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Billionaires amass more through inheritance than wealth creation, says UBS

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Re: Billionaires amass more through inheritance than wealth creation, says UBS

#121

Post by bobthepanda »

Buttons840 wrote: post #111
Fauntleroy wrote: post #81

Earlier quoted context omitted.

People whine about "wealth distribution" day and night, but at the end of the day what alternative is there to combat the (continually increasing) concentration of wealth at the top? At some point there will have to be redistribution, in some form, and the sooner society comes around to that the better off we'll all be.

Wealth redistribution and making it easier for new businesses to enter markets and compete. These often go hand-in-hand; safety nets allow people to take risks, and new competition prevents markets from colluding and ceasing competition.

Also letting legacy businesses die.

It is more often than not that family firms in particular collapse after one or two generations, if not propped up.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#122

Post by pjot »

gsky wrote: post #20

How'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.

Your edited comment brings to light the concept of survivorship bias.

It’s important to recognize that there could have been farmers with superior skills and work ethic who, due to factors beyond their control like luck or chance events, still find themselves in poverty. To attribute financial success or failure solely to personal habits or skills is an oversimplification that ignores the multifaceted nature of wealth and poverty.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#123

Post by abeppu »

zozbot234 wrote: post #82
abeppu wrote: post #59

Earlier quoted context omitted.

I also think it's worth calling out that his follow-up, "Capital and Ideology" in its latter sections includes several suggestions for counteracting the trend to increasing inequality. One of these is basically that _every_ person should have a windfall inheritance when they're in their early adulthood, which would give them opportunities to pursue education, try starting a business, or whatever else. And naturally,…

So he supports education vouchers and healthcare vouchers for everyone? Because that's what "wealth you can spend down for some specific purposes" is , in a practical sense. That's a welcome attitude, given that these things are often dismissed ideologically. (Also, we generally want people to have some retirement income in their old age when they can't work, and the goal of letting young folks spend down their "inhe…

I think that muddies the water as much as saying that someone who supports UBI also must support foodstamps and housing vouchers. The point is pursuing greater _equality_. We are all heirs to a society that has produced enormous value; why should a small minority of kids get a huge extra unearned boost?

Purpose-constrained assistance is not _equal_ to inheritance, in that heirs to private wealth aren't generally subject to those constraints. Money that the recipient can choose how to spend gives greater freedom than assistance in that dollar amount. E.g. my understanding is a perennial issue with housing vouchers is that landlords often don't want to accept vouchers, so they are less effective than their face-value in dollars would be.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#124

Post by pmorici »

lawn wrote: post #107
pmorici wrote: post #87

This 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.

This 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.

It’s not a sentiment it’s statistics. Look at the number of successful businesses that result in wealth creation.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#125

Post by tokai »

pmorici wrote: post #87

This 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.

You got it wrong. It is easier to start a business in the "socialist" scandinavian countries than it is in the US.

https://archive.doingbusiness.org/en/rankings

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#126

Post by steveBK123 »

mushufasa wrote: post #17

This 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 c…

Low interest rates decade made this pattern seemingly no longer hold, but I think we are getting right back to the old pattern for sure.

The next question is what to do about it. Wealth tax is controversial and hard to implement. It seems to me that simplifying the tax code such that capital gains and various forms of non-salary income didn't have preferential treatment would be an important first step. Further, an actual meaningful inheritance tax that isn't easily avoided by various trust schemes.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#127

Post by rabuse »

mushufasa wrote: post #17

This 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 c…

What happens when the masses get fed up with the inequality and 400+ million guns in the U.S.?

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#128

Post by onlyrealcuzzo »

mushufasa wrote: post #17

This 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 c…

> 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.

You're obviously incredibly unlikely to become a billionaire.

If someone inherits billions - you're not going to out-labor them to become richer. Only luck will help there.

So where is the cutoff?

You can easily out-labor someone who inherits $2M at 50. >10% of people in the US amass >$1M (without counting their home equity) by around 50...

How many people are inheriting more than $2M? 0.5% of people?

You're never going to out-labor luck. It's always going to be better to be lucky than work hard. But luck doesn't scale, and hope isn't a great strategy.

I'm in favor of inheritance taxes. But this doesn't seem like the main driver of inequality....

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#129

Post by seydor »

mushufasa wrote: post #17

This 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 c…

Piketty's claim seems empirically obvious, but also virtually obvious to anyone who has created a gaming economy. The rich get richer faster than anyone can catch up, so you have to introduce artificial constraints like increasing prices for rich people.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#130

Post by chrischattin »

mushufasa wrote: post #17

This 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 c…

Hardly empirical. The data shows the opposite.

~80% of current billionaires in the U.S. are self-made first generation.

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