Founding vs. Inheriting(1729.com)
1729.com
Founding vs. Inheriting
https://1729.com/founding-vs-inheriting/
95 comments
As someone who grew up in middle class new england without any sort of inheritance, now living in southern california where there is seemingly an ethnic caste system in place, I think this article is a little circlejerky. People move to california for the weather.
Stopped reading when ... Bitcoin
1729 is Balaji's crypto newsletter, so you were bound to get there eventually.
[deleted]
why did you comment then?
Perhaps as a heads-up to those of us who now know not to bother clicking through.
Thank you, GP!
Thank you, GP!
I want to live in a society where I can found an institution, get rich, and then I can rest assured that my descendants will inherit and benefit from the wealth I made. Otherwise what’s the point?
Your position seems bizarre to me.
I want to live in a society where I can do what I like (which in my case involves founding institutions that help propagate things important to me like free software, and als making plenty of money).
My descendants? Some upbringing and a good education and then they are on their own. What would be the point of giving them some money or a company? Some sentimental knickknacks: fine.
I consider inheritance anti-democratic and not part of the kind of society I would like.
I want to live in a society where I can do what I like (which in my case involves founding institutions that help propagate things important to me like free software, and als making plenty of money).
My descendants? Some upbringing and a good education and then they are on their own. What would be the point of giving them some money or a company? Some sentimental knickknacks: fine.
I consider inheritance anti-democratic and not part of the kind of society I would like.
> I consider inheritance anti-democratic
I consider restricting the ability for people to provide inheritance to their children by force of state anti-democratic.
I consider restricting the ability for people to provide inheritance to their children by force of state anti-democratic.
Are you objecting to something someone suggested?
Without the force of state or a private army it’s pretty difficult for anyone to leave anything to someone after they kick the bucket.
Without the force of state or a private army it’s pretty difficult for anyone to leave anything to someone after they kick the bucket.
Protecting someone’s property is not the same as taking away someone’s right to their property. When the state does the former, it is a liberal state, when it does the latter it is a tyrannical state.
If you aren’t suggesting the state take away my ability to provide inheritance to my descendants, then what is the function of calling inheritance anti-democratic? Are you suggesting that a true democracy does not allow individuals to leave inheritance to their descendants?
If you aren’t suggesting the state take away my ability to provide inheritance to my descendants, then what is the function of calling inheritance anti-democratic? Are you suggesting that a true democracy does not allow individuals to leave inheritance to their descendants?
"what is the function of calling inheritance anti-democratic?"
As I understand it, legacy can be (and definitely is) used as a tool for wielding power, which (democracy wise) gets naturally viewed as a problem.
That's not to say that inheritance is bad or that it causes more harm than good. Personally, I think that denying inheritance will take away an important working drive for many people, which in turn will invite in the said people a cool off after achieving certain level of personal comfort. All that while the society at large would benefit more from the same people to fulfill their working potential than from diminishing whatever vector of risk to the optimal function of democracy. Also, whatever much or little one may achieve in life, at one point it must be passed to someone else, due to our mortal nature. I'd rather let the owners have control over how and whom they pass that to (i.e. to someone they know and maybe even had the chance to personally educate), as that to me seems the best setting for having things built in the long run.
As I understand it, legacy can be (and definitely is) used as a tool for wielding power, which (democracy wise) gets naturally viewed as a problem.
That's not to say that inheritance is bad or that it causes more harm than good. Personally, I think that denying inheritance will take away an important working drive for many people, which in turn will invite in the said people a cool off after achieving certain level of personal comfort. All that while the society at large would benefit more from the same people to fulfill their working potential than from diminishing whatever vector of risk to the optimal function of democracy. Also, whatever much or little one may achieve in life, at one point it must be passed to someone else, due to our mortal nature. I'd rather let the owners have control over how and whom they pass that to (i.e. to someone they know and maybe even had the chance to personally educate), as that to me seems the best setting for having things built in the long run.
That attitude does tend to align more with mine, with some important distinctions. It would also be interesting to compare long term societal/general impact and survival with that attitude.
My reasoning is that being exposed to the influence of power and wealth when someone is young is a bit like having them snort cocaine - unlikely to produce a long term successful human).
Is not taking wealth when it is available and not giving it to your progeny a long term survival/genetic benefit or not?
Wouldn't really change anything, but I guess curiosity in the face of a unclear benefit is pretty much the definition of us here. :)
My reasoning is that being exposed to the influence of power and wealth when someone is young is a bit like having them snort cocaine - unlikely to produce a long term successful human).
Is not taking wealth when it is available and not giving it to your progeny a long term survival/genetic benefit or not?
Wouldn't really change anything, but I guess curiosity in the face of a unclear benefit is pretty much the definition of us here. :)
Why do you only care about your descendants, and not anyone else. We could create a society where everyone in the next generation benefits from the wealth that everyone in the current generation creates. Is that not a much more worthy goal to strive for?
Much. The parent comment reads like a mix of severely lacking empathy and selfish grandiosity. This guy would probably also agree he should have 500+ kids to spread his blessed seed to the world.
I care about other people but I care about my family more. I couldn’t tell you why, I just do, it’s my instinct. I don’t believe in utopias nor do I commit myself to what other people consider “worthy” goals, this is not a popularity contest for me, it’s about survival.
anotha1(2)
"I care about my family more. I couldn’t tell you why, I just do, it’s my instinct."
Let me rationalize that for you. In order to keep yourself at a functioning level you have to see some good in yourself, to be able to respect yourself, and in that line of thinking - to trust that your physical base has enough value to be preserved long term in the genetic pool. You also have to see the same kind of value in the person you associated yourself with (i.e. your wife), and consequently - in the resulting lineage. Anything less is just prone to higher risk in the natural selection game.
"I don’t believe in utopias nor do I commit myself to what other people consider «worthy» goals, this is not a popularity contest for me, it’s about survival."
Not believing in utopia is one thing but, unless you're a nihilist or think we're at the end of times, you surely have to believe that the world can be made better and maybe do something about it. That's part of caring for the same descendants that will have to live in the world you'll leave them to. In consequence, the fact that you say you don't commit to other people's goals could mean that (A) it's because you don't share any views with other people out there on what would make the world better, which is very unlikely, or (B) you care and can afford to contribute but you just rely on the fact that others' effort will be enough and you can focus on more personal gains (which attracts contempt, and rightly so), or (C) you share the concerns and maybe even the goals for common problems but can not afford to do anything due to some limits in your life, like if you're in a war zone and can care only for physiological (Maslow scale) needs. It's hard to believe that you'd be in condition C, but then you actually say that it's about survival...
Let me rationalize that for you. In order to keep yourself at a functioning level you have to see some good in yourself, to be able to respect yourself, and in that line of thinking - to trust that your physical base has enough value to be preserved long term in the genetic pool. You also have to see the same kind of value in the person you associated yourself with (i.e. your wife), and consequently - in the resulting lineage. Anything less is just prone to higher risk in the natural selection game.
"I don’t believe in utopias nor do I commit myself to what other people consider «worthy» goals, this is not a popularity contest for me, it’s about survival."
Not believing in utopia is one thing but, unless you're a nihilist or think we're at the end of times, you surely have to believe that the world can be made better and maybe do something about it. That's part of caring for the same descendants that will have to live in the world you'll leave them to. In consequence, the fact that you say you don't commit to other people's goals could mean that (A) it's because you don't share any views with other people out there on what would make the world better, which is very unlikely, or (B) you care and can afford to contribute but you just rely on the fact that others' effort will be enough and you can focus on more personal gains (which attracts contempt, and rightly so), or (C) you share the concerns and maybe even the goals for common problems but can not afford to do anything due to some limits in your life, like if you're in a war zone and can care only for physiological (Maslow scale) needs. It's hard to believe that you'd be in condition C, but then you actually say that it's about survival...
> Not believing in utopia is one thing but, unless you're a nihilist or think we're at the end of times, you surely have to believe that the world can be made better and maybe do something about it.
I’m not entirely sure about the three options you presented. I reject the premise that the world needs to be made better. It seems roughly good enough to me. I’m free to work on whatever I want. I’m free to have as many children as I want. I’m not sure how it could be made better outside of the government taking less of the fruits of my labor. If that makes me a nihilist, so be it, just leave me free to build my life how I want it. I can manage the rest, don’t need anyone to “fix” the “world” for me.
I’m not entirely sure about the three options you presented. I reject the premise that the world needs to be made better. It seems roughly good enough to me. I’m free to work on whatever I want. I’m free to have as many children as I want. I’m not sure how it could be made better outside of the government taking less of the fruits of my labor. If that makes me a nihilist, so be it, just leave me free to build my life how I want it. I can manage the rest, don’t need anyone to “fix” the “world” for me.
> I reject the premise that the world needs to be made better. It seems roughly good enough to me. I’m free to work on whatever I want. I’m free to have as many children as I want. I’m not sure how it could be made better outside of the government taking less of the fruits of my labor. If that makes me a nihilist, so be it, just leave me free to build my life how I want it. I can manage the rest, don’t need anyone to “fix” the “world” for me.
Again, this seems pretty self-centred. The world is good enough to for you. you have the freedom to work on whatever you want. Don't you care that most people don't have that freedom?
Again, this seems pretty self-centred. The world is good enough to for you. you have the freedom to work on whatever you want. Don't you care that most people don't have that freedom?
> Again, this seems pretty self-centred. The world is good enough to for you. you have the freedom to work on whatever you want. Don't you care that most people don't have that freedom?
Everyone in my country has the same freedoms to work whatever job they want and to have as many kids as they want. The freedoms people have in other countries is out of my control. How is that self-centered?
Everyone in my country has the same freedoms to work whatever job they want and to have as many kids as they want. The freedoms people have in other countries is out of my control. How is that self-centered?
I'm referring to the general sense of leaving a legacy to next generation(s), which may include improvement of the world we're commonly living in, however one may imagine such improvement. (I'm not getting more specific than that, as that is the origin of all politics.) Personally I don't reckon the lack of desire for something better in the world to be necessarily nihilistic (that's more like "the end of times" option, in the "all improvement has already been achieved" sense), but I must say, it's a bit funny that you see the world "good enough", considering the current pandemic if nothing else.
> it's a bit funny that you see the world "good enough", considering the current pandemic if nothing else.
Pandemics will inevitably occur, however rarely, as long as humans exist. Similarly computers will be exploited, no matter how secure they are. That’s just the reality of complex systems. Natural market forces have already deployed people toward decreasing the probability of future pandemics, which were already rare. Seems good enough to me, if not ideal. What else can be done?
Pandemics will inevitably occur, however rarely, as long as humans exist. Similarly computers will be exploited, no matter how secure they are. That’s just the reality of complex systems. Natural market forces have already deployed people toward decreasing the probability of future pandemics, which were already rare. Seems good enough to me, if not ideal. What else can be done?
Dynastic wealth transfer is extremely inequitable. While everyone defines their own meaning, to frame the human condition as the process of generating excess capital is a diminishment of life and experience.
> to frame the human condition as the process of generating excess capital is a diminishment of life and experience.
Yes I completely agree. Accumulating wealth should not be the end goal of the human experience. It’s just the means by which we ensure the continued health and prosperity of our families and loved ones.
Yes I completely agree. Accumulating wealth should not be the end goal of the human experience. It’s just the means by which we ensure the continued health and prosperity of our families and loved ones.
I cannot believe this comment is grayed out.
There is really not point in accumulating wealth if you cannot pass it down.
And maybe consider that you might have been lucky in your life and your children or your grandchild won't be. So don't think, "I did it easily, so they can as well".
Don't know, but maybe accumulating wealth isn't what life should be about?
We are on HN, so I just assumed everyone on here was interested and seeking out way to accumulate more wealth than the average working professional.
Of course not everyone has to have that mindset.
But if you do have that mindset, then I find it hard to understand why you'd be against inheritance.
You could have the mindset that your wealth helps everyone and not just those who happen to be your offspring.
> We are on HN, so I just assumed everyone on here was interested and seeking out way to accumulate more wealth than the average working professional.
You may be surprised to learn that many hackers are passionate about tech, and see the handling of money as a dreadful necessity of life that brings as much joy as wiping one's ass. The fact that tech can be lucrative has attracted a bunch of folks to tech, who are only in it for the money. HN does skew towards the latter, but it certainly isn't everyone here
You may be surprised to learn that many hackers are passionate about tech, and see the handling of money as a dreadful necessity of life that brings as much joy as wiping one's ass. The fact that tech can be lucrative has attracted a bunch of folks to tech, who are only in it for the money. HN does skew towards the latter, but it certainly isn't everyone here
The good thing about being able to do it, is that you're not obligated to do it.
I'd you dont want to pass on anything to your children, you're welcome to spend it all however you see fit. Allowing people to pass it on to whomever they like won't change your ability to do that.
I'd you dont want to pass on anything to your children, you're welcome to spend it all however you see fit. Allowing people to pass it on to whomever they like won't change your ability to do that.
True, but I'm assuming that it doesn't work as long as everyone does as they please.
You just have to look at all the stuff paid by mandatory royalities like taxes or payments for public health care. As long as rich people can opt-out it will never work 100%.
You just have to look at all the stuff paid by mandatory royalities like taxes or payments for public health care. As long as rich people can opt-out it will never work 100%.
That's called feudalism.
Feudalism involves using force to take and hoard finite resources such as land from others without recompense. I’m describing a society where everyone is free to create wealth from their labor and is also free to have their descendants inherit and benefit from the wealth they created from their labor.
Serfs were often descended from freemen who had to sell their freedom. The lords did hoard land, but they did not necessarily take it by force. Usually they inherited it, or they bought it.
> create wealth from their labor
I am not sure what you mean by lasting wealth created by labor. Can you give some example? You mean "intellectual property"? You want society broadly based on that?
I am not sure what you mean by lasting wealth created by labor. Can you give some example? You mean "intellectual property"? You want society broadly based on that?
I can think of a bunch of examples not based directly on intellectual property (I assume you mean "royalties" and similar, such as from songs / books / etc).
If I found a prosperous business, say Walmart, and my kinds inherit it, this looks to me pretty much based on labor and not on taxing the use of some "intellectual property". Same for an industrial enterprise, like an automaker that is privately owned.
Of course, the kids would have to find a way to continue managing it well in order to reap the benefits, it wouldn't exactly be "forever free money with no work", though they could get close to that for themselves by selling the company.
I guess some could question whether being a CEO of such a company is actually "labor", especially when considering the kids (when the "building" phase is over) but I'd say that's a whole different debate.
If I found a prosperous business, say Walmart, and my kinds inherit it, this looks to me pretty much based on labor and not on taxing the use of some "intellectual property". Same for an industrial enterprise, like an automaker that is privately owned.
Of course, the kids would have to find a way to continue managing it well in order to reap the benefits, it wouldn't exactly be "forever free money with no work", though they could get close to that for themselves by selling the company.
I guess some could question whether being a CEO of such a company is actually "labor", especially when considering the kids (when the "building" phase is over) but I'd say that's a whole different debate.
Honestly, I don't see, conceptually, a big distinction between building a corporation (like Walmart) and a nation. In both cases, there is a person which organizes other people and makes sure that collectively, they fight with other neighboring organization over resources, for mutual benefit within the group, and win. And then, like in feudalism, the descendants of the organizer himself inherit the organization, and the right to control it, and tell people what to do.
Yes, technically the leader's job is still qualified labor (although in case of being just a shareholder, there is no labor involved, if you are CEO or in a board, you are actually paid extra aside from the dividends).
But that's not the main point, the main point is, just like in feudalism, the founder of the institution has the indefinite, and hereditary, power to make decisions concerning the institution, in other words, he owns it. The other people involved in building it (and their descendants) do not have such powers. And that is deeply problematic, which is why today we reject feudalism in favor of e.g. democracy. For similar reasons, I believe, we should reject hereditary ownership of corporations in favor of, say, worker coops.
Yes, technically the leader's job is still qualified labor (although in case of being just a shareholder, there is no labor involved, if you are CEO or in a board, you are actually paid extra aside from the dividends).
But that's not the main point, the main point is, just like in feudalism, the founder of the institution has the indefinite, and hereditary, power to make decisions concerning the institution, in other words, he owns it. The other people involved in building it (and their descendants) do not have such powers. And that is deeply problematic, which is why today we reject feudalism in favor of e.g. democracy. For similar reasons, I believe, we should reject hereditary ownership of corporations in favor of, say, worker coops.
Well, to me, there is one very, very big difference between a company and feudalism, which makes this analogy break down.
As a worker, I have the choice of becoming a serf to the owner of company A, or I may set up my own company B and compete with A.
Or anything else in between, like starting as a serf and then quitting and deciding that I'm going to do my thing. Or even decide that I've amassed enough money as a serf and don't need to work anymore (see the early retirement folks).
All this is not possible with feudalism, if only because joining another master would have me move to a possible distant land and cut me from my family.
Of course, I realize that depending at least on circumstance, some people may not actually have that much of a choice. But then, the question becomes, how much does the owner of the company owe to the workers? Why would they strive to improve the company if they can't reap the benefits? Only from the goodness of their heart? Not sure how well that works out in practice.
The issue, in the end, is of who's entitled to the fruit of one person's labor. It's not clear to me that the workers should have a bigger share than the owner. Of course, this devolves back to the classic "the owner can't build the company without the workers / the workers can't build the company without the owner" which doesn't have a clear-cut answer.
> For similar reasons, I believe, we should reject hereditary ownership of corporations in favor of, say, worker coops.
Genuine question: why don't we see more coops? I know in France there are some, mostly around agriculture. But they seem more an exception than a rule.
Would you argue this is a situation where the local optimum (the hereditary corporation) is better than the global optimum (the coop)? Which would explain why people, given the choice, will set up a corporation instead of a coop, like a tragedy of commons of sorts?
As a worker, I have the choice of becoming a serf to the owner of company A, or I may set up my own company B and compete with A.
Or anything else in between, like starting as a serf and then quitting and deciding that I'm going to do my thing. Or even decide that I've amassed enough money as a serf and don't need to work anymore (see the early retirement folks).
All this is not possible with feudalism, if only because joining another master would have me move to a possible distant land and cut me from my family.
Of course, I realize that depending at least on circumstance, some people may not actually have that much of a choice. But then, the question becomes, how much does the owner of the company owe to the workers? Why would they strive to improve the company if they can't reap the benefits? Only from the goodness of their heart? Not sure how well that works out in practice.
The issue, in the end, is of who's entitled to the fruit of one person's labor. It's not clear to me that the workers should have a bigger share than the owner. Of course, this devolves back to the classic "the owner can't build the company without the workers / the workers can't build the company without the owner" which doesn't have a clear-cut answer.
> For similar reasons, I believe, we should reject hereditary ownership of corporations in favor of, say, worker coops.
Genuine question: why don't we see more coops? I know in France there are some, mostly around agriculture. But they seem more an exception than a rule.
Would you argue this is a situation where the local optimum (the hereditary corporation) is better than the global optimum (the coop)? Which would explain why people, given the choice, will set up a corporation instead of a coop, like a tragedy of commons of sorts?
I think your objection to that analogy doesn't affect much the main moral argument against it. Yes, maybe it's less brutal, and you have more freedom, but it is still, IMHO, fundamentally unfair, i.e. that of all the people who collectively built something, some of them get the hereditary right to control the institution (the owners), while some of them do not get the right (the workers).
Who gets the fruits of labor (and how much) is IMHO always a matter of debate in any society. I do not believe there is an objective justification (contrary to some free market advocates). In any case, if you own shares of a company, your labor input can be zero and you still get fruits; I don't know how that is fair (unless this entitlement is divided among all members of the society, like for example all citizens of Norway share the oil profits).
> Genuine question: why don't we see more coops?
IMHO, two reasons. One is lack of legal framework. You have to keep in mind that legal frameworks for modern corporation evolved over at least 300 years, and in the beginning, there wasn't even things like limited liability.
Second, in practice coops face threat of investment strike, because investors simply do not want that system and they are more connected than workers are. Sometimes both of these are a factor, for example many coops faced problems getting bank loans, etc.
It's like asking in 15th century, if democracy is so great, why don't we see more of it? Humans are creatures of habit, and often there are existing power structures that have to be resisted first.
Who gets the fruits of labor (and how much) is IMHO always a matter of debate in any society. I do not believe there is an objective justification (contrary to some free market advocates). In any case, if you own shares of a company, your labor input can be zero and you still get fruits; I don't know how that is fair (unless this entitlement is divided among all members of the society, like for example all citizens of Norway share the oil profits).
> Genuine question: why don't we see more coops?
IMHO, two reasons. One is lack of legal framework. You have to keep in mind that legal frameworks for modern corporation evolved over at least 300 years, and in the beginning, there wasn't even things like limited liability.
Second, in practice coops face threat of investment strike, because investors simply do not want that system and they are more connected than workers are. Sometimes both of these are a factor, for example many coops faced problems getting bank loans, etc.
It's like asking in 15th century, if democracy is so great, why don't we see more of it? Humans are creatures of habit, and often there are existing power structures that have to be resisted first.
It's not a different debate at all. Because these arguments are really about living off the value of other people's labour.
Sometimes managerial/organisational ability is productive and creative, but in reality it's often piratical and exploitative.
It's much easier to get rich by limiting worker freedom and opportunity and herding workers towards a precarious existence than it is by creating genuine opportunities for enhanced collective wealth.
Do you want wealth to be a narcissistic signifier of being better than other people - and therefore wholly deserving of extra special treatment - or do you want to be an organiser and inventor who creates systems which give everyone (not just a small in-group) a helping hand up and makes the culture more creative, inventive, and interesting?
Sometimes managerial/organisational ability is productive and creative, but in reality it's often piratical and exploitative.
It's much easier to get rich by limiting worker freedom and opportunity and herding workers towards a precarious existence than it is by creating genuine opportunities for enhanced collective wealth.
Do you want wealth to be a narcissistic signifier of being better than other people - and therefore wholly deserving of extra special treatment - or do you want to be an organiser and inventor who creates systems which give everyone (not just a small in-group) a helping hand up and makes the culture more creative, inventive, and interesting?
if that child inheriting a business is not actually very good at managing, they should not try, but instead hire a good manager.
There's nothing wrong with living off the profits of the business, and do no labour at all.
There's nothing wrong with living off the profits of the business, and do no labour at all.
IP rules restrict others' production or ownership. Wealth is owning of the products themselves. You don't become less wealthy in that sense if another person makes a copy of something you own.
Not all of them, copyright doesn't. In any case, aside from something like a Minecraft world, I don't really see how you can "create wealth" without taking from someone else first. Can you provide a positive example?
What is included in "taking from someone"? Am I allowed to purchase or gather cheap resources and make much more valuable products after applying skilled labor?
Yes. But I am not sure how you transfer the fruits of this labor to your descendants, so they would benefit from it. Every property needs maintenance, and "being rich" (as OP said), or even middle-class, means to have enough property that you need to hire somebody (at least ocassionally) to maintain it.
Also OP talked about building an institution, which presumably means that there are other people involved. Unless he meant something like building a worker cooperative, I feel like in the arrangement he envisioned for his descendants, it will be other people working for them, providing them with their labor. I don't see that much different from feudal arrangements.
Also OP talked about building an institution, which presumably means that there are other people involved. Unless he meant something like building a worker cooperative, I feel like in the arrangement he envisioned for his descendants, it will be other people working for them, providing them with their labor. I don't see that much different from feudal arrangements.
Can you give an example for a case where someone has created significant wealth from their labor that isn't based on a laughably broad definition of the term "labor"?
[deleted]
I’ve been reading The Millionaire Next Door and surprisingly few descendants stay rich. By fourth generation the wealth is completely destroyed. Likely because each generation didn’t have to work as hard and value the money. Of course there are exceptions, but this was what their data said.
Also I think only 20% of millionaires in USA inherited it, which really surprised me.
Also I think only 20% of millionaires in USA inherited it, which really surprised me.
"Also I think only 20% of millionaires in USA inherited it, which really surprised me."
$1M isn't as much as it used to be. You pretty much need that much or more to retire, so it makes sense that there is a large percentage making it.
$1M isn't as much as it used to be. You pretty much need that much or more to retire, so it makes sense that there is a large percentage making it.
That's just because the wealth is dilluted amongst the descendants. The growth of the business is not strong enough to compensate.
And statistically speaking even if all grand-grandkids worked as hard as the founder, a lot of them will fail.
That is a part of the equation, but it’s undoubtedly true that descendats of wealth are weaker wealth makers since they have it on a plate. Some of them greatly benefit from the wealth inherited from their descendants but the majority of them squander it away, there are too many temptations out there..
There is an element to that, but it is not only that.
Most (but not all) sizable wealth builders I've met or done research on have been people with a combination of:
- ability to cut through bullshit but play the game (so can generate bullshit when necessary, but aren't fooled or impeded by it) - work hard (yes - bill gates, bezos, etc. all worked their asses off during many important periods). - know the right things to work on (so avoid expending their effort on digging ditches when they can spend the effort negotiating better deals) - get in the right place at the right time (combination of luck, pragmatism, paying attention to wider trends). You can influence this, but never really control it. - ability to work with wildly different people effectively (often nicely, often not nicely depending on the group) to get what they needed done - ability to raise capital, and put it to use. (significant environmental, education, networking effects here) - don't give away the farm/give away too much of their own ownership or assets. - knows how to effectively address a market and deliver a useful product, or find and direct people who do.
This is not a common set of qualities. If you spent all the money in the world on training, you'd be lucky if 1 in 10 people could pick those qualities up. With Genetics and personality traits (ignoring the nurture element), even if they cloned themselves I doubt you'd get better than 50/50 odds.
If being a wealth builder is the result of a large confluence of events coming together just right, say:
- right genetics & right influences in early childhood to produce the right world view and personality - right set of circumstances early on to connect useful people for capital, or circumstances later to connect them to capital - right skillset with understanding and being effective with others of widely different backgrounds - right exposure to the right potential market, and the right luck with with many things (all of which have elements of personally influenceable factors and external non-influencable factors)
It shouldn't be too much of a surprise that what works in the first generation doesn't usually last very long. The circumstances are different, everything is different by the time generation #2 or #3 happen.
With the right training, education, and circumstances you can improve the odds. But maybe a generation or two?
There is a saying I've run across a bunch - first generation builds it, second generation spends it, third generation blows it.
In large part because the environment each generation is in has fundamentally different pressures and environments 'by default', and a lot of our personality and approach to things is set in early childhood.
It's also why you see societies with more stable traditions of wealth/nobility/etc focus so much on traditional ways of doing things, acting, etc. is to attempt to keep reinforcing what was necessary for prior success even when it's not obvious for the new generation. Because they do provide necessary coping skills and the like.
Even still, a great many of them lose it all (statistically).
Most (but not all) sizable wealth builders I've met or done research on have been people with a combination of:
- ability to cut through bullshit but play the game (so can generate bullshit when necessary, but aren't fooled or impeded by it) - work hard (yes - bill gates, bezos, etc. all worked their asses off during many important periods). - know the right things to work on (so avoid expending their effort on digging ditches when they can spend the effort negotiating better deals) - get in the right place at the right time (combination of luck, pragmatism, paying attention to wider trends). You can influence this, but never really control it. - ability to work with wildly different people effectively (often nicely, often not nicely depending on the group) to get what they needed done - ability to raise capital, and put it to use. (significant environmental, education, networking effects here) - don't give away the farm/give away too much of their own ownership or assets. - knows how to effectively address a market and deliver a useful product, or find and direct people who do.
This is not a common set of qualities. If you spent all the money in the world on training, you'd be lucky if 1 in 10 people could pick those qualities up. With Genetics and personality traits (ignoring the nurture element), even if they cloned themselves I doubt you'd get better than 50/50 odds.
If being a wealth builder is the result of a large confluence of events coming together just right, say:
- right genetics & right influences in early childhood to produce the right world view and personality - right set of circumstances early on to connect useful people for capital, or circumstances later to connect them to capital - right skillset with understanding and being effective with others of widely different backgrounds - right exposure to the right potential market, and the right luck with with many things (all of which have elements of personally influenceable factors and external non-influencable factors)
It shouldn't be too much of a surprise that what works in the first generation doesn't usually last very long. The circumstances are different, everything is different by the time generation #2 or #3 happen.
With the right training, education, and circumstances you can improve the odds. But maybe a generation or two?
There is a saying I've run across a bunch - first generation builds it, second generation spends it, third generation blows it.
In large part because the environment each generation is in has fundamentally different pressures and environments 'by default', and a lot of our personality and approach to things is set in early childhood.
It's also why you see societies with more stable traditions of wealth/nobility/etc focus so much on traditional ways of doing things, acting, etc. is to attempt to keep reinforcing what was necessary for prior success even when it's not obvious for the new generation. Because they do provide necessary coping skills and the like.
Even still, a great many of them lose it all (statistically).
I think that's a bit of a myth, at least in a global scale.
In Europe there's a lot of old money, or sources of income that only later generations can rip the benefits of their ancestors.
The most common example in my country is people that sustain a lot of their wealth with cork. The thing with cork is that it takes decades to build up, and a large area.
Basically people are living from their great+ grand parents buying small patches of land over many years, that had the trees already planted (or that just grew in the meanwhile).
And I'm pretty sure this reality is probably also common across the Mediterranean region.
In Europe there's a lot of old money, or sources of income that only later generations can rip the benefits of their ancestors.
The most common example in my country is people that sustain a lot of their wealth with cork. The thing with cork is that it takes decades to build up, and a large area.
Basically people are living from their great+ grand parents buying small patches of land over many years, that had the trees already planted (or that just grew in the meanwhile).
And I'm pretty sure this reality is probably also common across the Mediterranean region.
Portugal? Corticeira Amorim is the exception, not the rule.
I don't mean the major buyer/exporter, I mean the many smaller families/businesses which most likely get their cork bought by Amorim - still, they get a large share of their wealth from inherited terrains.
Also, where you have oaks you can have cows or sheep. They have ways to make the most out of the land that just felt into their hands.
Also, where you have oaks you can have cows or sheep. They have ways to make the most out of the land that just felt into their hands.
> By fourth generation the wealth is completely destroyed.
It doesn't change the fact that free people, living in a free country, should be free to give their wealth to whomever they please, including their children.
It doesn't change the fact that free people, living in a free country, should be free to give their wealth to whomever they please, including their children.
Not if there are social, political, and ecological costs to other people.
What makes you think that "free" should only ever benefit you, and everyone else's "free" is irrelevant?
What makes you think that "free" should only ever benefit you, and everyone else's "free" is irrelevant?
> ...free people, living in a free country, should be free to give their wealth to whomever they please, including their children.
Sure. And those children should be as free as anyone else to pay the appropriate tax rate on that category of income. (Given that it's a sudden unearned windfall, a pretty high rate seems quite equitable.)
Sure. And those children should be as free as anyone else to pay the appropriate tax rate on that category of income. (Given that it's a sudden unearned windfall, a pretty high rate seems quite equitable.)
https://en.wikipedia.org/wiki/Madeleine_Schickedanz
Heiress of a multi-billion dollar online retail business in Germany. She was the 13th richest woman in the world at one point. Gave her entire wealth to a private bank to manage. The bank got involved in shady real estate deals and long story short she's lost practically everything.
Heiress of a multi-billion dollar online retail business in Germany. She was the 13th richest woman in the world at one point. Gave her entire wealth to a private bank to manage. The bank got involved in shady real estate deals and long story short she's lost practically everything.
Anecdote. First generation, not 4th. External fraud, not laziness/entitlement/wastefulness.
Irrelevant.
Irrelevant.
Someone who doesn't understand finance and doesn't know how to invest is bound to lose the money sooner or later. There is always fraud, there's always wastefulness. How many generations it takes is irrelevant, that number four is just a meme that gets repeated because someone wrote this in an investment book once, and people think it sounds about right. It's not based on science.
It's an extreme example. But you don't have to just look at billionaires, it's easy to observe this all around you with families that are worth much less. And it would be very concerning if it were any other way.
It's an extreme example. But you don't have to just look at billionaires, it's easy to observe this all around you with families that are worth much less. And it would be very concerning if it were any other way.
> Someone who doesn't understand finance and doesn't know how to invest is bound to lose the money sooner or later. There is always fraud, there's always wastefulness.
I agree; if you don't spend a lot of time researching how money works, you will almost certainly get scammed. There are so many perfectly legal ways how to deprive a person of their money in a way that seems like investing. And the people who want to take your money will approach you, helpfully provide advice when you ask, get recommended by your friends (whom they also scammed, in a way that is not immediately obvious). Even the serious institutions provide some product that are designed to be bad.
I didn't inherit anything, but since I got my first salary, I tried to save and invest some of the money. Two decades later, I see (with the knowledge I have now, but didn't have back then) that almost everything I did was pretty much guaranteed to make the money gradually disappear. So if I inherited money, but not a very good knowledge how to handle it, it would probably be all gone by now.
The only good investments I made was real estate and bitcoins. Ironically, two things that many smart people on internet are strongly opposed to. If I knew in my 20s what I know now, maybe there were better options available. But all the other options I knew about were scams.
I agree; if you don't spend a lot of time researching how money works, you will almost certainly get scammed. There are so many perfectly legal ways how to deprive a person of their money in a way that seems like investing. And the people who want to take your money will approach you, helpfully provide advice when you ask, get recommended by your friends (whom they also scammed, in a way that is not immediately obvious). Even the serious institutions provide some product that are designed to be bad.
I didn't inherit anything, but since I got my first salary, I tried to save and invest some of the money. Two decades later, I see (with the knowledge I have now, but didn't have back then) that almost everything I did was pretty much guaranteed to make the money gradually disappear. So if I inherited money, but not a very good knowledge how to handle it, it would probably be all gone by now.
The only good investments I made was real estate and bitcoins. Ironically, two things that many smart people on internet are strongly opposed to. If I knew in my 20s what I know now, maybe there were better options available. But all the other options I knew about were scams.
Heiress = Second generation, not first.
Noted. First generation of descendants, I should have specified, especially since the OP doesn't.
Of course, being HN, we start counting at zero by default anyway.
Of course, being HN, we start counting at zero by default anyway.
> Of course, being HN, we start counting at zero by default anyway.
Yes, but do we call something "the zeroth"? I think not; AFAICS it ends up in "We call the first generation 'Generation Zero'."
Yes, but do we call something "the zeroth"? I think not; AFAICS it ends up in "We call the first generation 'Generation Zero'."
Buddy, I acknowledged the error/confusion and then made a light-hearted joke. Don't take it so literally that you act like a dick.
Less than 20%. Around 90% of millionaires in the US are selfmade
If everyone wants that however, it seems like an unsustainable game to play.
> Otherwise what’s the point?
The answer to that question defines a society. For most of recent history that was true with the exception of communist countries and many other interludes.
> Otherwise what’s the point?
The answer to that question defines a society. For most of recent history that was true with the exception of communist countries and many other interludes.
Out of interest, because this has a substantial effect on the meaning of your comment:
Do you literally mean all your descendents? E.g. in 200 years there will be 100ish people still substantially benefitting from your wealth? That's how your post reads and is probably how most people would interpret it but I suspect it may not be what you meant.
Or do you just mean your wealth just benefits your immediate descendants? (What you've written would be a very odd way to say that because most people would describe those people as "my children".) Obviously there would still be an indirect effect all the way down e.g. your grandchildren would probably get a better education which would let them earn more for themselves, etc., but that would fade out eventually through the generations.
Do you literally mean all your descendents? E.g. in 200 years there will be 100ish people still substantially benefitting from your wealth? That's how your post reads and is probably how most people would interpret it but I suspect it may not be what you meant.
Or do you just mean your wealth just benefits your immediate descendants? (What you've written would be a very odd way to say that because most people would describe those people as "my children".) Obviously there would still be an indirect effect all the way down e.g. your grandchildren would probably get a better education which would let them earn more for themselves, etc., but that would fade out eventually through the generations.
If it is well managed and a safe withdrawal rate is maintained, it very well could go to all descendants.
Good luck though when the person who learned how to be an assassin/shark and was able to build and maintain the wealth has handed it off to their kids (or grandkids) who probably never had much contact with them (what with all the assassin/sharkiness), and are now trying to judge well managed and safe from what they were exposed to as children. Which was probably massive wealth, and people who aren't always scamming you (because the filtering happened off screen).
Especially since you either have to pick someone (or a small group) from the set to judge, or have to deal with an ever increasing and ever more distant from the original wealthbuilding set of decision makers.
Definitely possible to do, but very, very, very unlikely and rare (based on clear examples around us).
Especially since you either have to pick someone (or a small group) from the set to judge, or have to deal with an ever increasing and ever more distant from the original wealthbuilding set of decision makers.
Definitely possible to do, but very, very, very unlikely and rare (based on clear examples around us).
I haven’t fully considered what the best way is to ensure my dynasty but I imagine that my first born male son should inherit the lion’s share of the wealth. So no, in practice it probably wouldn’t be all my descendants, just my direct male line.
Wow. All hail Misogynicus Maximus.
No, the point is that a daughter would not need inheritance as much if she marries well. She would still get something, just not the lion share. Everyone benefits that way. That’s actually philogyny.