Not many of our wealthiest share this same attitude, usually opting to leave their fortunes to their families. For example, in the Forbes Magazine 2008 list of the 400 richest Americans, four of the top ten were heirs of Sam Walton and three of the top twenty were those of Forrest Mars. Buffett, however, does not think that this is in the best interest of society, "I'm not an enthusiast for dynastic wealth, particularly when 6 billion others have much poorer hands than we do in life."
What I think it comes to is this: People, particularly wealthy people, want a meritocracy-- right up to that very instant when it becomes their competitive advantage at risk. In other words, people are quick to note that those on welfare are getting "something for nothing," yet viciously fight to keep the fruits of their own genetic good fortune. The truth is that it is hypocritical for those who wish to defend capitalism as a meritocracy, as a system that rewards those that work the hardest, to accept anything that they have not earned-and that includes an inheritance.
Buffett himself noticed a similar hypocrisy, "I love it when I'm around the country club, and I hear people talking about the debilitating effects of a welfare society. At the same time, they leave their kids a lifetime and beyond of food stamps. Instead of having a welfare officer, they have a trust officer. And instead of food stamps, they have stocks and bonds," he said.
The truth, which takes us beyond our capitalistic teachings, is that nobody earns a billion dollars. Many people work hard and make a good living, but great fortune is made ambiguously and exponentially-- often the result of opportunity and chance.
"My luck was accentuated by my living in a market system that sometimes produces distorted results. . . I've worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions. In short, fate's distribution of long straws is wildly capricious," Buffett said.
Jesse Dukemiller, Robert Sitkoff and James Lindgren in a Wills and Trust casebook succinctly note, "The most powerful argument against permitting the transmission of wealth is that it perpetuates wide disparities in the distribution of wealth, concentrates inherited economic powers in the hands of a few and denies equality of opportunity for the poor."
A true meritocracy depends on equal opportunity, and it is here that the argument is best made against excessive inheritance. Those born into the privilege already attend the best schools, have the best social and professional connections, and probably work in the family business-what more opportunity do they need? Can the privileged not survive on an inheritance limited to, perhaps, a quarter of a million dollars?
I've noted on many occasions the increasing amount of wealth being accumulated in the richest of American families. There was a sharp rise in wealth that began in the 1980s and as noted in "Them That's Got Shall Get: Inheritance and Achievement in Wealth Accumulation," by Melvin Oliver, Thomas Shapiro, and Julie Press, the amount being passed through generations is staggering, "Between 1987 and 2011, the baby boom generation stands to inherit an estimated 6.8 trillion dollars." Among the richest one percent, the average inheritance is about $6 million.
While inheritance has been described as the "ultimate something for nothing," it is important to note the societal concern is that of great wealth; I am not arguing that hard-working families should not be permitted to leave their modest estates to their children. It is not a negligible right that people should be able to do what they want with their money. The concern is the creation of a class of people whose wealth and influence stifle democracy in their own interest-the creation of a class who can politically influence those who were otherwise elected to do what is in the best interest of society as a whole.
De Tocqueville warned that, "What is the most important for democracy is not that great fortunes should not exist, but that great fortunes should not remain in the same hands. In that way there are rich men, but do not form a class."
It is a warning that should not be easily dismissed, lest we trade any hope of a meritocracy for a plutocracy.