Inheriting is becoming nearly as important as working
More wealth means more money for baby-boomers to pass on. That is dangerous for capitalism and society
Inheriting is the problem. We need a 90% inheritance tax.
Or better yet, a simple maximum wealth cap. No one should have more than 1000x the median household income. That's the kind of fortune that even the most highly paid of doctors and lawyers, if they lived as absolute paupers and invested everything, would struggle to reach within their lifetimes. Even if you earned a salary of $1 million/year and lived like you were a broke college student, you would still be very unlikely to reach that level of wealth, even if you earned that salary from age 20 til death. The only way to amass that kind of fortune is through inheritance or through exploiting the labor of others.
We need a maximum wealth cap. 1000x median household income is incredibly generous, but it would still pale in comparison to even a single billion dollars. Currently, 1000x median household income would be a cap of about $80 million. A cap there still provides great incentive to work and innovate, but it prevents anyone from amassing such a fortune that they become a threat to their nation.
I think it's the economic system that is designed to funnel money to the 1%.
More of a lack of system. Wealth concentration isn't some grand master plan centuries in the making, it happens organically and we make systems to fix the problem.
I knew economics was behind the other fields but holy hell they're about 15,000 years late to reach this conclusion.
I think the problem is more that there is a significant amount of research and politics that actively fights that conclusion. Why? "Meritocracy"
I agree. Growth (quantitative and qualitative) is slowing down overall, on the whole planet, especially in the "west". And since growth requires human labor input - much more so than simply maintaining things does - demand for human labor is going down. And that can be noticed, by observing how wages (i.e. prices for human labor) are also going down.
The biggest problem is housing becoming unaffordable, and believe me paying 40-50% of your net income just to put a roof over your head is very depressing. It really makes a big difference in your lifestyle. And mind you it is almost impossible to buy even a modest apartment in big cities on an average salary.
But why is housing becoming unaffordable when materials are cheaper and technology is significantly more efficient?
How come this doesn't apply to any other technology? The computers are better and cheaper, the TVs are, the machine tools are, the cars are etc. etc. The concrete is cheaper, the wood is cheaper, the quality is better, the logistics are faster and work force is more skilled and available.
No matter how you look at housing issue there's no explanation other than policy failure and market manipulation. It just makes no sense, right?
It’s plain impossible to buy a condo on a big city (the ones with jobs) on 2 above average salaries as well.
No it isn't.
Meritocracy dies when inheritance outweighs effort—welcome to the new feudalism.
🐱🐱🐱🐱
lmao, my parents are dumbfucks who spend all their money on Disney vacations and Harley Davidsons when they don't even have any retirement accounts and everything is in cash. I have no inheritance coming my way, are you kidding me?
Why shouldn't your parents be allowed to spend their money on whatever makes them happy? Don't blame them for this financial system.
I hope my parents spend everything so the US healthcare system gets none of it.
Sounds like they can’t really afford to live the lifestyle they are.
Yes, let them be happy supporting Disney, a company founded by a Nazi sympathizer and HD, a company that makes over-priced and 'Murican sized motorcycles with a built-in engineering defect that has become a feature.
Even with this shit financial system, you can make better choices. My comment still stands, they are dumbfucks. They've shown me that have no respect for me and my life, or my sibling and their child's life. But yea, let them be happy while they piss on nature with their wallets.
"Becoming"??? Brother... Be serious
Kings and nobles know this one simple trick
Don't worry, insurance companies already have a solution to take away that inheritance for you. It's called reverse mortgage, where the insurance company give monthly payments to your parents, and when they die their house is transferred to the insurance company to be sold to Blackrock or Vanguard.
Yup, my wife's grandmother got suckered into it. Three story, Victorian era house, located blocks from the beach, easily worth over a million dollars and it'll go to whatever bank instead of to her family that's already supporting her financially. Thanks, Tom Selleck...
So still inheritance, just consolidated, going to another nepo baby.
Inheriting is more important than working and has been for some time now.
I made all of my money by working, but my success is to some extent related to being born to parents that paid for my college provided I made decent grades in high school. (And the luck of having access and interest in the early Internet in the mid 90s due to inheritance.)
Whereas what you say is true, there is a difference in the kind of inheritance. The kind of inheritance that the article talks about means that doing no productive work is in the optimal approach to getting rich.
always has been. it's only a problem because the poors stand to benefit.
If you read the article it actually says that billionaires have benefited the most from inheritance, almost as many of them became billionaires by inheriting rather than earning it themselves.
"Nearly as"????
Having enough money to get the education NEEDED to work in today's world (or enough money inherited to get a position based on your financial influence) has A MASSIVE impact on your quality of life.
Having one of those gets you to an equivalent position to "working your way up the ranks of a company", except you get there YEARS earlier and with less effort.
"becoming"?
You can always educate yourself.
We have the best library in the history of mankind right at our fingertips, and most college courses are just walking people through books.
Yes, but that’s not what they were saying. Self-educated people might be just as smart as people with a formal education (possibly smarter even), but that does little good if you can’t get a job without the official credentials.
Our system survives by creating economic slaves. For instance the mortgage acts as a gatekeeper in the fiat system, by locking up an inelastic good in a form that can only be unlocked by completing the payment obligations. Housing rises in price to max out the metaphorical bucket of whatever interest rates allow for debt accumulation, and property ownership is controlled by one's ability to secure debt. This ensures that the financial system has a steady stream of obligations that help sustain the flow of currency, which helps drive aggregate demand.
The goal is to create a 2% inflation, as calculated by an index that excludes housing appreciation and investments, you require ever growing money supply. Money supply is grown via debt accumulation, this then funnels down into foods and services, excluding substitutions and hedonic adjustments, deriving a 2% inflation to a dynamic basket of goods. Housing works well for this because housing is finite and demand in inelastic; prices can rise faster than fundamentals, and it is therefore a liquidity sponge.
We need a liquidity sponge because for every person who saves money someone else must have a corresponding debt. Since the gold standard ended debt now has to grow, to create the new money supply to pay past debts. The money you spend at the grocery store is somebody else's debt, its somebody's mortgage or bank loan, that you acquired by working a job to produce something that the newly issued currency desired.
If the next guy doesn't take out debt, say because prices are falling, then the entire scheme unwinds, and we get a crisis. That money owed has already been spent several times, until it ends up in an equity, unmortgaged home, or bond, and outside of what the CPI uses to hold back money supply growth. If debt isnt taken out then rates will keep falling until someone is encouraged to borrow, in which case debt is securitized into a new supply of money, which creates the windfall that can be spent on consumer goods to derive a 2% inflation.
If debt does keep accumulating you can extract the cantillon effect, as long as the next guy in line takes out debt past debts are inflated away and your past debt is paid off. As people realize this phenomenon they are then willing to sign up for ever larger debts, and you get a bubble in asset prices, because we treat promises of future money the same as present money. So in my opinion its the monetary system that is the main cause of the growing wealth inequality, and the farther we get from the gold standard the worse it will get.
I think for most Americans, they are considering it a win if their parents saved enough to retire and have their affairs in order. Just knowing you won't have to do some bizarre financial trickery to handle your parents retirement housing and end of life care is a huge relief, to say nothing of having anything left over to inherit when they're gone.
Retirement housing can be planned for? Per-month it's more expensive than a posh high-rise down-town!
The price can be explained; I'm just saying "retirement housing" is easily beyond what any mortal can pay.
Yeah well assisted living with skilled nursing costs a fortune. Luckily most people only need that for 6 months to a year before they die anyway. I'm talking more like "55+ downsized housing" that doesn't yet require a nurse, memory care, or any of that stuff.
ah, feudalism
The Economist nearly spelling out the truth there.
Feels like a rather dystopian title.
yes, reality has a dystopian bias
Please tell me I'm not the only one who thought that was something other than a pacifier when I first glanced at the image
You're not the only one..
