"The first generation makes it, the second generation spends it, and the third generation blows it."
Digression:
Interestingly, this adage about hereditary rule is one of the loan phrases brought back after the First and Second Anglo-Afghan wars. Primarily these were from the language of the ruling Pathans (as we would call them Pashtuns.)
The original Pashto, more literally translated:
"The grandfather was born in a tent. He remembers living in a tent. He will lead the people well.
The father was born in a tent. He remembers both living in a tent, and living in a palace. He will lead the people well.
The son was born in a palace. He has never lived in a tent. He will not lead the people at all."
There are several of these Afghan sayings, from both the Pashtunwali and folk-wisdom, that the British officers brought back home. The most well-known of these most don't realize is an Pashto loan phrase at all:
That doesn't necessarily contradict the proverb. It's saying that somebody who starts out poor and then rises is still likely to have descendants who are poor. That is actually a statement that social classes are sticky.
Gloria Vanderbilt has an estimated $200 million, so I wouldn't say the Vanderbilts lost it all. Rather than 3 generations shirtsleeves to shirtsleeves, it's more like 5 generations from America's richest to merely very rich.
Alfred Vanderbilt was less fortunate. He decided not to take the Titanic at the last minute, but 3 years later was on the Lusitania when it was torpedoed. Despite not knowing how to swim, he gave his life jacket to a young mother and died. (This is an interesting counterpoint to yesterday's article "Does power really corrupt" about how the rich are less caring.)
Alternatively, 7 centuries without new lasting wealth / dynasty's. Clearly, some groups understand how to maintain wealth, but for most newly wealthy it's easy come easy go.
On that time scale, I'm guessing IQ differences would come into play.
I'd be fascinated if they did a study on whether noble lineage predicts intellectual performance.
As a piece of side-data, Jews have, for many centuries, been above-average in wealth, and it's well-understood now that they're also above average in IQ. They've also long been discriminated against and sometimes massacred. Even in Nazi Germany, where Jews were openly hated, they remained wealthy. Even after WW2, when their families had been butchered and their homes destroyed and their things stolen, they quickly became wealthy again within a few decades.
In this case, it seems the Jewish IQ advantage consistently weighs more in their favor than their social disadvantages weight against them.
It's mostly a culture of investing in education for their children and working both smart and hard in business. Plus, there were tons of piss-poor jews in the US and elsewhere and tons still are.
It's quite a stretch to know that one group has a higher average IQ (by ~10 points) and yet still insist that there is some other explanation for why they are economically successful in every society.
I mean seriously. Question is there: Why are Jews wealthy? Answer is there: 110IQ. These are obviously the fixed cause and effect; everything else (e.g. culture of intellectual achievement) is just the fuzzy link between them.
>* It's quite a stretch to know that one group has a higher average IQ (by ~10 points) and yet still insist that there is some other explanation for why they are economically successful in every society.*
Actually, you probably just confuse cause and effect. Why do the jews have higher IQs? Answer: because they are wealthy, so their offspring have had the benefit of better nutrition, better early care, etc, and better selection of healthy and intelligent prospective partners. Tons of hereditary and environmental factors come into play just by being wealthy.
Not to mention that not all -- or even the majority-- of jews are wealthy, nor are all successful. These claims are mostly the province of stereotype, not to say racism.
I sincerely doubt that it's genetic. There just simply wasn't enough population isolation to generate that level of genetic variation over the timescale involved (even a couple kiloyears isn't that long in evolutionary terms.)
In the early twentieth century, the world also marveled at Jewish athletes. That isn't exactly the stereotype anymore.
If you perform even a casual examination of
Ashkenazi Jewish culture in the United States (if such a monolithic group could be said to exist), you'd see a few fairly common elements: bilingual study from an early age, a strong focus on education as the path to wealth, strong family ties creating a social safety net, kin-group contributions both tangible and intangible, and among the wealthy, all the factors that go along with having wealthy parents.
Wealth confers a bevy of physical advantage: early childhood nutrition, sanitary living conditions, and a stable family environment all come to mind.
Finally wealth conveys a package of invisible advantages: better parenting strategies, more parental involvement, intellectual confidence, social belonging, really an entirely different series of mental models for understanding and navigating the world.
People underestimate exactly how much parents' shape their children's destiny. Data from admissions programs, studied during ththe affirmative action and legacy admissions arguments, demonstrates the single most powerful predictor of a student's likelihood of finishing undergraduate education isn't GPA, SAT, or high school institution; it's the level of education completed by their parents.
The point is that it is very difficult to disentangle the effects of any combination of wealth, genetics, epigenetics, and a particular culture, especially compounded over generations.
No, the study shows that similar families are rich today as back then. It does not say what happened in between. It could well be that these families lost and regain their fortunes multiple times.
Strictly speaking, the aphorism relates to the nouveau-riche. Old money may have other aspects of social entrenchment to wealth, which is only disrupted by major social disasters like World War I or the Black Plague.
Life is more complicated then Keynes at places.
SARDAR title is bestowed after 5 generations for example in PUNJAB regarldess of what 3 of them did with their money.
It's really not some crazy idea. I'm sure you've heard
"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,"
And this precisely defines the reason for the existence of institutions, which can continue the execution of a set of values longer than a single lifespan of a human. A well designed institution can continue to amass wealth and power throughout its multi-generational existence.
I'm fascinated by this topic. How do the legacy-type families do it? I'm talking your Kennedies, your Bushes, etc. Preserving wealth and power for generations?
"Joseph P. Kennedy’s choice to place his fortune in trusts is possibly the single most critical reason why the family wealth is still around today. The most obvious benefit was to protect the fortune from the prying fingers of ne’er-do-well heirs, said Laurence Leamer, who wrote three Kennedy biographies. Trusts often prevent beneficiaries from tapping more than 10 percent of principal, said Rick Kruse, principal at Kruse and Crawford, which offers estate management advice.
The trusts also protect the family assets from another set of prying fingers: Uncle Sam’s. By holding assets in so called “dynasty trusts,” which are passed from heir to heir for decades, if not longer, the Kennedy family fortune is largely insulated from the estate tax, Kruse said. Handled correctly, a dynasty trust could potentially maintain an un-taxable fortune indefinitely. The oldest Kennedy trust on record dates back to 1936."
The same way "legacy type" universities, or "legacy type" companies do it. An institution is a set of processes, governing rules, and feedback mechanisms which serve to reinforce the core mission. Individual (fallible) control is ceded to the rules and processes in exchange for ensured existence.
Harvard University is a good example of a durable institution, look at how its bylaws and processes protect its mission, but more importantly how its feedback mechanisms try to identify and purge potential threats to the institution. In a lot of ways it is similar to programming, only with people who can be modeled as unreliable computers which don't always follow their instructions. So you need interconnected missions of individuals to support the institution's mission. At some point if you have enough individuals who are off script the institution will fail, but with clever process and incentive one can minimize that risk.
Digression:
Interestingly, this adage about hereditary rule is one of the loan phrases brought back after the First and Second Anglo-Afghan wars. Primarily these were from the language of the ruling Pathans (as we would call them Pashtuns.)
The original Pashto, more literally translated:
"The grandfather was born in a tent. He remembers living in a tent. He will lead the people well.
The father was born in a tent. He remembers both living in a tent, and living in a palace. He will lead the people well.
The son was born in a palace. He has never lived in a tent. He will not lead the people at all."
There are several of these Afghan sayings, from both the Pashtunwali and folk-wisdom, that the British officers brought back home. The most well-known of these most don't realize is an Pashto loan phrase at all:
"Revenge is a dish best served cold."