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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

#221

Post by burkaman »

iNic wrote: post #196
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…

It turns out the thing that Picketty missed was that he grouped land with Capital. Land should be treated differently as it can not be created or destroyed. If you seperate out the data into land and capital (w/o the land) then all of the outsized returns come from rich people hoarding land[1]. This is in line with the observations of Riccardo[2]. [1]: https://www.salon.com/2015/01/02/joseph_stiglitz_thomas_pike... […

Sorry if this is nitpicking, but valuable land absolutely can be created (Boston) and destroyed (climate change) on human timescales.

I'm sure the amount of land that can realistically be created and destroyed within a few lifetimes is negligible compared to the amount of land in existence, but compared to valuable inhabited land it might actually be significant. Coastal land tends to be pretty valuable, and that's where (almost) all the creation and destruction occurs.

Edit: Actually, the interview you reference is not even really talking about land.

> When you say “land,” you’re not talking about land in the Jane Austen sense, that is, agricultural land under the ownership of the lord of the manor, right?

> It’s not agricultural land, it’s the value of urban land.

Obviously urban land can be created and destroyed as cities expand and contract.

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

#222

Post by qeternity »

rabuse wrote: post #137
lifestyleguru wrote: post #91

Why should one even try anything at all?

There'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.

At what point in history do you think it has been easier to compete against giants?

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

#223

Post by saalweachter »

bertjk wrote: post #142
digging wrote: post #26

Earlier quoted context omitted.

That's a false dichotomy. Redistributing =/= squandering.

How 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…

Concentrated inheritance is investing in one person's (or a small number of people's) success.

Taxing inherited wealth, and using the revenue to support infrastructure, education and research, is investing in many people's success.

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

#224

Post by qeternity »

darklycan51 wrote: post #148

There 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.

Alright, I’ll bite. Pick a billionaire and tell me what should have happened such that they wouldn’t be a billionaire.

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

#225

Post by kelseyfrog »

zozbot234 wrote: post #208
ambientenv wrote: post #202

Earlier quoted context omitted.

This feels true to me. So my question is - and I don't know the answer yet, though I continue to seek such - when do we, as a humanity, break this cycle? When, and how, do we override the greed impulse, the impulse for power and control and domination of others? When do we begin to leverage a superior cognitive capacity enough to gain true enlightenment and break free from the bonds of behaviour which, while necessar…

We are pretty much there already. The average person in a developed Western country is pretty much a billionaire when compared to the living conditions of even the wealthiest people in ancient history. It's only the impulse of greed and envy towards others that leads us to believe otherwise.

I'm always reminded of the video where one monkey is rewarded with a cucumber and one with a grape[1]. Certainly getting a cucumber is infinitely better than not having a cucumber, and yet the monkey protests.

Despite having higher cognitive functions, that impulse still exists and can only be suppressed for so long and so far. No one has infinite capacity to maintain what they see as unfairness indefinitely, especially when it seems that humans make their own rules.

1. Capuchin monkey fairness experiment, total duration: 57s, https://www.youtube.com/watch?v=-KSryJXDpZo

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

#226

Post by rjsw »

kelseyfrog wrote: post #136
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.

The alternative of last resort is always violent revolution[1]. Wealth redistribution is the olive branch. There seems to be an open question among the wealthy and political class of how far inequality can go given the modern police state and effectiveness of technology in accomplishing the goal of maintaining or exacerbating the current political economy. 1. See historical populist grivences against aristocracy that…

There is an argument that Karl Marx provided a guide for the aristocracy to work out the point that inequality would provoke a revolution then back off slightly from it.

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

#227

Post by matheusmoreira »

hilux wrote: post #13
triceratops wrote: post #12

Earlier quoted context omitted.

Why don't you recommend it?

Because it's depressing.

> A Dynasty Trust can be free of estate taxes and protect the assets from potential creditors.

> Further, Dynasty Trusts can take the greatest possible advantage of a grantor’s gift tax exemption

> currently $12.92 million per taxpayer and $25.84 million per married couple in 2023

> and generation-skipping transfer tax exemption

> $12.92 million per taxpayer and $25.84 million per married couple in 2023

You weren't kidding... So how much wealth does one need to have in order to get one of these things?

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

#228

Post by qeternity »

callalex wrote: post #50
tylersmith wrote: post #23

Earlier quoted context omitted.

But what about it a Trust is depressing exactly? It's just a legal agreement for how wealth can be spent.

Money is a social construct, and it seems you are starting from the base assumption that wealth can be transferred infinitely and unrestricted between generations. Not everyone holds that view of money.

> Money is a social construct

Money and wealth, though often used interchangeably, are very different things. Money is one form of wealth. So whilst you are correct, it’s not the point you’re trying to make.

Wealth is absolutely not a social construct and never has been.

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

#229

Post by lapcat »

DennisP wrote: post #204
hn_throwaway_99 wrote: post #178

Earlier quoted context omitted.

I 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" tha…

I 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.

> 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-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

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.

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

#230

Post by tomwheeler »

burkaman wrote: post #221
iNic wrote: post #196

Earlier quoted context omitted.

It turns out the thing that Picketty missed was that he grouped land with Capital. Land should be treated differently as it can not be created or destroyed. If you seperate out the data into land and capital (w/o the land) then all of the outsized returns come from rich people hoarding land[1]. This is in line with the observations of Riccardo[2]. [1]: https://www.salon.com/2015/01/02/joseph_stiglitz_thomas_pike... […

Sorry if this is nitpicking, but valuable land absolutely can be created (Boston) and destroyed (climate change) on human timescales. I'm sure the amount of land that can realistically be created and destroyed within a few lifetimes is negligible compared to the amount of land in existence, but compared to valuable inhabited land it might actually be significant. Coastal land tends to be pretty valuable, and that's w…

The Netherlands has also created quite a bit of land. Chernobyl is an example of land that was effectively destroyed by becoming uninhabitable.
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