Hacker News Reader

Comment by bko | Hacker News Reader

Taking your question at face value.

Meritocracy: A system in which advancement is based on individual ability or achievement.

If you think the most able individuals are creating and running the largest organizations, and know whats best for those organizations, why would you want the state to allocate those resources upon death of the individual?

Also, most people have a time span much greater than their own life. I know I do. If I knew I wasn't able to leave a better life for my decedents, I wouldn't work as hard. If you have a wealth creation mindset (wealth is created) then this would be devastating to productive individuals

View on HN

You may have a vision for your children, they may not follow-through. Most family businesses fail upon generational transfer. Most children I know who believe they are inheriting money don't bother to work, the children of wealthy children are usually far enough removed from wealth creation as to believe utterly irrational things about money.

If wealth is large enough, then useful incomes can be maintained in perpetuity - meaning the great, great grandchildren are still living off of the wealth created centuries ago.

The latter case was common in Europe, but relatively rare in the US due to the estate tax. Historically, landed gentry were rarely bastions of wealth creation and innovation - and are usually more focused on fending off threats to their inherited wealth than creating more wealth.

Reminds me of the quote:

"My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel."

Wealth dissipates very quickly especially with the nature of dilution as a bloodline grows exponentially. If you notice most inherited wealth that's more than a few generations is in authoritative states. I don't think its due to the estate tax as there are always ways to get around it.

An alternate way of viewing this is that large productive resources are channeled into providing consumption for an exponentially growing bloodline rather than re-invested for general profit.

There was a general practice that samurai funded positions for the children of their servants. By the time of the meiji restoration the number of servants a Samurai supported had grown by nearly an order of magnitude. Meanwhile the productive land remained fixed.

Unfortunately this lead to the productive assets of Japan being directed to support an increasingly capital inefficient consumption system. There is no natural reason to assume that an estate would be obliterated with time.

Wouldn't the problem be self correcting, then? Incompetent inheritors waste their ancestors hard earned wealth on Lamborghinis, bad investments, casinos etc. The money returns to the wider economy (Lamborghini engineers, real estate taxes, tips for cocktail waitresses). After 3 generations the problem solves itself. Those families who remain rich may be the most intelligent ones.

Unless you're doing management-by-seance, dead people - no matter how exceptional - don't run organisations.

And besides, only private wealth is subject to inheritance tax. Public corporations don't die with their founders, and private businesses are assessed for value, usually with significant tax breaks.

None of this changes the fact that inheritance is the opposite of true meritocracy. It gives the mediocre an unearned safety net and starves, stresses, and distracts talent from a modest background.

Why is meritocracy always viewed as a single generation concept? Memes, especially effective ones, transcend generations and are quite effectively passed down from parent to progeny. I certainly am more effective because of ideas my forefathers taught my father who, in turn, taught me.

Because while people may be rational about their business, they are not rational about their children.

As for not working as hard, plenty of rich people have recently declared the majority of their wealth won't go to their children. So certainly won't have a 'devastating' effect as you claim!

> As for not working as hard, plenty of rich people have recently declared the majority of their wealth won't go to their children.

A lot of them are actually putting the wealth into foundations that their children will end up controlling. I believe Warren Buffet has done that.

So even though their children might not have all that wealth outright, they still have the influence and wealth that comes from control of that wealth through the foundations.

Perhaps they know what's best for their companies which is why they're not giving their entire wealth to their children.

And if they do, if you believe in meritocracy, it won't matter as that wealth will be squandered away with each subsequent generational transfer, as is often the case.

It's not about punishing the foolish, it's about maximizing the utilization of societies resources. If you hand ten million dollars to a fool and he squanders it, he's not the only one that loses.

The best reason for a meritocracy isn't fairness or justice, it's the benefits it creates for everyone. When someone smart is given control over resources, they create more resources, for themselves and others.

When that someone smart creates more resources, isn't is likely that they're in a better than average position to plan for its distribution, specifically including placing those resources under the control of smart people to utilize them?

I trust the creator of wealth (small, medium, or great) to allocate it intelligently far more than I trust a bureaucracy to do so.

Hence the need for a meritocracy.

There is a huge difference between voluntarily giving one's wealth away to one's choice of entities than the government forcibly taking that wealth from one's estate. Giving one's wealth away is a choice. A freedom. So should be the option of leaving that wealth to one's descendants or successors (biological or otherwise).

When you say forcibly, they've been protected by the government their whole lives. They're protected from crime, protected from armies, protected from assassins, thugs, and warlords.

They've taken advantage of the schools, infrastructure, courts, laws, etc.

It's a social contract, it's two ways, and part of the price of all that stuff they've been using is to pay inheritance tax.

If they don't want to pay, they could go to a country without all those benefits. But they shouldn't expect to be able to take everything with them, it's not just theirs.

> why would you want the state to allocate those resources

You're making this about "big government". A red herring straw man.

That's not the point. The point is that it does not go to your children or whomever you choose as inheritors (aka your dynasty). There are many ways this could be handled. For example, when you die, the resources/wealth reverts back to the commons. A simple way to do that would be to it distribute equally over the whole population.

Or perhaps distribute it equally to everyone under the age of, say, 30.

Regardless, that's a whole other topic. It's separate from the point being made.

Even with an estate tax of 50% you'd still be able to bequeath massive wealth to your children.

> If you think the most able individuals are creating and running the largest organizations, and know whats best for those organizations, why would you want the state to allocate those resources upon death of the individual?

To prevent the formation of feudalistic aristocracies. There's no difference between empowering bloodlines drawn from wealth or monarchy. You're still going to end up with incredibly corrupt and incompetent people running the show because they didn't earn their position -- they were born into it.

If you actually believe in meritocracy, why do you want to pass on your wealth to your children? If you do that, they won't be able to demonstrate their "individual ability or achievement."

> There's no difference between empowering bloodlines drawn from wealth or monarchy

The Walton family can't throw my in prison. In fact, they can't do much of anything to me besides perhaps denying me a Sam's Club membership.

Monarchy and wealthy families are not the same. Hyperboles like this don't serve your case.

If you believe in meritocracy and you pass your company on to your children who are not suited for the role, then they'll fail and lose it all, as is often the case.

I think you need to put a yet on the Walton's throwing you in prison. Extreme wealth inequality tends to distort surrounding institutions as all individuals paychecks become beholden to the wealthy individual.

In company towns the boss could absolutely have you thrown in jail if they felt like it. If Carnegie didn't like someone then the Pinkerton's would happily take care of them.

The only reason we haven't seen modern equivalents to the above scenarios is that the information age has increased competition. But if you already don't feel like you could sue any of the Walton's for any reason and win... then just wait for when their wealth is 10x larger.

> The Walton family can't throw my in prison. In fact, they can't do much of anything to me besides perhaps denying me a Sam's Club membership.

They most certainly can. They simply have no reason or motivation to.

> The Walton family can't throw my in prison.

The Disney family can. [0]

‘What one fool can do, another can.’

https://unclewalts.com/wwwd/hey-walt-does-disney-world-have-...

Reply on news.ycombinator.com