Piketty and Inheritances, WASPs and Jews
27th June 2014
French economist Thomas Piketty has succeeded in raising the always important and fascinating topic of inheritances back into the public spotlight, even though his contention of a return to pre-20th Century French norms mostly doesn’t seem to have gone through the formality of coming into existence yet, unless Piketty is right about their being countless vast concentrations of hidden inherited wealth that have wholly escaped the attention of taxmen, fundraisers, salesmen, and divorce attorneys.
And good luck with that. Unless you’re a Kennedy or a Rockefeller or some other flavor of Democrat. Then you’re good.
One reason is that the pre-Baby Boomer “Greatest Generation” didn’t inherit all that much, since their ancestors tended to have been hit hard by the Depression and confiscatory income tax levels at the high end. Moreover, new homes were cheap during the era of suburbanization, so inheriting grandma’s old house wasn’t typically very exciting.
My grandmother lived in a house that had a basement that my grandfather (and friends) dug out from under it. She used one of those open washing machines with an attached mangle to wring the water out. My cousin wound up with it in return for looking after her in her final years; don’t think she got much for it.
These days, the parents of many Baby Boomers are dying off and often leaving significant sums, but the large average family sizes of the Baby Boom mean that the inheritances tend to get split up among three or four kids. Individuals in Post-Baby Boom generations with smaller family sizes may do even better. The oldest post-Baby Boomer (b. 1965) is just shy of 50, although many of them are younger siblings of large Baby Boom families. But in another decade or so, the average number of children an inheritance is split among will probably be down notably.
When my mother died, my share of the estate was about half of my then annual salary. Not something you could retire on.
After WWII, however, the entire topic of inheritance and trust funds virtually disappeared from popular culture. This helps explain the often-noticed “How can they afford that place?” mystery in movies and television shows (e.g., Friends). Characters tend to live in apartments and houses for which they have no visible means of support.
Ever notice how people like TV-show police sergeants in NYC live in places for which in real life they couldn’t even have afforded the utilities?