The real horrors and injustice of inheritance

[moorobot]

A poster recently posted a link to the christian science monitor containing ostensible facts about inheritance. I decided to research this topic in some actual peer-reviewed, professor written, scholarly journals and found a piece by Samuel Bowles and Herbert Gintis called 'The Inheritance of Inequality' in Journal of Economic Perspectives 16 (2002) 3-30. You can read the article for yourself if you want at Samuel Bowles website . Just click on frequently requested past papers, it is the second one listed.

First and foremost, I should mention that I did not learn of the following (first) fact from the paper, nor is it, strictly speaking, about inheritance. However, the poster of the last 'inheritance post' told us not to be worried about inheritance because it is redistributed by "voluntary transactions" anyway. Assuming it is redistributed, how does the market redistribute it? A: In the United States right now 1% of the people own 40-50% of the wealth, while 50% of the population have zero or a negative net wealth (If all their debts were called in they would be bankrupted). That is horrible and unjust, ethically and politically, for all the obvious reasons.

Secondly, although people cannot plausibly be held responsible for being born in Scarsdale as against being born in Harlem, we can predict with a good deal of accuracy where they will finish up just from the knowledge of their place of birth. An example from the above linked paper illustrates this: in the U.S. the ammount of advantage and disadvantage that is transmitted from one generation to the next is striking. Furthermore, this is an example based on income, not wealth, which is even easier to transfer, of course.

'A son born to the top decile has a 22.9 % chance of attaining the top decile and a 40.7 % chance of attaining the top quartile. The son of the poorest decile has a 1.3% chance of attaining the top decile and a 3.7% chance of attaining the top quintile. Children of the poorest decile have a 31.2% chance of occupying the lowest decile and a 50.7% of occupying the lowest quintile, while...the probabilty that a child of the richest decile ends up in the poorest decile is 2.4%, with a 6.8% chance of occupyingg the lowest quintile. [Studies] suggest that direct transmission mechanisms may be at work at various points of the income distribution. For example, wealth bequests may play a major role at the top of the income distribution, while at the bottom, vulnerability to violence or other adverse health episodes may be more important" pg 5 on the website article.

Real Equality of opportunity, where art thou?

[Borodog]

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A: In the United States right now 1% of the people own 40-50% of the wealth, while 50% of the population have zero or a negative net wealth (If all their debts were called in they would be bankrupted). That is horrible and unjust, ethically and politically, for all the obvious reasons.

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No, it isn't. Do you see why?

I've explained this before. The vast majority of "wealth" is tied up in capital, machines and tools and the like. The owners of the capital benefit through profits, while consumers benefit through the competition of capitalists to provide ever more newer and better products at lower prices, increasing everyone's standard of living. I gain the benefit of literally hundreds of billions, if not trillions of dollars of capital every day, without having to own any of it. Oil rigs, refineries, gas stations, car factories, mining operations, forests, mills, thousands of trucks and container ships, telecom infrastructure including orbiting satellites, radio and cell towers, power plants and transmission lines. I get the benefit of it all, and yet I own none of the capital.

The only way a capitalist accumulates a vast fortune is by greatly improving the lives of an enormous number of people.

[Sharkey]

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The only way a capitalist accumulates a vast fortune is by greatly improving the lives of an enormous number of people.

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An extraordinary statement.

[hmkpoker]

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The only way a capitalist accumulates a vast fortune is by greatly improving the lives of an enormous number of people.

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An extraordinary statement.

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The only exception to the rule that I can think of is incidents where the consumer buys things that ultimately make his life worse. Cigarettes and gambling come to mind.

However, is that the capitalist's fault, or the idiot consumer?

[Riddick]

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The only way a capitalist accumulates a vast fortune is by greatly improving the lives of an enormous number of people.

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An extraordinary statement.

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So if I create the cure to cancer, AIDS, and Diabetes all in one cure, and then I earn $100 billion in a single year by selling the cure, the fact that I accumulated this vast amount of wealth would be extraordinary? Would it be horribly unjust and unethical?

[andyfox]

"I gain the benefit of literally hundreds of billions, if not trillions of dollars of capital every day, without having to own any of it."

I don't think anyone's arguing with the fact that we all can and do benefit from the economic productiveness of other members of society. Your phrase "having to own any of it" implies (to me) that you're saying that consumers of the oil rigs, etc. have burdens that at least counterbalance the greater economic benefits of ownership as opposed to just usage. Am I correct in this assumption? I know people who own oil rigs and they live much better lives than most of the people I know who don't.

[damedash]

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No, it isn't. Do you see why?

I've explained this before. The vast majority of "wealth" is tied up in capital, machines and tools and the like. The owners of the capital benefit through profits, while consumers benefit through the competition of capitalists to provide ever more newer and better products at lower prices, increasing everyone's standard of living. I gain the benefit of literally hundreds of billions, if not trillions of dollars of capital every day, without having to own any of it. Oil rigs, refineries, gas stations, car factories, mining operations, forests, mills, thousands of trucks and container ships, telecom infrastructure including orbiting satellites, radio and cell towers, power plants and transmission lines. I get the benefit of it all, and yet I own none of the capital.

The only way a capitalist accumulates a vast fortune is by greatly improving the lives of an enormous number of people.

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Some of your points are good. It can be easily seen when you go to a store like walmart. Everything but the food is as cheap as it can be. Walmart being an econemy of scale passes on its savings and destroys the mom and pop competition. I benefit 100% from this because I can afford to buy everything I need for my home.

But what you were talking about is more a task of specialization and hence diversification. A society with excess food and shelter allows for advancement and for its citizens to aquire a whole bunch of stuff thats not on Mazlow's Hierarchy. Link

I think the biggest problem people have with the disproportion in wealth is that there is no trickle down effect. Reaganomics was pushing it and Bush came with the same thing when he was pushing his tax cuts. The biggest tax burden in this country is on the middle class. The people on the top and on the bottom pay virtually no taxes.

The Ivy leaguers make the rules in this country however. We all know that there is a trickle up effect. If you give people more money they spend more. But people with real wealth can only spend the interest on their capital. The system that we have, while the most free, has measures in place to keep the majority of people in their station. Things such as the credit scoring and lending system all favor the wealthy. The tax system favors business owners. The investing system also favors the rich. In this game its every man for himself. But if success was easy it wouldn't be worth achieving. I love America.

[hmkpoker]

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But what you were talking about is more a task of specialization and hence diversification. A society with excess food and shelter allows for advancement and for its citizens to aquire a whole bunch of stuff thats not on Mazlow's Hierarchy. Link

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Au contraire; capitalism provides for all the stuff on Maslow's hierarchy.

First level: Physiological needs. Food, clothing, shelter. Shop at walmart and acme and you'll get 'em cheap.

Second level: Safety needs. Future security, investments, better jobs. Spend less than you make, make a lot, buy low, sell high.

Third level: Belonging needs. Having friends and having fun. Capitalism can offer a wider array of entertainments than any other system.

Fourth level: Ego. Capitalism is better for this than anything else [img]/images/graemlins/smile.gif[/img]

Fifth level: Independance and helping people. Capitalism allows self-actualizers, those who have already established financial security and enough money to fill their egos, to create businesses, charities, or do whatever else it is with their money that helps people.

I like Maslow's hierarchy personally. I think that socialism can, at least temporarily, provide the first tier needs well, but big deal, so can a hunter-gatherer society. Socialism can't provide second tier needs because the economy is unstable and bound for failure, and it certainly doesn't help people have more fun, fulfill their egos, or create helpful organizations. Capitalism is, simply, better for the soul.

[damedash]

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But what you were talking about is more a task of specialization and hence diversification. A society with excess food and shelter allows for advancement and for its citizens to aquire a whole bunch of stuff thats not on Mazlow's Hierarchy. Link

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Au contraire; capitalism provides for all the stuff on Maslow's hierarchy.

First level: Physiological needs. Food, clothing, shelter. Shop at walmart and acme and you'll get 'em cheap.

Second level: Safety needs. Future security, investments, better jobs. Spend less than you make, make a lot, buy low, sell high.

Third level: Belonging needs. Having friends and having fun. Capitalism can offer a wider array of entertainments than any other system.

Fourth level: Ego. Capitalism is better for this than anything else [img]/images/graemlins/smile.gif[/img]

Fifth level: Independance and helping people. Capitalism allows self-actualizers, those who have already established financial security and enough money to fill their egos, to create businesses, charities, or do whatever else it is with their money that helps people.

I like Maslow's hierarchy personally. I think that socialism can, at least temporarily, provide the first tier needs well, but big deal, so can a hunter-gatherer society. Socialism can't provide second tier needs because the economy is unstable and bound for failure, and it certainly doesn't help people have more fun, fulfill their egos, or create helpful organizations. Capitalism is, simply, better for the soul.

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I think you misunderstood. What I meant was that Maslow's Hierarchy was the basics and Capitalism accomplishes more than just that. But a lot of the things it accomplishes aren't really neccessary. What you must also wrap you mind around is that in the U.S. we live in econemy a little closer to socialism than pure capitalism. But I was agreeing with you in my above post if you didn't notice.

[hmkpoker]

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But I was agreeing with you in my above post if you didn't notice.

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Sorry, I guess I just sped through it. My apologies.