More than half of all private wealth has been inherited in most of Europe • Hacker News Board

Re: More than half of all private wealth has been inherited in most of Europe

#11

Post by humanrebar » Sun, Dec 17, 2017, 11:40 PM UTC

zokier wrote: post #7

TheSpiceIsLife wrote: post #4

> Fascinating chart: more than half of all private wealth has been inherited in Germany, UK, Switzerland, France — trend: rising fast! > Ever less private wealth is accumulated through own work, increasingly more through inheritance. A massive part of people's motivation to work is to provide for their children. That an increasing portion of wealth is inherited rather than build in an individual's working life-time i…

Modern inheritance should be inherently dissipative, as the estate is repeatedly divided among the heirs, amplified by death/inheritance/estate taxation. The problems arise when the wealth accumulation overpowers the dissipative effect of inheritance, combined with increasingly absurdly high wealth levels that go far beyond providing for children and grandchildren. As for the "golden area" you mentioned; yes, the war…

Wealth naturally dissipates through the generations. What has changed the most is the birth rate of the wealthy.

If they went back to having a dozen children apiece, wealth would dissipate at least an order of magnitude per generation.

Re: More than half of all private wealth has been inherited in most of Europe

#12

Post by ryanwaggoner » Sun, Dec 17, 2017, 11:41 PM UTC

jondubois wrote: post #2

What's interesting about this is that it barely scratches the surface. Assets and money are just some of the things that people inherit from their parents. Many people inherit their entire careers from their parents through social connections - These people would probably be classified as 'self made' which makes the statistics seem more benign than they actually are. I bet if you counted out all those people who were…

Fortunately, we don’t have to rely on guesses, we have measures of economic mobility. In particular, how likely is it that someone born into a particular quintile moves to a higher (or lower) quintile?

https://en.m.wikipedia.org/wiki/Socioeconomic_mobility_in_th...

Answer: it’s not great and getting worse, but not as dire as you portray.

Re: More than half of all private wealth has been inherited in most of Europe

#13

Post by laretluval » Sun, Dec 17, 2017, 11:46 PM UTC

nicolashahn wrote: post #6

I was just discussing this as a result of watching this video: https://www.youtube.com/watch?v=-asltUUvcGU in which they discuss the result of the western capitalist system loosely resembling a meritocracy, except in the case of inherited wealth. An exceptionally productive individual can generate billions, but then when he dies the money goes to his heirs which may not have done anything to deserve commanding that m…

> deserve

??

Who gets to determine who deserves what?

Re: More than half of all private wealth has been inherited in most of Europe

#14

Post by nicolashahn » Sun, Dec 17, 2017, 11:46 PM UTC

crdoconnor wrote: post #10

nicolashahn wrote: post #6

I was just discussing this as a result of watching this video: https://www.youtube.com/watch?v=-asltUUvcGU in which they discuss the result of the western capitalist system loosely resembling a meritocracy, except in the case of inherited wealth. An exceptionally productive individual can generate billions, but then when he dies the money goes to his heirs which may not have done anything to deserve commanding that m…

Most of this wealth probably has nothing to do with merit. For every Steve Jobs there's a whole bunch of people who did nothing more than sit on property that appreciated in value and yielded rents. The tax system seems to prefer this to actually earning money for some reason.

True, and almost everyone would be unaffected by the law I proposed. If you have two children, you'd need >$10 million in assets for it to affect you. I guess what I proposed is a fix for just the super-rich's inheritance, but it's low hanging fruit and there's a lot of it.

Re: More than half of all private wealth has been inherited in most of Europe

#15

Post by nicolashahn » Sun, Dec 17, 2017, 11:48 PM UTC

laretluval wrote: post #13

nicolashahn wrote: post #6

I was just discussing this as a result of watching this video: https://www.youtube.com/watch?v=-asltUUvcGU in which they discuss the result of the western capitalist system loosely resembling a meritocracy, except in the case of inherited wealth. An exceptionally productive individual can generate billions, but then when he dies the money goes to his heirs which may not have done anything to deserve commanding that m…

> deserve ?? Who gets to determine who deserves what?

Good question, and one that economics has been trying to solve for thousands of years. This is just one idea that I think might make for a more just world under my own (possibly misguided, but let's discuss it) ethics.

Re: More than half of all private wealth has been inherited in most of Europe

#16

Post by julian_1 » Sun, Dec 17, 2017, 11:50 PM UTC

crdoconnor wrote: post #9

TheSpiceIsLife wrote: post #4

> Fascinating chart: more than half of all private wealth has been inherited in Germany, UK, Switzerland, France — trend: rising fast! > Ever less private wealth is accumulated through own work, increasingly more through inheritance. A massive part of people's motivation to work is to provide for their children. That an increasing portion of wealth is inherited rather than build in an individual's working life-time i…

A massive part of people's motivation to work is to provide for their children. >That an increasing portion of wealth is inherited rather than build in an individual's working life-time is indicative that the system is function as intended. No, it just signals that the tax system treats unearned income and wealth more favourably than earned income. Political choices. How you feel about that depends upon how you feel…

> the tax system treats unearned income and wealth more favourably than earned income.

The income was taxed when it was earned. What reason is there to tax it twice?

> how you feel about in increase in unearned income flowing to the wealthy I guess.

Or about how you feel about the government's use of it's citizen's resources. Why should wealth earned by the breadwinner of the family, not remain with the family? It's arguably better than expropriating citizen's wealth to fund expaditionary warfare.

Re: More than half of all private wealth has been inherited in most of Europe

#17

Post by jogjayr » Sun, Dec 17, 2017, 11:52 PM UTC

crdoconnor wrote: post #10

nicolashahn wrote: post #6

I was just discussing this as a result of watching this video: https://www.youtube.com/watch?v=-asltUUvcGU in which they discuss the result of the western capitalist system loosely resembling a meritocracy, except in the case of inherited wealth. An exceptionally productive individual can generate billions, but then when he dies the money goes to his heirs which may not have done anything to deserve commanding that m…

Most of this wealth probably has nothing to do with merit. For every Steve Jobs there's a whole bunch of people who did nothing more than sit on property that appreciated in value and yielded rents. The tax system seems to prefer this to actually earning money for some reason.

> The tax system seems to prefer this to actually earning money for some reason.

The tax system favors unearned income over earned income to adjust for risk. If you work a job you're guaranteed to be paid for the hours you worked (assuming an honest employer). Investments have no guarantees and you could lose all the money you put in.

There's an argument to be made that the top tax rate for unearned income is too low in some countries, but it makes sense to me that the tax rate for unearned income should always be less than the tax rate for the same amount in earned income.

Re: More than half of all private wealth has been inherited in most of Europe

#18

Post by perfmode » Sun, Dec 17, 2017, 11:54 PM UTC

nicolashahn wrote: post #6

I was just discussing this as a result of watching this video: https://www.youtube.com/watch?v=-asltUUvcGU in which they discuss the result of the western capitalist system loosely resembling a meritocracy, except in the case of inherited wealth. An exceptionally productive individual can generate billions, but then when he dies the money goes to his heirs which may not have done anything to deserve commanding that m…

Is this the idea behind the estate tax?

Re: More than half of all private wealth has been inherited in most of Europe

#19

Post by learnstats2 » Sun, Dec 17, 2017, 11:58 PM UTC

laretluval wrote: post #13

nicolashahn wrote: post #6

I was just discussing this as a result of watching this video: https://www.youtube.com/watch?v=-asltUUvcGU in which they discuss the result of the western capitalist system loosely resembling a meritocracy, except in the case of inherited wealth. An exceptionally productive individual can generate billions, but then when he dies the money goes to his heirs which may not have done anything to deserve commanding that m…

> deserve ?? Who gets to determine who deserves what?

I suggest it is not difficult to find a better determinator than parental wealth.

Re: More than half of all private wealth has been inherited in most of Europe

#20

Post by nicolashahn » Sun, Dec 17, 2017, 11:59 PM UTC

perfmode wrote: post #18

nicolashahn wrote: post #6

I was just discussing this as a result of watching this video: https://www.youtube.com/watch?v=-asltUUvcGU in which they discuss the result of the western capitalist system loosely resembling a meritocracy, except in the case of inherited wealth. An exceptionally productive individual can generate billions, but then when he dies the money goes to his heirs which may not have done anything to deserve commanding that m…

Is this the idea behind the estate tax?

Yes, but currently it's a % of the estate. I think right now the highest bracket is 40% (correct me if I'm wrong) so an inheritance of $500 million is still $300 million after the estate tax.