
More than half of all private wealth has been inherited in most of Europe - doener
https://twitter.com/mfratzscher/status/942460950224998401
======
kiliantics
Piketty showed in Capital that most modern work about the trends in economic
inequality was flawed. We usually think of the industrial revolution and
modern era as periods where power and wealth became much more fairly
distributed. However, if you go far back enough into the records, as he did,
you can see a clear trend of concentration of wealth even now in the current
system. The trend was briefly disrupted by the two world wars which were so
destructive to our economies. The necessary reconstruction led to massive
wealth redistribution and evened the playing field somewhat.

It seems that the graphs in this tweet are another confirmation of Piketty's
observation.

~~~
arkh
There are two extreme ways to remove the inheritance problem. One would be to
forfeit personal property: you can't give what you don't own. The other would
be to remove the concept of family: when born you are placed in a communal
system to be raised by professionals. People start with the same chances, the
same level of social knowledge, network and vocabulary, you almost get to a
pure meritocratic society (there are still those pesky genes).

Let's not imagine the unwanted effects and just bask in the idea of those kind
of perfect societies.

~~~
raducu
Not living with your family in you first ~7 years of life has disastrous
effects on brain development and emotional health for the rest of your life.

~~~
golergka
I don't think that the parent comment was actually suggesting implementing
these things, quite the opposite.

------
jondubois
What's interesting about this is that it barely scratches the surface.

Assets and money are just some of the things that people inherit from their
parents. Many people inherit their entire careers from their parents through
social connections - These people would probably be classified as 'self made'
which makes the statistics seem more benign than they actually are.

I bet if you counted out all those people who were raised with a silver spoon,
the percentage of real 'self made' people would probably be less than 1%.

~~~
ryanwaggoner
Fortunately, we don’t have to rely on guesses, we have measures of economic
mobility. In particular, how likely is it that someone born into a particular
quintile moves to a higher (or lower) quintile?

[https://en.m.wikipedia.org/wiki/Socioeconomic_mobility_in_th...](https://en.m.wikipedia.org/wiki/Socioeconomic_mobility_in_the_United_States)

Answer: it’s not great and getting worse, but not as dire as you portray.

~~~
ekianjo
Relevant part:

> If a parent's income had no effect on a child's opportunity for future
> upward mobility, approximately 20% of poor children who started in the
> bottom quintile (in the bottom 20% of the US range of incomes) would remain
> there as poor adults. At the other end of income spectrum, if children were
> born into wealthy families in the top 20%, only 20% would stay in that top
> income category if their mobility opportunities were equal to every other
> child's in the country.

> But long-term income statistics show this isn't happening. Mobility
> opportunities are different for poor and wealthy children in the US.
> Parental incomes and parental choices of home locations while raising
> children appear to be major factors in that difference. According to a 2012
> Pew Economic Mobility Project study[19] 43% of children born into the bottom
> quintile (bottom 20%) remain in that bottom quintile as adults. Similarly,
> 40% of children raised in the top quintile (top 20%) will remain there as
> adults. Looking at larger moves, only 4% of those raised in the bottom
> quintile moved up to the top quintile as adults. Around twice as many (8%)
> of children born into the top quintile fell to the bottom.[19] 37% of
> children born into the top quintile will fall below the middle. These
> findings have led researchers to conclude that "opportunity structures
> create and determine future generations' chances for success. Hence, our lot
> in life is at least partially determined by where we grow up, and this is
> partially determined by where our parents grew up, and so on."[20]

~~~
wycs
This would all be true if we were all genetically identical. However
psychometrics has proven and now cognitive genomics is confirming that
valuable mental characteristics have very large genetic components.

Intelligence is the capacity to achieve your goals. Intelligence is highly
heritable. A goal of most people is to become wealthy. So people who acquire
wealth tend to be much more intelligent than average, as wealth is graded on a
curve. Thus though there is regression to the mean, their children will be
more intelligent than average, and so worth more as employees and more likely
to succeed even if they were put up for adoption.

This has unfortunate class implications, but putting cotten in our ears is not
going to help. We must separate the normative from the descriptive. This is
horrible and unfair. But natural selection is heartless algorithm literally
running on death and suffering. We should not expect it to distribute
capacities in a manner that is aligned with the prescriptions of our flimsy
ideologies.

Wealth distribution would not fix this.

But let us seize the high-IQ alleles and distribute them to the proletariat!

Such thoughts are verboten now, even as our tools for such interventions get
ever sharper and assortative mating magnifies these differences to a point
where it is getting difficult to ignore.

~~~
capisce
> Wealth distribution would not fix this.

But a certain amount of wealth distribution could improve the life quality of
those born with less potential.

~~~
RyanZAG
> improve the life quality of those born with less potential

While a noble goal, I don't believe this is a goal shared by the majority of
the population. I think if you ran a poll between "improve the life quality of
those born with less potential" and "improve the progress of humanity", the
results would favor the later.

Is it better to bring fresh cold water to all, or hot and cold water to some?
If it cost $100 to each person for either, I believe that those who possessed
$100 would pay for hot water for themselves.

There's an argument for "do both", but that's not always realistic. Those
without can force the issue with democracy, but if they force the issue too
far, bad things are known to happen from history. I'd be wary of forcing it
too far, but your opinion is your own.

~~~
capisce
> While a noble goal, I don't believe this is a goal shared by the majority of
> the population.

Then why do most countries have welfare for the poor?

> I think if you ran a poll between "improve the life quality of those born
> with less potential" and "improve the progress of humanity", the results
> would favor the later.

What's the point of improving the progress of humanity if not to actually make
life better for the majority of humans?

In a few decades the majority of the population might find _themselves_ poor
due to not being born with enough potential to compete with automation and
robots. Should we keep engineering the economy such as to only improve life
quality for the most fortunate?

~~~
RyanZAG
> Then why do most countries have welfare for the poor?

Because of democracy.

The rest of your points are good and I agree with them. Just pointing out that
"improve the life quality of those born with less potential" is probably not a
goal most people strive for. I do hope I am wrong, but I don't believe I am.

------
DoreenMichele
When I was stationed in Germany in my twenties as an American military wife,
the Berlin Wall came down and the Two Germanies reunited. An East German aunt
went to visit West German relatives, then visited relatives who had immigrated
to the US. She said that "Compared to East Germany, everyone in West Germany
looks rich. Then you go to the US and everyone looks like on (the nighttime
soap) _Dallas_."

My maternal grandmother came from a low level German noble family that sold
the family title when they fell on hard times. Given my aunt's assessment of
wealth distribution in relation to nationality, I guess mom made the right
decision coming here.

(Edited to clarify my nationality in response to a question. I did not realize
I left that out. Oops.)

~~~
bradfitz
> I guess mom made the right decision coming here

Where's here?

Oh, from your Hacker News profile -> Twitter profile
([https://twitter.com/doreen_michele](https://twitter.com/doreen_michele))
which says "Southwest Coastal Washington".

~~~
dang
I'm sure you were just making polite conversation but it's maybe not so great
to follow two pointer hops to someone's personal details. People have many
reasons for being sensitive about these things.

I've never thought about it before, but your comment made me realize that
maybe the best thing is to feel free to mention what's in someone's HN profile
but leave it at that. On the other hand, I broke that myself only this
afternoon:
[https://news.ycombinator.com/item?id=15947396](https://news.ycombinator.com/item?id=15947396).
So I don't know.

~~~
Johnny555
Those that are sensitive about such things shouldn't post such details online,
and having that veil of secrecy penetrated and posted publicly might be a
wakeup call.

There's no point in protecting someone's imaginary privacy, if their personal
details are a google search away, they have no privacy and if that's important
to them, they shouldn't post their private details in their profile.

~~~
dang
Those are good points too, but it's so much more complex than that. To see
how, try the thought experiment of someone digging up absolutely everything
that can be found online about you and then posting it as a dossier in some
place you care about. If that doesn't make you shudder, you're a rare one.

------
TheSpiceIsLife
> _Fascinating chart: more than half of all private wealth has been inherited
> in Germany, UK, Switzerland, France — trend: rising fast!_

> _Ever less private wealth is accumulated through own work, increasingly more
> through inheritance._

A massive part of people's motivation to work is to provide for their
children. That an increasing portion of wealth is inherited rather than build
in an individual's working life-time is indicative that the system is function
as intended.

The graph seems to indicate there was a bit of a golden area after WWII up
until the early nineteens, and that the nations included on the graph are
returning the regular state of affairs.

But what does any of this mean?

~~~
zokier
Modern inheritance should be inherently dissipative, as the estate is
repeatedly divided among the heirs, amplified by death/inheritance/estate
taxation. The problems arise when the wealth accumulation overpowers the
dissipative effect of inheritance, combined with increasingly absurdly high
wealth levels that go far beyond providing for children and grandchildren.

As for the "golden area" you mentioned; yes, the war(s) did function as great
equalizing wealth redistribution force. Arguably bit of a blunt instrument to
accomplish that.

~~~
humanrebar
Wealth naturally dissipates through the generations. What has changed the most
is the birth rate of the wealthy.

If they went back to having a dozen children apiece, wealth would dissipate at
least an order of magnitude per generation.

~~~
ridgeguy
Depends on laws and customs.

Primogeniture concentrates inherited wealth in firstborn (usually male)
offspring. [1]

[1]
[https://en.wikipedia.org/wiki/Primogeniture](https://en.wikipedia.org/wiki/Primogeniture)

~~~
goliatone
OT but I grew up in a place where first borns would inherit the land that was
good for farming and other siblings would get the less desirable land, usually
on the coast. Apparently it would make siblings tear each other apart because
the difference in land had a huge impact on a family’s wellbeing. Eventually,
with tourism, the value of land flipped, making families that owned land by
the coast become wealthy. Talk about external factors affecting upward
mobility.

------
nicolashahn
I was just discussing this as a result of watching this video:
[https://www.youtube.com/watch?v=-asltUUvcGU](https://www.youtube.com/watch?v=-asltUUvcGU)
in which they discuss the result of the western capitalist system loosely
resembling a meritocracy, except in the case of inherited wealth.

An exceptionally productive individual can generate billions, but then when he
dies the money goes to his heirs which may not have done anything to deserve
commanding that much wealth other than having been raised by (and having the
genetics of) the exceptionally productive individual, which is a far cry from
being exceptionally productive themselves.

My thought was to create a cap on inheritance. Enough so that the heirs would
be able to live a normal middle class life without working, but not be
disgustingly wealthy like the parent. ~$5 million seemed like enough to live
off interest for a lifetime. I don't think productivity would be
disincentivized too much by this, as the productive individuals still get to
use their wealth as long as they're living. It'd probably be pretty difficult
to plug all the loopholes but I think it's worth thinking about.

edit: another thing, we could lighten some other taxes (income, property,
whatever) for this increased death tax such that the overall government tax
income remains roughly the same, to make the proposal more palatable. Overall,
everyone keeps more of their wealth, and the playing field is leveled and
we're a bit closer to an actual meritocracy.

~~~
laretluval
> deserve

??

Who gets to determine who deserves what?

~~~
learnstats2
I suggest it is not difficult to find a better determinator than parental
wealth.

~~~
ericd
Are you a parent? I'm not sure you understand what you're playing with here.

~~~
learnstats2
I'm not sure what your point is.

Determining someone's future on parental wealth means determining someone's
future on a lack of parental wealth - and a vast majority of parents don't
have meaningful wealth.

So we're (society is at present) consigning a majority of children to a life
of missed opportunity and missed potential. I don't see how that can be a good
thing.

~~~
ericd
My point is that if you were a parent, you'd probably realize that for many
parents, a large part of the reason they strive to earn is to be able to leave
their children in the best possible position in life. It's not something we
should be trying to "correct" by removing that ability from parents, and it's
uncomfortable to have the government trying to get in between that
relationship, beyond the normal inheritance taxes.

Also, parental wealth doesn't "determine their future" any more than the
quality of the parents does. It's certainly a leg up, all else being equal,
but it's very possible to live an enjoyable and fulfilling life without much
wealth if you're willing to get outside of the focus on consumption, and
personally, I'd generally take poor, loving parents over rich,
uncaring/selfish/narcissistic parents.

Who you're born to will always be a lottery that leaves winners and losers,
even if everyone is equally wealthy. You'll get variable quality genetics, if
nothing else, at least until we completely master human genetic engineering.

~~~
nicolashahn
I'm not a parent (also not the person you're directly responding to), but I
think one day I might be. Right now we're encouraging the productive people to
pass on their assets, but not _the ability to create wealth_ \- which would be
better for society, and (totally my own subjective opinion) will lead to a
better life for the child as well.

There's still the option of living a comfortable life being totally
unproductive - but why let that option waste an unnecessary amount of our
society's assets?

This would be an extremely strong move by the government, you're right, but I
think most people would be behind it, especially since it would affect less
than a percent of the population. We're not headed down that path currently,
but I thought it was an idea worth sharing.

~~~
ericd
> _Right now we 're encouraging the productive people to pass on their assets,
> but not the ability to create wealth - which would be better for society,
> and (totally my own subjective opinion) will lead to a better life for the
> child as well._

Most productive parents are already highly incentivized to not see their
children become totally unproductive wastrels, because the culture that made
them productive taught them to value productivity, and good parents typically
want to see their children instilled with what they see as good values. I
don't think the government needs to do much more there.

> _There 's still the option of living a comfortable life being totally
> unproductive - but why let that option waste an unnecessary amount of our
> society's assets?_

There are a couple things to unpack here. First off, wealthy peoples' wealth
doesn't just sit in a cave, it's almost always ~100% invested in productive
ventures. Even sitting in the bank, the bank is using it to write loans to
people and businesses to do things with.

The other thing is that it's part of our very basic social compact that
peoples' property is theirs and their family's, not the society's, and only in
very limited circumstances can the government/society seize that property for
the use of the group.

------
joshuaheard
This doesn't surprise me at all. Based on my observations, I would say that at
least the bottom 80% lives solely on income from labor, and accumulates no
wealth. Of the upper 20%, some live below their means, some earn slightly more
from their labor than necessary to live, and others make enough to accumulate
capital. Once you begin to accumulate capital, you earn money from the capital
itself. Some accumulate enough capital to earn enough income to quit earning
income from labor entirely. Some use the excess capital income to accumulate
even more capital. Capital is then passed down to heirs. So the accumulated
capital is about equal to new capital generated.

------
6502nerdface
A theory... It takes time to create wealth, and a lot more time elapsed before
the current generations than has elapsed (or will) during the current
generations, thus perhaps it’s not surprising that as time goes on, most of
the accumulated wealth around us is from previous generations.

Furthermore, when a person dies, their wealth can either be destroyed/lost,
inherited by heirs, bequeathed to some institution, or absorbed into the
state/public... by measuring only “private wealth” as TFA does, we don’t see
those latter two routes for the flow of wealth across generations, thus
biasing our view toward the inherited component of wealth.

~~~
askvictor
While you raise a very interesting point, I suspect that overwhelmingly wealth
is passed down to children; it's a pretty basic human instinct to look after
your clan. Though I would like to see some data to be sure.

------
gbacon
The flawed thinking that wealth is a pie of fixed size wherein gain by one is
necessarily another’s loss is known as mercantilism and was long ago
discredited as bunk economics.

~~~
justicezyx
Or it was what they want you to believe.

~~~
ataturk
I think the matter is well documented. Wealth is not a zero-sum game. However
--you have countries that deliberately hold people down. Everyone wants safety
nets and such. That all has a huge effect on individual upward mobility.

~~~
justicezyx
Wealth might not be a zeronsum game, but we need to prevent someone to play it
as such.

Imagine an economy where wealth is accumulated more and more to a few, then
even the total wealth grows, how everyone enjoy them equally? If not equally,
the inequality soon will make wealth zero sum anyway.

------
woodpanel
This statistic is from the DIW, a German think-tank which is known for it's
left leaning/biased views. It cost them their membership in the country's
"council of economic experts" once.

PS: That doesn't mean that the claim is false. But you could - as is often the
case - draw different conclusions from the data. E.g. that the European
countries have heavy welfare and tax burdens that reduce social mobility and
the chances of earning private wealth through work.

~~~
wutbrodo
> E.g. that the European countries have heavy welfare and tax burdens that
> reduce social mobility and the chances of earning private wealth through
> work.

I agree with the general principle, but the US has lower social mobility IIRC
than most of the EU countries. My current model is that whatever flaws our
model has are currently dominating Europeans' reduction of social mobility.

Given how much better we integrate immigrants (especially in the parts of the
economy that are high growth, like urban coasts), I wonder how much US social
mobility is overstated. We didn't have a lot of money when I was growing up
and my sister and I are both in a pretty high percentile of income, so we'd
certainly show up as a data pt of social mobility. But my parents are upper
class in "the old country", they both have master's degrees, and their kids'
income relative to their human capital isn't really a central example of
social mobility.

------
contingencies
The Chinese have a saying 富不过三代 which means "wealth does not survive three
generations".

~~~
closeparen
Have there been three generations in China since the Communist revolution?

~~~
contingencies
Yep, just! Wealth certainly didn't survive that one, except by moving to
Taiwan, and its economy is tanking right about the three generation mark...

------
ajeet_dhaliwal
Won’t this eventually happen in the United States too? What’s stopping it
other than a later start.

There’s more entrepreneurial spirit perhaps but the sons and daughters of
wealth creators will still inherit.

~~~
gbacon
Read the chapter “Economic Outpatient Care” in Thomas Stanley’s _The
Millionaire Next Door_ to learn how poorly on average American millionaires
pass to their children the skills necessary to build wealth.

~~~
askvictor
Americans, perhaps. But whole nobility (more of a European thing) thing is in
part to preserve these skills across generations.

------
scotty79
This seems natural to me. Wealth might be either inherited or gathered from
people that are not wealthy and that usually requires some excuse (for example
giving them temporary access to some limited resource you own like roofs or
capital or selling them something you can make cheaply in large quantities at
low cost).

It stands to reason that most wealth is inherited as inherited part grows
gradually by gathered part (which is limited by human lifespan and pace of
development of technology that creates new value).

Some inherited part is list due to gambling (on business mostly) but that just
lowers pace of growth.

------
skookumchuck
I suspect a lot of inequality is due to better access to wider markets. How
rich could you get if your marketplace was just your village? Now, with the
internet and cheap global transport, an entrepreneur has access to the globe,
and so can make much more money.

------
mapleoin
How is "UK, Germany, France and Switzerland" _most of Europe_? Those aren't
even the four richest countries in Europe. The title implies this is the case
for all of Europe, but the link only claims this for four countries.

------
pmontra
Maybe what follows is naive but wealth is not destroyed when somebody dies, it
passes on to heirs. If there isn't an economic boom the share of inherited
wealth is going to be larger and larger as time passes. Even succession taxes
don't destroy wealth, they distribute it and probably most of it becomes
private again (salaries to public servants and private suppliers of public
works.)

An extreme example: in Egypt they're making money out of the Pyramids, non
inherited businesses (tourism) on the top of inherited public property.

------
alexnewman
That's what a real estate bubble does

------
myth_drannon
I wonder how the tendency of Russian oligarchy to move their family to UK,
Switzerland skews the charts

------
erdle
that's kind of why my family left...

failed revolution in the 1800s...

~~~
mbroncano
Yeah, thankfully that's hardly the case everywhere else /s

------
marxwasright
It is quite sad, but predictable, that people are trying to silence your voice
with their votes. Piketty’s observations dovetail nearly with this article.
And a world where r>g, and inherited wealth dominates is a world of economic
inefficiency; where lucky sperm dominate all aspects of life regardless of
their talent or their value.

~~~
dang
> _It is quite sad, but predictable, that people are trying to silence your
> voice with their votes_

Would you please read
[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html),
which ask you not to post like this? The parent comment has actually been
decisively upvoted. It takes time for the community verdict to become clear.

Also, the "people are trying to silence your voice" thing is an internet trope
that is best left elsewhere. We're hoping for thoughtful, non-repetitive
discussion on this site, not boxing matches.

Edit: actually, since it looks like you're using this site for ideological
battle and have done it multiple times before, I've banned this account.
Please don't create accounts to break the HN rules with.

