The True Cause of Wealth Inequality

I was just typing another thread about my thoughts on the family unit, when I decided to catalogue my thoughts on the serial dilution of wealth by inheritance.

The True cause for the dilution of wealth

The rich family will have at most two children. They will bring them up responsibly and send them to university. The children in turn will be successful and productive members of society. The children will therefore also be rich.

The (irresponsible) poor family (but not all poor families) will have 4 or 5 children, bring them up without nurturing them but only keeping them alive, they wont pay for education and the net result is a bunch of adults only fit for menial labour. The children will be poor, and the cycle will continue.

This effect leads to the so called “spreading inequality” that sociologists are observing. The disparity between rich and poor is twofold:

1. The rich better equip their own children to be rich + they have fewer children, so inherited wealth is in a higher ratio. The two rich parents leave the legacy of two richer children.
2. The poor do not equip their children properly + they have too many children. The inherited wealth (if any) is significantly lower. The two poor parents therefore leave the legacy of five or six poor (if not poorer) children.

The correlation between social class and number of children is starkly proportional.

Left wing propagandists have sought to claim that the increasing inequality is due to debt bondage and the rich stealing money via banking and exploiting the middle classes via wage slavery. These are blatant fallacies. The real drivers for increasing inequality are stated above, and they are as simple as demographic changes.

The reason that the rich get richer, while the poor get poorer is because of the endemic cycle of inheritance found naturally in nature. The strong beget the strong and the weak beget the weak. The only way to break the cycle is for a child to be born into a poor, but responsible family; who subsequently becomes rich, and his children are therefore rich. Evidence for this is that the top five richest men in the world all came from humble beginnings. This socio-economic mobility does exist in modern society and that is enough for me to rest my case that each person gets in life exactly what they deserve.

Very interesting read. I've contemplated this myself a few times. However, what about the children that are born poor to non responsible families yet still manage to make a better living than those of their parents? I do agree completely with the idea of those richer having fewer children for the reasons of wealth. I think the reason those that are less fortunate have more children in hopes that one of them will "make it" and take care of them. Or it may have something to do with a lack of sex education or availability of birth control? Just tossing around ideas at this point.

Basically the cause is stupidity. But thanks for elaborating.

two lines.

Poor people can get rich and rich people can become poor given a reasonablly equal access to the free market. The true source of wealth is the human brain.

44soulslayer,

I have always enjoyed your posts. I hope you take no offense to my responses, they are intended as an alternate point of view. A debate, if you will. Thank you.

Originally posted by 44soulslayer
I decided to catalogue my thoughts on the serial dilution of wealth by inheritance.

The True cause for the dilution of wealth

The rich family will have at most two children. They will bring them up responsibly and send them to university. The children in turn will be successful and productive members of society. The children will therefore also be rich.

There is a lot of generalization there. It is difficult for me to accept it directly, considering the exposure I have had in my life to rich dysfunctional families. I think parenting is a combination of 'skills' and 'emotional IQ'. Wealth appears, at least in my experience, to have little to do with the success of the children (unless it's what some might consider 'store bought' success).

As far as being 'productive' members of society, I could argue that also, is a judgment which begs examination. But each society will have it's own measure of 'productive' so I won't deconstruct the argument.

The (irresponsible) poor family (but not all poor families) will have 4 or 5 children, bring them up without nurturing them but only keeping them alive, they wont pay for education and the net result is a bunch of adults only fit for menial labour. The children will be poor, and the cycle will continue.

Um, I will try to remain clinical about this, but I assure you; I come from one of those 'irresponsible' poor families. I suppose you speak from your experiences, as we all do. I am fit for 'menial' labor. I don't want my children to be poor. I guess I gotta change, but at the risk of my family's security. If I fail, we all live in a cardboard box under an overpass. I'll have to consider this 'reality' you paint as fatalistic.

This effect leads to the so called “spreading inequality” that sociologists are observing. The disparity between rich and poor is twofold:

1. The rich better equip their own children to be rich + they have fewer children, so inherited wealth is in a higher ratio. The two rich parents leave the legacy of two richer children.
2. The poor do not equip their children properly + they have too many children. The inherited wealth (if any) is significantly lower. The two poor parents therefore leave the legacy of five or six poor (if not poorer) children.

By your reasoning, poor people should just stop reproducing, thus leaving only the wealthy. I wonder how that would work out?

The correlation between social class and number of children is starkly proportional.

Do me a favor, drive the point home with some numbers. 'Proportions' are exceeding pliable to interpretation.

Left wing propagandists have sought to claim that the increasing inequality is due to debt bondage and the rich stealing money via banking and exploiting the middle classes via wage slavery. These are blatant fallacies. The real drivers for increasing inequality are stated above, and they are as simple as demographic changes.

You have succinctly stated that anyone claiming "debt bondage and the rich stealing money via banking and exploiting the middle classes via wage slavery" is a left-wing propagandist. I feel that this is not representative of any truth other than you need to call any observations or reasoning in this vein, 'left-wing' and 'propaganda'. Technically, as well as ironically, this statement is propaganda.

Fallacies are self-evident when examined. The paradigms of 'wealth' are mostly clearly defined for us. Therein lies the truth. Who defines it, how do they propagate this definition, is the definition based on agreement or imposed? There are many 'surprising' demographics, the most striking are in the realm of how many children starve to death everyday. Throw that into the equation to raise it above the 'media' definition of lifestyle.

The reason that the rich get richer, while the poor get poorer is because of the endemic cycle of inheritance found naturally in nature. The strong beget the strong and the weak beget the weak. The only way to break the cycle is for a child to be born into a poor, but responsible family; who subsequently becomes rich, and his children are therefore rich. Evidence for this is that the top five richest men in the world all came from humble beginnings. This socio-economic mobility does exist in modern society and that is enough for me to rest my case that each person gets in life exactly what they deserve.

I propose that the rich get richer as the poor get poorer and the middle-class declines into extinction is because the process and structure of our society allows it to be so. Those who would change it have no voice or power to affect either....

And frankly, I can't respond in kind to the sentiment of your rested case "..each person gets in life exactly what they deserve." That may be how you feel, I don't.

reply to post by 44soulslayer


Actually, I although it's an interesting theory. However you'd be wrong.

The opposite is true. The majority of consequential wealth acquired by one specific person or family is lost within 2-3 generations. This is such a problem, that investment firms which manage these fortunes have recently developed new games to help start converstations with the younger generations and teach them about wealth and how to hold on to it.


Thats a good concept though.

reply to post by Maxmars


Max,

I assure you the respect is mutual, and I always enjoy your opposing point of view! Forgive me for omitting quotations, the post would be too large with them.

Correct me if I'm wrong, but good parents only make the decision to have children when they can care for them financially. Im not positing an ever-lasting correllation between wealth and success as a parent... instead Im saying that there is a threshold for familial wealth which corresponds to the ability to raise a child. It is only responsible parents that will wait to have children once they cross this threshold, while the irresponsible ones will have their child too early.

I think our definition of rich differs here. By the "wealthy" I mean anyone who is capable of providing for themselves without being reliant upon wider society. I think you are thinking of the dynastic richness of the Du Ponts or the Rockefellers... which are an entire aberration and cannot be explained by this theory because as you say, they too produce dysfunctional rich kids.

I hope you didn't take my analysis too personally (though of course its hard not to). Clearly the correllation is never perfect. There will always be intelligent, successful children born into families that could not care for them. If I may say so, you seem to be one of them. Why did your path lead to menial labour?

May I ask where do you think you were failed by the "system"? Was it a lack of adequate parenting? Was it a lack of education access? In other words, what kept you from being a wealth generator rather than a "wage slave"?

I do not wish poor people to stop reproducing. Rather I want them to consider how they may support the large families that they generate without thought of how to care for them. People can have howmany ever children they want, I have absolutely no right to stop them... but when they put the burden of care for their children upon me (ie medical care costs, education costs etc), then can I not object to them being irresponsible?

Clearly I was overly forceful with my argument, I hope you do not consider it to be propaganda. The notion that wealth inequality is the direct result of debt bondage and wage slavery does seem to be abound in much of the media today, wouldn't you agree? People even in the highest offices seem to be worries about rising inequality... whereas they neglect other attributes to the dilution of wealth. Perhaps the truth is somewhere in between?

I have always maintained that equality should be equality of access to success. Equality is not some state where everyone's bank balance is the same. Equality is not some state where everyone's salary has the same number of zeros behind it. Equality to me is the ability for every man to make of himself what he can.

Clearly you feel that there are people in your country that do not get what they deserve. Why is this? Where is the intrinsic bottleneck in the system that prevents them from rising up in life? If I may be so bold, what held you back?

In my estimation, there is equality of access such as we have never seen before. Each man can achieve his potential in today's society and under the capitalistic system. This does mean that some will be in dire poverty, but when they have been given all the tools to succeed yet they do not, I am inclined to question why. I've often thought of the journey that some of my relatives made from the third world villages to their current position in life. Despite not having access to the tools that they needed, they managed to accrue wealth that has never been seen before in their families. Most were the first generation of their family to go to university, most were the first millionaires in their families (whose net worth before that was negligible).

I guess what Im really trying to identify is where does it all go wrong for people who are in poverty? My answer is that they were brought up by sub-par parents; and statistically speaking the parents were fiscally incapable of supporting them.

Some interesting sources:

www.childstats.gov...

An interesting book and film

I couldnt find any sources about the correlation between family income and number of children... perhaps someone could point me in the right direction? Surely theres no doubt about lower income families having more children...

Originally posted by HunkaHunka
reply to post by 44soulslayer

 

Actually, I although it's an interesting theory. However you'd be wrong.

The opposite is true. The majority of consequential wealth acquired by one specific person or family is lost within 2-3 generations. This is such a problem, that investment firms which manage these fortunes have recently developed new games to help start converstations with the younger generations and teach them about wealth and how to hold on to it.


Thats a good concept though.

I totally acknowledge that inherited wealth is only partly the issue. As Max pointed out, there are plenty of dysfunctional rich kids. In those cases, the parents actually don't raise their children properly, and wealth becomes a substitute for parental contact time.

The inheritance issue is more relevant to third world countries actually; where a sensible man only has two sons, the farmland is split equally amongst them whereas the foolish one will have ten sons who in turn get a tenth of the land. This turns into a vicious cycle, and eventually it all descends into violence as no man has enough land to farm properly.

A little add-on:

We do learn and pick-up habits and behaviours and thought-patterns and even emotional-patterns from our surroundings.

So, growing up in a poor neighbourhood, seeing the many children our neighbours get, being surrounded by talk of "we dont have enough money" and "rich people are evil" will guarantee that the next generation is the same.

The rich kid doesnt have to do too much...he grows up surrounded by higher expectations, fancy restaurants and cars, and talk of wealth, investment, return-on-investment, golf-courses...

What goes around comes around. This creates a self-perpetuating, self-fullfilling cycle of poverty or wealth.

One approach to a solution is to strengthen the middle-class, for the middle-class to uplift the lower class....so that some day the "lowest" class is what we today call the middle-class.

Of course giving free hand-outs to the poor is not only ineffective (as shown time and time again throughout history) but actually weakens the poor, who thereby become dependent on the more wealthy. If any free hand-outs should be given, then in the form of education - an education that will enable them to handle their own situation.

Thanks for letting me add my 33 cents


[edit on 13-11-2008 by Skyfloating]

I fully agree with Maxmars on the comment about poor, irresponsible families.

I too come from a poor family. And I will stand toe to toe with ANYONE who will put my upbringing and origin into a catagory of irresponsible!!!!

I am not saying there isnt irresponsible poor people, but there are also irresponsible rich people too.

And from what I have seen growing up being raised by my highly responsible parents who did everything in their capability to provide for me and my brother and sister, and seeing who I am today, I think I came out very well.

The true cause of wealth inequality is very simple.....GREED.

Originally posted by RFBurns


The true cause of wealth inequality is very simple.....GREED.

This is just a typical phrase used by the poor in order not to have to think and look deeper.

Its based on the mentality that the rich can only become rich at the expense of the poor.

Greed is not the cause of poverty. Lack of education, vision and energy is.

Originally posted by RFBurns

The true cause of wealth inequality is very simple.....GREED.

Thats the easy explanation... the cop out answer. Its easy to chalk it down to greed and say "oh look at that greedy rich bastard hoarding his wealth and running a business instead of working an honest job like me".

The truth is always infintely more complex. I agree that my theory isn't the whole answer, but I think its a damn sight more intellectual than just demonizing the rich.

Btw Im not saying that all poor families are irresponsible. Im saying that the poor families who are irresponsible end up having more children than they can look after both fiscally and time-wise. This leads to the children being unequipped to succeed in life. There was also the secondary issue of inheritance.

Rich men have often come from humble backgrounds. Being from a humble background is not the same as being from a poor background. As I often state, the five richest men in the world are from humble backgrounds. My own parents are from humble backgrounds. The common theme throughout all successful "rags to riches" stories however, are the fact that their parents were responsible and had children whom they took care of and spent time on.

By "poor, irresponsible" parents I mean those who have a very low paying job, no foreseeable ability to care for their children and yet go on to have 4/5 children. If this describes your background, then please do not take personal offence. I am just saying that your parents did not equip you as well as they should have to succeed. If you did succeed from such a background, then my full congratulations since you have achieved something very rare... you have broken the cycle.

Originally posted by 44soulslayer

Originally posted by HunkaHunka
reply to post by 44soulslayer

 

Actually, I although it's an interesting theory. However you'd be wrong.

The opposite is true. The majority of consequential wealth acquired by one specific person or family is lost within 2-3 generations. This is such a problem, that investment firms which manage these fortunes have recently developed new games to help start converstations with the younger generations and teach them about wealth and how to hold on to it.


Thats a good concept though.

I totally acknowledge that inherited wealth is only partly the issue. As Max pointed out, there are plenty of dysfunctional rich kids. In those cases, the parents actually don't raise their children properly, and wealth becomes a substitute for parental contact time.

The inheritance issue is more relevant to third world countries actually; where a sensible man only has two sons, the farmland is split equally amongst them whereas the foolish one will have ten sons who in turn get a tenth of the land. This turns into a vicious cycle, and eventually it all descends into violence as no man has enough land to farm properly.

Actually it's the families with more children which prosper the most.

And it's not that there are plenty of dysfunctional rich kids. It's that most families only hvae a couple of kids, and familial wealth disappears after two generations normally. It's not the exception, it's the norm.

Originally posted by 44soulslayer
reply to post by Maxmars

Edit to remove - too personal ...

[edit on 13-11-2008 by Maxmars]

What Hunka said about the loss of wealth in 2-3 generations is quite true. How many family businesses have we all seen falter when the next in succesion generation go bankrupt because those kids would rather squander the wealth rather than try to add to it for their own children?
I have worked part time for two family owned companies that have had just this happen!

Zindo