
The richest families in Florence in 1427 are still the richest (2016) - albertzeyer
https://qz.com/694340/the-richest-families-in-florence-in-1427-are-still-the-richest-families-in-florence/
======
DennisP
A while back I was reading a stack of financial books, and in one of them the
author (I think it was William Bernstein) wrote that he'd had the opportunity
to interview a member of one of these families, and asked how they'd managed
to hold onto their wealth for 600+ years.

The answer was "art, gold, and land." If you had a rich estate back then and a
foreign army was on the way, you could roll up your art, put your gold in
sacks, and ride away. The title to the land would still be yours, and after
the foreign army is expelled you just return home with your stuff.

I can think of some risks with this plan, and some improvements that could be
made today, but basically these people aren't chasing returns, they think
about preserving wealth for the long haul through worst-case scenarios.

~~~
Tade0
This idea ultimately didn't work in eastern Europe.

My family used to own some land but after WW2 it became Soviet territory and
was lost.

We received some compensation eventually, but it was a pittance comparing to
the original value.

~~~
InitialLastName
So maybe "art, gold, land, and 600 years of government that respects the
continuity of property holdings of their subjects".

~~~
joelx
We need to tax wealth, not income, to increase social mobility. Taxing income
hurts entrepreneurs, taxing wealth pushes the idle rich to work harder.

~~~
koheripbal
Taxing wealth will only increase the mobility of the wealthy.

------
wil421
One thing I learned in Florence is when the plague came the rich families from
Siena and Florence took two different approaches. In Florence, some of the
families noticed they might not last so they decided to, not sure if
distribute wealth is the right word, but they gave a lot to the city and
remaining people. They knew it would be needed for rebuilding. Siena did not
and according to my guide it’s the reason Florence flourished and Siena became
a lesser known city.

~~~
partiallypro
I have my sincerest doubts this is why Florence flourish and Siena did not. It
likely has a lot more to do with trade routes and the Arno river.

~~~
wil421
There are many reasons Florence flourished. Another reason Sienna didn’t is
because people stopped doing pilgrimages to Jerusalem. Siena relied on these
pilgrims and one big thing the banks did was exchange various currencies.

~~~
oh_sigh
A big reason was Spain united with Florence and together took out Siena. If
the Italian War went the other way, Siena would have been ascendant and
Florence just a subdued duchy.

------
netcan
I would love to know a bit more about mechanism. Is it through family
holdings, individual wealth management, sons of well-to-dos becoming
proverbial doctors and lawyers.

Florence is especially interesting. 15th century Italy had a relatively modern
(similar/ancestral to our own) economic-political system. Wealth wasn't all
about land-and-title aristocracy. "Merchant" families were the rich powerful
instead.

Generally speaking, I'm curious about how all thia works on the individual
level. Thomas Picketty's ideas about how wealth dynamics work in the long term
are convincing, but, on simple interpretation, it isn't obvious how Bill Gates
fits into the picture (other than as an outlier).

~~~
lmm
> it isn't obvious how Bill Gates fits into the picture (other than as an
> outlier).

Gates came from a wealthy family, which put him in a much better position to
do high-risk, high-reward things (e.g. he could drop out of Harvard to work on
his business, knowing that if the company failed his family could afford to
send him through again).

~~~
chuck-
If Bill Gates weren’t from such a wealthy family it is likely he wouldn’t have
ever attended Harvard. Grooming for Harvard and the ilk start up from an early
age. It is also likely no one would know who he is today as well. He might had
been that genius principle engineer that would have went on to do absolutely
amazing work, but not one to start or lead a company.

Imagine how many potential Bill Gates are majoring in CS from average to good
state universities that have the potential to do so much more in academia and
industry, but come from poor families/no one to help them. You’ll probably
never hear of them/know they exist.

~~~
aquadrop
I think that's questionable and downplays his abilities. He won National Merit
Scholarship. He scored 1590 out of 1600 in SAT. He had a profitable business
running when he was still in school automating some traffic calculations, and
he was actually hiring his classmates. You don't see that often. And I think
one more important thing happened - he met very bright Paul Allen and together
they were very powerful duo. Of course having wealthy family helped not to
care about some stuff, but it wasn't just luck.

~~~
chuck-
>I think that's questionable and downplays his abilities. He won National
Merit Scholarship. He scored 1590 out of 1600 in SAT.

I think you underestimate how much a proper background can help you in terms
of admissions to elite schools. I know someone that scored a 1600 out of a
1600 on their SAT, but came from more of a modest background than Bill. They
were denied from Harvard. Harvard receives plently of high SAT scoring, high
achieving applicants. Smart people from poor backgrounds have a lot more to
overcome in life to get to the same point as others with more resources. A
head start with a secure background can make a large difference later in life.
I'm sure if my friend didn't go to one of the worst high schools in the state,
and went to a better STEM school, they could have been admitted to Harvard.
Who knows how that would have changed their life for the better. Now we will
never know.

~~~
agent008t
Don't know about Harvard, but I interviewed people for admissions into Oxford
CS. If anything, poor background would help you - while we all try to be as
objective as possible, if anything we would cut you a bit more slack if you
came from a poor background.

In this day and age, I would argue that access to education is actually nearly
ubiquitous when it comes to STEM. Lack of encouragement/emphasis on education
from parents and the rest of the social circle is a much bigger problem. That,
and smart poor kids just don't apply, because they wrongly think they don't
stand a chance.

Arguably, a smart kid growing up in a poor family, but with parents that put
great emphasis on education, has an advantage over a rich kid - the rich kid
is unlikely to have the same kind of drive to succeed.

~~~
chuck-
This is excellent news. Great to hear this.

------
learn_more
"When regressing the pseudo-descendant’s earnings on pseudo-ancestor’s
earnings, the results are surprising: the long-run earnings elasticity is
positive, statistically significant, and equals about 0.04. 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)."

So if your family was rich then, you probably make 5% more than than most
people now. Nothing much to see here.

~~~
ForHackernews
Over 600 years, that's still a surprising result!

~~~
goofingaround
Why do you think so? Given the magnitude of the result, the mechanism might be
genetics rather than social immobility.

~~~
femiagbabiaka
How could someone be genetically predisposed to make more money?

~~~
ikeboy
IQ is highly hereditable and has a higher correlation with income than the 5%
here.

~~~
vezycash
Soft skills, have been shown to be a higher predictor of income than IQ.

You are right that something's been passed down - but it's not the genes. It's
the social connection to:

* Get jobs without applying for them.

* To learn important economic news before anyone hears them. E.g. President bought 1200 Cuban cigar just before banning imports from CUBA. Read this: [https://www.cigaraficionado.com/index.php/article/great-mome...](https://www.cigaraficionado.com/index.php/article/great-moments-kennedy-cuba-and-cigars-7840)

* To get contracts regardless of ones qualifications. I've read that Aristocrats ensure their kids have ivy league degrees to maintain a illusion of fairness.

There's an article I read here on HN that says, Ivy league schools are
successful because they select applicants who would be successful without
them.

~~~
ikeboy
If genetics doesn't affect income, why is there a correlation between
identical twins raised separately?

See e.g.
[https://helda.helsinki.fi/bitstream/handle/10138/38881/HECER...](https://helda.helsinki.fi/bitstream/handle/10138/38881/HECER_DP364.pdf)

~~~
marnett
It wasn't stated there is no effect, just that social class has a larger
impact at the highest rungs of society.

~~~
ikeboy
>You are right that something's been passed down - but it's not the genes.

That sounds like a claim that there's no causal connection running through
genes.

------
jaclaz
[2016] , discussed:

[https://news.ycombinator.com/item?id=13555925](https://news.ycombinator.com/item?id=13555925)

Actual paper:

[http://piketty.pse.ens.fr/files/BaroneMocetti2016.pdf](http://piketty.pse.ens.fr/files/BaroneMocetti2016.pdf)

~~~
OJFord
> discussed:
> [https://news.ycombinator.com/item?id=13555925](https://news.ycombinator.com/item?id=13555925)

[2017], also discussed in 2016:
[https://news.ycombinator.com/item?id=11731890](https://news.ycombinator.com/item?id=11731890)

------
huffmsa
A few quibbles.

1\. Wealth != Taxable income. Wealth is generally post tax holdings. It's
technical, but important to distinguish.

2\. This isn't too strange for Europe. The aristocracies that stratified
during the enlightenment did pretty well in places where there weren't
proletariat revolutions in the 19th century.

The northern Italian city states have always been odd, autonomous ducks.

~~~
bpicolo
That said, it's taxable on death, typically. Italian inheritance tax looks to
be pretty low though (sub-10%). That's miniscule.

------
peteretep
Related: "You won’t believe how far into this ‘millennial homeowner’ piece it
takes for us to mention their inheritance!"

------
benj111
So inheritance tax?.

Or is there an argument that this is good for society?

~~~
netcan
Why inheritance, why not just a wealth tax?

The problem with wealth, company any capex taxes has tended to be dynamic
effects like capital flight. But, those aside, a 1% effective wealth tax on
paoer/whiteboard, basically neutralises picketty's r>g, the driving force
behind wealth disparities.

^ edit: in that theory

~~~
benj111
I suppose ideologically a wealth tax presupposes that all wealth is bad,
whereas an inheritance tax just targets unearned wealth.

How would a wealth tax differ from a capital gains tax? The net effect would
seem to be similar?

~~~
perfunctory
> ideologically a wealth tax presupposes that all wealth is bad

Isn't it the same as saying that income tax presupposes that all income is
bad. We should tax wealth not because wealth is bad but because doing so might
have a positive effect on society.

> How would a wealth tax differ from a capital gains tax?

capital gains tax taxes realised return on capital. wealth tax is based on the
total wealth regardless of it's performance.

~~~
benj111
Re ideology. Its an choice between 2 similar taxes. And there are many, many
reasons for structuring taxes.

Re captial gains tax. Over the very long term, you would expect your
investments to at least track inflation, and you would expect to sell of those
investments to buy things. Its not clear to me that these 2 taxes necessarily
end up very different. Should we not expect to get at least a flavour of what
to expect by looking at capital gains tax?

~~~
perfunctory
I am curious to see the comparison as well. I suppose one difference is that
capital gain tax can be delayed far into the future. Wealth tax could also
have a cooling effect on stock market bubbles.

~~~
cr1895
Capital gains tax might also be a tax deduction due to a loss of capital. With
a wealth/asset tax it doesn't matter if you actually gain or lose.

------
mrfusion
I’m confused. Any family from the 1400s would have millions of descendants by
now.

~~~
gwerww
To a first approximation, yes. But it breaks apart quite quickly -> otherwise
we'd the world pop would be much higher.

thought experiment, if every rich family in Flrnc had a million decedents, and
there were (at least) a thousand families in Italy, then there would be a
billion ppl in Italy today.

What happens? Well first high child mortality, or death before reproduction.
Then you send most of your daughters off to the nunnery. Your youngest son
becomes the family priest. You marry within the group (actually not that
dangerous, genetically). End result? The numbers stay low.

Still many of us are probably related to these rich families. For example,
otherwise normal, boss is related to the Eastern European royalty... through a
courtesan. He didn't get squat from them (although he ironically ended up with
their name by sheer coincidence).

~~~
lalaithion
Your thought experiment assumes that each person today is a descendant of only
one family.

------
carusooneliner
Nassim Taleb uses the Florence example to make the argument that Europe has
more economic inequality compared to the US. He makes an interesting point
that static measures of inequality like 'top 1% of population have xx% of the
wealth' aren't that useful, a better indicator would be a dynamic measure that
shows economic mobility, people going both up (new money) and down the ladder
(bankruptcy). It looks like in Florence, families that climbed the ladder
centuries ago never came down.

Taleb's essay on inequality: [https://medium.com/incerto/inequality-and-skin-
in-the-game-d...](https://medium.com/incerto/inequality-and-skin-in-the-
game-d8f00bc0cb46)

------
wand3r
$100 dollars in principal with a $1 annual contribution @7% interest is >$28
Billion invested now. Still surprising between war, revolution or poor
financial management the fortune didn’t erode.

~~~
AnimalMuppet
Maintaining 7% interest over 600 years might not be easy...

------
kerng
There is a great book that I read a while ago (fiction) which this article
reminded me of. Called a trillion dollars:

[https://www.goodreads.com/book/show/22710315-one-trillion-
do...](https://www.goodreads.com/book/show/22710315-one-trillion-dollars)

------
kensai
The original paper.

[https://www.bancaditalia.it/pubblicazioni/temi-
discussione/2...](https://www.bancaditalia.it/pubblicazioni/temi-
discussione/2016/2016-1060/index.html)

------
maerF0x0
I see nothing wrong with a previously "wealthy" family remaining in the
"wealthy" category. To me the real need is rising tides raising _All_ ships
(and maybe that the lowest ships are rising at faster relative rates than the
highest ships).

Whereas the poor maybe used to only have (completely guessing here) basic
food, grade 6 education and didnt have any printed materials, now the poor
have excess calories, state mandated 12 years education and access to the
internet.

on the political side, IMO dividing people is just a tactic to conquer them,
so watch out for those who would turn us against eachother.

------
ryanmarsh
When you research the mega rich across time, up until the 21st century, you
learn a lot of weird things. Some are things most people would call
“conspiracy theories”. Some are things you would expect but can’t imagine
actually happening (like closely protecting blood lines).

If you want to read some weird mega-rich stuff do some digging on the “red
shield” family, their financial relationship with a particular large church,
the sinking of the titanic, and read “The Secrets of the Federal Reserve” by
Eustace Mullins (the benefactor for much of his research was Ezra Pound).

------
8bitsrule
I'd surmise that over 591 years (short of an exhaustive study) many 'rich'
families have -not- remained rich. I'm not sure what 'rich' means; who's in a
position (or even can be) to know who was objectively 'richest' then; and
centuries have a tendency to erase many or most fine details, and to embroider
others.

------
throwaway5393
This makes me wonder which "stable" country currently has the least amount of
generational wealth.

I would assume China, due to the Cultural Revolution. From what I recall, all
of their billionaires are currently first generation. But we will see as time
goes on.

Or maybe South Korea since they were were colonized for a long time and
suffered through a recentish, direct war.

~~~
dorfsmay
From the article:

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

[https://qz.com/314720/heres-the-surprising-social-trait-
that...](https://qz.com/314720/heres-the-surprising-social-trait-that-the-
english-and-chinese-have-in-common/)

~~~
throwaway5393
Thanks for the article! This is fascinating and I will look into their paper
more, but on a quick glance, I wonder about their methodology here:

> The authors identified 13 surnames that appear with unusual frequency in the
> Qin examination system—the Chinese test to identify who will become a member
> of the highest elite in the country, the state bureaucracy. They selected
> them from more than 50,000 successful candidates (the most successful) in
> the Yuan, Ming, and Qin dynasties, starting in 221 BCE (we are talking
> China). These surnames are overrepresented in the modern imperial era and in
> modern Chinese elites—the high officials in the Nationalist government from
> 1912 to the triumph of the communists in 1949; professors at the ten most
> prestigious universities in the country in 2012; chairs of the boards of
> companies listed in 2006 as having assets of $1.5 million and above; and
> members of the (still communist) central government administration in 2010.

It is my understanding that while the Chinese do have a variety of surnames,
they are often based on region. Not to mention, the 3 surnames "Wang, Li, and
Zhang" are attributed to almost 30% of Chinese people.

------
gwbas1c
The question I'd like to see answered: Does the wealth come purely as a result
of circumstance, or do the families have genetic traits that make their
descendants better at accumulating / retaining wealth?

------
JohnFen
That isn't surprising. It's much, much easier to gain and keep wealth when you
already have a lot of wealth (that's the flip side of the fact that it's very
expensive to be poor).

------
MrXOR
Rest in peace Karl Marx!

------
crushcrashcrush
This is a great example of why we need an inheritance tax.

~~~
randyrand
I feel like we need more information before we can conclude that. Why is it
assumed that this isn't a sign of the families doing a good job raising
children, etc?

