I think that is not much of a problem. You have to look at it in an over-generational manner:
Even the richest person dies. Maybe that person has inheritors, but if that's more than one person, that wealth is halved. Then you have to consider, that even if the likelihood is just 10% for one generation losing the family fortune, then after 7 generation the average likelihood is 100%. Just think about which is the oldest billionaire family and since when they exist? Is it the Rothschilds? The Al Sauds? Maybe something Subcontinental? The Rothschilds are now in the 5th generation and the Al Sauds in their 3rd. There was a descendant of the Moguls who's a trillionaire. But he got screwed over during in 2007 during the financial crisis (there was even a debate about it in the upper house because it was about a transaction that went over London). Bottom line: All wealth will go away. Just ask the Romanovs or the Quing dynasty. All gone. Bottom line: Old money is not really old and most families lose it after 2 generations. So, it's not really a persistence issue. Most of the billionaires worked for their fortune and then it's usually fair (criminal activity excepted)
Then there is the bottom end. That's also an over-generational issue. Growing into middle-class is an effort that takes 2-3 generations to last. But when a lower class family has more children than they can
- feed
- clothe
- house
- keep healthy
- educate
- (love!)
then you don't have to wonder about poverty. Especially Africa and the Subcontinent have lower classes which have an average of 5 children. What they should have is 1-2 children as an average. Just recently, Pakistans new census shows, the country's population DOUBLED within just one generation!
How the hell should it be possible to become wealthy at the same time? You need more infrastructure, more teachers, more land, more water, more productivity for agriculture, more jobs, more everything! That's doomed to fail, especially when the situation wasn't good before that.
The only country that did it the right way is China, which introduced a family policy in the mid 70. That was impart cruel and could've been done better, but it worked. Back then China had more people than India and was as poor and underdeveloped. Today, China is about to compete with the West and has an average income 5 times as high as India, which in turn is about to overtake China as most populated country on earth. Under such conditions, that is not a compliment.
Bottom line: You can get rid of poverty after 20 years, if you make sure, the bottom third of the population has an average of 1 child per family, while the middle third has 2 and the top third has 3 children.
Otherwise:
- When the upper-class has over-proportionally many children, then the next generation has a lot of genius
- When the middle-class has over-proportionally many children, then the next generation has a lot of stability
- When the lower-class has over-proportionally many children, then the next generation has a big problem.
Look at todays Africa, Pakistan and other places of that kind, you will see a lot of the latter.
My opinion therefore: The problem of poverty is not caused by rich people, but by unaccounted and self-inflicted long-term problems by the poor themselves (well, and their politicians..)
PS: Singapore did it that way and look at the place today..
Are you sure about inheritance diluting wealth?
https://www.bloomberg.com/news/articles/2016-08-23/how-to-stay-rich-in-europe-inherit-money-for-700-years
Singapore also collect land rent instead of excessive taxes on income. Value capturing unearned income instead of taxes on earned income doesn’t hurt the economy in the same way. This is in my opinion the main reason Singapore is successful.
But in theory you are correct. If poor people have fewer children poverty is reduced. I’m just not sure this actually happens in reality.
Thx for the reply, the Bloomberg article is great.
You can see, the oldest/richest families from Renaissance Italy went maybe through 20 generations so far. That's a long time, but mathematically still within the range of normal. Considering a generation losing the fortune is at 10%, then right now the man has a likelihood of 10% passing on the wealth. Well, he has a 99.99% chance, but considering the past generations, his children have that 10% likelihood to pass it on to his grand children.
In the example you can also see how you can beat time and disaster:
These families get that all right. But, how many families manage to set up such a mentality in the first place and then pass it on and keep it up?
Look at the Tetrapak Rausings (who died from street meth instead of simply buying a big pharma company) or in Germany not too long ago Madeleine Schickedanz who burned through several Billions by ruining Germany's pre-Internet Amazon. Or an example here from steemit: @samstonehill who's father got screwed out of his fortune.
Unfortunately, the article only shows who inherits the Billions but not who loses them over-generationally...
Low income taxes are always important for success. Liechtenstein, Andorra and others show comparable success with that. But I'm not sure if the land tax can be generalized to larger entities. Singapore is small and has a high density, which makes land a very scarce commodity (while the accounting is very simple).
Perhaps the equivalent for big countries would be access to fast transportation, aka road tolls for highways or a special tax for fast intercity trains and planes.
amazing thoughts i agree with you however we have to wait 2 generations till the rich families lose the wealth
Generally I'd say, the only thing that you accomplish with making the rich poor is to increase the poverty, because at the end there are more poor people.
That is of course a painful perspective for everyone who is poor or sees the parcels of poverty, but to be patient it's the only way (and the honest way) out, I believe. At the end, it is all a matter of compounded interest. Even if you start small, after 20-30 years you'll see the difference. The only thing that you/the poor have to do is: Start investing.