James_K 2y ago
        I don't think so. How many genocides can you think of on the scale of the Native American genocide? Such events seem rare to me.
        • echelon 2y ago
• TZubiri 2y ago
  I think we need to shift from seeing inheritance as something we benefit from. Every positive comes with a negative, nothing is created nothing is destroyed. Chemistry found it to be so in the physical domain, confucians in the spiritual domain, and accountants in the wealth domain. I won't deny that you CAN ignore the responsibilities that come from inheriting wealth, yes you can sell your father's company and life mission, but you destroy your legacy, and your children will destroy yours. Wealth comes with its own set of problems if taken. Sure we may argue about which problems are worst, but must we? Each is born into a place, each is born into a class. And the principle of balance shall bring equity in the form of responsibility (to paraphrase Spiderman's uncle). I just feel it's a more appropriate response to tell your parent "I will take care of it" rather than "thank you" and selling it to go on trips and snort cocaine. I'm not saying I'm free of sin and don't indulge in the pleasures of hedon, be it in a coffee (brought to me by a less attractive waiter of a distinct race from other commensals serving a publicly traded company, and made with beans grown and brought under a veil I can assume hides even more injustices) or in the wasting of my intellectual and physical talents on the pursuit and satisfaction of short term audiovisual novelty, but I will do so in guilt damnit!
  • soared 2y ago
    Are you trying to say it’s harder to inherit wealth than it is to be born low income, grind a construction job, and come home to the house your parents bought 40 years ago that homes your grandparents, parents, and your family?
  • gruez 2y ago
    >Every positive comes with a negative, nothing is created nothing is destroyed. >Chemistry found it to be so in the physical domain, confucians in the spiritual domain, and accountants in the wealth domain. This is a platitude that has no bearing on reality. Technological advance in the past 2 centuries has increase our wealth and standards of living by orders of magnitude. You can come up with token objections about how each advancement had some downsides (indoor plumbing is bad because... copper mines pollute the environment?), but it's certainly not the case that "nothing is created nothing is destroyed". Technological advancement has created untold wealth.
• jimbohn 2y ago
  If skills and knowledge matter less and less because technology and automation grow over time, what matters if not already existing wealth? Might be an hyperbole dictated by the current times, who knows.
• nemo44x 2y ago
  When you look around at how expensive homes are in certain areas and continue to lose the auction because everyone else had a cash bid, realize a lot of people are getting a lot of money from their aging and dying boomer parents. Where I live nearly everyone had a lot of help from mom & dad.
  • jarsin 2y ago
    Money flowing out from the real estate sales on the coasts are also a big contributor. Californians have been flooding Idaho, Nevada, Utah etc. They buy their homes and 2 new cars then have money left over to invest in the markets.
    • nemo44x 2y ago
      Indeed. I don’t think people outside the coasts realize how much more the large set of top earners make.
• tehjoker 2y ago
  In other words the rich are an increasingly large parasite that is increasingly impairing the functions of real society and subverting it to their ends. Two oligarchs are running the country right now in their own interest.
  • scotty79 2y ago
    I'd be more worried about a swarm of smaller, less flashy oligarchs that have a choke-hold over large groups of American population through various for-profit schemes across myriad of industries who influenced lawmaking for over half a century or more.
• BenFranklin100 2y ago
  A dirty little secret is that that over a third of Gen Z and Millennials get down payment help from their home-owning parents. In expensive cities, the percentage is even higher. When you add the number of parents who co-sign in order to secure the mortgage, the number could reach 2/3rds in expensive metros. It’s the new feudalism. https://investors.redfin.com/news-events/press-releases/detail/1071/nepo-homebuyers-more-than-one-third-of-gen-z-and https://investors.redfin.com/news-events/press-releases/deta...
  • betaby 2y ago
    > It’s the new feudalism. In a sense that basic housing now is luxury - yes.
    • asdf6969 2y ago
      In the sense that there’s a growing class of landed gentry and nobody else can buy anything. People with houses today will be the aristocracy in a few decades
      • betaby 2y ago
        > People with houses today will be the aristocracy in a few decades Not really. Peasants were mostly owning their houses, that did't make them aristocracy. I genuinely do not see how owning a 1970s-built bungalow translates me into the aristocracy in a few decades.
        • asdf6969 2y ago
          Because you own land. It will make more money than most people make through employment. This is true in many parts of Canada over the last decade and the trend will probably spread
          • betaby 2y ago
            > Because you own land. It will make more money than most people make through employment. I genuinely don't follow. Yes, the bungalow sits on land ( enough for BBQ for 5-6 people ) and I sit inside the bungalow. Neither of the them make me any money. I can't sold them and live in the stratosphere. I either have to buy something else or rent.
• mattigames 2y ago
  I like how they always forget to mention the elephant in the room, 8 billion in absurd amount of any living organism, by many estimates we already surpassed the number of rats in the world, but the responses about doing anything at all to reduce that number in the long-term are all emotionally charged and empty of any rational thought. In the context of capitalism as we known scarcity increases value, such thing is true for number of employees available, the less employable people around the higher the wages and therefore the quality of life of the living.
  • scotty79 2y ago
    Human population will decrease thanks to miracles of education and contraception. Give it a few centuries.
    • mattigames 2y ago
      I'm a afraid it will be a bit too late.
      • scotty79 2y ago
        Too late for what? There are organisms living in boiling water. Life will prevail.
        • mattigames 2y ago
          Live living in booking water would need millions of years to become sentiment (once again), so any chances of expanding beyond planet heart diminish as we get closer to the day the sun explodes, or grows enough to finish all life.
• femto 2y ago
  As predicted in Piketty's book "Capital in the Twenty-First Century". He posited that wealth trumps labour and the post-war period was an anomaly. His proposed solution is a wealth tax. I can't see those with wealth/power implementing a wealth tax, so the alternative is to invest to accumulate wealth and know that your children, who are not in a position to invest, will probably be relying on that wealth.
  • adverbly 2y ago
    I'd prefer a land value tax personally. Capital flight is a thing. Land isn't going anywhere. Economists including multiple Nobel laureates on both the left and right have been screaming for land value tax for almost a century for this and many other reasons.
    • steezeburger 2y ago
      Same. I've been somewhat Georgist pilled lately.
      • zemvpferreira 2y ago
        Likewise. It’s effectively like a wealth tax with better incentives.
        • MarcelOlsz 2y ago
          Is it basically saying to tax land that has productive assets? Like if you have land that has a factory, you're paying taxes, but if you have land with a house, you're not?
          • Waterluvian 2y ago
            I believe LVT is the opposite. Tax land ignoring what’s on it. If you own land with tremendous potential but don’t improve it, that’s your loss. Otherwise by taxing land based on what’s on it, it negatively incentivizes improving it. The nicer my home gets, the more my taxes go up.
• fumeux_fume 2y ago
  Most of my friends who bought a house in Seattle in their 20s or 30s used inherited funds. When I worked in mortgage lending it was basically universal that anyone younger than 30 was getting a lot of help from parents. There's a massive advantage to owning a house when you're young, especially pre-rate hike.
  • kristianp 2y ago
    Just getting into a home loan pre-rate rises is the biggest advantage, due to the fixed-rate nature of home loans in the US. This article is another restating of the fact that wealth inequality is the greatest its ever been.
• JimmyBuckets 2y ago
  https://archive.is/RKUl4 https://archive.is/RKUl4
• rqtwteye 2y ago
  We are building a new aristocracy where people are better than others just by virtue of being born into the right family. And if we don't limit the ability to inherit this process will just accelerate.
  • Supermancho 2y ago
    Same as it always was.
• brine 2y ago
  [flagged]
• fragmede 2y ago
  Shit, I would have chosen richer parents if you'd just told me before I was born.
• lanthissa 2y ago
  In a stable society where you dont tax wealth, this is the inevitable outcome.
  • betaby 2y ago
    We do tax wealth of course. We wealth is defined as primary residence. No need to remind me about 'services'. Countries tax plebs by constantly changing the definitions of income, wealth.
• raminf 2y ago
  Relevant Calvin and Hobbes: https://www.gocomics.com/calvinandhobbes/1991/11/29 https://www.gocomics.com/calvinandhobbes/1991/11/29
• drivebyhooting 2y ago
  What value can most US educated bring to the economy? I count myself included. They’re not hardcore enough to do meaningful research. They’re too expensive to work in factories. (And not going to compete with Chinese slave labor) What’s left? Hard to automate or offshore labor: service, or menial labor. Surely you can’t become wealthy that way? I just happened to blunder my way into tech despite subpar education.
  • jpalawaga 2y ago
    America is not hardcore enough to do meaningful research? huh?
    • drivebyhooting 2y ago
      Did you go to American high school? Most kids barely pass algebra 2. Even the “smart kids” can’t really compete in college. With standard American route there’s a sub 1% chance you can make it as a researcher in a hard science.
      • asdf6969 2y ago
        That’s better than a system where future janitors are still expected to grind math problems instead of having a childhood
      • firstplacelast 2y ago
        What? I went to an American public high school, there were/are plenty of kids who are very smart. 8% of my graduating class were in the uber-advanced honors math track. This is in a flyover state outside a small city. I also used to work in science, the reason there's so few chances to make it as a top researcher is that there is little opportunity. Look at jobs for a lot of life science majors after a BS, you will find a ton that is washing glassware in a lab, a complete waste of anyone with half a brain. There's reasons why there is little opportunity that's not worth exploring here, but suffice to say there are a ton of very smart kids in America that choose other paths. Outside tech and specialized physicians, nerd careers are not lucrative on average. With little opportunity, smart people end up doing banal work. Why do banal work and have a mediocre salary predicated on jumping through higher than average academic hoops? Doesn't add up for most people.
• georgeburdell 2y ago
  This is why I believe the Financial Independence movement is too rearward looking, if you have children. Parents now need to plan for the college (and graduate school) tuition and the house downpayments of their children, because the cost of both have increased by an order of magnitude in the last 50 years.
  • fullshark 2y ago
    I reached the same conclusion. Ultimately I do not believe my children will own a house unless I give them down payments. Ensuring your children don't start life saddled with education loans + ensuring they can own a house are the two biggest legs up you can give them going forward. The alternative is indentured servitude and variable housing costs keeping them impoverished forever.
  • mettamage 2y ago
    Education can still be hacked by studying in Europe, even as an international student.
    • rcbdev 2y ago
      What do you mean "hacked"? Our universities are top-tier.
      • lurking_swe 2y ago
        i think they mean “get a good education for very cheap”. Compared to the US at least, education in europe is extremely cheap.
• jarsin 2y ago
  A groundbreaking 20-year study conducted by wealth consultancy, The Williams Group, involved over 3,200 families and found that seven in 10 families tend to lose their fortune by the second generation, while nine in 10 lose it by the third generation. This study matches my anecdotal experiences. Second and third generations of wealth don't respect money and this manifest in all kinds of bad behavior that leads to wealth destruction.
  • Etheryte 2y ago
    This is an interesting concept that in its abstract form applies to far more than inheritance. For example, it's a pretty thoroughly studied phenomenon that if a part of an immigration population becomes radicalized, it's usually the third generation. The reasoning if I recall correctly off the top of my head is similar to your reasoning.
    • scotty79 2y ago
      Seems like people saying "kids are dumb" for millennia, were actually right every time. Who knew?
  • cle 2y ago
    We’re increasingly protecting rich folks from the consequences of bad investments, I wonder how much this moral hazard impacts mobility?
• focusgroup0 2y ago
  part of the reason marriage was invented as a social technology was intergenerational transfer of wealth. so, inheritance has been 'nearly as important' as working for millennia.
• starioIC 2y ago
  What is opposing theory to this? I.e., idea that inequality bad Maybe I’m in a bubble that I seem to hear this and while I do agree I would still like to know what the opposing idea is here.
  • bombcar 2y ago
    I suppose it’s something like inequality is inevitable so you can’t remove it; instead you can try to make it comfortable for everyone and that due diligence can help. Perhaps a well-run military would be an example; unequal by definition but without all the parts working well it falls apart.
• UncleOxidant 2y ago
  https://archive.is/M5kId https://archive.is/M5kId
• asdf6969 2y ago
  Almost everyone I know got several hundred thousand dollars gifted for a down payment and most of these people are from typical middle or upper middle class backgrounds. I have a top 2% income (by Canadian standards) but the best I can do is a 2 bedroom condo or a bottom of the market townhouse with a long commute I don’t know a single neighborhood in this city where the average household in that neighborhood makes enough to live there with current prices. I genuinely don’t know why I even work anymore. I don’t have any achievable financial goals except save as much as I can until I move away to live off my savings in a cheap area
  • TriangleEdge 2y ago
    I moved to the USA and got 2.5x my salary in CAD. Canada is fucked and I'm glad I left. I've lived in tiny apartments there and now I just bought my first house in an expensive city with 0 help from my parents. Am also starting a family here which is something I could have never dreamed of in Canada. I suggest you look at historical trends for USD to CAD and trends for home prices vs income in Canada.
    • asdf6969 2y ago
      working on it :) I like it here but I have no future and it’s seriously impacting my mental health
      • MarcelOlsz 2y ago
        I bought a house here on ridiculous terms (believed in my job at the time). Then I got let go and I've been paying $4k/mo ever since hahahaha. I cannot wait to sell and get out.
  • chasely 2y ago
    I see this a lot as someone that came from a solidly middle-class background (parents were a teacher and secretary) and went to a "highly-ranked" university with plenty of upper-middle or upper class students. I work in the same jobs as my peers, but there is a clear wealth difference in how our lives are spent. We have a nice house in a good neighborhood, but our peers have very nice houses is some of the best neighborhoods due in large part to down payment gifts, gifts for remodeling, etc. We can both afford the mortgage payment, but the down payment would take us probably a decade to save for. On vacations, we'll drive a couple hours away with the kids, while our peers will fly to Europe and spend two weeks since they pay for the flights and their parents pay for lodging and food. And then there is family support. Some of my peers have parents who bought second (or third) homes to be closer to their grandchildren, or will pay for the very nice private school, etc. It's taken me a lot to not very bitter about this -- and I'm clearly still a little bitter -- but I also know that we will likely be in a position to offer some of this support to our kids in 20+ years.
• talkingtab 2y ago
  In United vs FEC, corporations were granted to the ability to be treated as persons - with all the rights - when it was good for them. And to enjoy the protections of being a corporation when that was good for them. This was a unilateral decision by the US Supreme Court. The result is that corporations now choose who candidates are in the US and who gets elected. Once a candidate is elected they serve the master who got them elected. Not, We the people. Any even casual evaluation of the laws passed confirms this. Affordable medical care, which the People want and need? No. Obscene profits from corporations overcharging people for medical care? Great! Regular people push addictive drugs? Jail. The Sackler Family, probably the biggest cause of drug overdoes deaths ever? Are they in jail? And what about the millions of stock owners who made a tidy sum? Did they lose their money, are they in jail? Nope. We are not a democracy, we are a corpocracy. Because of a US Supreme Court decision. We need to fix this. And hint: is the word corporation in the US Constitution. Hint #2 does the 14th amendment prohibit unequal protection under the law. In a democracy the representatives represent the will of the people. In a corpocracy they represent the will of the wealthy corpocrats and corporations. We have two corpocratic parties to choose from. Democrats and Republicans. We need to fix this.
• boelboel 2y ago
  Housing is the obvious problem, only way to fix this is by making it easier to build houses and some kinda land value tax (higher property taxes would work but not as well). Problem is most western countries are gerontocracies and property taxes are the most hated tax. If you didn't get lucky you might as well give up on ever owning a house.
• fsckboy 2y ago
  >People in advanced economies stand to inherit around $6trn this year—about 10% of GDP this is mixing apples and oranges. Let's say the stock market yields 10% annual returns on average (it doesn't, but it's a round number in the ballpark). Let's say you inherit a million dollars. That million dollars invested in the stock market would return $100,000 to you as annual income. THAT number is comparable to GDP which is a measure of income. So, in other words, "people in advanced economies stand to earn annually from their inheritances less than 1% of GDP (yawn) not 10%" other nits, the baby boomers were an unusually large population group in an unusually prosperous and healthy period of history: we've known they would die for quite some time and we've known they would leave a lot of money. It's not "a trend" and it's not "news". It's a well known anomoly, a blip/bulge passing through the system. It's interesting but it's not alarming.
  • gruez 2y ago
    >this is mixing apples and oranges. Let's say the stock market yields 10% annual returns on average (it doesn't, but it's a round number in the ballpark). Let's say you inherit a million dollars. That million dollars invested in the stock market would return $100,000 to you as annual income. THAT number is comparable to GDP which is a measure of income. So, in other words, "people in advanced economies stand to earn annually from their inheritances less than 1% of GDP (yawn) not 10%" I get where you're trying to go with this (ie. "you can't compare stock vs flows!"), but you've patterned matched too aggressively. There's nothing wrong with using GDP of a country as a benchmark. Sure, it's comparing stock vs flows, but GDP of a country is nonetheless a valuable yardstick when comparing sums, for instance comparing debt to GDP levels. As long as they're not directly comparing the figures (eg. implying that the whole country is going to be inherited in 10 years time or whatever), it's fine.
• encoderer 2y ago
  As long as most millionaires are self-made, we are ok. My dad worked at a gas station and I run a tech company.
• guywithahat 2y ago
  This doesn’t hold up logically. To inherit money means the generation before you saved it, but for it to be generational wealth you must then pass on more than you inherited. Further it doesn’t serve as a major investment, because your parents only die ~25 years before you do, meaning it can’t be used to start a business or something similar. For inheriting wealth to be important to your success, it would either have to come much sooner or you would have to have no kids of your own
  • gruez 2y ago
    >but for it to be generational wealth you must then pass on more than you inherited. Further it doesn’t serve as a major investment, because your parents only die ~25 years before you do, meaning it can’t be used to start a business or something similar. At least in theory that's not hard to pull off. From the article: >By one calculation, if America’s rich families in 1900 had invested passively in the stockmarket, spent 2% of their wealth each year and had the usual number of children, there would be about 16,000 old-money billionaires in America today. In fact, there are fewer than 1,000 billionaires and the vast majority of them are self-made. The average inheritor might be too spendthrift to stick to the plan, it's not exactly impossible as you suggest.
    • guywithahat 2y ago
      I’m not saying it’s impossible for someone to invest inherited money, just that on average, the returns aren’t that significant and the money comes too late. I’m sure there are people who’s parents pass way early and they get a lot of money at 25 If we’re talking about an average population, the authors premise doesn’t make sense if you look beyond one generation. It sort of feels like the author is jealous of someone else’s inheritance, and wrote this article to complain about it.
      • gruez 2y ago
        >If we’re talking about an average population, the authors premise doesn’t make sense if you look beyond one generation. It sort of feels like the author is jealous of someone else’s inheritance, and wrote this article to complain about it. Are you arguing that because the average person only inherits $100k or whatever, rather than the $20M+ required to build "generational wealth", everything's fine?
• DrNosferatu 2y ago
  The Economist agreeing with Piketty??? The world has truly gone mad!
• DrNosferatu 2y ago
  So wealth wasn’t all merit then? Who would say…
• cco 2y ago
  If I've said it once I've said it a thousand times, there is no cogent and respectable argument for why income from labor is taxed at a higher rate than income from capital. I hope we start there, a very simple and straightforward action to take.
  • xdavidliu 2y ago
    my guess is because capital has more options than labor, and the decision makers since time immemorial are more afraid of capital leaving than labor leaving
    • Aromasin 2y ago
      This seems backwards to me. Labour can leave; someone can get on a plane in the UK where they get taxed 40%, and arrive in Dubai where they're taxed 0. Their buildings and assets can't come with them however. Capital that's not ethereal assets like stocks, shares, credit, etc, can't be moved. If you want to leave the country you need to become liquid, which means you sell off your assets and whoever is left in the country gets to buy them at cheaper rates. The issue is when we allow people who do not live or pay tax in this country to make profit on assets in said country. A landlord who lives in the Cayman Islands should not be able to collect rent on UK assets while not paying the UK government tax in turn.
      • xdavidliu 2y ago
        > This seems backwards to me. Labour can leave; someone can get on a plane most labor does not individually have the means to leave like that. also, you're talking about capital moving as in already-invested capital, while I'm talking about the people with capital making decisions to invest in the first place.
  • _1tem 2y ago
    Why should income from labor be taxed at all? Income taxes strike me as fundamentally wrong.
    • 2y ago
• apwell23 2y ago
  I suddenly became the poor person in my peer group that all went to same school and did similar jobs. Why? because they all got 'help' buying a home and now have a fancy homes. I live in a rental apartment. I am still the most judicious about spending money but its hard to hang out with a ppl who can afford to be more careless. It all happened so fast in 2022.
• pjdemers 2y ago
  From the article: "Building enough houses in the right place is the single biggest action governments can take to restore the link between work and wealth" No greater truth can can be spoken about what's wrong with the economy in rich countries today.
  • hn_throwaway_99 2y ago
    I think Austin, TX is just a great proof point for this over the past 5 or so years. We built a ton of housing over the past 5 years, and last I read rents have fallen 22% and house prices have also gone down considerably (though they were so insane during the pandemic I still think they've got a way to go). I may consider myself liberal, but general housing policy by most liberal leaders has been a total disaster and should be recognized as such.
    • pinkmuffinere 2y ago
      Looking at the Case-Shiller index for Austin[1], Dallas[2], NYC[3], SF[4], and LA[5], it doesn’t seem like Austin’s prices have grown any less in the last five years. They’ve basically all nearly doubled in that time. If there is any improvement it’s too small for my eyes to see. In fact, SF seems to have had the lowest price growth (perhaps due to fears about crime?). [1] https://fred.stlouisfed.org/series/ATNHPIUS12420Q https://fred.stlouisfed.org/series/ATNHPIUS12420Q [2] https://fred.stlouisfed.org/series/DAXRNSA https://fred.stlouisfed.org/series/DAXRNSA [3] https://fred.stlouisfed.org/series/NYXRSA https://fred.stlouisfed.org/series/NYXRSA [4] https://fred.stlouisfed.org/series/SFXRSA https://fred.stlouisfed.org/series/SFXRSA [5] https://fred.stlouisfed.org/series/LXXRSA https://fred.stlouisfed.org/series/LXXRSA
      • kjkjadksj 2y ago
        I’d wager sf had the lowest price growth due to having the lowest job growth in that time more than anything.
      • Nimitz14 2y ago
        NYC keeps going up while Austin has clearly reversed the upward trend. It seems you may have not looked at the graphs you linked.
• sambull 2y ago
  Always has been.. that's why churches have old ladies and community to poach lonely old peoples stuff. Also Psychics love your dead husbands boat.
• aczerepinski 2y ago
  Taxing estates over 1B at 100% would move the needle a good amount. Rich people will insist that if you remove their incentive to earn more than a billion they’ll stop working and I’m ok with that. There will always be plenty of non billionaires left to pick uo the slack.
  • jfengel 2y ago
    Make it 99%. Then they will increase their wealth by $.01 for every dollar earned, which is better than $.00 for doing nothing. Logically they must continue using their special billionaire-skills because they are earning money for it. Probably at a faster rate than 99% of us. Plain economics. Surely they will make the rational choice.
    • BJones12 2y ago
      The rational choice would then be to move their economic activity and the jobs involved to another country with lower taxes.
      • luckylion 2y ago
        That would already be the rational choice, if it was. There are countries with lower taxes, yet the economic activity isn't flocking to them.
      • thfuran 2y ago
        The US taxes non-resident citizens.
        • erikerikson 2y ago
          And citizens can abandon their citizenship if they feel it is worth it.
      • jfengel 2y ago
        If they think that they can be as economically productive in a different country without American citizenship, then they should indeed do that.
• seydor 2y ago
  There is a weapon that younger generations have virtually forgotten, but we re likely to see it making a big comeback in the short term: strikes.
• tonetheman 2y ago
  [dead]
• chasing 2y ago
  People don't seem to realize that the alternative to a democratic, egalitarian society is a violent one. For rich and poor alike. People will strive to make their lives better. If that effort can be funneled into productive actions that provide benefits to society as a whole, then that's what people will do. If that effort requires stealing from and killing hoarders of wealth because there's no other way to get resources, then that's what people will do. The hyper-wealthy seem oblivious to the fact that you can't both be a trillionaire that's causing societal economic desperation and live in a society where people politely do their business and leave you in peace.
  • Vegenoid 2y ago
    We have lived in a stable system long enough for people to forget the horrors of instability. It is a certainty that a reminder is coming - what is uncertain is how far away it is.
  • untwerp 2y ago
    > The hyper-wealthy seem oblivious to the fact that you can't both be a trillionaire that's causing societal economic desperation and live in a society where people politely do their business and leave you in peace. They have been well aware of it. See Beware, fellow plutocrats, the pitchforks are coming https://youtu.be/q2gO4DKVpa8 https://youtu.be/q2gO4DKVpa8 We seem to be in the bread and circus phase for the time
• hnthrowaway0315 2y ago
  If working is still a little more important than inheritance, it marks the advancement of the human civilization. In the country where I was born, inheritance was way more important than working 100 years ago.
• cytocync 2y ago
  [dead]
• quantadev 2y ago
  The American economy can be explained very simply: We went broke in 1970, and so we went off the Gold Standard, got the world to agree to use USD as reserve currency, and then just started printing money on an as-needed basis to fund gov't spending, and also for banks to hand out [basically] freely to investors, which pumped up the stock market (and all other assets) USD valuation to crazy insane levels. All this free money also caused inflation and so everyone holding assets saw those USD valuations rise accordingly. Basically the baby boomers indebted the nation by stealing $36T from all future generations, and every one of them will all be long dead before one nickle of this debt is paid down, if it ever is, and no one even thinks it ever will be.
• neycoda 2y ago
  I can't wait until the rich start inbreeding so much they get deformed.
• presentation 2y ago
  Higher inheritance/gift/estate taxes + closing loopholes like step-up basis upon death at least in the USA seem like pretty direct ways to combat these issues as well - though nobody with money (read: nobody who benefits from the inequality) really wants to support that, which is reflected by almost nobody in the comment section here mentioning them.
• oarla 2y ago
  This article seems to contradict itself. It notes that tax system is flawed in favor or inheritors but goes on to suggest that taxing the inheritance or property will address this issue. Why would those not be tilted to benefit the inheritors? History of mankind has been shaped by housing. It also is the most common and long lasting vehicle of investment, primarily because how easy it is to pass it down to descendants. It's not going away anytime soon.
• pontifier 2y ago
  The solutions are simple, but the execution requires a radical change in the way we all see each other. You don't cut off your finger when you get a splinter, or tell your earlobe it needs to fend for itself because it just hangs there and does nothing most of the time. Pain in our bodies can make us shift our whole being to ease pressure on a stiff muscle or avoid a small burn. Pain in our society falls on deaf ears and drives us to fight over scraps when there is abundance everywhere. The solutions are simple. We all need our basic needs met, we should strive to end the suffering of others, and to help each other reach our true potential from where we are right now.
• wtcactus 2y ago
  The middle class (in Europe at least) is now paying around 50% of their income to the state. This is absurd and cuts any upward social mobility.
• rayiner 2y ago
  Why isn't the inheritance tax 100%? Or say 100% on anything that isn't real property? Inheritance made sense back when most peoples' estate was land, and you needed an orderly arrangement to keep land in the hands of the people who would work it. But why should the government provide legal means to transfer say stock ownership after death?
  • s1artibartfast 2y ago
    Because the common premise is that private property belongs to the individual and is theirs to direct, not that of the government.
• gurumeditations 2y ago
  If you do not get the chance to go to or complete college at a young age then you will never own a home in America in 2025. You will be a cattle who pays almost everything you earn to the rent seekers of America. The American Dream is dead.
• fallingfrog 2y ago
  A society of equals needs very little coercion to run, since everyone feels like they have ownership and importance and so everyone feels like they are more or less on the same team. A country in which a wealthy few rule over masses of poor however requires a lot of violence to keep orderly. And of course, it will be in the interests of the elite that the poors are divided against one another.
• runeks 2y ago
  > People in advanced economies stand to inherit around $6trn this year—about 10% of gdp, up from around 5% on average in a selection of rich countries during the middle of the 20th century. As a share of output, annual inheritance flows have doubled in France since the 1960s, and nearly trebled in Germany since the 1970s. Whether a young person can afford to buy a house and live in relative comfort is determined by inherited wealth nearly as much as it is by their own success at work. I wonder how much of this inherited wealth is from rising house prices. My parents' generation (I'm 38) have earned around €500k from rising house prices during their lifetime. The price of their house has more than quadrupled since when they bought it 35 years ago. That's a lot of money in inheritance right there. Something that children of parents who rent don't get.