
The richest families in Florence in 1427 are still the richest (2016) - SQL2219
https://qz.com/694340/the-richest-families-in-florence-in-1427-are-still-the-richest-families-in-florence/
======
gmunu
Not surprisingly, the qz.com article distorts the meaning of the original
paper and looking at the comments, they seem to follow the false, but
suggested interpretation of the paper that qz gives.

It's useful to note the title of the paper: What’s your (sur)name?
Intergenerational mobility over six centuries. This paper is not tracking
wealth, it's tracking income via tax records. It notes things like people who
are lawyers or bankers now were more likely to share surnames with people in
similar professions in the 15th century. It is not tracking inter-generation
transfers of wealth.

In fact, qz even drops the most interesting conclusion in the article, which
is their measurement of changing intergenerational income mobility overtime.
They measure inelasticity at > .8 in Renaissance Florence and a generally
static society until the industrial revolution, with inelasticity coming down
starting in the 20th century.

The article isn't about secret trusts set up by the Medici, but the more
prosaic fact that if you father and grandfather were lawyers, you're more
likely to be one too. Still interesting, but it's not evidence that families
were "able to maintain their wealth" through revolutions at all.

~~~
yummyfajitas
This also looks like it's more work in the same direction as the "The Son Also
Rises" ( [http://amzn.to/2jFnUmZ](http://amzn.to/2jFnUmZ) ).

There are actually a lot of studies of this nature, across Europe, Asia and
the Americas. This result is not unique to Florence - you get much the same
result everywhere in the world.

Furthermore, this result seems primarily driven by factors intrinsic to the
people/families themselves and not to the society they live in. There are a
number of _invisible_ subgroups (e.g. "New France", or people with names like
Bauchau) which underperform or overperform across the generations. And when
people shift from one society to another (e.g. West Bengal to America), the
effects persist.

------
rwinn
This is purely anecdotal, but I live in Florence and know a couple of people
from the "old-money" families and they are not rich by todays standard. They
make a modest living renting out and managing the properties handed down
through the generations and have to be frugal to make it work.

Also, you should be very sceptical of any study made using Italian tax records
as a data source :D

~~~
kobeya
That describes everyone who is from old money. Those who aren't frugal and
cost conscious see wealth exit their family within a few generations.

------
true_religion
This only feels surprising to me because in England, aristocratic houses tend
to last only 100-200 years before losing their name by being subsumed into
another, renaming due to politics, or vanishing in some other way.

The House of Windsor only formally dates back to 1910.

However if you trace it via the Mountbatten line, it'll rate as being as old
as 1567, since it comes from a branch of the House of Hesse-Darmstadt in the
Holy Roman Empire.

I think there's 3 things that might cause this:

\- I am thinking that Florencian plutocratic houses simply never rename
themselves. The Medici family for example continues to exist today, holding
some minor titles.

\- I think it also helps that Italian aristocrats were heavily involved in
trade, and other mercantile professions so could continue to hold wealth and
power after being deposed from statutory privilege. English aristocrats on the
other hand, often only hold value in land.

\- The English have historically allowed women to inherit, so family names are
lost due to inheritance, enriching others with the same bloodline but
different names.

~~~
caf
Holding value in land typically means involvement in agriculture, though.

~~~
AnimalMuppet
Yes, but agriculture became less a source of great wealth during the
industrial revolution. Trade probably continued to be quite profitable,
though.

~~~
MagnumOpus
Agriculture isn't the way to riches anymore, but holding all the former
farmland is.

Say your ancestor Rich Grosvenor owned the village of Belgrave near
Westminster Cathedral and the farmland around it - then just by holding on to
it, watching it as it becomes prime urban real estate and living off the
million-pound rents you and your children can't avoid becoming billionaires a
dozen times over. Then you can proceed to buy and sell the British government
and media at your pleasure, having been made a duke and a lord of the realm...

~~~
pcrh
This phenomenon is exacerbated by selling leases rather than freehold rights.
A leasehold may expire after 99 years, at which point it reverts to the
original freeholders and can be sold again. In this manner the same land can
be sold repeatedly, generation after generation, and is how the Grovenor
family acquired such huge wealth.

------
acomjean
One of the reasons Bill Gate's father among others were campaigning against
the repeal of "Estate Taxes" was so we wouldn't have a permanent wealthy class
in the US. (Estate taxes are taxes paid on your money when you pass away
before being distributed. Right now I think its only on holdings over
5million)

[http://billmoyers.com/2015/04/18/william-gates-
sr/](http://billmoyers.com/2015/04/18/william-gates-sr/)

~~~
wahern
Unfortunately, several states have repealed the common law rule against
perpetuities entirely. Long story short, rich people can create trusts that
pay a steady income to their families for as long as they want, including for
hundreds of years.

There's no estate tax upon your death because the assets were already
transferred. The assets aren't taxed on transfer, either, but only as they're
paid out to the beneficiaries. The effect is as if the original grantor (your
great Uncle Gates) was immortal, giving out stipends to his descendants.

You don't hear about this much because the state laws are only a few decades
old, but the repercussions play out over generations. It'll become a thing in
another 100 years or so when people finally realize what's happening.

Before this the trick was to use corporations. Maybe nominally non-profit, but
mostly existing to employ the descendants. That's still a good idea depending
on what you're trying to accomplish. Like with trusts you create it in a state
with friendly legislation.

It sucks that conservatives are so hell-bent on repealing the estate tax, but
it's really not a battle worth fighting over. The war was lost long ago. What
nominal revenue the estate tax brings in has been shrinking for awhile, and
it'll eventually shrink to nothing.

At this point people are just fighting for an idea. And I literally mean
_just_ an idea. Retaining the estate tax won't stop anything, and it might
give people a false sense of comfort. Maybe better to let it get repealed,
then hope that in a few generations there's enough backlash to not only
restore the estate tax, but to foreclose the alternatives as well.

~~~
nugget
It's become painful to me to listen to most well-intentioned folks debate
estate taxes and wealth inequality. So few understand what wahern describes
above. The whole debate is a school of red herrings. European tax law is even
more of a mess than the US in this regard; even if some practices are
eventually ended here, whether in 10 years or 100 years, I have little doubt
they will continue on unabated most everywhere else.

~~~
jstanley
> It's become painful to me to listen to most well-intentioned folks debate
> estate taxes and wealth inequality. So few understand what wahern describes
> above.

Can you talk us through what exactly it is that we misunderstand, and what the
correction would be?

~~~
rconti
nugget was concurring with what the parent post said; that people don't
understand that the wealth tax is irrelevant and that money is instead passed
down via trusts that are designed so as not touched by the wealth tax.

~~~
learnstats2
If a wealth tax has a loophole exception for wealth, is it really a wealth tax
at all?

------
conistonwater
> _taxpayers data in 1427 was digitized and made available online_

Wow, the Renaissance was really ahead of its time.

~~~
motoboi
If I recall correctly, they invented banking. So, yes, they were really
advanced.

~~~
vixen99
Yes, indeed because it allowed wealth creation (=businesses) to flourish.
Lending is an act of faith in the future.

------
tristanj
Article is from 2016, and had extensive discussion last year

[https://news.ycombinator.com/item?id=11731890](https://news.ycombinator.com/item?id=11731890)

------
sologoub
From the original source: "Stated differently, being the descendants of the
Bernardi family (at the 90th percentile of earnings distribution in 1427)
instead of the Grasso family (10th percentile of the same distribution) would
entail a 5% increase in earnings among current taxpayers (after adjusting for
age and gender)." [http://voxeu.org/article/what-s-your-surname-
intergeneration...](http://voxeu.org/article/what-s-your-surname-
intergenerational-mobility-over-six-centuries)

So 5% extra as the result of being related to a wealthier family 600 years
ago. While definitely remarkable when considering how much happened during
that time that should have destroyed wealth, it's far from apocalyptic.

There seems to be no implication that the descendants do not have to work
either, just that they earn slightly more.

~~~
MagnumOpus
On the contrary, it is staggering that a result is still present after 30
generations of splitting the family wealth.

Even on the assumption that the rich only have 2-3 children, a billion-dollar
inheritance should be diluted to nearly nothing after 15 generations. And with
the 4-8 children that were usual back in the day, in less than 10 generations.

Having such a massive difference that it can be traced by very low-powered
population statistics after 600 years means that the effect on having a head
start in terms of wealth is enormous on your potential to stay wealthy.

~~~
Mvandenbergh
>Even on the assumption that the rich only have 2-3 children, a billion-dollar
inheritance should be diluted to nearly nothing after 15 generations

Not if your children exclusively marry other wealthy people. Then the rate of
dilution depends primarily on the growth in the overall population of the
wealthy in each generation. The Italian population overall has quintupled
since the 1400s, even if we make an allowance for the wealthy having more
living children who reproduced, the wealth will not have diluted away
completely.

------
mjfl
I don't understand this. Assuming no inbreeding, families that consistently
have 2 kids roughly double in size every generation - a 600-year-old family
would have 1 billion unique descendants by now. Of course, there is a ton of
inbreeding - in the technical sense - but I still have a hard time imagining a
600 year continuous family line that isn't a pretty arbitrary chart of certain
descendants here and there. It's very probable that some of them became poor
too!

~~~
xenadu02
That's not correct; once you reach out a few generations the branch becomes a
web as distant relations marry. That's the only way it can work if you think
about it.

~~~
mjfl
still, it would be a very large web, large enough to encompass several
families, not just one.

------
irrational
"While it comes as little surprise that families pass on their wealth to their
children, it’s still somewhat remarkable that these families were able to
maintain their wealth through various sieges of Florence, Napoleon’s campaign
in Italy, Benito Mussolini’s dictatorship, and two world wars."

When you are a part of the Illuminati, anything is possible!

~~~
analognoise
Username checks out.

~~~
irrational
Oh cmon! That was funny!

------
ChuckMcM
This makes for a great headline but fails to capture the entire picture which
would include "families that are rich now and weren't before" and "families
that were rich then and aren't now".

Another interesting statistic has families that were made wealthy in a short
time by circumstance (lottery, judgement, IPO, etc) and are still rich, vs
those that lost all of their wealth again.

It seems the best way to have the family wealth hang around is to create an
institution with it that has as its mission to manage that wealth. Too much
control by family members is strongly correlated with losing it all (which
isn't too surprising when you think about it).

Wars and conflicts are the large redistributors of wealth. Not that it's a fun
way to do so.

~~~
xenadu02
The Freakonomics podcast covered this. There have been small-scale examples of
this sort of thing but the best researched one is from Georgia.

The tl;dr is that the government stole a huge chunk of land from the Cherokee
but the white public got really angry because the politicians intended to
split up the land among themselves. To avoid being tossed out of office they
setup a lottery and distributed the land randomly. About 20% of Georgia's
white population at the time got a huge chunk of land for free. The study
shows it didn't have much of an impact on families over the long-term.

The paper:
[http://www.nber.org/papers/w19348](http://www.nber.org/papers/w19348)

The podcast: [http://freakonomics.com/podcast/would-a-big-bucket-of-
cash-r...](http://freakonomics.com/podcast/would-a-big-bucket-of-cash-really-
change-your-life-a-new-freakonomics-radio-podcast/)

------
BurningFrog
Fun anecdote, but to say something universal about families and wealth over
centuries, you'd have to look at vastly more regions.

Especially since this is talked about for being so _different_ from the norm.

------
mavelikara
From before:
[https://news.ycombinator.com/item?id=11731890](https://news.ycombinator.com/item?id=11731890)

------
Nomentatus
No article last year held me in such horror as this one. I haven't dared even
discuss it with anyone until now. It still takes my breath away. Especially
because the U.S. now has less class mobility than most of Europe does.
Automation is likely to be a "Yuuge" force multiplier for societal
stratification; certainly modest minimum annual income grants aren't going to
change that. All my life I've wanted to believe everything this study
disproves. My parents and grandparents worked very hard for their kids because
they didn't thing this was really the way the world worked. But it certainly
is. If I want to become damned depressed all I have to do is think about it.
There's no reason not to enjoy the day 'cause of it, but it is more than a
little demotivating.

~~~
kriro
I have had heated debates over inheritance taxes. I'm strongly against them
because I don't like the signaling effect (if you work really hard, the
government will take half of it) and it's a strange form of multi-taxation
which is also questionable from my POV. I'm very family driven and I think
"working hard to make the life of your children better" is a very strong
motivator that should not be underestimated.

The counterargument is usually "well let's set the cap at X million" which I
find very problematic because I don't see an ethically sound way of defining
these lines in the sand. Additionally in the age of webscale(tm) it's
reasonably possible to start a "new dynasty" from scratch. Unfortunately most
of these debates tend to boil down to "the rich are evil" which is usually
when I use interest in them.

I've only roughly browsed the study but the effects aren't that big compared
to compound interest from 1427 to now. If anything I'd argue the rich are
still rich but not as rich as expected is the take away message.

~~~
pcrh
I'm in favor of inheritance taxes as I see it as taxing income of the
inheritors. I don't see any rational reason why income from this one source
should be exempt of taxation.

~~~
altstar
One reason can be double taxation. Normally all income and capital growth
would already have been taxed.

~~~
pcrh
Pretty much everything is subject to multiple taxes. For example, the money
you spend after income taxes are deducted may further be taxed by the means of
sales taxes. Or, the money you invest from your taxed income might be subject
to capital gains taxes.

------
dimitar
[http://www.aiel.it/cms/cms-
files/submission/all2015061418365...](http://www.aiel.it/cms/cms-
files/submission/all20150614183657.pdf) \- link to the actual paper

------
OscarCunningham
I think that this effect will have ended with modern gender equality. Each
family has on average only one male child per generation, so if you
consistently pass the money down to your son (the child with the same surname
as you) then it will last a long time. But these days it's more common to give
money to all your children, so it's halved at every generation.

------
TXV
>It’s a trait shared by elite families in China, whose high status has
persisted since the Mao years.

Well, but that's just about 60 years...

------
BuffaloBagel
Makes a good argument for the inheritance tax

~~~
TomMarius
Why is this so bad it needs to be taxed?

------
at-fates-hands
I wonder if at some point inheritance of the family wealth was dependent on
having a viable offspring to pass the wealth onto. The article does not
mention this, but in the 14 and 1500's, I can only assume at some point it
was.

------
randyrand
This is hard to believe.

Over 600 years, a family of 4 becomes a family of thousands. Take any
reasonable sum of money and divide it by 20,000 and its not that big of a sum
of money anymore.

~~~
FooBarWidget
I don't think money works that way? Think of the family wealth as starting
capital that gives decendants better education, an environment that simulates
growth, etc. They take a piece of the family wealth and grow it bigger through
good jobs, investments, companies, etc.

------
forkandwait
"the history of all hitherto existing society is the history of class
struggles" \-- Karl Marx, Communist Manifesto.

~~~
valuearb
To a man with a hammer, every problem is a nail.

To a man with a hammer and sickle, every problem is a class struggle.

~~~
piaste
That is a _brilliant_ aphorism. I shall make good use of it.

------
Proven
To a normal person the title is an argument against taxation. To a socialist
it's the proof that taxes ought to be higher.

~~~
trome
Anything but, the title literally states that social mobility in Florence is
very low, and that capital is more valuable than labor. Bring back the death
tax at 90%!

~~~
geon
He is calling you a socialist, and implying that you are not normal.

~~~
trome
I know and get that, he is an extremist that believes that the landed gentry
deserve to rule over the landless serfs. I oppose that destructive policy, as
it is a great way to stifle society as a whole and ensure we slide back
towards the dark age.

~~~
eigenmeister
Don't straw man his argument like that. I take it we both consider social
mobility good for society. In that frame, defend the estate tax - does it
improve social mobility? More than it costs? More efficiently than, say, a
Georgist tax, or a basic income?

