I started classes this week, one of which is Wills and Trusts. My textbook has some interesting statistics and quotes about the passage of wealth from generation to generation. Note this edition was published in 2009, well before any catchphrases about the 1% were coined.
The baby boom generation inherited, between 1987 and 2011, $6.8 trillion:
Much of this wealth was built by their parents between the late 1940's and the late 1960's when real wages and savings rates were higher and housing costs were considerably lower. [...] Of course not all will benefit equally, or at all. The richest one percent will divide one-third of the worth of estates, each inheritance per estate receiving an average of $6 million; the next richest nine percent will divide another third for an average inheritance of about $396,000. Much of this wealth will be property.1
Four of the top 10 spots in Forbes' list of 400 richest U.S. Americans belong to relatives of Wal-Mart founder Sam Walton, while 3 of the top 20 slots are held by Forrest Mars' family. Mars invented M&M's candy.
The concentration of wealth in the U.S. decreased sharply from 1929 to the 1940's, leveling off until the 1970's. However, the 1980's saw a sharp rise in the share of wealth held by the richest U.S. Americans. By 2004, the richest 1% owned 34.3% of family wealth, and the top 10% owned an astonishing 71.2% of family wealth. Many wealthy people are wealthy simply by virtue of being born.
The textbook offers a quote by philosopher Robert Nozick, who said this "sticks out as a special kind of unearned benefit that produces unequal opportunities." And Alexis de Tocqueville wrote:
What is the most important for democracy is not that great fortunes should not exist, but that great fortunes should not remain in the same hands. In that way there are rich men, but they do not form a class.
We now enjoy less economic mobility in the U.S., and a recent study has suggested that conflict between rich and poor has surpassed even racism and nativism as a source of tension. While many become rich simply by being born, 45 million others rely on food stamps to keep their family fed.
This is why I will be so intrigued with the 2012 presidential election. Mitt Romney has warned against "a bitter politics of envy" in discussions about wealth inequality. Romney even prefers to discuss questions about the distribution of wealth "in quiet rooms."
My textbook authors imply that our system, with its entrenchment of wealth passed from generation to generation within privileged families, is a danger to democracy and equal opportunity. An alternative to the U.S. system of passing wealth strictly within families is to require part or all of one's wealth upon death to be returned to society. I use the word "returned" because no one becomes wealthy without help from society - take Wal-Mart for example. It drives down wages by billions of dollars, so its employees have to rely on public aid. Perhaps 4 of those top 10 richest U.S. Americans should thank the U.S. taxpayer for subsidizing the wages of their company's employees, thus helping the Walton's accumulate massive wealth. Or am I simply being envious of their wealth?
I wonder if we've reached the breaking point, and discussions about wealth and inequality will bust out of those quiet rooms...
1Dukeminier, Sitkoff, and Lindren, Wills, Trusts, and Estates, 18 (2009, 8th Edition).