Oops: Turns Out Rich Families Actually Get Poorer
In Pictures: Thomas Piketty Hardest Hit
Based upon The Myth of Dynastic Wealth [PDF].
Everybody knows the tale: rich families stay rich forever, the money snowballs, and the rest of us get crushed under it. That’s what French economist Thomas Piketty, if that is his real name, stated as truth. He was celebrated for it. There’s just one problem: looking at the data, his assertion is bullsh**. Massive fortunes have a habit of vanishing, and the names at the top keep changing — and are self-made! This is the story of how that happens. You know all this, but I put it in pictures so your Aunt Susan and Cousin Karen can follow the plot.
“The Prophecy”
This is the big idea they pitched: once you have generational wealth, your kids and grandkids and great-great-grandkids will be rich for ever. So one economist points at his famous formula, r > g, like he’s preaching gospel. His idea: a giant snowball made of money rolls downhill, getting bigger and bigger, flattening regular working people in its path. A smug baby heir clutches a gold spoon in his crib, already set for life. The message is simple: the experts promised that rich families would keep growing richer forever, passing down fortunes that never shrink.
But is there really such a thing as a permanent dynasty?
What really happens with generational wealth?
What really happens to this kind of generational wealth? Grandpa builds a $120 million plumbing empire with two hands and a cigar back in 1962. Fast-forward, and his soft grandkids are blowing it all on yachts, vape shops, and bad habits. The IRS and the estate lawyers show up and divide the fortune into pieces, while cousins and ex-wives each grab a chunk. By the end, the stats are clear: 70% of the family fortune gone by the second generation and 90% gone by the third. The message is brutal and clear — money built by one person rarely survives the people who inherit it.
The Wealthiest Americans Are Self-Made
Truth is that the Forbes 400 is a revolving door. In the center, a giant cosmic washing machine of capitalism churns away — old faded fortunes swirl down the drain while fresh new wealth bubbles up to the top. At the bottom, the “economist” learns: yes, some people are rich and some are poor, but the same families don’t stay on top forever. The wheel keeps turning. Life finds a way.
It’s like Jurassic Park at a higher level. Capitalism finds a way.
It turns out that capitalism is a form of evolution.
Maybe a scientist will discover why Democrats hate evolution so much someday.
Based upon The Myth of Dynastic Wealth [PDF].
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I know this for a fact. Grew up in Scarsdale, the granddaughter of a wealthy investor. Grandpa’s smarts didn’t go far in my family as mom and dad were drinkers and spenders, and though I had a great childhood and private schools, I worked for everything I have, no generational wealth. Some of My classmates in uber private girls school were the same story-daddy built a fortune, children spent it. The smarts skipped town with the dough.