So? Whats the issue? That's the point. I work hard to help my kids. They're supposed to be better off because of my work. That's the reason many of us get up in the morning. Dont take that away from me.
If my hard work wasn't reflected in the data, why would I work hard? Why would I care about bettering my kids if it had absolutely no impact on how well they would do?
Some people are acting like this is a problem. And to some small degree it is. But the opposite would be a much bigger problem.
Of course, a good parent teaches their kids how to fish, not just gives them fish. If anything this study just shows that successful parents are good at teaching their kids to be successful.
So there's a lie being told to the rest of us that life is supposed to be reasonably fair and that we're supposed to work toward keeping it that way. Keeping that lie while many people are intentionally trying to subvert the concept by having kids start life at different points is an unnecessary cruelty.
By all means hand them advantages, but don't then go and try to mingle them with the lower classes. Don't act like we're all in this together. Don't force my poor past self to listen to the girl sitting next to me in class talk to her friend about owning 7 houses.
If we're going to settle for feudalism can we at least just call it feudalism and set the bar at appropriate heights for each class? Why the hell do I need to be put up against your performance enhanced kid when it comes to success? Just have me toil in your lands where I compete against all the other serfs instead. If you're going to start people off in life ahead of me at least give me the courtesy of degrees of separation.
Pretending at equality while everyone is rigging the game is trying to have your cake and eat it too.
> So there's a lie being told to the rest of us that life is supposed to be reasonably fair and that we're supposed to work toward keeping it that way.
Whoever told you that did you a massive disservice. You're not entitled to what others have; you get what you create.
> Why the hell do I need to be put up against your performance enhanced kid when it comes to success? Just have me toil in your lands where I compete against all the other serfs instead. If you're going to start people off in life ahead of me at least give me the courtesy of degrees of separation. Pretending at equality while everyone is rigging the game is trying to have your cake and eat it too.
Drop the histrionics; at least in the US and Canada, the game isn't that rigged, especially in fields where merit and effort matters (and within tech, I've noticed PR, marketing, other non STEM to be where the 'connected' get promoted). I grew up relatively poor and my kids will grow up significantly better off because you can earn your way into better opportunities (and I say this not being particularly smart).
>(and within tech, I've noticed PR, marketing, other non STEM to be where the 'connected' get promoted).
I think you hit on something important, this merit and skills based promotion is something unique to tech where there is a culture of meritocracy. That doesn't exist in many fields and in many fields people get where there are solely because of who their parents were rather than what their parents taught them, and that applies even in the United States and Canada
>So there's a lie being told to the rest of us that life is supposed to be reasonably fair and that we're supposed to work toward keeping it that way. Keeping that lie while many people are intentionally trying to subvert the concept by having kids start life at different points is an unnecessary cruelty.
The goal is equality of opportunity, not equality of outcome. Even that is loose, because of course no one has exactly the same advantage profile (and no one has exactly the same disadvantage profile either).
As upsetting as tactless people can be, the fact that children from a family that is struggling to make ends meet freely mingle with children from families that have abundance, even excess, is a very positive and rare thing. We should treasure it.
The belief that everyone has something important to contribute and that people from all backgrounds, creeds, and prosperity levels working and learning together will result in a better world is unique, and we absolutely should not be longing for its more conventional opposite: a world where everyone is divided up so that their feelings are protected from heterogeneity.
Looking at the graphs in the article, the "Ivy plus" line is at about 70% for the "top 5% parental income" bucket on the "top 20% income" graph.
I will claim that every single student in that bucket (a fairly small number of people, when you stop and count them, adding up to well less than 5% of the population of the US) in fact had perfectly reasonable opportunity to end up in the top 20% of the income distribution. And just to be clear, from looking at page 17 of the original paper at <http://www.equality-of-opportunity.org/papers/coll_mrc_paper..., "top 20% of the income distribution" in this case means an individual income of $58,000/year by age 34.
The 30% that did not end up there almost certainly prioritized other things over income. But that does not take away the fact that they had the opportunity.
So it might be more correct to say that opportunity is the probability distribution over outcomes, conditional on goals. That statement I might be willing to accept.
"Opportunity is the probability distribution over outcomes."
No, it's not. You aren't accounting for choice at all. Some people choose happiness over wealth, some people choose short-term outcomes over long-term outcomes, and some people just make choices that result in a much greater struggle for whatever reason.
>No, it's not. You aren't accounting for choice at all.
Only in the sense that I consider individual choice to be "marginalized out" here. People's choices have only a limited causal influence on outcomes, after all, but it is instructive to look at how much causal power choices have, versus circumstances. Trying to maximize the causal power of choices and minimize that of circumstances is a worthy goal.
It still requires looking at the outcome distribution quantitatively, and admitting that both factors have causal power.
"Only in the sense that I consider individual choice to be "marginalized out" here."
Why?
"Trying to maximize the causal power of choices and minimize that of circumstances is a worthy goal."
I see what you are saying, but I'm not sure we want to take that to an extreme. Diverse, interesting, and challenging circumstances produce a lot of creativity, culture, and happiness.
I'm just giving a quantitative way to think about the issue. If we said, "Anyone has the opportunity to win the lottery, and the actual outcome isn't relevant", everyone would acknowledge that we're talking about a probability problem. If we mean what we say about equal opportunity, then we're essentially talking about cutting the probabilistic link between one's background and one's distribution over outcomes. Ways to do this include:
* Admitting students to university based on merely adequate grades and their citizenship in the community, rather than based on a "meritocratic" competition that actually just conditions outcomes on starting-points.
* Supporting trade unions and other institutions that regularize wages/salaries/incomes.
* Taxing inheritance heavily.
* Enforcing anti-trust law.
The point is to ensure that random events like which family you're born into can't strongly affect the course of your life. I'd love to hear other, less "bog standard" ways to compress the distribution over outcomes, thus equalizing opportunity.
However, note that we're talking about cutting a link. By default, opportunities are only available to people with past actual successes. By default, outcomes build upon outcomes and compound exponentially. We're looking to defy that natural process, cut a natural link, and thus regularize certain statistical structures.
>The point is to ensure that random events like which family you're born into can't strongly affect the course of your life.
This is impossible. We pretend like it's not true in America, but one's parents have massive, near-total influence. That doesn't mean you'll turn out to be an exact clone of your mom or dad, but it does mean that your childhood, and the choices your parents make on the family's behalf, are going to dictate a great deal about your life from the day you're born until the day you die.
There's no way around that. Should we take all of the community's children and randomly distribute them to different households so that parents with business aptitude don't grant their children an "unfair opportunity" by giving them good business advice? Is this not an unfair opportunity granted to children by the "random event" of their birth? If the benefit of a parent's intellectual resources is fair, why isn't the benefit of his/her financial resources?
>However, note that we're talking about cutting a link. By default, opportunities are only available to people with past actual successes. By default, outcomes build upon outcomes and compound exponentially. We're looking to defy that natural process, cut a natural link, and thus regularize certain statistical structures.
I disagree. By default, in the absence of a government, the market is open and opportunity is equal; two persons with no knowledge of one another can walk up to each other in the desert and make any trade considered agreeable between the two of them. That is equal opportunity. In a complex society, the government's role is to protect that natural transaction flow, not to confiscate the goods and redistribute in the way that it has decided is fair. That makes both parties unhappy and leaves only the governors pleased.
The government protects natural transaction flow by refusing to allow the enforcement of provisions that would unfairly exclude the participation of large portions of the population based on artificially imposed constraints (i.e., not inherent constraints that exist due to lack of financial, physical, or mental resources).
Natural marketplaces are also safeguarded by refusing to allow similarly artificial prohibitions to flow from the centralization of control within certain de-facto authorities, usually monopolies or cabals.
And for all that to work, the government also must provide more basic enforcement to safeguard human life and protect private property.
That's basically it! The goal is not to equalize the outcome, or ensure that the difficulty gradient of actually succeeding is identical or near-identical for everyone (which is impossible).
Opportunity refers to the ability to start out without someone's boot on your neck, not the ability to do better than your peers (that's merit, not opportunity).
> If we mean what we say about equal opportunity, then we're essentially talking about cutting the probabilistic link between one's background and one's distribution over outcomes.
The intrinsic problem with this approach is that it "drags others down", reducing the purpose of working harder or unfairly affects those more naturally capable.
> * Admitting students to university based on merely adequate grades and their citizenship in the community
Assuming you mean "citizenship in the community" to be "I live in state X, that means I have a better chance of access to X State University", over a generation, this would just mean that for higher achieving state X, students from state Y would be locked out of better opportunities based on geographic residency.
A real life example would be higher admittance for Californians to California State schools, which reduces the opportunities for a kid from Missouri or Alabama (because of realistic capacity constraints). The kid that went to University of Missouri is now at a significant disadvantage (based on education) and is not able to compete against her peers for jobs in regions with better long-term opportunities, even if she had a lot of potential. University of Missouri then has to accommodate the lackluster abilities of its enrolling body (as it ostensibly does with a 77% acceptance rate), which leads to dropping STEM requirements, which means an even less capable constituency.
> rather than based on a "meritocratic" competition that actually just conditions outcomes on starting-points.
Related to the last point, this would seek to normalize the achievement by "boosting up" those that haven't demonstrated aptitude, while limiting the opportunity of those that would benefit from a more rigorous program.
> * Supporting trade unions and other institutions that regularize wages/salaries/incomes.
For non-specialized labor, maybe. If the idea is that the base salary would need to increase, that would just increase the costs of goods "across the board", which doesn't do much except broaden the divide between the full-time employed and the unemployed.
Would you be willing to give up a percentage of your salary to someone else in your department that earns less, even if he/she doesn't work as hard or isn't as skilled? If yes, why aren't you doing that now?
> * Taxing inheritance heavily.
Why are others more entitled to the results of my labor after I'm dead versus when I'm alive? It's not my job to posthumously give advantage to the kids of strangers against my own in a competitive world. Also, if you try to implement this, you'll end up getting the government involved in interpersonal gifting (as the logical workaround would be to give the maximum tax deductible gift per year or sell assets to family at well below their value, if not just creating new avenues to tax avoidance).
> * Enforcing anti-trust law.
Agreed.
> We're looking to defy that natural process, cut a natural link, and thus regularize certain statistical structures.
This suggestion makes my brain feel fuzzy. If the thought is that it's a natural process for the above-average to create advantages for themselves and their own, isn't this asking for more laws to compel them to act against their own interests?
>The intrinsic problem with this approach is that it "drags others down", reducing the purpose of working harder or unfairly affects those more naturally capable.
I don't think that there's anything natural about how much money your parents have. If we go back into history, the only "naturally capable" advantage some people had was a natural capacity to stick a sword through peasants and take their grain. "Natural" advantages came from violence, not from intrinsic individual greatness.
Actual individual greatness, like that of Einstein (for instance), is often just thrown into the general lot of human advancement.
>Assuming you mean "citizenship in the community" to be "I live in state X, that means I have a better chance of access to X State University", over a generation, this would just mean that for higher achieving state X, students from state Y would be locked out of better opportunities based on geographic residency.
Yes, that is a problem. However, the capacity limits you mention don't disappear when we just say, "Open University of California to the whole planet". The only real solution is to build up more top-quality universities in Missouri and Alabama.
Now, I know that trying to multiply one fish into thousands of fish and feed the masses can sound miraculous, but the amazing thing about education and technology is that they enhance productivity. Once you've committed to making Missouri and Alabama more productive, the process helps itself along, so it's actually nowhere near miraculous.
>Would you be willing to give up a percentage of your salary to someone else in your department that earns less, even if he/she doesn't work as hard or isn't as skilled? If yes, why aren't you doing that now?
Actually, the last place I worked, everyone earned the same salary. We functioned pretty well.
>Why are others more entitled to the results of my labor after I'm dead versus when I'm alive?
Because you can't enjoy things when you're dead, and we've seen in history that inheritance leads to aristocracy, social instability, and mass destruction.
>This suggestion makes my brain feel fuzzy. If the thought is that it's a natural process for the above-average to create advantages for themselves and their own, isn't this asking for more laws to compel them to act against their own interests?
Is it in your interest to defect in a one-shot prisoner's dilemma? Was it in the interest of Marie Antoinette to say, "Let them eat cake"? Your long-term rational interest can differ from short-term selfishness.
>Because you can't enjoy things when you're dead, and we've seen in history that inheritance leads to aristocracy, social instability, and mass destruction.
No, passing resources from generation to generation is not what leads to "mass destruction", etc. Familial/generational resources have been the sustenance of almost all free humans since time immemorial. They would live on tribal [read: familial] lands for their entire existence, cooperatively sharing the wealth to ensure that the needs of family members were supplied.
We're still dependent on generational wealth for the first couple decades of our lives at a minimum, and there's no reason to cut it off there except a) jealousy that some people are able to do so; and b) a desire to lessen the interdependent bonds between sympathetic family members and strengthen the dependency on the cold, hard creditors, standing at the ready to collect interest and increase the cost of all durable goods by 1.5x-3x.
The fact that some things, like thrones and other official positions, may not be good fits for straight inheritance models doesn't mean that all inheritance is evil or that parents shouldn't be allowed to provide a resource pool that will persist after their deaths.
I hope that I can leave an estate that provides for the housing and basic needs of my children and grandchildren and I fully intend on passing it down to them. This has nothing to do with "aristocracy, social instability, and mass destruction", and the claim that it does is plain class hostility.
There's no private-message interface for hackernews (so I'm unable to communicate this out-of-bound), but I wanted to tell you that even though we recently disagreed in a different thread, I appreciate your perspective.
> Yes, that is a problem. However, the capacity limits you mention don't disappear when we just say, "Open University of California to the whole planet". The only real solution is to build up more top-quality universities in Missouri and Alabama.
That's unrealistic, otherwise there would be a top-quality university in Missouri and Alabama. Our existence is one of constraints.
> Once you've committed to making Missouri and Alabama more productive, the process helps itself along, so it's actually nowhere near miraculous.
Education is the immediate antithesis of productivity -- we're on hacker news and you know that pair programming is either a code-quality, knowledge-sharing, or bug-avoidance issue, and specifically never a means for immediate gains nor all three. You can't throw cash at university and get smarter students -- I went to a top 50 school where the top administration is compensated better than the top 10.
> Actually, the last place I worked, everyone earned the same salary. We functioned pretty well.
What about now? Do you ask junior QA if you can give them the earning difference? If you oppose this notion based on separation of duty, do you think union politics would be better at making this differentiation?
> Because you can't enjoy things when you're dead, and we've seen in history that inheritance leads to aristocracy, social instability, and mass destruction.
You avoided the issue of removing inheritance being untenable. If I die, my nephew gets all of my wealth and I hope it brings him happiness and fulfillment. If you try to legislate that, I will simply route around you.
What mass destruction? What social instability? My partner comes from a communist nation and his/her (not interested in disclosing sexual details) experiences add color to the reality that political dispensation of resources is a terrible machinery.
Socialism/communism does not result in a more "equal" society. If hard numbers don't do it for you, find the nearest Chinese/Russian emigrant area and buy an older person a drink and ask if it's alright to pick his/her brain.
> Is it in your interest to defect in a one-shot prisoner's dilemma? Was it in the interest of Marie Antoinette to say, "Let them eat cake"? Your long-term rational interest can differ from short-term selfishness.
I have no obligation to your kids, will always pick my own kids over yours, and it's not a prisoner's dilemma -- if you try to tax me to the extent that I'm providing luxury for others, that changes the moral algebra for resources that I very well could shield from taxation.
>That's unrealistic, otherwise there would be a top-quality university in Missouri and Alabama.
Are you really claiming it's impossible to have good educational institutions anywhere except where we already do? This sounds like an overly-general claim: "anything that can be accomplished, already has been".
You're conflating opportunity with outcome. Opportunity is abstract; it's a system that doesn't create artificial barriers to success, and in which your average person won't be actively disallowed from amassing resources. Opportunity basically means that everyone has the same rights of access to the marketplace. It doesn't make any guarantee about anyone's success once they enter that marketplace. While I'm sure we're not perfect here, we're pretty good overall.
Outcome is bona fide; it's the resource access that allows people to do the things they wish to do, not the market access that allows one to generate those resources.
Since we don't have a substantial, legally-enforced caste system or other artificial limitations on success in America, it doesn't look like opportunity has anything to do with money (unless you're referring to the excessive fees and qualifications which the government imposes to engage in some types of business (licensing bodies, etc.)), so I'm not sure why you say that confiscating a family's resources will ensure opportunity for anybody.
>Opportunity basically means that everyone has the same rights of access to the marketplace. It doesn't make any guarantee about anyone's success once they enter that marketplace.
Having money (derived from inheritance or anywhere else) gives you privileged access to the marketplace since it helps you get over natural as well as artificial barriers to entry.
This is exactly why the unifying feature of entrepreneurs is not a greater appetite for risk (quite the opposite), but access to cash - often from parents:
>Since we don't have a substantial, legally-enforced caste system or other artificial limitations on success in America,
Access to wealth is an artificial limitation on success and it's largely what the American caste system is geared around.
>I'm not sure why you say that confiscating a family's resources will ensure opportunity for anybody.
Opportunity flows from resources.
You can act like you don't care about equality of opportunity or you can support a 100% inheritance tax (and no private education) but you can't really have it both ways.
>Having money (derived from inheritance or anywhere else) gives you privileged access to the marketplace since it helps you get over natural as well as artificial barriers to entry.
You're re-defining opportunity to mean the same thing as outcome.
If all outcomes must be equal for opportunities to be equal, which is the argument you're making when you say that both artificial and natural barriers must be equally surmountable and that any potential benefit, direct or indirect, from one's access to and deployment of resources is inherently unfair, then you're in an argument that fundamentally opposes private property and the hard physical realities that dictate human behavior.
If you have a specific complaint, like that the qualifications to be admitted to the bar in almost every state require graduation from a school accredited by the ABA and that this constitutes an unfair monopoly and presents an unduly burdensome artificial constraint which was installed only to limit competition in the law profession, then that's a totally valid example of opportunity gap that should be fixed.
But saying "Someone with more resources could potentially derive more benefits, either direct or indirect, than someone without an equivalent quantity of resources, as long as they deploy them efficiently" is only stating the obvious. Suggesting that this is an inequity to be resolved is simply suggesting that individuals should not be trusted to participate in a real marketplace at all.
I'm not sure if I should upvote this or not... I mean, I went to a "less competitive" college to start out with, then ended up at a major university for a masters and then another major university for a PhD. I have definitely been upwardly mobile due to my education and it didn't cause me much debt. No, I'm not a 1%er, but my station in life improved greatly from the humble place I started from. That's the American Dream, right? No guarantees, just maybe a chance at something better.
I would stress about all these legacy rich folks--a lot of them don't amount to much. They party, do drugs, flame out young.
And then again, in some ways I totally agree with what you're saying--it isn't fair to tell a kid they can become a CEO when in fact the people who become CEOs are picked from a very select, elite group.
Other people also work hard to help their kids. Many even work multiple jobs and gruelling hours. The point is, we have a system that doesn't reward hard work, but instead rewards rentiers, people who do no productive work (relatively speaking) and yet keep getting rich.
Yeah, this is the point that the parent is making.
Basically, you're arguing that access to resources should be predicated upon a) the quantity of labor rather than its value; and b) that access should only last as long as the effort is continually expended (curious re b: how many days can one take off before access to resources is denied? what if I want to take a year off to focus on a business? what if you think my business is a sham and not a legitimate expenditure of effort? are some people entitled to resource access without effort, and if so, which people, and why?).
People who want to leave an inheritance for their kids argue instead that access to resources should be predicated upon a) the value of their contributions rather than the amount of labor; and b) access to any excess resources should persist until they are fully exhausted by the owner's willful use, without regard to the amount of effort involved in earning it.
Only one of these models scales, not just in a free society, but any society.
The perspective that idlers should not get to eat while laborers starve is solid, but the plans that have been proposed to resolve it are impractical. The fact is that to some extent, inequality and unfairness will always be around. That's due to the fundamental functions of the physical world that cause scarcity, not how nice or kind the people who surround you are, so just trying to make better people won't solve the basic problem of inequity (it may, however, prevent class oppression).
"People who want to leave an inheritance for their kids argue instead that access to resources should be predicated upon a) the value of their contributions rather than the amount of labor; and b) access to any excess resources should persist until they are fully exhausted by the owner's willful use, without regard to the amount of effort involved in earning it."
It's a very compelling argument, except that in practice it seems to evolve into access to resources being predicated on a) the ability to extract resources from the system via external factors rather than labor or contributions.
I agree that systemic exploitation by carving out an unfair advantage is a bad thing and that it happens frequently right now. I talked about it in another comment in this thread. [0]
However, even if we agree that someone's gains were based on unfair rules, that's not justification for pilfering a family's nest egg. If we allowed them to accrue that money legally, it's theirs, and we just need to correct the loopholes and move on.
Dismantling the free markets and systems of exchange enabled by private property only results in shifting every advantage to a tiny centralized core (usually government ministers, bureaucrats, and their families and staffs) who quickly grow rich while 90%+ of the population becomes impoverished. It is simply not possible for any government to produce a sufficient central plan, no matter how well-meaning or knowledgeable the planners. The world's natural chaos doesn't allow for it.
We saw this tried many times in the 20th century and there's not one success story to come out of it. People must be free to make their own price and value judgments in an organic marketplace because it's the only thing that can adapt quickly enough to the real world, and the only thing that actually provides some advantage resilience to keep a dishonest, exploitative pirate class from pillaging the economy with stunning rapidity. Ask yourself why this clear fact is often misrepresented as its polar opposite, and consider the interests of the propagandists with reference to that misrepresentation.
There is too much inequality today. We should work to fix that, but no one seems interested in paying attention to the details that are necessary to do so because the propagandists are too busy whipping them into a frenzy about the need to confiscate the assets of the 1% and transfer control of that money to their friends in the government.
>We saw this tried many times in the 20th century and there's not one success story to come out of it.
Mid-20th-century America seemed pretty damned successful, and it involved very high income taxes at the top, confiscatory inheritance taxes, and strong antitrust laws.
Also systemic racism of a kind nearly unimaginable today, cultural barriers to many jobs for half the population, and a world economy severely unbalanced in the US's favor by a World War.
Nostalgia for the era of "Mad Men" seems bizarre to me.
I'm not nostalgic. I think that the egalitarianism and shared prosperity of that era came from certain structural features it had, which can be replicated today, rather than from peculiar, one-time historical circumstances.
Except that most people on the other side of this issue are not calling for a 100% tax on inheritance or a 100% tax on all income above a certain level. I'd be happy with a return to the tax rates of the late 90s before all of this "tax cuts for the rich" nonsense got started.
Your philosophical approach seems to be inching toward an argument between the libertarians and the communists and their ideal policy on tax rats. I think that is kind of a false choice myself.
Quite the contrary. While the scarcity of diamonds is enforced by a small cabal of diamond hoarders, the scarcity of labor is enforced by unchangeable biological demands that are universal across the human family.
Biology will always place a limitation on the amount of labor that one can expend, and psychology, which is an only slightly more pliable abstraction on top of biology, limits it further. Humans are biologically programmed, as part of the survival instinct, to preserve as much energy as possible. They will only expend hard effort when they are convinced that it will provide them with tangible and necessary benefits (where necessary means that the brain sends rewards in response to the anticipated benefit).
Inasmuch as wealth refers to the ability to command labor, either directly (like hiring an employee) or indirectly (like paying for the work product of another organization's employees), there are real limits that can't be circumvented.
As automation and technology enable us to a) prevent or seriously impede natural corrosive processes that destroy our work product and b) generate more useful goods and services with increasingly-less dependence on human effort, I agree that "wealth", for the value of wealth that means access to conveniences and luxuries, will become more generally available as we continue to improve.
Sorry the school system lied to you, you're supposed to work smart, not hard.
Flipping burgers for 14 hours a day doesn't improve society, which is why it doesn't pay anything. Get a real job if you want to make money. Improve people's lives.
New flash Mr. or Ms. 1%, the other way around is an actual problem that people deal with everyday. There are people who probably work harder and sacrifice more than you everyday, yet they're working class and in poverty.
Isn't that the case for anyone? Isn't there always someone out there with a sob story that can top yours?
If we're going to allocate resources based on who has "sacrificed the most" (...for what? and what algorithm should be used to quantify the sacrifice?), it seems that all the resources will ultimately flow down to the most self-sacrificial individuals in the area.
As these people are extremely self-sacrificial (and it will be hard to find such selfless people, because they are unlikely to talk about how selfless they are), they will then spend all of the money immediately, for the good of those around them who need access to more resources. Then we will give them more resources to re-spend, yes? How will the self-sacrificial people manage all of the services and goods they're procuring, or are they so self-sacrificial that they wouldn't ask for an exchange when transferring the resources? Perhaps these people are the new banks, but interest free? If they become interested in saving some resources for themselves, to compensate for their efforts in distributing the resources of the society, are they automatically disqualified from possessing the resources, since someone less selfish now probably exists?
Incidentally, in these types of systems, the parties most deserving of resources have a mysterious tendency to be the people who've set up the economic system and their close associates. Who can argue that the founders of a new fair system of resource allocation are not the most deserving and self-sacrificial? These revolutionaries broke the oppressive chains of the bourgeoisie. They fought, killed, and died, and they watched their family and friends die, for the good of the nation. They beheaded the dirty rich kids who thought they should eat cake while others starved.
Those brave souls, who at least metaphorically did all this for the good of the millions of innocents whom they would never meet, and the sage councils and carefully-chosen successors that protect their legacy, are surely the most self-sacrificial in any society. It is only right that these persons should collect all the resources and wisely distribute them. You would not suggest that your efforts are comparable, and thus deserving of their resources, would you?
News flash Mr. or Ms. communist, life isn't fair. Maybe those people should have worked smarter and sacrificed the right things. How many people do you know in poverty who read books? Nonfiction books?
Everyone from my highschool who is doing nothing at some dead end job 10 years later is there because they didn't try and work hard at all, and they sure as heck didn't try to read any books or learn any skills that society found valuable.
And somehow these people deserve my stuff? They get to treat my success and reward for working hard as some kind of loot chest that they can just take from me?
Hypothetically, capitalism and meritocracy work because people who provide societal value are rewarded. When those rewards are diverted to others who have created no value, the system does not work. We call that nepotism and cronyism.
>Hypothetically, capitalism and meritocracy work because people who provide societal value are rewarded.
Capitalism is about rewarding those with capital. It's right there in the name. Nobody pays rent to the Duke of Westminster because he created value. He has created zero value. They pay him rent because he owns value.
Not all incentives are socially productive. My guess is that if that particular incentive were cancelled out, people would still have plenty other ones to drive private enterprise. And there would be significantly fewer people lucking into enormous amounts of unearned resources.
Because money is not a self-renewing resource, in all but the most extreme circumstances, the resources controlled by those who have created no value get exhausted relatively quickly. If someone is not interested in losing access to those resources permanently, they are motivated to make independent value contributions, at least insofar as we assume that things that renew monetary supplies are valuable.
It's very important to remember that we should not punish the 99.9999% of people based on the obnoxious immodesty of a select few. Even the well-off are likely to need to dip into their reserves occasionally, especially when you consider that the well-off do risky things like give some teenagers $100k so they can try to start a website that might make money some day.
The real problem is not private ownership, which necessitates that at some level, some people will always have more resources than others. The problem is that we've set up an artifice that grossly over-values certain contributions.
For example, the government has created an artificial monopoly on the usage or representation of most ideas, which curtails their free use in the marketplace for hundreds of years. That's bad! As good as ideas are, they are not that valuable, and if we truly believe someone is a genius who outputs unparalleled ideas, granting them a multi-generational monopoly to display facsimiles of those ideas hurts everyone because it actively discourages those geniuses from contributing more for the remainder of their lives. Copyrights are not real property and they must be modified to better represent their value.
Look at the Fortune 100 and think about how many of those companies are there just because the government has given them the exclusive and practically eternal right to resell the same ideas.
Compare Disney, who makes most of their money copying and pasting three semi-concentric circles and suing anyone who does the same, with peers in the top 100 like Walmart and Exxon. Those companies run extremely complex, high-overhead operations that require the daily labor of millions of people to generate new value that assists in fulfilling the population's basic needs. That's the kind of company we should expect to see at the top, not the people who loop re-runs.
Also consider the stock market. There's very little about that which isn't artificial and rigged up and down half way to Sunday. People with 0 involvement in the company can throw in money and watch it grow with 0 input or value contributed, other than already having money. The need to convince people who have been successful that you're a valid investment is a good thing, but we've definitely taken the rewards on this too far.
Such gross misvaluations are primarily enforced by legal actions that codify the mismatch between true value, which the market usually converges upon in a fairly reasonable time period, and the resources the contributor is able to reap for the contribution.
So if we want to be serious about fixing inequality, instead of suggesting forceful confiscation, redistribution, disinheritance, and the creation of taskmasters to make sure everyone is working enough hours, we should look at the places where the market's natural ability to converge upon a fair and reasonable value is being stymied and perverted by profiteering middlemen.
The whole bottom 2/3 of your post I largely agree with. But it also veers off-topic of the issue of inherited wealth. I'm not criticizing private ownership, rather the non-economic transfer of it. I totally get the impulse -- I want to give my children the advantages they need, just like everyone else.
But I also recognize that this creates a tremendous hazard of unearned privilege. We have to acknowledge the fact that it allows us to tip the scale in favor of our own offspring -- and against those of the less successful. And when I consider the fact that the less successful often had less successful parents, I'm confronted with the reality that success is inseparable from unearned privilege in a society where there a large intergenerational transfers of capital.
To critique a couple of your specific points:
> Because money is not a self-renewing resource [...]
But it is. For a large enough fortune, you can easily live off part the interest, and let the rest compound. If your family tree grows geometrically, eventually the fortune runs out, but who cares at that point? Already, it's been wasted on a couple generations of people who lucked into it.
> the well-off do risky things like give some teenagers $100k [...]
I'm not criticizing investment. If there were no inherited wealth, there would still be excess capital in the hands of living people that needs to be invested. And the wealth of the deceased could be put towards investment in a whole bunch of possible ways.
> if we truly believe someone is a genius who outputs unparalleled ideas, granting them a multi-generational monopoly [...] actively discourages those geniuses from contributing more for the remainder of their lives.
Totally agree :). Applying capitalism to capitalists. Crazy idea!
This makes no sense. Being in the top 1%, by most people's measures, should always come down to working to be there. It is accepted that some things are easier to learn at the top, so that they do have an advantage of education. However, they should still be working hard to be there.
Consider it in sports. Is it surprising that there are some families that have "figured it out" and are better overall than others? No. Not at all. Some will be genetics and some will be learning successful training regimes from a young age. However, even in there, the top performers are just that. The top performers.
This is showing that the top is not made up of people that are capable of getting to the top. That is concerning. Not life stoppingly so. But it is against what a lot of the world teaches each other for how working hard can help you get ahead in life.
On the other side, if you were to achieve dynastical levels of wealth, should you be prevented from passing it down? Should your descendants centuries in the future be forced to prove they deserve their position as a 1%er?
I think % is a flawed metric. Your measuring your position compared to the rest of society as a gauge for "getting ahead in life" when you should measure yourself to yourself at different points in time.
> On the other side, if you were to achieve dynastical levels of wealth, should you be prevented from passing it down?
Absolutely; to the extent that there a person has natural property interests, they don't extend beyond the end of their life; the ability to direct the disposition of property beyond that point makes sense as a legal privilege only to the extent that model on which that privilege is granted has social utility. It's clear that some rights here are probably desirable, but not unlimited, and beyond a point the inequality that results has considerable externalized disutility.
> I think % is a flawed metric. Your measuring your position compared to the rest of society as a gauge
Whatever you think people should value, it's empirically quite clear that relative deprivation -- compare to contemporaries as well as compared to one's own former state -- is a source of significant disutility consistently, across cultures.
It's also clear that, ceteris paribus, increasing concentration of wealth decreases the amount of progress people on the lower end of the scale can make against their own past state as well as against those on the upper end.
This crap is infuriating. Wealth. Is. Relative. It's your ability to buy other people's time. Nobody wants to get rich so that they can have a bigger fridge. The middle-upper class has essentially all materialistic wealth they could ever use. They want the prestige and spare time you get when you're rich.
I'm not sure where it should land. However, I do think there is ample evidence that anything which widens the gap between individuals increases instability.
So, should you be able to increase the ability for your "dynasty" to do better? Yes. Of course, increasing society at large accomplishes this more effectively than just giving them more money. Good stewards of a society typically have it better in the long run than greedy stewards.
Define "top". Having a lot of money does not make you a top businessperson any more than it makes you a top athlete. Also, define "ahead". Having a lot of resources doesn't necessarily mean you're "ahead" of anything. And isn't the thought process that someone should try to "get ahead" sort of the root problem here, anyway? Who do you want to get ahead of, and why do they deserve to be behind you?
Hard work is important for many reasons. Hard work can be involved in getting access to a lot of money, but it isn't necessarily involved in it.
And there's nothing wrong with that, because monetary resources are just one aspect of an individual's overall circumstances and it doesn't mean anything in isolation. Like many other personal circumstances (including health, much, much more valuable than money), reversal in fortunes are not uncommon. Seeking to maintain a positive position for the people you care about to rely on as needed is good, and they should be allowed to enjoy the fruits of their forebears' labors without undue judgment or excessive expectation.
So? Whats the issue? That's the point. I work hard to help my kids.
Yeah, we all want to help our kids. But they weren't referring the middle (or even upper-middle) classes; but rather to the super-rich. Which have their own set of privileges and advantages -- which are rather different from what the rest of us experience.
But the opposite would be a much bigger problem.
Bolshevism, you mean? (Really now, it's not that helpful to always think in terms of polar opposites: "Either we leave things the way the are, or we begin an irreversible slide into the Pure Hell of its exact opposite"). But if that's not what you mean, you can at least be more specific about what you mean.
I don't think anyone would argue that parents shouldn't be able to send their kids to top universities. However, despite top universities accepting significant quantities of low-income and minority students, those students remain under-represented among the top earners; implying that it's your parents money and not your elite education that ultimately determined your earning potential.
I think a less contentious interpretation is that this data simply supports the theory that intelligence is mostly hereditary. And that a predisposition for intelligence can account for both the parents' as well as their offspring's high earning potential.
> I think a less contentious interpretation is that this data simply supports the theory that intelligence is mostly hereditary. And that a predisposition for intelligence can account for both the parents' as well as their offspring's high earning potential.
As someone with kids in kindergarden and grade school, it's rather visible that 99% of the advantage 1% parents give kids is simply the will to do anything at all. In most kids, there is no such impulse present at all, and it is painfully obvious what the results will be, barring huge behavioral changes. Or at least this is rather obvious in kids whose parents are doctors or lawyers, something along those lines. Less so for kids with manager parents, but still, I do think I see a difference in attitude.
It's not intelligence that's hereditary, it's the 1% more effort (usually more like 100% more effort), that when sustained over 10 years will completely overwhelm any innate intelligence advantage that may be present.
Yes rich parents also give kids more means to accomplish things and that certainly also helps. No student debt, maybe even a house to live in ... certainly helps (frankly, a way to opt out of our financial "services" industry is what makes the difference). But this advantage is useless unless the extra effort is also present.
>I don't think anyone would argue that parents shouldn't be able to send their kids to top universities.
I would argue that. The university's time has come and gone. It's not valuable anymore.
>However, despite top universities accepting significant quantities of low-income and minority students, those students remain under-represented among the top earners; implying that it's your parents money and not your elite education that ultimately determined your earning potential.
That's far too simplistic an explanation. I think the fact is that at the point, a lifetime of non-quantifiable variables have piled up, and anyone who thinks they can suss out a general cause in an objective way is kidding themselves. That's a case of "Schrodinger's stats"; one can take any factor and contrive some semi-feasible background story by which it's among the principal causes, and anyone else who takes any other factor can do the same thing.
>I think a less contentious interpretation is that this data simply supports the theory that intelligence is mostly hereditary. And that a predisposition for intelligence can account for both the parents' as well as their offspring's high earning potential.
In many cases, I think that's a good theory. I would extend it to say it's not limited exclusively to intelligence, but also that more successful people are more likely to have characteristics that are useful for generating success, and thus are more likely to pass those some characteristics down to their kids.
I think overall, the issue is that many people are too insistent on a world that conforms tightly to their existing perceptions of fairness. They have not been taught to survive in the chaos and randomness that is the physical world, but rather they've been misled to believe in a pristine, curated world where anything they find distasteful or annoying is condemned and shut down. IMO, that is a sign of too much prosperity and not enough reality.
>However, despite top universities accepting significant quantities of low-income and minority students
I don't think that's in evidence. The top universities are almost devoid of low-income students, however many "minorities" they pick up through international admissions.[1]
Some people believe in equality of opportunity (as opposed to equality of outcome). When privileged children are protected from their bad behavior and decisions, the class gap widens.
The opposite means that parents have very little reason to care about how well they raise their kids. Maybe thats a good thing, but I think its a bad thing. Mainly because then many of us would have very little happiness in life. The drive to make your kids succeed is very motivating. It gives purpose to life for many of us.
Why should children be allowed to receive gifts from their parents (aka inheritance)? It's a really weird question.
There is the normal fact that the rightful owners of property don't need a reason to give it to someone; they are free to give, keep, sell, or destroy their property as they see fit, just as everyone else is.
That alone should settle this question, but it's even weirder that someone would complain when you apply this theory to parent-child relationships. Children have a natural claim to the prosperity of their parents at least until they come of age, and after that point, the parents will almost always have a continuing interest in the prosperity and well-being of the child, and they will use every rightful advantage they possess to secure it, including the ability to share money. Why shouldn't they? Isn't that what parents are supposed to do for their kids? If parents have sufficient resources to make it so their children can be secure and prosperous, wouldn't you expect them to deploy those resources to that end?
When you have kids, supplying for their needs becomes the main focus of your life for decades (and I would suggest it never ends, as your children have children that you will want to care for, and they'll have children, and so on...). If we want to encourage productivity, parents will be deeply de-motivated by rules that prevent their children from sharing in their property.
I know that personally, one of my overarching life goals is to have enough money not only to survive, but to put me in a position to ensure the survival and prosperity of my posterity as they age. That doesn't mean that they won't ever have a job. But if, for whatever reason, I felt my kid needed some money, I absolutely would expect to be able to give them money, and putting myself in a position to do that is a strong motivator for me.
Is the anti-inheritance theory that if some people have to waste 8 hours a day in wage slavery or spend 30 years in debt slavery to "own" a house, everyone else should have to too? Is it unfair for some people to have enough money to share with their kids that the kids don't have to go through that? Why do we all have to be born slaves of the financial-industrial complex?
I want to have enough money that wage and/or debt slavery are optional for my kids. I don't want them to have to worry about becoming homeless because they don't prostrate themselves to the boss's satisfaction. There's no reason my children should have to have those limitations if I'm able to supply an alternate path for them.
If my kids become evil because they have too much money, I'll stop giving them money. Pretty simple, right? Why should anyone be able to tell me that they don't trust my evaluation of my own child's needs and that the child must be a wage and debt slave to develop "good character" (read: to generate a lot of interest for us)?
I've known my children since they were born and I plan to know them until I become deceased. My wife and myself are now and will continue to be the persons most intimately familiar with the children and therefore best qualified to judge their needs and make determinations as to the beneficial extent of their wage and debt slavery. That's how it should be!
And I'll add tangentially, I think attempts to characterize children from wealthy families as lazy or entitled merely because they are not wage slaves are absurd. Wealthy children have many unique opportunities and frequently get involved in a variety of interesting engagements and causes which are surely much more socially beneficial than the cart-pushing, fry-cooking engagements of their peers. Equating idleness with freedom from wage and debt slavery is a very dangerous fallacy, but it clearly serves the interests of some nefarious anti-social actors.
The phrasing of the headline is a trap. Arguments against inheritance are really arguments against private property. Articles about "the 1%" are propaganda orchestrated specifically to anger 99 out of 100 people, who will say "what makes them so much more deserving of abundance than me?! We should take some of their stuff away so that things are 'more fair'."
That's not what inheritance or security is about. Notice that none of my motivations refer to having more than others, or buying fancier things, or doing anything else to oppress or harm anyone. My motivations are limited solely to ensuring that I can fulfill my direct responsibility to work to ensure the health, security, and prosperity of my family in the long-term.
The stigma on inheritance is pure propaganda, intended to keep as many people in wage and debt slavery as possible.
As a father and patriarch, I see developing the ability to protect my children from that slavery (not necessarily from those experiences) as an important element of my role, to the extent that I'm able to do so. Rules that jeopardize this are oppressive and I would seek to vacate any jurisdiction in which they were applicable.
And this is the problem for Marxists. Engels wrote a whole book[1] on how the family destroyed the ideal prehistoric communism[2] by accumulating property to pass to the next generations. This created classes and the state.
Originally this was just a trivia and the principal tool of reaching communism has been the revolutionary overthrowing of the bourgeois state. But in late 20th century, after many of these revolutions failing to spread worldwide, they naturally want to explore other ways to achieve communism, including targeting the root cause of the state.
It's an issue because so much of the justification for less taxes on the 1% and on inheritance is centered on the idea that they somehow "earned it." Also that you are punishing people who are not part of these extremely wealthy households, but could be if they "worked hard".
If the reality is that they basically are there because they were born into it and that there's very little chance that anyone outside the 1% can move into that level of wealth, then you have to find a different justification for the tax benefits they have received over the past 20-30 years.
This article seems to be missing an obvious point: The top 1% earn most of their money from investments rather than salary. And since rich parents will often give their assets to their children (in the form of trust funds or inheritance) it's natural that the children will also be rich.
In fact, I'm surprised at how little advantage there is to having rich parents. Someone whose parents' income is in the top 1% and graduates from an elite university has less than a one-in-five chance of staying in the top 1%.
Top 1% income includes a lot of people who are just barely in that 1% and get most of their money from income. Many people go in and out of that top 1% in good and bad years so it's not as fixed as your thinking. Wealthy people may even have a net negative income for multiple years while keeping a 7 figure lifestyle.
Even wealth is tricky as someone's wealth at death is probably a better indicator. Though again complicated by trusts that are not in their name.
Citations? I think the top 1% is a much more stable group than this indicates. Top 10%, I would completely agree with here.
And I fully accept I could be wrong. I'm currently googling a few things, to see if I am off here. I'm asking not to be a jerk, but this is put forward as fact here. So I'm assuming you have actual numbers to back this up.
Did you even read the paper? From 1991-2005, the odds of remaining in the top 1% for 5 years have ranged from 21% (in 1999) to 36% (in 1994). Intermediate results are more or less the same from 2005-2010.
I'm curious how much of that is falling out of the top, and how much is the to accelerating ever higher. And you still need to adjust for inherited wealth.
That is, of those that fell out, how many got there from inheritance?
1% is a rather arbitrary division point. Even if you assume that there exists a stable cluster of wealth at the top, why would it be bounded around 1%? It is much more likely that the group is either smaller than 1%, or larger.
Suppose it's larger, then the group could still be stable, but the churn between people at 1.1% and 0.9% would still cause the arbitrary measurement of top 1% to change a lot.
Now suppose the group is smaller than 1%, and the churn is instead at the top of the cluster directly beneath the stable group at the top, but still causes the composition of the top 1% to change constantly.
Studies of lottery winners show regression to the mean over generations. Self-earners do not. What do you think the discrepancy's cause is, given your hypothesis?
A lump sum of money and an estate built around extracting wealth from economic processes are two different things. The typical lottery winner doesn't have the social connections or technical skills necessary to create such an estate themself. Having money quite obviously is different from having investments.
If the lottery winning family does not focus on wealth accumulation, then their wealth will regress towards the mean for their lifestyle. If the lottery winner puts all their winnings in an index fund, that would be a good start to creating such an intergenerational estate.
However, surprising perhaps to many people, not everyone is interested in turning money into more money. People who try to make money, surprise, have the skills, connections, and desire to do so. Of course, wanting to be such a "self-earner" doesn't mean one has the means or the luck to become one.
The key point is this: if your estate is currently extracting wealth from investments, odds are that you inherited that estate. Your family having money in the past is a precondition of such a state, but it is not sufficient to sustain it. Wanting to be the first generation of your family with wealth extraction privileges does not mean you'll succeed and most such aspirants fail.
Maintaining weath is something weather family's teach their kids. Avoiding losing the fortune is not that hard, but requires a focus on doing so. Further, family's tend to spread weath between members. If you have wealthy friends and hit bad times then plenty of people may help you get a leg up. But, if you are the only person is a circle with weath you end up helping a large group which can't help you back.
As an example, a weathly family friend may help with tuition. Or funding a business venture, which is how people may go broke and then become rich again.
In the case of the Chinese that might also have been caused in the past by communists taking over the country and nationalizing everything or by people from up-North invading and making themselves rulers.
Things are much more stable in Europe, not to mention the US. The Nazis were, generally speaking, quite friendly towards accumulated wealth (unless you were a Jew, of course), and in case of Britain the last major "all of your accumulated stuff is ours"-thingie happened after the Norman invasion, almost 1,000 years ago.
On average, there has been a massively destructive war or peasants revolt or foreign invasion every three or four generations, down through the ages of Chinese history. But I'm sure it is the same sentiment as the Dutch expression I remember from a couple of Dan Carlin podcasts, about ascending the stairs in wooden clogs, and descending them in silken slippers. The idea of a cycle where hard work leads to prosperity, leading to decadence, leading to ruin, seemingly crosses all times and cultures.
That's patently false by what seems to be a factor of at least four. It it were merely three or four generations, dynastic change should be every ~100-120 years, however the average seems many times that. https://en.wikipedia.org/wiki/Dynasties_in_Chinese_history
Not every massively destructive revolt, invasion or war directly overthrew a dynasty, but the history is littered with revolts and incursions from the steppes, even during some of the strongest dynasties. The Tang and Qing dynasties were able to stagger through and survive two of the most destructive wars in human history, the An Lushan and Taiping Rebellions, respectively, which killed tens of millions and devastated huge swathes of the countryside, as two examples.
I of course know that, just wanted to say that a saying it's just a saying, nothing more. You can think that all is nice and stable and then a guy like Mao and his army comes along and all the sayings attached to the old order of things don't mean anything anymore.
Wouldn't a guy like Mao coming along render this saying even more true? But to be clear, the saying has nothing to do with government seizure or anything like that - it's about the nature of mankind.
I would guess that the author read the study from which the report is based, and noted the section defining 'Child Income' :
"Our primary measure of child income is total pre-tax
individual
earnings. For
single filers, individual earnings is defined as the sum of wage earnings and net self-employment
income"
They go on to say how they also measured child income in the same manner as for parents (including investment income, etc) to see if that made a difference.
I don't see why it's surprising. Unless you're exceptionally lucky as well as exceptionally successful, it takes more than one working lifetime to amass enough wealth to be in the top 1%, and so you will only get there if you inherit some significant amount of wealth.
What I find most interesting is the article's assumption that the biggest predictor should be which college you go to, a perception which the 'best' collages have spent millions of dollars to create.
"Unless you're exceptionally lucky as well as exceptionally successful, it takes more than one working lifetime to amass enough wealth to be in the top 1%, and so you will only get there if you inherit some significant amount of wealth."
Not really. In terms of income, it's $500K/year.
If you go into certain kinds of banking from a decent school, and do well, you can 'easily' earn that.
Again, this is 1% income, not assets of which I'm speaking.
But even then - if you spend 30 years in banking, and do well, you'll probably be in the 1%.
If you were to say the top 0.05% - I think I might be more inclined to agree with you.
Most of the 1% are not 'rich', they're really the upper bounds of 'upper middle class' - I'd say the 0.1% is where you can start calling yourself 'wealthy' in terms of economic class.
I'm sorry, but you must be out of touch with reality.
Certain kinds of banking from a decent school? You mean an Ivy League or top school with acceptance rates lower than 20%?
The reality is, you must be exceptionally lucky to have the circumstances that get you into your so-called "decent" school that gets you into "certain kids of banking" that allow you to "easily" earn 1% income.
* ...estimated the threshold for being in the top 1 percent in household income at about $380,000, 7.5 times median household income, using census data from 2008 through 2010.
* But for net worth, the 1 percent threshold for net worth in the Fed data was nearly $8.4 million, or 69 times the median household’s net holdings of $121,000.
>There are 3 million people in America earning more than $500K a year
There aren't nearly that many people earning $500k a year regularly. A huge percentage of the people in a given year who earn that much did so because of a one time real estate sale. Then you have another large chunk who some kind of temporary windfall--particularly good bonuses, commissions etc... And people who sold a business.
Basically if you look at people who regularly make $500k+ from a job, the percentage from top schools is going to be very high.
Yes, to a large degree. A child born to a stable 2 parent family where both parents have college degrees and earn a high income is much more likely to get into a good school than the child of a single parent who makes $10 an hour at Walmart.
And the children from disadvantaged backgrounds who make it into good schools do it mostly through luck, since intelligence is a byproduct of inheritance and environment. Even work ethic is mostly a learned behavior.
"I'm sorry, but you must be out of touch with reality."
You obviously don't know any bankers, and probably don't have exposure to the industry.
There are tons of middle-class folks who earn $500K/year in banking, most of whom did not attend Ivy League - even if they did - it's not a big deal as most who do attend Ivy League are in fact 'middle class'.
$500K/year is mid-range doctor salary (some earn much more) - it's enough to have a nice house or flat (probably in an expensive area - meaning that its' not even that nice, just has a good location), nice cars, travel, a cleaner, pay for your kids private schools, and have a cottage/second house.
But not that much more than that.
After all the 'added expenses' of a upper-middle-class lifestyle, they can sock away some money, but not that much.
I know several families in this range and you would not consider them 'rich' by any means. They're just 'well off'.
To be 'economic upper class' you'd have to be way past the many millions in net worth. I'd say more than $20 million at least. Probably more.
> $500K/year is mid-range doctor salary (some earn much more) - it's enough to have a nice house or flat (probably in an expensive area - meaning that its' not even that nice, just has a good location), nice cars, travel, a cleaner, pay for your kids private schools, and have a cottage/second house.
The suggestion that this is a middle class lifestyle is patently absurd.
This [1] indicates average doctors' income in the US is about $200K, and specialists' average is about $285K. That seems to exclude your statement "$500K/year is mid-range doctor salary...".
> After all the 'added expenses' of a upper-middle-class lifestyle
You mean if you earn a lot but then make the decision to spend a lot, there's not much money left over, making you middle class?
You seem to treat it as a given that if your income is high, you necessarily ratchet up your lifestyle expenses to a point where there's "not that much" left over.
What if your income is $4 million per year? After all the 'added expenses' of an upper-class lifestyle, you're certainly left back in the... middle class...?
It's serfs and masters, and it always has been. Since a few hundred years ago, a creative/merchant/white collar class clawed their way a bit above the serfs, but the gap between all of us and the 1% is still enormous. Sure there are individual outliers between those two close lumps on the scale, and between the very distant lump and the rest of us, but lest we forget, those that have the gold make the rules.
This is an excellent point, whose magnitude I have come to appreciate more recently.
One of my favorite ruminations on the fundamental role that inequality plays in civilized society comes from "Midnight Tides" by Steven Erikson:
"As they walked, Tehol spoke '... the assumption is the foundation stone of Letherii society, perhaps all societies the world over. The notion of inequity, my friends. For from inequity derives the concept of value, whether measured by money or the countless other means of gauging human worth. Simply put, there resides in all of us the un-challenged belief that the poor and the starving are in some way deserving of their fate. In other words, there will always be poor people. A truism to grant structure to the continual task of comparison, the establishment through observation of not our mutual similarities, but our essential differences.
'I know what you're thinking, to which I have no choice but to challenge you both. Like this. Imagine walking down this street, doling out coins by the thousands. Until everyone here is in possession of vast wealth. A solution? No, you say, because among these suddenly rich folk there will be perhaps a majority who will prove wasteful, profligate, and foolish, and before long they will be poor once again. Besides, if wealth were distributed in such a fashion, the coins themselves would lose all value - they would cease being useful. And without such utility, the entire social structure we love so dearly would collapse.
'Ah, but to that I say, so what? There are other ways of measuring self-worth. To which you both heatedly reply: with no value applicable to labour, all sense of worth vanishes! And in answer to that I simply smile and shake my head. Labour and its product become the negotiable commodities. But wait, you object, then value sneaks in after all! Because a man who makes bricks cannot be equated with, say, a man who paints portraits. Material is inherently value-laden, on the basis of our need to assert comparison - but ah, was I not challenging the very assumption that one must proceed with such intricate structures of value?
'And so you ask, what's your point, Tehol? To which I reply with a shrug. Did I say my discourse was a valuable means of using this time? I did not. No, you assumed it was. Thus proving my point!'"
it has always been like that.Few powerful people only.Unfortunatelly socialism emerged like a fake and dangerous pseudosaviour and from then on many people think we are supposed to be 'equal'.
If I buy a house, and give the house to my children when they retire (and they either use it or sell it to get one they want to use), they'll never have to pay rent, only taxes and maintenance.
They can use that money to invest, to take longer to pick better job, to train and get better at what they do...and eventually they can take all of that, and give it to their children who'll be even richer, and so on.
The only way to prevent this from happening is to ban inheritance, which would be all sorts of bullshit.
There's not a whole lot of benefit to society of inheritances. Inheritances mostly just distorts society and encourages a "fuck you, got mine" attitude
We should certainly be more aggressive about taxing inheritances since we are very far from the point where people will stop working because they have no desire for money.
The inheritance tax is a tax on people who were too stupid to put their money in a family trust or similar arrangement before they died. It's trivial to avoid if you are the kind of person who has enough money to be subject to such a tax. Increase the tax, and avoidance will increase as well.
You would be wrong, because you do not understand the estate tax system in the USA. There are things like the generation skipping tax. All the significant loopholes are covered, in terms of passing on wealth and avoiding any estate tax.
That said, the estate tax is very low. The exemption is huge. The vast majority of people who die in this country are just folks and they bury their dead and they don't go through probate or have trusts. Maybe they have a little life insurance if they are lucky.
I don't know all the loopholes, but I agree that we should be closing them.
The thing about the law is that it can be very flexible if we want it to be, so if we were serious about enforcement we could definitely do it, we're just not that serious about it.
What gives you the right to treat other people's hard work as some kind of treasure chest you can loot? How about I come to your house and start drinking your beer? There's not a lot of benefit to society for you to have beer in your fridge, after all. You could be feeding some orphans or helping some refugees instead of lazing around drinking beer.
If you want something, work for it. Don't steal it from others.
A rights-based framework is not the only way of making decisions in this world.
It's one a lot of people who are fortunate enough to have attained success in life, or expect to in the future, subscribe to, but it's not the only way to see the world.
If you were to follow your reasoning through to it's extreme the same way your beer example does, you would probably need to give all of society's land back to the native populations, but I doubt you're rushing to do that, I'm sure you have some moral gymnastics that makes that fine, but anyone trying to make a claim to anything you see as yours is immoral.
While you certainly may have worked hard, and I have no desire to disincentivize hard work, our position in society at birth and even our genetics are probabilistic, so I find it hard to justify the idea that the fruits of your labour should be yours alone.
Private property is a useful concept, but it is also not a universal requirement for a society, nor is is a binary feature.
The native Americans didn't have a concept of land ownership. What gives anyone the right to own land? The land existed before us, and stays here after we die. That you can own it seems kind of strange, when you think about it.
We make up the rules. We want to benefit society, and usually, to some degree, protect individual rights. If we change the rules so that we take your property when you die, then people thereafter get born into a world where they know that they can't work to have some amassed property passed on when they die.
If I responded with the same kind of hyperbole you used, I'd just say you can't steal from dead people, and what gives a dead person a right to dictate what happens in the world of the living?
>The only way to prevent this from happening is to ban inheritance, which would be all sorts of bullshit.
Shifting the tax and legal system to favor earned rather than unearned income would easily prevent it.
One example of this would be a land value tax. Another would be watering down patent enforcement. Another would be strengthening bankruptcy protections. Another would be strong enforcement of anti-trust law.
> ban inheritance, which
> would be all sorts of
> bullshit
My only concern about a 100% inheritance tax is enforcement — what other bullshit is there? If there is one thing I can absolutely guarantee you, it's that once you're dead, you won't care what happens to your money.
I fail to see any benefit to society of people receiving unearned money for having the right parents.
Edit: as always, this is an unfailingly unpopular view. I'd encourage you to comment on what you don't like about it, though.
Many people with children that work incredibly hard do so precisely so that their children can live a better life than they did. Removing this motivation would definitely reduce economic activity.
Or they'd simply spend more, which would increase economic activity. And one assumes their children will need to work harder without inheritance, so that work isn't going anywhere.
There should at least be a decay function built in. People care before they're dead about the immediate future - but they won't care as much about 150 years into the future. Yet intergenerational wealth can last more than 150 years.
So, I'm in my 30s right now. I own a home, have quite a bit of investments and valuables. My parents did not give me a dime (it has been the other way around, really).
Now, if i decided to give all of this to my hypothetical kids -right now-, potentially decades before I'm dead. They could grow up with it, invest it, make money, and be reasonably "rich" (not 1%, but better off than most) by the time they are in their 30s. And then they could give THAT right away to their kids, again, decades before they are dead.
Repeat the cycle. So my grand-grand-grand-etc childrens could be absurdly rich, technically thanks to me, but where do you draw the line between whats inheritance and what is not? I gave the money while I was alive (taxed and stuff, but still), they were the one who invested it and made that additional money through their own action (though it was super easy, it was still them clicking the buttons on their investment account's website, and according to taxes, they made it).
So how to you stop that from happening? I can't give money to my kids while I'm in my 30s?
Now ok, let say I can't give money. Instead I take my money and I spend it on private school, tutors, private college, etc. Even if living in a place where education is free, you can certainly have a lot of influence through money.
No matter how you spin it, somewhere down the road, this effect will compound. Starting from scratch in a videogame means you'll take longer to catch up than someone who's been playing the game for a while and twinked their subsequent characters. No way is it going to be different in a system as complicated as real life.
> Now, if i decided to give all of this to my hypothetical kids -right now-, potentially decades before I'm dead. They could grow up with it, invest it, make money, and be reasonably "rich" (not 1%, but better off than most) by the time they are in their 30s. And then they could give THAT right away to their kids, again, decades before they are dead.
> Repeat the cycle. So my grand-grand-grand-etc childrens could be absurdly rich, technically thanks to me, but where do you draw the line between whats inheritance and what is not?
Actually, you don't need to draw the line. It's covered in the tax code. There's this thing called the "gift tax." People moan about the complexity of the tax code but a lot of it is there for a reason, so you can't just go AHA and pivot a little bit and subvert the entire intent.
If you give enormous wealth to another who is not a spouse or a charity, while alive, or while dead, then you (or your estate in place of your dead spouse) will, in fact, have to pay the taxes due.
The thing is the taxes are too low and the Republicans keep zeroing them out when they get in power.
Yes. But it does not change the final result: lineage has a huge influence on financial success.
There's pros and cons on the various ways they can happen, but it does not change the fact that the kid of several generations of successful/influencial/rich/whatever people will do better for themselves on average than someone fleeing a poor country who just came in this one.
It is, but thats not a bad thing (in the board sense of irrational).
A parent is willing to save a lot of money to give a bigger inheritance for his children, even knowing that his children will be much richer than he ever was at any point. That is irrational, but in the end is a huge part of the economic progess of society. Why would we want to deny some people the opportunity to do what they want AND benefit society as a whole at the same time?
And I see no indications there will be a pile of money for my kids once I die. So, intellectually, it's easy for me to agree with you.
But if by a turn of events my life transforms from being a financial disaster into a money-making success story and I end up with money at the end, I would like to give them what I feel every human being should have: a chance to find themselves, to find out what they are good at and what they love, without wrecking their finances. Because you only live once and you should try not to give your small amount of hours on earth to someone or something you do not believe in. So I would like to give them each a little "go and find yourself" fund that they could utilize once they're, say, 20 or 30 years old.
That feels wrong, intellectually, but if I have money and we haven't yet scrapped the notion of inheritance, then there will be "find your true you" funds for my kids. No doubt. Because if my kids find what they're really good at, they'll kick your kids asses ;)
That's what life's all about right? Setting things up for your genes. Bootstrapping your gene carriers lives, not with money in particular, but with the things they'll need to out-perform the rest or more importantly, to be as happy as they can be. Anything else we do with our time are just hobbies.
Many things are massively beneficial on an individual level and bad at a societal level. My children will be well looked after by a trust as long as others' children are too.
My point was this: will you not create such a trust yourself, for your kids, if there does not exist one that is available for all, if you had the means?
I hope Bill Gates starts a trend. I'm sure he'll give away all of his money except for that 100M trust fund for his kids. What if they then turn that measly 100M into billions and then repeat what their father did? That would be pretty cool. How could laws about inheritance stop that from happening, I wonder.
I think laws about inheritance are mostly good because they protect the inheritor. The money would go that way either way, unless the parents and their kids ave afalling out. If a child has a falling out with his parents, parents could easily cut him out of the heritage if it were not for laws protecting those children. I think those laws are mostly good. Because rebelling against your parents is mostly a good thing, to society that is, because there is a very good chance you are smarter than them.
> Won't the inheritance stop their children working so hard?
Any evidence of the income from labor of children that came from wealthier family is very likely to point that the highest income jobs go to people with richer parents. That points to the exact opposite: the inherited capital allows them to pursue higher education and more perfectioning of skills, even if they dont need that labor.
But even if at some point of inheritance, people developed a significant dissuasive to work well paying jobs, it would be a drop in the bucket. The labor of the people who's inherited capital allows them to never work, and not only that but never for their children to work, is not a significant population and clearly, managing the capital is worth a lot more than their labor.
But lets say that even then, we want to squeeze as much as possible. Why stop at life? Lets just confiscate everything at any point in a mans life: someone that IPO'd and made 50 millions by 30y-old is tempted to never work by that same assumption, shouldnt we tax it all away? Of course, we know that taxing in that way is not only not to the liking of many, but it has economic consequences. SAme with the inheritance tax.
> Isn't spending better than hoarding for the economy?
I need more context for this, im not sure i get it. Spending by itself is not good for the economy, its actually terrible. Frivolous spending is not good for the economy: it creates jobs that have limited use beyond basic wealth transfer. If you spend your money on maids and people to afford luxury to you, once the capital is spent, all that value goes with you when you die. But if that capital goes into something that lasts after you perish, the economy gets richer. For example, if you buy 200 cars, at least after you die ,there are more assets in the overall economy.
> I suspect most people's education is complete by the time their parents die.
I guess it depends on how you define or implement inheritance tax. If you can afford your kids your entire capital while you are alive, the inheritance tax will only affect the unprepared. In argentina there is a sizable estate tax , so people transfer all their deeds to their children in their 60's. Of course such implementation would not render the kids unable to live without wages.
> Because I can assure you that once dead, you will maintain no further interest in your assets. While alive, I suspect you will.
I dont see how this follows what I said. I said that if the goal is to maximize the amount of labor in the system (adding inheritance tax so children of welathy people also have to work) then we could just ban wealthyness altogether and truly maximize the amount of people that work. by making it a necessity. I dont know what interest in assets means in this context.
> They were teaching it in highschool economics when I was a kid.
I dont know what model they taught you, but if spending by itself were the undisputable best use of capital, then we should collectively just ban savings from ever existing and reap the rewards.
> They were teaching it in high school economics when I was a kid.
If you mean the Paradox of Thrift [1], I remember that class in macroeconomics. But it was quickly followed up with the point that funds that aren't spent are either (a) invested in capital which increases society's productive capacity, or (b) made available as loanable funds to others.
So it's really not a paradox at all. Whether you're spending, investing or saving, you're still making an important contribution to the economy.
Takes money to make money. Plus, if you grow up in the top 1% the way you see the world, and the opportunities you're exposed to are dramatically different to those in the bottom half... Or, really, even in the 80th-90th percentile.
I was very expensively educated despite having lower-middle class parents (the government paid). I worked at Pizza Hut during the holidays while classmates went to private islands.
Simply put, if I had told my teachers I wanted to be Prime Minister one day, they'd have told me I needed to enroll in debate club and study politics, rather than laughing or doubting my ability. As a child at school, nobody ever doubted or questioned that me and my classmates would run the world one day, and lo and behold, many of my classmates at 33 are in positions of considerable influence, power, and/or wealth. It is generally very very easy to spot other people who went to expensive private boarding schools in social and work situations.
Was this expensive education as helpful for you and other folks from the relatively lower economic class as for private island hopping students (in terms of career opportunities)?
This is very true. In my experience many people from money carry a certain confidence and expectation. They're higher on Maslows pyramid and they're not worrying about the wolf howling at their door. There's a certain ritual of knowledge that wealthy people have -- a kind of of dance signals if you're in or your out.
The real advantage to being rich is that failure carries little to no consequence. You get many do-overs, and aren't stuck eating ramen in the bootstrap stage.
The really proper term is "the owning class": those for which money is invested, to produce goods, which are then sold for a profit to make money. This contrasts with everyone else, who uses labor to produce goods, which makes wages, which are then spent to consume goods.
The US median family income is ~$50k/yr. Most people think that you can spend 4% of capital indefinitely. So to make $50k/yr you need $1.25M. If you have $1.25M in assets you are in the 92nd percentile(1).
So apparently you don't even have to be in the 1% to be in "the owning class" and get by as well as the median American household.
That's a much better term, and I agree, with one caveat - more and more the owning class don't invest in production (the 'real economy') but in financial instruments that really at the heart make money by extracting value from the productive sectors.
Yeah, I really like Michael Hudson. His work does a lot to illuminate what makes neoliberalism different from earlier kinds of capitalism (such as the Industrial Revolutions and the social-democratic period).
Well, if you mention Bill Gates, you aren't mentioning someone who worked their up from nothing. Rumor has it family connections helped Microsoft get their deal with IBM but in any case: "He is the son of William H. Gates Sr.[b] (born 1925) and Mary Maxwell Gates (1931–1994). His ancestry includes English, German, Irish, and Scots-Irish.[17][18] His father was a prominent lawyer, and his mother served on the board of directors for First Interstate BancSystem and the United Way."
Which is simply to say the group of entrepreneurs who have worked their way up from nothing is smaller than many people imagine - since people do generally think of Gates as being in this group. And lots of Billionaires like to portray themselves as coming from nothing.
Yes, or the "bourgeoisie", but really we ought to be evolving our language to get the meaning across. Why bother repeating 19th-century cliches that cause more heat than light?
it's established terminology, and much of whatever "heat" comes from its use has more to do with simply talking about class, not because of the word. (i'm not sure i understand the meaning of the expression, "it causes more heat than light." my take is that it rankles people more than it expresses an idea.)
Well also, "bourgeoisie" denoted a 19th-century "middle" class who were above the proletarians (owned means of production) but below the aristocracy (did not necessarily own land or have the power to tax anyone). Nowadays we have very few aristocrats, and those who retain great power and wealth do so as burghers (owners of the means of production) and land rentiers rather than as aristocrats, per se. So the class system has actually changed to put the bourgeoisie on top, where they were once the upper-middle, while also merging them with the landowning caste of the aristocracy.
So I do think it's appropriate to change terminology.
I can't really trust this analysis if they think less than one quarter of the Princeton graduates end up in the top 1%.
All right, kidding aside (although the above observation is serious), statistics about the earnings of the graduates are very unreliable. I never disclosed to my Alma Mater how much I earn, and I guess most people don't disclose that either. How then do they figure out how many of the graduates are in the top 1%?
Statistical sampling works if the sampled people answer your question. It also helps if you can find the contact of the samples to begin with. Now, here's some ways the statistical sampling can be substantially biased: people who are still repaying their student loans are in Princeton's database, and they can be contacted; those who didn't take loans (the rich kids) are not, so negative bias. Opposite: Princeton alumni with kids, who hope to get their kids into Princeton, donate. So they are in a database, and they end up in the statistical sampling. This is positive bias. Back to negative bias: some Princeton graduates end up unemployed (generally not because they are unqualified, but because of burnout/depression/family problems). Do you think they are in the mood to answer the phone and disclose their (non-existant) current income?
In principle you can correct for a known bias. You can correct for several, but the more adjustments, the more noise in the estimation.
Now back to my original remark: do you honestly believe only 23% of the Princeton graduates are in the top 1% of the earners?
does the survey check a few classes or a large sample?
Between folks still in graduate school, in their early careers, people who have left the workforce to have kids or pursue lower paying jobs because they have financial security, you might end up with a smaller group than you expect putting in all the hours to make top 1% income.
And it's even worse in the 1% of the 1% circles, which are the real "aristocracy" that can tell politicians what to do.
(Note: there are 30,000 people who are top 1% of top 1% in the US!)
Upon reading the title I thought it would some kind of genetic study (maybe something like a genome-wide association study) on joining the 1%. Imagine 23andMe adding that to their panel.
Not quite sure why this was down voted. This was my initial take as well. I was thinking, where did this widespread DNA test happen amongst the 1%? I guess maybe clarifying the thought would not have the downvotes?
This is why we should have a 95% inheritance tax on assets over $1 million dollars outside special case like family owned businesses and a family home.
I cannot disagree more heartily. $1 million is really not that much money. I would immediately start squirreling hard currency away in the walls or burying mason jars of it in the back yard if idiocy like that were made law.
$1 million dollars is what many people earn in a lifetime of work. I wouldn't describe it as 'not really that much money.' It's the same size as the loan Trump got from his father. It's certainly more than most people can save.
If you earn a huge fortune, I would prefer that it be gone from your family in a maximum two generations of mediocre management. Otherwise we risk hereditary fortune and power.
No special cases. Why should there be? $1 million should be enough to cover most family homes. For businesses alike. Why should the next generation be a better business owner than anybody else?
I think it's terrible how universities reduce a student's achievements down to a single number (GPA) when there are so many factors involved.
When I was at university, some students didn't have to work to earn money and they could focus on their studies 100% - That gave them an unfair advantage.
I worked for the second half of my studies and there was an obvious, sudden decline in my grades.
I don't think it is a problem, and I think that letting people keep what they've earned is only proper.
The real reason this is happening now is that now the way to get rich is not to produce seomthing, but rather to bully people into making you rich. "riches" through pull, not work.
Who cares who is in the top 1%? You're all missing the point. We should strive to provide decency to all people, and decency doesn't require being rich. The best societies can be monarchies or even oligarchies. Stop obsessing over the super rich!
Sshhh dude you're going to ruin the facade. People need to keep believing money will make them happy so they will endlessly consume cheap junk. What if they start doing things like living with less and making their own stuff???
In line with the core ideas Thomas Piketty lays out in Le Capital au 21ème Siècle. I like to think it's gotten better, but being born rich is still the easiest road to being wealthy later in time.
> It doesn't seem to be the case in the Forbes 400
Per the link, 7 of the 20 inherited their wealth. Of the others in the top 10, per Wikipedia:
* Gates' wealthy family background is described in another post in this discussion.
* Bezos' family (broadly defined) owned a 25,000 acre ranch in Texas and his father was an Exxon engineer
* Buffet's father was a member of the US Congress
* Zuckerburg is the child of a psychiatrist and dentist, and attended high school at Phillips Exeter academy (possibly the most elite high school in the U.S.).
* Ellison grew up middle class
* Bloomberg seems to have been working class
Note also that in the land of opportunity, where ~33% of the population is white-skinned and male, 90% (18 of 20) of the 20 wealthiest people are white guys and the other 2 are white women who inherited their money from white guys.
Census data, land ownership, shareholding, etc etc... It's a research field for a reason, figuring out this sort of data is not trivial.
Edit: btw, this is why Piketty's work is so famous: he supposedly crunched more numbers than others, and produced extensive references. And still, there is/was a huge diatribe on how he crunched and what he crunched...
If my hard work wasn't reflected in the data, why would I work hard? Why would I care about bettering my kids if it had absolutely no impact on how well they would do?
Some people are acting like this is a problem. And to some small degree it is. But the opposite would be a much bigger problem.
Of course, a good parent teaches their kids how to fish, not just gives them fish. If anything this study just shows that successful parents are good at teaching their kids to be successful.