The problem is in the definition of "created". A CEO of a company may say he "created" the wealth of the company through his decision to create a new gizmo. The engineers may say they created the wealth because they designed the gizmo. The workers who built the gizmo can also say the created the wealth in the most literal sense. Capitalism, technocracy, and socialism disagree on the importance of the three types of creation.

I believe in classical economics the terms are Production and Distribution, the latter being in reference of profit, or value-add.

I totally agree that the ambiguity you described is an issue. It's unfortunate that common political parlance isn't in a habit of defining its terms as a step 1a before proceeding in a discussion.

Of course it is hard to define how wealth is attained. But does that mean we should not try? What is worse? Giving up or finding a partially satisfactory solution? There may never exist a precise test for how wealth is created, but it would be better than nothing.

The problem is we don't tax wealth directly, only when it's transferred. A large portion of government spending is to protect the value of capital, but we fund it largely with taxes on incomes.

We could replace most federal taxation with a 150 basis point tax on all assets. It'd be an interesting way to pay for a government.

| Was it inherited?

old money

| Was the wealth created?

nouveau riche

| Or was it taken at the expense of others?

plutocrat/oligarch

Indeed, for an economic system that supposedly rewards merit, why should Capitalism even have the institution of heritage?

because that's one of the greatest incentives for people to create wealth. Why would I work and create wealth if I can't give it to my children or to charity that I created? Let's consume all of it.

A lot of notable scientists have given up all patent rights to their discoveries because they were motivated to help the world. And to be fair, be famous and respected too.

I can understand that for the first few million, but an inheritance of hundreds of million or even billions doesn't really do society much good.

Depends what he/she does with the money. There are many things that government won't do and there is no market for it e.g. Polio vaccine. You have to have wealthy individuals to fund these ideas. Never mind that. You cannot design the system to force people to give you the money. They would move with the capital abroad. What do you do then? Start a war? Wealth is not a problem. Corruption and poverty are.

> Depends what he/she does with the money

No, it doesn't. Justifying the choice is good after it turns out good as some sort of moral strategy. The choice (of how to use absurd wealth) is now subject to not-society. So any benefit is accidental, at best. It can easily be lit on fire and that is just as bad because society gets no say in it.

> There are many things that government won't do and there is no market for it e.g. Polio vaccine

From my reading of [1], the Polio Vaccine was developed by Jonas Salk at the University of Pittsburgh.

[1] https://en.wikipedia.org/wiki/Polio_vaccine#History

I agree wealth is not a problem, but corruption can be particularly devious in the hands of the wealthy. Wealthy people also have a greater benefit to the world than the average person when they are benevolent. I think both facts are the same with a wealthy government.

Or even the recipients: "If my children are competent, they don’t need my money. If they’re not, leaving them a lot of money is only doing them harm."

http://www.theglobeandmail.com/news/world/chinese-philanthro...

Even in our age most of the wealth is in the hands of people who don't own millions, and they're the ones that would really worry about inheritance. If you keep looking at the exceptions to explain the rules, you'll always end up with weird edge cases. The super rich don't need inheritance law, they can use their money to get what they want, even if it's illegal.

Bill Gates makes a similar point in his review of Piketty's Capital in the 21st Century: https://www.gatesnotes.com/Books/Why-Inequality-Matters-Capi...

From Gates:

>Take a look at the Forbes 400 list of the wealthiest Americans. About half the people on the list are entrepreneurs whose companies did very well (thanks to hard work as well as a lot of luck). Contrary to Piketty’s rentier hypothesis, I don’t see anyone on the list whose ancestors bought a great parcel of land in 1780 and have been accumulating family wealth by collecting rents ever since. In America, that old money is long gone—through instability, inflation, taxes, philanthropy, and spending.

This is exactly why I don't buy the "rentier class" argument. Even the mega-wealthy families of the robber-baron era are not that well represented in these lists.

The other take on the wealth that is rarely discussed is the incentive that the ability to secure the lives of ones offspring provides - it is a very powerful drive. I suspect a large number of very talented individuals would accelerate their retirement if they were not able to pass their wealth on to their kids.

While I heavily rely on my skills/labor for income, even I would make very different choices if I had no hope of passing on at least something. Fair or not, it's a pretty primal instinct.

>>Even the mega-wealthy families of the robber-baron era are not that well represented in these lists.

May be because bulk of that wealth is locked in Trusts. And passed on through Trusts.

The Bezos, Zuckerberg's and Gates will leave behind Trusts which their descendants will inherit. You won't find their names in the richest person list in the next few decades. Their descendants will almost be as rich as the richest guy of their times. They will just be rich through a proxy.

Any sources of these stats?

I've actually had "you probably have a trust fund" thrown at me in college because I drove a sports car, but I worked 3 jobs to afford it and pay for education/rent/etc, so apologies if I'm overly skeptical about the trust fund claim.

In your estimate, of the people driving sports cars during college, how many worked 3 jobs to pay for the car and college?

I don't agree with Piketty, but do note that he's looking at things from a mainly European perspective. Europe probably has a lot more old money + there is still some (very) wealthy aristocracy around.

I in fact personally know a family that still owns land they somehow acquired in the 1700s. But they're not the billionaires or hundred millionaires that roam todays capitalistic system.

They're.. well off? I would call it FU money, but given they (sort of) have to pass it down the generations for forever, they definitely spend a lot less of it and enjoy it less.

Capitalism should have as many words for wealth as the Inuit purportedly have for snow.

We do. We also have as many words for snow as the inuit did.

Just of the top of my head for frozen water that falls from the sky: snow, sleet, powder, crusty, ice, slush, hail, wet, thick, dusting, etc...

And for wealth : cash, money, asset, value, income, revenue, etc

It's usually created by one frugal couple not spending much of their income their entire life, and then passing on the savings. Money that isn't spent generates even more money passively.

Hard to tell if you are serious. My mother and father are going to leave me a bit of cash from their business earnings (I wish they wouldn't). That doesn't make me a Rothschild or a Hearst. Not to mention regal dynasties or modern tech entrepreneurs which are in another category entirely.

Why do you wish they wouldnt? To value signal to anonymous commenter on hacker news that you are not "elite"?

I suppose you could say that, although by US standards I'm far from "elite". Generally I think people should focus on maximizing their "life happiness". It's not my parents responsibility to scrimp and save to make my life better after they have passed. I would much prefer they spend their time and money enjoying their time here. I'm not suggesting they spend zero on me, I'm just saying they should not be unnecessarily frugal their entire life for my benefit. Obviously there are trade-offs. They have helped me in many ways (as parents do) which has contributed to my high quality of life. I'm suggesting that they enjoy the remainder of their lives as they wish.

While I can't speak for him, in my case it's because I want my predecessors to reap the benefits of their labours and spend their money on themselves before they die. As I say to them (and others), you only get one life and there are no prizes for checking out with money left in the bank.

I had this conversation with my parents recently as I share a similar view to the parent comment. My father has made a decent amount of money from his successful business, but by far the greatest proportion of their wealth is tied up in various property assets. They put this fortune down to good timing vs being "earned" in the same way as the business profits, and believe it should be something that future generations in the family benefit from. They travel internationally multiple times a year and assure me they will continue to enjoy the good life for as long as they can, but they're adamant when it comes to their plan to leave a meaningful estate for the kids and grandkids.

Exactly this.