A human being may bequeath to progeny their money, their property, titles, debts and rights. But there is more to it than that, isn’t there? We humans also pass on our genes, our attitudes, our beliefs and our cultural traditions. Unlike property, this is not a single and direct transfer that takes place at death. It is a continuous two-way interaction that takes place throughout our lifetimes, and in some cases, continues after we are dead – but it is nevertheless a part of the inheritance passed on. Some people see this non-financial transfer as a definitive task or a familial or social obligation, and many people seek control of the entire process as as if it were their absolute right, akin to the Western tradition of private property. The desire to control the destiny of private property and non-property estate assets past the finishing-post of death is a very strong human trait. Yet there are greater issues that flow from this seemingly most personal of acts, issues that impact on the evolution and efficiency of society as a whole, and that is the subject of this post. Let’s start this thought-walk by dismissing out of hand any pretence at considering the precise rights and obligations imposed by laws or regulations. Quite simply, the issues to weigh are greater than the haphazard implementation of a handful of mildly disinterested law-makers, and the haphazard nature of such implementation results in demarcation disputes over just which relevant law or body of laws applies in each situation. So we will dismiss the exactitudes of this or that local, state or national rule-book, and consider instead just what is happening when the process of inheritance and hereditary transmission take place.
Hereditary right vs inheritance
A hereditary right is one granted through the virtue of birth. For those fortunate enough to be born in the ‘right’ family, and at the ‘right’ end of a family tree branch, there will be benefits, obligations, position and prestige provided by society simply because of that accident of birth. There have been exclusions and exceptions over the years, with some societies limiting inheritance to the eldest son or positing exceptions of one kind or another, such as the inability of lepers to inherit.
(see this link for an example of inability to inherit owing to leprosy). An inheritance, on the other hand, may be benefits, obligations, wealth, debt, prestige or denigration. You may inherit land, buildings, income, precious art/ metals/ objects or basic cash. You may in some circumstances even inherit a debt. Now this is an interesting one, and an area where laws set a rather illogical precedent. It is a basic principle of Western laws that children are not responsible for the debts of a dead person – in other words, your estate balances up assets against liabilities, and pays out the net amount to beneficiaries. If there is nothing left then there is no inheritance. If the sum of assets and liabilities is a negative – that is, the debts are greater than the assets – then beneficiaries are not asked to make up the difference. They may not get the family farm or the family home that they through they were entitled to but neither are they going to be asked to put their hand in their pocket, and stump up cash to balance the books of their parent’s estate. It’s like a one-way valve – you can make money but you cannot lose. We’ll come back to that little anomaly…
Back to the non-financial inheritance. Prestige may come in the form of a very much revered and ancient family name – with or without any associated property wealth. Bill Bryson covers this in his book At Home, in which he points out that wealthy US folk married impoverished British aristocracy at a rate of knots in the 19th century. The British aristocracy obtained capital in the form of cash, while the newly-wealthy of the United States obtained capital in the form of a historical lineage. And money was sufficient to grant more than just a financial inheritance. Bill Bryson goes on to talk about the Vanderbilt family, who “… at one time he personally controlled some 10 per cent of all the money in circulation in the United States.” Bryson then highlights the benefits of inheritance, in that “The Vanderbilts grew so powerful and spoiled that they could get away, literally, with murder. Reggie Vanderbilt, son of Cornelius and Alice Vanderbilt, was a notoriously reckless driver (as well as insolent, idle, stupid and without redeeming feature) who ran through or over pedestrians on five separate occasions in New York. Two of those he flung aside were killed; a third was crippled for life. He was never charged with any offense.”
In a similar yet negatively correlated way, denigration can be an inheritance in circumstances such as being born into a family with a much hated history, to the wrong caste or class in a rigidly class-structured society. Being born an ‘untouchable’ could hardly be considered a hereditary right but it quite definitely is an inheritance. Similarly, it is possible to be born into a family of immense wealth and prestige – but with an odorous past. Perhaps one of the ‘great families’ who have recently undergone this or that demotion or event of shame. In this case, there are hereditary rights but the inheritance is not completely positive. So, why does it matter to differentiate between an hereditary right and an inheritance? We’ll return to this one but first we need to revisit the issue of ‘ownership’, most broadly understood in the Western sense,as “private property”.
What do you actually own?
Private property is the over-riding lynch pin of Western economic thought. Private ownership rules and laws have changed and evolved over the millenia, with empires, royalty, aristocracy and various other “ocracies” finding their claim to all that is built, made, born and present slowly erode, as others became able to earn and retain their own assets and wealth. This evolution of ownership eventually reached the stage where all individuals are able to own something in their own name, safe from state, institutional or ‘right-of-might’ confiscation, robbery, damage, coercion, cheating and fraud. This right to individual ownership of property is seen as a fundamental step towards the modern world. The benefits of private ownership are not universally acknowledged. Proudhon’s “Property is theft” slogan has been a rallying call for the anarchist movement throughout the years – but any real-world examples of this philosophy in action have been unmitigated disasters, and so ownership of property continues to be the fulcrum on which Western nations operate. Ownership and ‘private property’ are seen by some as the only practical way of ensuring the efficient distributions of scarce resources. Private property ensures personal obligation, concern, care, and responsibility. It obviates the “tragedy of the commons”, and ensures that assets and property are efficiently managed. The idea behind this is covered in this article from the Concise Encyclopedia of Economics. The following excerpt is longer than usual but it does quite beautifully paint a picture of the point under discussion :
The rational explanation for such ruin was given more than 170 years ago. In 1832 William Forster Lloyd, a political economist at Oxford University, looking at the recurring devastation of common (i.e., not privately owned) pastures in England, asked: “Why are the cattle on a common so puny and stunted? Why is the common itself so bare-worn, and cropped so differently from the adjoining inclosures?” Lloyd’s answer assumed that each human exploiter of the common was guided by self-interest. At the point when the carrying capacity of the commons was fully reached, a herdsman might ask himself, “Should I add another animal to my herd?” Because the herdsman owned his animals, the gain of so doing would come solely to him. But the loss incurred by overloading the pasture would be “commonized” among all the herdsmen. Because the privatized gain would exceed his share of the commonized loss, a self-seeking herdsman would add another animal to his herd. And another. And reasoning in the same way, so would all the other herdsmen. Ultimately, the common property would be ruined.
The complete article is a worthwhile read. Just keep in mind that the site is on economics and liberty – so there is a clearly stated focus for individualism and hints of the Austrian school of economics. Climate change is a great example of the tragedy of the commons at work. Each country, company and individual can continue to degrade the atmosphere (and to all intents and purposes, the broader environment), as the benefits from doing so (in terms of standard of living and pure economic self-interest) are greater for them than the shared cost of the outcomes. The financial market equivalent is the ability of global level banks to take outlandish levels of risk and keep the reward, while stepping up to governments to share in the costs of any negative outcomes from those risks. “Privatising profits and socialising losses” is the phrase used post the 2007/08 Global Financial Crisis. Private property is a central plank in modern economies. Even developing countries such as China, with their gradual steps towards capitalism, are finding that private property is a tricky concept to play around with. This article from the venerable New York Times reports on villagers in Wukan who have barricaded the streets and marched to enforce their individual property rights.
And so we return to the point under discussion – private property and inheritance. There are many ways in which to view the seemingly simple process by which the assets and liabilities of an individual are passed to beneficiaries. When viewed in a narrow sense, it involves little more than the transfer of cash and the assigning of private property ownership rights under respective laws. When viewed in a wider sense, we begin to touch on less definitive processes and ideas and thoughts.
Is inheritance A SOcial “Good”?
Why is it that the possessions and chattel that you or i accumulate during our lifetime, can pass on to others? This chain of possession is taken for granted by Western nations but is it a useless legacy of times and needs past? A bit like the appendix, a rather pointless left-over that from time to time can cause a lot of trouble but the thing itself is of no redeeming benefit? What is the alternative or alternatives? Maybe a free-for-all in which locals and family fight it out for whatever remains, as soon as your passing breath is made? There is a very disturbing scene in the classic movie “Zorba the Greek”, in which a elderly woman’s – Madame Hortense’s – house is ransacked as soon as she dies.
It is reminiscent of the stories passed on to us about scenes surrounding the deaths of kings of the past – posts abandoned and royal bodies lost through the mad scramble to be a part of the new royal prerogative. Is this an appropriate way of dealing with death and the passing on of an inheritance? Logic and polite society would suggest that this is a recipe for conflict, disagreement, disappointment and instability. So we have rules that allow a person to decide before they die, how they would like their possessions dealt with when they die.
Is society better off for enforcing the distribution of material wealth wishes of a person who is no longer alive? Touchy subject but an interesting one to ponder.Touchy, because most people want to do “the best” for their children or grandchildren, favourite pet or institution, and therefore aim to accumulate and pass on, as much financial asset as they possibly can. Interesting, because the person/people/pet/institution who inherits these funds has done nothing of worth to earn the capital. They have simply been born into or been liked by, the “right” family. And this, dear friends, is just another form of aristocracy.
If one generation does nothing to earn their beneficial entitlement then what benefit is there to society in this person receiving the endowment? One argument is that the private property transcends generational divides and death, so inherited wealth is just another logical outcome rewarding those who are successful in a capitalist society. The next generation has seen the previous work hard to generate money, so they are likely to be well suited to managing the excess capital. Better pass the wealth on to an indolent progeny than to distribute to hordes of the lazy and unimaginative.
Inheritance and private property
Inheritance seems so straight-forward. However, there are quirks in the system. How about theft? What if the current generation accumulates significant wealth but does so in an unethical, immoral or simply criminal manner. If that generational member dies, how legitimate is the claim to assets of whoever was nominated in the unethical, immoral or simply criminal testator?
So many things to ponder on this issue. We’ll come back to it in a little while.