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PostGenerational Preservation of Wealth; from Ric Mauricio (John Eipper, USA, 06/21/18 6:37 am)
Ric Mauricio writes:
I concur with Istvan Simon (June 19th) that "one should not put too much into these poorly formulated theories" on the generational preservation of wealth.
I have known people who are born with all the advantages, parents who are well-to-do, belonging to the middle class or to the wealthy classes, who go on to fritter away their advantages. In fact, take a look at the Forbes 400. The richest man in the world is Jeff Bezos, the son of a Cuban immigrant, with barely a nickel to his name. The same could be said of Carlos Slim Helú of Mexico, who has gone from poor to the richest man in Mexico. Sure, one can point at Buffett (son of a congressman), Bernard Arnault (dad started the business), or Koch Brothers (father Fred was a successful businessman) and point to their advantages. But a cursory glance at the list will point to mostly self-made billionaires. Of course, there are the Waltons (Walmart) and the Pritzkers, who inherited their billions, but there is only one Rockefeller and no Vanderbilts or Gettys. Keep in mind that the Vanderbilt wealth turned into Vanderbilt University, the Carnegie wealth turned into libraries, and the Getty wealth became the Getty Museum in Los Angeles.
Many trust-fund babies just self-destructed, the partying and drugs their panacea for being born into wealth. Did they learn anything? Obviously not.
But closer to home, my parents were immigrants. My dad's family had nothing, but in one generation, managed to raise themselves to the top 30% of net worth ranking. My dad, the first college graduate in the family (UC Berkeley), unfortunately was killed in action in Korea when I was 5 months old (Silver Star recipient) and couldn't utilize this advantage to help his family. The next generation, of which I belong to, is an interesting study of what to do and what not to do. My two cousins and I were able to leverage our advantage to raise ourselves to another ranking, while other cousins frittered away their advantages. I am trying to make sure that my children and grandchildren do not fritter away their advantages.
This leads me to a discussion on net worth rankings. The bottom 10% have a net worth of negative $1,000 or below. The bottom 40% have a net worth of less than $49k. The next 40% have a net worth ranging from $$49k to $499k. So to break into the top 20%, one must have a $500k net worth. To break into the top 10%, you need a net worth of $1.2M, and to breach the top 5%, the number is $2.4M. The top 1% is $10.4M. That's millions, not billions. The billionaires are .1% of the population.
So why do those with more modest means (or no means at all) succeed where others with advantages don't? Perhaps it's the hunger. Perhaps it is in our DNA to strive for success. Perhaps it is because I did not learn to make excuses or to blame others for my failings. Perhaps it is my ability to not compare myself to others and to not be jealous of others' successes and to throttle any feelings to tear others down because I cannot measure up to them.
Perhaps this is why the President doesn't like Bezos. How can Bezos, the son of a Cuban immigrant, become the richest man in the world, while the President (who started off earlier than Bezos at $200M) is relegated to #276, and perhaps now #300? How can John McCain survive a POW camp and become a war hero, when the President had to deal with bone spurs?
OK, so the President will just destroy the stock market with a trade war and bring the value of all those above him down to his level.
JE comments: We love riches-to-rags stories almost as much as rags-to-riches ones (unless you are the wealthy kid who goes broke). But are the Bezoses and Slims of the world the exceptions to prove the rule?
(We're back at WAIS HQ, Royal Oak, to welcome in the summer. Our nine days in Colombia were unforgettable. A couple of further Colombia-themed WAIS posts are in the pipeline...must write them up before I forget!)