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It’s better to be born rich than gifted

washingtonpost.com

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Re: It’s better to be born rich than gifted

#171

Post by jakelazaroff »

kazinator wrote: post #167
jacobolus wrote: post #166

Earlier quoted context omitted.

There is nothing “rightful” about a 100 million dollar inheritance (or whatever). Just like there is nothing “rightful” about inheriting a royal throne. Money is an arbitrary social convention, and wealth is generated by the whole society not by single individuals. Inheritances that provide centuries of descendants with a work-free life and the power/influence to corrupt the government make a grotesque mockery of our…

The main reason there is nothing rightful about inheriting a royal throne is that there is nothing rightful about holding it in the first place.

That's the point: there's nothing self-evidently "rightful" about holding $100m either, and there are multiple political/economic systems practiced today that would consider it unjust.

Re: It’s better to be born rich than gifted

#172

Post by perfunctory »

SaintGhurka wrote: post #113
perfunctory wrote: post #78

Earlier quoted context omitted.

> reward you get for taking the risk won't be high enough. Also, as long as the tax rate is less than 100%, the reward will be higher than 0, which is what you get if you don't invest at all.

That reasoning is correct if the investment is risk-free. But what if you are investing in stocks or corporate bonds or a broadway play or a promising health technology company like Theranos? There is a non-trivial chance that your reward will be less than 0 - and it could even be a complete wipeout. The low capital gains rate is meant to encourage people to put money at risk rather than sit on it.

We are talking about risk-adjusted return. That's right. So as I long as expected risk-adjusted return is positive, a rational investor is supposed to invest regardless of the tax rate. I would think.

Re: It’s better to be born rich than gifted

#173

Post by verbify »

ageek123 wrote: post #155
jacobolus wrote: post #111

Earlier quoted context omitted.

Not just educational outcomes. More money has massively diminishing returns to happiness, health, fitness, longevity, creative output, ... The biggest constraint is often individual people’s time/attention; additional money is only slightly (if at all) helpful for the already rich. But a little bit of money goes a long way to help people who are not eating well, don’t have a place to live, need to work 3 stressful pa…

Even if you taxed estates at 100% you wouldn't contribute any meaningful amount of money compared to total government revenue or expenditures. So let's be honest, it's about punishing wealthy people (and accepting all the downsides to society of doing that), not actually helping people.

Unless I've read the figures wrong, a 100% estate tax could provide around 1/6th of government expenditure in the UK. This would be a meaningful amount of money.

Source: https://www.gov.uk/government/statistics/inheritance-tax-sta...

Re: It’s better to be born rich than gifted

#174

Post by mercer »

skookumchuck wrote: post #24
sonabinu wrote: post #17

Rich always have the advantage of better nutrition, information and resources (if parents don't have time, they hire tutors). Is it truly a genetic advantage or a socio-economic advantage? Is there a good way to hold all other variables as a constant in this study?

Rich parents also are more likely to show their kids how to handle money and get rich. See the book "Rich Dad Poor Dad" by Kiyosaki. Edit: Teaching kids how to manage money, the time value of money, the basics of running a business, how markets work, etc., is painfully neglected by the schools. Young adults often have little knowledge of this, and it definitely puts them at a serious disadvantage.

https://en.wikipedia.org/wiki/Robert_Kiyosaki#Criticism_and_...

Re: It’s better to be born rich than gifted

#175

Post by skookumchuck »

mercer wrote: post #174
skookumchuck wrote: post #24

Earlier quoted context omitted.

Rich parents also are more likely to show their kids how to handle money and get rich. See the book "Rich Dad Poor Dad" by Kiyosaki. Edit: Teaching kids how to manage money, the time value of money, the basics of running a business, how markets work, etc., is painfully neglected by the schools. Young adults often have little knowledge of this, and it definitely puts them at a serious disadvantage.

https://en.wikipedia.org/wiki/Robert_Kiyosaki#Criticism_and_...

Thanks for the info, I didn't know that about him.

I've read his book, and the fundamental idea of looking at money differently is sound. I know I look at money very differently now than I did when I was young. I.e. I view it now as a tool rather than a scorecard.

Re: It’s better to be born rich than gifted

#176

Post by mercer »

skookumchuck wrote: post #175
mercer wrote: post #174

Earlier quoted context omitted.

https://en.wikipedia.org/wiki/Robert_Kiyosaki#Criticism_and_...

Thanks for the info, I didn't know that about him. I've read his book, and the fundamental idea of looking at money differently is sound. I know I look at money very differently now than I did when I was young. I.e. I view it now as a tool rather than a scorecard.

Yeah, I can see that.

I rather believe in the "God can draw a straight line with a crooked stick" principle, so it's quite possible his advice is good, or at least part of it. Just figured it'd be good to know this about him.

Re: It’s better to be born rich than gifted

#177

Post by ashelmire »

dahart wrote: post #79
dokein wrote: post #6

This isn’t going to be popular, but: Should parents be allowed to try to give their children a boost in life? If the answer is yes, then it follows that parents with more resources will be more able to provide that boost. For me, the line is drawn at “legacy” admissions or jobs, where a clearly lesser candidate is given the nod over someone who is more qualified. But if the parent is able to provide e.g. volunteer op…

> Should parents be allowed to try to give their children a boost in life? Should society be allowed to try to give the poor but genetically gifted children a boost in life? Nobody’s suggesting that parents shouldn’t use whatever resources they have. The question is what we should do as a society with all the potential we’re wasting. If every dollar we spent on boosting smart poor children yielded two dollars back to…

> Should society be allowed to try to give the poor but genetically gifted children a boost in life?

I think the idea is that it benefits society for the best to rise and spread their genes. Additionally, it helps to pacify society and prevent revolutions and other violence if poor people have a realistic path to wealth.

An unequal society is an unstable one. I hope we don't have to relearn that lesson in the US when we can see it around the globe.

Re: It’s better to be born rich than gifted

#178

Post by socketnaut »

perfunctory wrote: post #172
SaintGhurka wrote: post #113

Earlier quoted context omitted.

That reasoning is correct if the investment is risk-free. But what if you are investing in stocks or corporate bonds or a broadway play or a promising health technology company like Theranos? There is a non-trivial chance that your reward will be less than 0 - and it could even be a complete wipeout. The low capital gains rate is meant to encourage people to put money at risk rather than sit on it.

We are talking about risk-adjusted return. That's right. So as I long as expected risk-adjusted return is positive, a rational investor is supposed to invest regardless of the tax rate. I would think.

It's not that simple because taxes modify gains but not losses.

Imagine we bet $1 on a coin toss. The expected value for either of us is $0. Now imagine the winner is required to pay 10% tax on his proceeds. The expected value becomes (-$1.00 + $.90)/2 = -$0.05.

Re: It’s better to be born rich than gifted

#179

Post by zouhair »

dokein wrote: post #6

This isn’t going to be popular, but: Should parents be allowed to try to give their children a boost in life? If the answer is yes, then it follows that parents with more resources will be more able to provide that boost. For me, the line is drawn at “legacy” admissions or jobs, where a clearly lesser candidate is given the nod over someone who is more qualified. But if the parent is able to provide e.g. volunteer op…

Good old meritocracy[0]

[0]: https://www.youtube.com/watch?v=GT2iU9pAI_Y

Re: It’s better to be born rich than gifted

#180

Post by cmurf »

dokein wrote: post #6

This isn’t going to be popular, but: Should parents be allowed to try to give their children a boost in life? If the answer is yes, then it follows that parents with more resources will be more able to provide that boost. For me, the line is drawn at “legacy” admissions or jobs, where a clearly lesser candidate is given the nod over someone who is more qualified. But if the parent is able to provide e.g. volunteer op…

>Should parents be allowed to try to give their children a boost in life?

If society really believed and committed in meritocracy, no. But this is always the trap of meritocracies: people lower ladders for friends and family. And that is what always corrupts meritocracy in a free society.

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