Header Ads

The morality of passing on wealth

Is it right that the rich should be able to pass on their wealth?

These are one of the big questions that I ask myself. Can it be fair that some people get a huge advantage in life when it comes to inheritance? Children of rich children can inherit large amounts perpetuating unfairness in society, whereas those who from a lineage of poorer people will continue to start from behind.

However there are several popular examples of wealthy people giving away their fortune rather than passing it all onto their families. Famous philanthropists include Bill Gates, Mark Zuckerberg, and Warren Buffett, all three of which have committed to giving away circa 99% of their wealth.

Buffett has often talked about winning the ovarian lottery. He was born in the right era, to the right parents, in the right place, at the right time, he was a white male. He attributes much of his success to these exogenous factors.

Personally, I believe that he is being a little too humble. Much of his success comes down to his aptitude for capital management. However, he makes a good point that people shouldn't attribute all of their success exclusively to themselves.

It is in that philosophy that Buffett determined that whilst he has and will provide a decent start for his children, allowing them to set up their own charities and funds, he does not believe that they should win the game of life simply by being fortunate enough to be his children. Buffett is removing some of the benefits of winning the ovarian lottery, although not all.

But haven't you earned the right to pass on your wealth?


Much of the above focuses on the rights of the children of wealthy people. It looks at their needs and their entitlement to inherit wealth. But what of the need and rights of those who earned the money in the first place?

Many people work hard in order to provide for themselves and for their families. Once you have all that you need you might start to consider the needs of your children or future children, or your wider family. If you have worked hard in order to provide your children with a better start in life than the one that you had, surely that is your right to do so?

Whilst it is polite to argue the unfairness of those people who get a boost in life from a big inheritance versus those who don't, it is also reasonable to point out the unfairness of not allowing those who've worked hard all their lives to determine whom they should help.

Redistribution of wealth at each generation


There is an argument for recommending that wealth shouldn't be passed on to children and should instead be passed onto charities or into a central pot for redistribution. This would put everyone within a generation on a level playing field. No one would have any more of a head start than anyone else.

There are several issues with this argument. Firstly, monetary advantage isn't the only unfair start that some children have over others. Intellect is another example. Some children are simply more intelligent than others. 

We accept that some children have a greater earnings capacity and capability than others. Why is it that as a society we can accept this type of unfairness but not the monetary kind. Perhaps it is related to the fact that we cannot make our children less intelligent. Nor would we want to, yet we would with wealth...?

Secondly an redistribution could damage incentives of those looking to create something great in the world. Let's assume that a businesswoman has created a brilliant product that brings joy to millions of consumers. She has made millions as a result. Where is her incentive to continue to grow this company and create new and beneficial products when she knows that this will all be taken away by an unknown third party?

Finally, let's take a more reasoned stance and assume that only a portion of wealth should be  mandated to be assigned to charity. You then have the problem of which charity. In the same way that it isn't fair that some children get an unfair advantage over other children, similarly is it fair that some charities get more funds than others? 

Think the answer is yes - then perhaps you should answer why for example cancer research should be entitled to any more funds than social care. 

Unfairness is inherent in a capitalist system. Whilst it may feel unreasonable, unfairness isn't necessarily a bad thing.

No comments