Relatedly, 60% of NBA Stars are bankrupt within 5 years after retirement:
http://sports.espn.go.com/espnmag/story?id=3469271
Filing for bankruptcy is a long-standing tradition
for NBA players, 60% of whom, according to the Toronto
Star, are broke five years after they retire.
So it's not completely true that wealth is an advantage that cannot be squandered. And in the US there was a saying that used to be more popular -- "from shirtsleeves to shirtsleeves in three generations".
But many more smaller figures of the Robber Baron age
made immense fortunes, took no care of them, were not
of a generous or philanthropic nature, handed the money
on as a life belt to their sons who then squandered it,
so much so that their sons returned to the shirtsleeves
in which grandfather had landed in the United States.
To the extent that the unusual combination of traits required to create enormous wealth is at all heritable, it is certainly imperfectly heritable. This is augmented by the fact that when you have large families, the wealth is divided among all children. So insofar as we think of income mobility as a good thing, it's actually abetted in part by highly imperfect heritability and large family size.
(Not driving at any particular point here, just some interesting links of relevance to thinking on income mobility).
I have a friend who worked for a "wealth management" firm here in Europe, and they had code names for all of their clients for privacy.
One of his clients asked for the code name "962" because that was the year the family had made their fortume. (!)
But as my friend told me, one of the main reasons they were able to keep the money in the family is that the vast majority of it passed to the eldest son, with other children getting only very little. It'd be interesting to know the relative entrepreneurial nature of kids that grow up wealthy, but don't get any real money.
Note that in more rigid societies in particular, wealth can be somewhat uncorrelated with status. Being the child of a notable family with a lot of connections can give one more opportunities, even if the family (or that branch of it) is not actually very well off.
Re sports players going broke, I think that's because they acquire a lifestyle proportionate to their income at an age when they're too young to understand that their lifetime income is front-loaded. For the first 5 or 10 years of their career, they only move up in value and income; they're not fully aware that they're going to fall off an income cliff, and they ought to be spending no more than 10 to 20% of what they earn on consumption.
(paraphrasing but) "There is nothing so easily parted as a fool and his money".
The NBA thing makes perfect sense to me. I see a lot of (god I hate the term but it has the meaning I want to convey) "Nouveau Riche" here in NZ who just blow it on the stupidest stuff. All that really shows is that there are two aspects to having money 1. Having the ability and freedom to make consumption decisions that were not available to you when you didn't have money. 2. the flipside of that is knowing how to keep it.
I think there's a lot of education and responsibility that comes with being wealthy and a lot of people who have been raised without money don't have the requisite knowledge and financial management skills to keep the new found fortune that they never expected to make that they suddenly find themselves in possession of.
TL;DR not only are the rich richer than us, they're better at being rich than we are - because they're already rich.
That's true enough, parent should have been more careful in word choice. But it doesn't change the fact that even the worst players get paid a significant amount of money and should be able to retire just fine, if they knew how to manage their money.
I was going to argue with this but after some research, NBA players really do get decent minimums. In other sports, you can be the last pro who managed to not get cut and only get $100k per year, which is nice but isn't "retire after five years of it" money either. In the NBA, the minimum salary for a rookie is still $490k and it goes up to $788k after one year. That really is "retire after five years of it" money.
http://news.bbc.co.uk/2/hi/programmes/letter_from_america/11...
To the extent that the unusual combination of traits required to create enormous wealth is at all heritable, it is certainly imperfectly heritable. This is augmented by the fact that when you have large families, the wealth is divided among all children. So insofar as we think of income mobility as a good thing, it's actually abetted in part by highly imperfect heritability and large family size.(Not driving at any particular point here, just some interesting links of relevance to thinking on income mobility).