Piketty on the power of inherited wealth

In Balzac’s story Pere Goriot, set in the early 1800s, the struggling law student Rastignac lives in the same boarding house as the master criminal Vautrin and the impoverished former millionaire Goriot.   Vautrin explains to Rastignac the odds against his ever achieving success sufficient to earn a life with dignity, and advises him to woo and wed a rich heiress instead.

In the charts above and below, Thomas Piketty, in his book Capital in the Twenty-First Century, showed the gap in those days between inherited wealth and wealth achieved through one’s own efforts.   He didn’t have comparable data for the United States, and doesn’t think the flow of inherited wealth was as great in the USA.

That gap has narrowed, Piketty warned that there is nothing to prevent those days from returning.  A Sam Walton may build a retail empire through his own efforts, but all his children and grand-children have to do in order to be rich is simply to mess up.  His research indicates that great wealth compounds faster than moderate wealth, because the ultra-rich can diversify their investments and call upon the best expert advice.

LINKS

Inequality & Capital in the Long-Run by Thomas Piketty

Capital in the Twenty-First Century: Introduction by Thomas Piketty

The Dead Are Wealthier Than the Living by Timothy Noah for Pacific Standard

Taking on the Heiristocracy by Kathleen Geier for The Washington Monthly

Why the rich will probably get richer, my synopsis of Piketty’s book.

Tags: Balzac, Capital, Capital in the Twenty-First Century, Distribution of Wealth, Economic inequality, Inherited Wealth, Thomas Piketty, Wealth, Wealth Inequality