wonderpup Posted August 25, 2014 Share Posted August 25, 2014 Almost everyone agrees-I think- that the notion of intergenerational wealth is on balance a good thing- not many people would argue that a parent should not be allowed to pass his wealth down to his children- we just tax the transfer of wealth via inheritance tax. But I would also guess that in most people's minds the wealth they imagine being passed down is earned income or family held assets like land and property. But it's fair to say that much of the 'wealth' currently in existence is essentially rent seeking in nature, either in the form of literal rents on property or less obvious rents like shares in institutions that create debt like banks and building societies. So in many cases what we see happening is that the children of the rent seekers are inheriting the ability to collect rent from the children of the rent payers. After all, in order for there to be a 'generation rent' there must also be a generation of rent collectors. So the ongoing financialization of the economy is not a single generation one off, it in fact embeds a more enduring state of affairs in which those who are lucky enough to be born to a successful rent extractor will in their turn be in a position to extract rents from their less fortunate contemporaries. Thus when we talk of the pernicious impact of QE or other measures we should be aware that what they represent is not a single one off transfer of wealth from the 99% to the 1% but a far more long term entrenchment of inequality in which the lucky few will inherit the ability to feed on the labor of the rest far into the future. We are, as taxpayers, funding the enslavement of our children. Quote Link to comment Share on other sites More sharing options...
msi Posted August 25, 2014 Share Posted August 25, 2014 This is probably a result of my lack of inheritence (ahem), but why would intergenerational wealth be good? The cornerstone of any liberal democracy is the myth of being self made. That you can work, directly or via investment, to build up capital and subsequent wealth. The direct opposite of this is Feudalism, whereby wealth and power is handed down by birthright (whether or not this is done by divine right or by inheritance is semantics). Note I am not advocating stopping inheritance, but recognising getting Grandma's hard worked capital as a result of gentic luck. Nearly all established commercial civillisations have some sort of concept around death geld, where a proportion is given to the community or to the established state. That's enough pseduo intellectualism...I've found the Special Brew Quote Link to comment Share on other sites More sharing options...
Timak Posted August 25, 2014 Share Posted August 25, 2014 Several friends of mine are now owners of multiple properties (and therefore rent extracting) through inheritances. Likewise a lot of my parents friends (in their mid 60's) are keeping their own parents properties to rent rather than selling. Harvesting rents is the new working. Quote Link to comment Share on other sites More sharing options...
wish I could afford one Posted August 25, 2014 Share Posted August 25, 2014 ... Harvesting rents is the new working. ...and thus in this great country it has been this way for hundred's of years. The hint is in economic model we sort of run under - capitalism. Quote Link to comment Share on other sites More sharing options...
R K Posted August 25, 2014 Share Posted August 25, 2014 EDIT: I would also add that we are largely in a post capitalist society. Capitalism requires money to be scarce and to command an interest rate. Scarcity helps you decide which projects should be undertaken and all other resources follow in its wake. When liquidity is unlimited and money is virtually free, money flows around simply trying to catch a ride (like rising house prices rather than rents). We also get huge amounts of malinvestment - which we are desperately sadly watching as our politicos feed their rich friends with rising inequality. That doesn't make any sense. Liquidity clearly isn't unlimited at all. Quite the opposite. We have 'austerity' which will last for (currently) around 10 years until/if the deficit is in balance ( for some pointless political objective), there's a complete DEARTH of investment. There's certainly ZERO malinvestment in housing. We're building at least 100,000 fewer houses p.a. than are needed to meet demand for housing. If there was malinvestment in housing we'd have millions of empty properties as they had in Spain. Money clearly isn't flowing around - money velocity is part of the problem. The inequality is a distribution issue rather than a liquidity issue and high house prices and low interest rates are a (largely) demographic and demand issue. It doesn't mean capitalism doesn't exist, simply that the real world as it is requires a lower real interest rate than it might hage done at some arbitrary point in the past. Such is the nature of nature. Quote Link to comment Share on other sites More sharing options...
Limon Posted August 25, 2014 Share Posted August 25, 2014 There's certainly ZERO malinvestment in housing. We're building at least 100,000 fewer houses p.a. than are needed to meet demand for housing. If there was malinvestment in housing we'd have millions of empty properties as they had in Spain. I'm no financier, but wouldn't malinvestment in housing under circumstances that prevent building just lead to inflation in the prices of existing houses? Quote Link to comment Share on other sites More sharing options...
ThePiltdownMan Posted August 25, 2014 Share Posted August 25, 2014 It's only a problem because of artificially restricted access to land and planning permission. It's this that limits the options of the renters whether its tenants paying rent or "owners" paying the mortgage. Quote Link to comment Share on other sites More sharing options...
Venger Posted August 25, 2014 Share Posted August 25, 2014 That doesn't make any sense. Liquidity clearly isn't unlimited at all. Quite the opposite. We have 'austerity' which will last for (currently) around 10 years until/if the deficit is in balance ( for some pointless political objective), there's a complete DEARTH of investment. There's certainly ZERO malinvestment in housing. We're building at least 100,000 fewer houses p.a. than are needed to meet demand for housing. If there was malinvestment in housing we'd have millions of empty properties as they had in Spain. Money clearly isn't flowing around - money velocity is part of the problem. The inequality is a distribution issue rather than a liquidity issue and high house prices and low interest rates are a (largely) demographic and demand issue. It doesn't mean capitalism doesn't exist, simply that the real world as it is requires a lower real interest rate than it might hage done at some arbitrary point in the past. Such is the nature of nature. Zero? There's malinvestment with landlords still buying them up, and the huge plunge in FTBs over 10 years and more, with 10 million or so renting in private sector. And malinvestment again with so many working families also needing housing benefit too, to pay their landlords - and reading one landlord forum... it's the smart carrying the totally dumb. Only good housing thing that's happened this year is, a hpcer I know of, renting for years, who I suspect bought a house for around £150,000 less than original asking price, for his family. A house now. Old codger in his 80s didn't go into any of the bedrooms for years since his wife died 20 years ago, living there to the end - their choice and that's fine, but surely didn't need Gordon's free rail/free tram/free bus (and in London, free tube as I understand it) . That was a Labour thing to buy votes from when they came to power 1997. Let's hope in your world even zirp is way too high - although they've been QE'ing for that reason too, in order to make borrowing cheaper and save those of VI high house price persuasion, of which there are many on this forum; who are so cosy in their VI, they would feel very differently if they had to experience a 10th of what it's like for younger renter/savers against these house prices. HTB schemes brought it because prices falling in Colne and places, err durrr. Quote Link to comment Share on other sites More sharing options...
StainlessSteelCat Posted August 25, 2014 Share Posted August 25, 2014 This is probably a result of my lack of inheritence (ahem), but why would intergenerational wealth be good? The cornerstone of any liberal democracy is the myth of being self made. That you can work, directly or via investment, to build up capital and subsequent wealth. The direct opposite of this is Feudalism, whereby wealth and power is handed down by birthright (whether or not this is done by divine right or by inheritance is semantics). Note I am not advocating stopping inheritance, but recognising getting Grandma's hard worked capital as a result of gentic luck. Nearly all established commercial civillisations have some sort of concept around death geld, where a proportion is given to the community or to the established state. That's enough pseduo intellectualism...I've found the Special Brew Probably for the same reasons I kind of agree. I'd estimate no access to inherited wealth (whether you directly, or via your parents etc) sets you back at least ten years on starting work with your peers. There's a much smaller, perhaps even non-existent, bank of mum and dad to tap into to start with. Plus you can take fewer risks, career breaks etc knowing that you won't be inheriting a handout at some point in the future. Spreading some of it around a bit after you've gone for common good would seem to be more equitable. Trouble is I don't know many who'd trust the government to spend it wisely. Plus it's clear given number of wealthy and powerful families which have been around since the norman conquest that it's not a rule which is likely to ever apply universally. Missus and I have agreed that the survivor inherits everything, and they then leave it to charity. But then we have no kids. Quote Link to comment Share on other sites More sharing options...
Guest Posted August 26, 2014 Share Posted August 26, 2014 This is probably a result of my lack of inheritence (ahem), but why would intergenerational wealth be good? The cornerstone of any liberal democracy is the myth of being self made. That you can work, directly or via investment, to build up capital and subsequent wealth. The direct opposite of this is Feudalism, whereby wealth and power is handed down by birthright (whether or not this is done by divine right or by inheritance is semantics). Exactly. You either have a meritocracy, where people succeed based on their own efforts, or feudalism, where people's station in life is decided by that of their parents. At the moment, due to the massive disconnect between house prices and wages, our society is swinging rapidly towards the latter. The only realistic way to gain housing wealth - which has become the only kind of wealth that matters - is to inherit it. So much for those of us without an inheritance or even a bank of mum and dad. We'll always be outbid by those who've inherited existing inflated equity, no matter how hard we work. Inheritance does nothing but ensure that inequality is further entrenched with each new generation. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted August 26, 2014 Share Posted August 26, 2014 That doesn't make any sense. Liquidity clearly isn't unlimited at all. Quite the opposite. We have 'austerity' which will last for (currently) around 10 years until/if the deficit is in balance ( for some pointless political objective), there's a complete DEARTH of investment. There's certainly ZERO malinvestment in housing. We're building at least 100,000 fewer houses p.a. than are needed to meet demand for housing. If there was malinvestment in housing we'd have millions of empty properties as they had in Spain. Money clearly isn't flowing around - money velocity is part of the problem. The inequality is a distribution issue rather than a liquidity issue and high house prices and low interest rates are a (largely) demographic and demand issue. It doesn't mean capitalism doesn't exist, simply that the real world as it is requires a lower real interest rate than it might hage done at some arbitrary point in the past. Such is the nature of nature. The Malinvestment is the continuance of payments of promises made by Government over the last 100 years. Index linked pensions, PFI, all manners of payments to be made in the future. Deficit spending IS inflation. And while there is a deficit, there can be, by any definition, no austerity...we are still spending beyond what we are earning. The Austerity of which you speak is the curtailment of new projects some fancy should go ahead, because current funds are going into old promises. There is no reason this should continue, Government is not bound by what a previous one promised...otherwise, any decision to continue on this path is purely a matter of democracy in action..more promises with less wealth to cover it. Quote Link to comment Share on other sites More sharing options...
gf3 Posted August 26, 2014 Share Posted August 26, 2014 I think it would be interesting if they got rid of inheritance tax and instead put a limit on how much you could inherit. This would mean cousins friends of the family could inherit and the money would be spread around more. Quote Link to comment Share on other sites More sharing options...
campervanman Posted August 26, 2014 Share Posted August 26, 2014 You could start with Mr&Mrs Windsor. Quote Link to comment Share on other sites More sharing options...
Limon Posted August 26, 2014 Share Posted August 26, 2014 Inheritance per se (at least from parents) is unlikely to play a major role in determining anyone's financial status - with modern life expectancies being what they are among socioeconomic groups with wealth to pass down, the average person is only likely to inherit when they're already well established, if not close to retirement age. The bigger deal is transfers of wealth from parents to children while the parents are alive. Quote Link to comment Share on other sites More sharing options...
rentbug Posted August 26, 2014 Share Posted August 26, 2014 You could start with Mr&Mrs Windsor. The Saxe-Coburg family pay tax to themselves Quote Link to comment Share on other sites More sharing options...
NewBrit Posted August 26, 2014 Share Posted August 26, 2014 It's only a problem because of artificially restricted access to land and planning permission. It's this that limits the options of the renters whether its tenants paying rent or "owners" paying the mortgage. Indeed, this is the biggest problem with housing in this country. For example there is only one building plot for sale in my county. Quote Link to comment Share on other sites More sharing options...
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