Assorted links


#1 - because they resent Piketty and want to make him look bad.

So for the heirs of the super-rich, r<<g. In fact, it is indistinguishable from -100%.

Seriously, #1 is long on anecdotes and short on statistics. Is this really a trend?

Also, bequeathing your wealth to charity would apparently be illegal in most of Europe (including Piketty's France!)
(via Scott Sumner)

It could be said that when we chose to obsess so much on the fates/lifes/economics of the super-rich, anectdotes are statistics.

This. We are into the top .01%. It's all anecdata to feed our preferred narratives.

35 million dollars (Philip Seymour Hoffman's estate) is unlikely to bring you into the .01%

And the real point of the article is here - 'Jamie Johnson has spent his entire life around the very, very rich. In 2000, when he turned 21, the Johnson & Johnson heir inherited a huge amount of money — reported estimates put the figure at $600 million — from a family trust. Each of his five siblings received a similar amount, with no restrictions on its use. His 2003 documentary “Born Rich” was a study of his family’s money and other super-rich friends.

“When vastly wealthy people say, ‘I’m not leaving my kids any money,’ it’s typically not true,” he says. Even when children don’t have immediate access to cash, they get the best schooling, housing, contacts and opportunities. “All of these are things that only rich families can do. These are all different ways of transferring wealth and influence.”'

And let us not have any illusions - none of those children who only have access to a couple of million dollars need worry about paying for any medical treatment. Ever.

Completely wrong and absurd. That line was the most vacuous of the article. The best housing? And a couple of million will hardly guarantee ability to pay for any medical treatment over a lifetime

Let me see - you are disagreeing with the personal observation of someone who inherited 600 million dollars, as did each of his 5 siblings. But then, why should someone who just happens to have a few hundred million dollars to his name have any experience in knowing what the best in housing looks like - compared, for example to anyone commenting here.

'And a couple of million will hardly guarantee ability to pay for any medical treatment over a lifetime.'

It is the family that pays - unless you think that Melinda Gates will not provide a couple of million dollars to her poor deprived children, if their $10 million is insufficient. Do you actually know anyone in a family with a net worth of more than 500 million dollars or 700 million euros? None of those families are going to let a child or grandchild die because they cannot scrounge up a couple of million dollars for medical care.

Those super rich probably have medical insurance just like the rest of us.

And even poor people aren't allowed to die just because no one can pay their medical bills.

Damn you're dumb.

And so, what? Should we all be incensed that rich kids get a good education? Im at a loss as to why anyone should really care one way or the other.

I'm sure that prior_approval is right that those parents wouldn't stint on their children's healthcare, and if they've set up their trusts right, their children's healthcare won't be a problem after their deaths. Which is pretty much all to the good, right? We aren't advocating for the children of rich people to die preventable deaths?

Note that these kinds of non-bequeathals are as much about ensuring that your children -- and grandchildren -- DO stay rich as that they don't stay rich. The concept is that growing up with access to gigantic amounts of cash ruins you. The parents in this case aren't saying, "I want my child to be poor and experience terrible hardship," they're saying, "I think that the best way for my child to live a happy, productive life is to not have unrestricted access to piles of cash." It's not like Bill Gates would be pissed off if one of his children became a billionaire in his own right.

If I ever get enough money to worry about such things, I'll stick with the motto: "Give the kids enough so they can do anything, but not so much that they can do nothing..."


And then give them $2B each?

You can ruin an heir with a legacy smaller than 2.5 million. Much smaller. If, as many people believe, the paltry sums available to the poor through welfare are sufficient to destroy their incentive to work, knowing that one is in line for even a half million could be enough to degrade the character of an impulsive or short-sighted middle class kid. We all probably know of a few cases.

'Those super rich probably have medical insurance just like the rest of us.'

Just like the super rich have credit cards like ours? Not really - another link from a radical leftist rag -

'And even poor people aren’t allowed to die just because no one can pay their medical bills.'

Of course not - but how many slots do you think are available at a research center which has the only technology/staff to treat a potentially fatal condition? Or, to use another example, how did Steve Jobs manage to ever so coincidentally get to the head of a liver donation line?

Truly - doesn't anyone here have any experience with what it is like to be truly wealthy? (or truly powerful, but this web site never seems to explore that aspect of inequality). It is simply a different way of doing things - like having your family (net worth in the early 1980s was ca. 500 million dollars and who expects you to be reasonably self-supporting, work a job while studying, etc) send a van and family employee that provides such general services to help you move. Of course in another case, maybe a family member will bring a van and help you move - it is just a different way of doing things.



that is all

'that is all'

Shame - because I have no idea what the face palm is about.

To use the research center example, clearly someone with the interest and motivation could find an open slot - and money or power are no guarantee of getting one. But to the extent that money would be a hurdle, it will not be faced by someone whose parents happen to have a net worth of 700 million euros.

The Steve Jobs example speaks for itself. As do recent events in Germany, leading to a lowered organ donation rate, where certain connections became apparent after an initial organ transplant scandal was uncovered - 'In the following months, additional suspect cases were uncovered at the hospital. Next in line for investigation was a specialist who had studied medicine at the University of Bologna. Particularly suspicious was the fact that out of the 99 patients that received a liver transplant in Göttingen between 1995 and 1999, 23 were Italian, with several of them coming from Bologna.

The clues also led the authorities to the university hospital in Regensburg in southern Germany, where the accused was employed between 2003 and 2008. There, according to an investigation by the "Süddeutsche Zeitung" newspaper, the rate of liver transplants rose by an unusually large amount in that time.

Giving an unfair advantage to some patients on the organ donation waiting list resulted in the deaths of others

It was suspected that Jordanian patients had been illegally placed on European organ transplant waiting lists. According to the "Mittelbayerische Zeitung" newspaper, this happened at the time when the hospital - as part of a cooperation project under the patronage of the Bavarian government - was in the process of creating infrastructure for liver transplants in Amman. An investigation into the case is currently underway.

Alarmed by the scandal, the German Medical Association and the health ministry launched an investigation of Germany's 24 transplant hospitals. They found evidence of malpractice at the Rechts der Isar Hospital in Munich: falsified laboratory results and cases of patients with advanced cancer, who would ordinarily not qualify for transplants, receiving donated organs. Bavarian Broadcasting cited hospital employees who claimed to have witnessed alcoholics also being placed on the transplant waiting list, against regulations.

In late June 2013, the Leipzig public prosecutor's office began investigating three doctors at the local university hospital. Here, too, allegations of manipulated patient data arose.'

People will go to great lengths to save themselves or loved ones - why this is surprising is hard to understand. And the more resources available, the more they can be used to further that goal. This should not be not difficult to grasp.

And for the moving example? Different families do things differently - but the only person I knew that had a personal family employed handyman do the moving, with a work van the family just happened to own, was a fellow student, co-worker, and friend who also just happened to be part of a sourthern Virginia family with an early 1980s net worth of around 500 million dollars. It is just anecdata, after all - there really aren't all that many really rich people, after all.

And to the best of my now decades old knowledge, she had no multi-million dollar trust fund, was not expected to inherit vast wealth when her grandparents died, and never, ever had to worry about accessing any of the advantages her family wealth could provide - legal services being another example of what was available for a single call, if necessary (the generations old connections to Virginia's establishment is literallly priceless, however). There are many and distinct advantages to being wealthy, after all.

I'm still not sure why a moving van is such a glass ceiling. I'm not rich and I've employed moving companies the last couple of times I've moved without by any means descending into poverty.

Anything to do with the superrich is anecdote. There are very few of them.

#5 - I'd say the results on lead are incredibly good news, rather than "scary." Reducing lead exposure is something feasible that we actually know how to do (and to a large degree have already done).

Also, how much is new here? Isn't this just a confirmation of what Kevin Drum has been finding? (Not to say it isn't valuable.)

The author seemed to include some of the improvements to the author's previous work other people suggested (for instance comparing people who were born the same year, looking at race, etc.).

I guess the question is how low on acceptable lead dosage do we need to go? Not sure that answers that.

How much do I need to pay you to double the blood levels in your children?

Ok, now let me decide to act to double the levels in your children to save me money to boost profits without paying you anything because you chose to play the game of "maybe the levels don't need to be as low as nature allows".

After all, those with the highest levels of lead in the 70s were those who lived right on the highways because that was the low rent district, in the industrial district, where waste with heavy metals were dumped as fill, where the lead paint still remains, and they never got a say in their exposure to lead, other than by voting for those willing to be committed to science and public health and the environment.

$10K. The levels are already miniscule, so doubling them won't matter. Still, I'm just superstitious enough to set the price above $0.01, so let's say $10K. Roughly the same that people might accept, after expenses, to give up a kidney.

You are going to want more than $10k, unless you have tested your kids for lead.

"After all, those with the highest levels of lead in the 70s were those who lived right on the highways because that was the low rent district,"

Actually, the busiest freeway intersection in America in the 1970s was in Sherman Oaks, CA, the natural habitat of the Valley Girl. "Fast Times at Ridgemont High" was filmed in the Galleria right at the interchange.

Lowpaw Reyes' big finding is that gasoline lead doesn't appear to be the magic bullet to explain black - white crime gaps. Instead, middle class whites appear to have been hurt worse by lead in gasoline:

Not necessarily. Let us assume aggregate behavior is a bell curve and "crime" is that behavior "below" some threshold on that bell curve.

If one group is already slightly shifted to the left or has a larger standard deviation, then shifting both curves to the left could create a much larger incidence even if the right-most curve is shifted more.

Here is my speculation: some races have higher expressions of certain gene variants (e.g. Monoamine Oxidase) that affect crime. If your brain has a lot of bridges to empathy and impulse control, losing a few might make a big difference relative to your starting point, but at least it keeps you from the worst behaviors.

As for the tradeoff, I don't know what the net present value of a brain cell is, but according to wikipedia "Between the blood lead levels of 5 and 35 μg/dL, an IQ decrease of 2–4 points for each μg/dL increase is reported in children" and "There is apparently no lower threshold to the dose-response relationship (unlike other heavy metals such as mercury)"

Sure, but Wolpaw Reyes explains that there's little evidence that blacks were exposed to more lead pollution from gasoline than whites were.

Thus, the black to white homicide offending ratio has bounced around but is still the same 7 or 8 to 1 as in 1976 when there was a lot of lead pollution from gasoline.

Was not aware that Drum did any original research. Are you sure he wasn't simply passing stuff along?

It is just as well to have confirmation. Needleman's work has had its detractors, as have other studies that associated lead and crime. Replicating results is critical to this kind of research.

How noble of Anderson Cooper to scrape by on his $11 million salary.

I think the point is that he knew he'd need his own career and wouldn't be as likely to be making $11 million if he had an inheritance coming his way.

I imagine it's a lot easier to break into show biz when your mom is a Vanderbilt.

Nobody is trying to make their kids unsuccessful. In fact, they're specifically trying to make their kids successful! The goal is not "make sure that my kid is no more likely to have a show biz career than the ESL child of immigrants born in abject poverty."

You still have to do the work. One might as well say "it's easier to break into i-banking if you go to Harvard." It's technically true, but dismisses all the hard work it takes to prove you actually have what it takes to be an i-banker. Being a Vanderbilt may have gotten him some extra auditions, but he still had to beat out the others.

That he was the best of the super-privileged bunch that he competed against doesn't mean that he would be the best of the bunch if competition were extended to those with less-elite backgrounds. Society is profoundly non-meritocratic.

Chelsea Clinton had what it takes to get into I-banking?

Are we talking skills, ability, or a Rolodex?

What's the difference between leaving the fortune to their kids using normal inheritance and making the kids the managers of the family foundations? The money stays within the family, and this approach has the added benefit of skipping past various forms of taxes.

If they leave their fortunes to charities or groups not controlled by their children, I'll be impressed, but if they just dump the family money from one family-run entity to another, not so much.

The family foundation is a charitable trust that donates the money to philanthropic causes?

Sort of. A foundation is a pile of assets with what amounts to a self-directed wealth tax of a few percent per year. Income to the foundation is not taxed, and there are lots of accounting games that can be played with the assets, as the foundation would want to understate its net worth. Also, assets such as family real property are typically held in the foundation, but available to the exclusive use of family members.

Also, a foundation needs paid managers, and who best to manage it but the family that created it?

There are numerous other advantages to having a family foundation:

1. There is far less exposure to divorce settlements and other legal actions against family members.
2. A billionaire who runs a foundation is a philanthropic hero, basking in the righteous glow of "nonprofitness", while a billionaire who runs a business is a greedy robber baron.

Some foundations do useful work, but a whole lot of them are simple wealth preservation devices which make large donations to local operas or political issues of interest to the family.

Who is qualified to run the Bill and Melinda Gates Foundation? BillG is probably one of the few people in the world who can do it, and unless he's groomed his children especially for the task, it would be incredibly stupid to leave it to them.

Now I'm really curious who takes it over. Is there a succession line for it?

From what I understand, Buffett, partly for the reason you mention, argues that these type of foundations should _NOT_ be perpetual, that they should have a finite life and period of time to make their impact. Once you get way down the succession line it's more likely to be run for the manager's benefit as opposed to the initial founder's wishes.

I'm not sure what I think about it - I really like the "idea" of a self sustaining charity - but it seems at high risk of being co-opted.

I'll back this Buffet idea when he extends it to government "causes" as well.

@John, so are you saying charities should be perpetual in nature? or that governments should have end dates?

"Some foundations do useful work, but a whole lot of them are simple wealth preservation devices which make large donations to local operas or political issues of interest to the family."

Sounds like populist rhetoric. "Some"..."a whole lot"? How many? What percentage of total foundation wealth "do useful work" and what percentage are "simple wealth preservation devices" I suspect more of in the former than the latter. And why are donations to local operas not useful work? Donations by a charitable foundation to political issues would run afoul IRS rules.

All money, whether invested in a business or chasing charity, is benefitting others.

The reason for the charitable foundations is tax avoidance. Note that these are not popular in places w/o inheritance taxes (ie much of Europe).

Also, in nations in EU with inheritance taxes (France but others too), folks can easily legally avoid said taxes on much of their assets. This is of course impossible in US.

Though I am certain that there are many rich folks who give to charity out of pure desire to help others, with no tax interests in mind.

No, the reason for inheritance taxes is to incentivize charitable foundations. The alternative to private foundations that target funds to the truly needy is to give it to the government to be distributed to those with political influence.

#5 is a worry -- lots of people growing up in deeply unstable countries who have had a lot of exposure via leaded gasoline and industrial pollution.

Very good point, I should have thought of that.

And don't forget bullets and other remnanets of war!

Actually, this seems like it would create a pretty awful feedback cycle. Poor regions are polluted from poorly planned industrial development; lead contamination makes people more violent; wars break out, increasing lead exposure; more wars break out with more violence; and so on.

Great news for Western weapons manufacturers, though!

#1: Apparently all these people are willing to bet against a singularity type scenario. They want their children to develop human capital but what happens when the value of all human capital goes to zero?

What are the chances that financial capital will be worth anything if the value of all human capital goes to zero?

Really high.

#1. Because they are dumb and don't realize that any problem can be solved if you throw enough money at it.

#4: Do dogs ... get that “Eureka!” feeling?

A question that need not be asked by anyone who has a border collie.

#1: The weird thing about the super rich is that they do things like give $600M to 21 year olds. That seems like it would screw a person up but why is it necessary? Middle class people just leave their estate to their children when they die. That way their kids get a chunk of money when they are like 50. That seems unlikely to screw someone up. They'll be established in their own life by then. Why don't rich people just do that? Taxes or something?

1. Have to teach them to be responsible at an early age.

2. In US, taxes.

I know I would have been WAY more responsible in college if I'd had a cool $2 billion. Life lessons all. Giving people free money is almost the only damn thing teaches anyone responsibility. That's why you guys love welfare, right?

Got a better idea?

At 21, your kid isn't your kid anymore. Perhaps (some) of the rich are wise to respect them as adults.


In the us, it's largely taxes. The punitive estate tax system strongly encourages you to give money to the kids much earlier than seems wise, even at relatively low wealth levels.

Put another way, the focus on Bill Gates is incorrect. The real problem is the distortionary effect on people of modest wealth.

Imagine you're a guy in his late thirties with young children and a million or so in liquid assets. You're modestly successful - maybe a finance professor or a somebody who's going to make partner at the firm. But surely not elite wealth. Unless there's a major change on the law, you're highly unlikely to evade the estate tax. You will be hammered by it. So you are incented to give your money away now. And trust design is not straightforward, particularly with the kind of advice your middle class budget can pay for. You will be rich at 70; you really aren't at 37.


The U.S. estate tax threshold is over $5 million

Per spouse, and indexed for inflation. Bad example, Finch.

Nonsense, the estate tax encourages the establishment of private foundations because wealth that is left to heirs is taxed.

You know a lot of the super rich do ya?

The idea that giving someone a lot of money at a young age will "spoil" him is just something poor people say to each other to make themselves feel better. Super-pampered rich kids tend to be just as successful as you would suspect. Hardship in life isn't necessarily ennobling and it doesn't necessarily pay off. The universe doesn't keep a tally -- "Joe had a really shitty year when he was 27 due to no fault of his own but worked through it responsibly: an extra hundred thousand dollars to him when he's 42." People need to realize that the old phrase is really, truly, 100% accurate: life isn't fair. If you're a rich parent, might as well let your kids enjoy the hedonistic lifestyles their accidental births have afforded them. If you're not rich, might as well lobby the government for redistribution schemes so you can have more money for yourself.

"Who’s inherited a lot of money that has gone on to do things in their own life?"

Off the top of my head:

1. Rupert Murdoch?

2. Koch Bros?

3. Many in Hollywood?

4.Some/all Waltons? (charity)

5. Some of the Rockefellers?

6. Many current & former CEO's of large US corps?

6. Most CEOs do not come from inherited wealth. Just looking at the top 5, only Warren Buffet came from more than a middle class background:

Doug McMillon of Wal-Mart started at one of the company's distribution centers.

Rex Tillerson of Exxon started with the company as an engineer. John Watson of Chevron came from finance.

Apple's Tim Cook is the son of a shipyard worker.

Well, GE:

"Immelt was born in Cincinnati, Ohio, the son of Donna Rosemary (née Wallace), a school teacher, and Joseph Francis Immelt, who managed the General Electric Aircraft Engines Division."

I'd have to imagine managing GE's Aircraft Engine Division comes with both a healthy cash comp and stock/options?

I said many, not most...

I have in mind corps with decent family interest (Walmart, former Anheuser-Busch, etc)

It's probably not even many. Mostly family members are chairmen, not CEOs. There are very few family member CEOs of public companies and most don't last very long.

It's a common misconception that CEOs come from wealth and attend elite schools.

#1: The super-rich aren't leaving money to their "kids", because unless we are talking about a unusually late-in-life birth or an unfortunately early death, the "kids" will be middle-aged adults (and probably have actual kids of their own) by the time they inherit anything. So concerns about how having heaps of money will prevent the "kids" from ever developing a work ethic or whatnot, are probably misplaced. Even the anticipation of great wealth seems unlikely to have that effect if the wealth isn't expected show up until one is pushing fifty.

A: What access do the scions of the super-rich have to the family cash while their parents are still alive?

B: What are the super-rich parents doing to ensure that their offspring develop that pesky work ethic and whatnot, while they are still alive and their kids actually are kids, or later young adults?

C: When the super-rich parents do eventually die, they are going to leave a super-concentration of wealth that has to be managed by someone. If not their own children, then who gets that job and why?

C) The directors of the nonprofits that receive the money

2. I couldn't find the current Total scores anywhere. Where were they?

I don't know if it's true but I've read that Gérard Louis-Dreyfus is giving his daughter Julia Louis-Dreyfus (Elaine from Seinfeld) most of his $3.4 billion stake in Louis Dreyfus Group as she made her $200 million entirely on her own.

"Hou Yifan and four Norwegian girls (scroll down a fair ways for the photo, but not actually recommended)." - why not? The blonde girl in the middle is cute. Notice the Scandinavians also have oriental features, as in epicanthal folds, and we all know about the Ugric-Altaic connection between the languages of north Europe and south Asia. Nuff said.

#4: if not actually recommended, then why suggest it, Tyler?

And what's so special about this photo, anyway?

#4. Speculative, anthropomorphic.

#6. Cool.

Potentially anthropomorphic. Don't forget that dogs, cows, and humans have a lot of biological similarities and evolved under identical conditions. It is already well understood that cows and dogs are highly emotional and empathetic. There are animal psychologists for both of those species.

I do agree that tail wagging is just a best guess at measuring happiness. Humans hunt and fight for recreation. There is almost certainly some hormonal reward for these tasks.

Yeah, I think I get how emergent phenomena work and how they bedevil classification systems. We have a lot of shared ancestry with dogs and cows, and, particularly with dogs, lots of comparatively recent interaction that puts dogs more in tune with humans than most animals are.

But I believe that somewhere along the line, humans crossed a threshold that significantly changes our subjective experience compared with all of our cousins. The life of the mind is, I think, a flickering phenomenon among most animals but is central to the human experience. I'm prepared to believe otherwise, but for the time being I'm highly skeptical of transferring our subjective experiences to others.

I generally agree, hence my religious belief in a human soul -- what others might describe as a spark of consciousness.

It is certainly plausible that human cognitive development took off at an exponential rate. What confounds me is the uniqueness. Sure, we may have killed off Neanderthals, but why don't species beyond our reach until recently, like dolphins, have this spark?

I also have a tendency to believe that animals we have domesticated or cohabitate with tend to be smarter than the average animal. I admit I may be biased.

There can also be participant-observer problems in these experiments. Maybe thats what you mean.

My dog and two cats have some remarkable problem solving abilities, especially when it comes to food.

Ive seen circumstantial evidence of a raccoon manipulating the straps of a backpack to get to food inside. We came back to a tent to find a backpack open, food from the bottom removed, ripped open and eaten, and several items of value untouched. Either a coon or a human with a sense of humour.

This is all pretty speculative, but to me, the difference is that most animals, even apes and dolphins, largely live 'in the moment'. Somehow, humans have learned the trick of stopping the tape and stepping outside the moment. Anticipation, dread, joyous or painful recollection, regret- this is the stuff of psychic pleasure and pain, and I don't think it's a big part of the life of animals.

#6. could this explain all the beach "myths"? you're close to the beach and the sea just pulls you into the deep, people say.

#2. I don't get the fascination with the Hou Yifan photo. Why is that interesting, and why did Tyler say that it's not actually recommended?

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