> I don't think there's any evidence that generational wealth transfer is the cause of income inequality.

Well, it was in reference to general inequality. It absolutely creates wealth inequality. If you are born to poor parents, and your buddy Steve inherits a $1M San Francisco apartment from his family, well, Steve has a big head start over you.

That directly translates into income equality too, as inherited investments yield 7% returns invested in the S&P, or that $1M apartment generates $3-4000 per month in rent for Steve, while you have nothing.

You know what they say, time in the market beats timing the market -- the sooner you have money the more money you will have thanks to geometric returns.

Had Steve's family donated that money before they shuffled off this mortal coil, or the state collected it in taxes, that wealth could have been used to raise the minimum standard of living for everyone in the next generation -- not just Steve.

Generational wealth transfer isn't just your inheritance either:

> It has not been easy for me. And you know I started off in Brooklyn, my father gave me a small loan of a million dollars.

Makes it a bit easier to start a business when you can just ask your parents for a million dollars. Imagine growing up with the idea that a million dollars is a "small loan."

The way you put it, it sounds like geometric returns are the primary cause of wealth inequality, with generational transfer being a minor blip. Transfer alone is roughly O(1) over time; geometric returns are O(k^t). And imagine if your k < 1!!

Maybe that's the cause of wealth inequality and we should examine that. It seems like income taxation and social subsidies O(t) are unlikely to outcompete exponential processes as ameliorations for the root problem.

Geometric returns are, in a way, the primary cause of wealth inequality. However, if everyone starts at the far left flat end of the curve, it's a fair playing surface allowing for meritocratic rewards for those who provide outsize value.

On the other hand, if you start at the parabolic upward portion of the geometric return curve, having demonstrated no value of your own, you've destroyed meritocratic rewards.

The founding fathers were historically against generational wealth, after all, they fled such a system in Europe.

> It seems like income taxation and social subsidies O(t) are unlikely to outcompete exponential processes as ameliorations for the root problem.

Taxation can absolutely outcompete potential exponential processes, that's why we have progressive taxation. Progressive taxation is exponential in dollar terms.

Progressive wealth taxation is another way of approaching this, but so is an estate tax. That short-circuits the whole process.

To be clear, I believe in wealth inequality, and I believe in income inequality, so long as it's coupled with social mobility (i.e. everyone has the ability to reach higher tiers), and so long as the minimum standard is a decent existence, not death.

If progressive taxation outcompetes exponentiality, empirically it never has, not even in the most progressive states, as we see that the wealth gap still increases, even in most European nations.

I don't mind that, though, I think outsized reward is fair for outsized value creation. Where I disagree is that it should last more than a generation, and I believe that higher taxes should be levied to raise the standard of living for the bottom rung.

I believe in wealth and income in equality.

> I think outsized reward is fair for outsized value creation

How do you define "fair" and how do you define "value creation"? And how do I get to be the administrator who gets to make those calls, so that I can make sure that my friends and family's "value creation" classes are put before everyone else's?

While I agree that the inheritance tax should be somewhat higher, I think you’re discounting the extent to which parents specifically work to give their kids that head start. They’re also working to give them head starts in many other ways. That’s a feature, not a bug. Perhaps there should be a limit over which the tax rate becomes fairly high, but to try to stamp out any head start is a very bad idea, IMO. The limit should be far higher than your apartment example.