I'm interested in how shrinking populations may impact generational wealth.
In past generations, where it was common for a successful person to have six, seven, or eight heirs, even a large inheritance was quickly dissipated over a few generations.
In a shrinking population, the opposite is true. A single child often inherits the wealth of two working adults. And childless couples will commonly leave anything remaining to a niece or nephew. This could have a consolidating effect on wealth distribution.
Most aristocracies practiced primogeniture to prevent this sort of dilution - the entire estate was inherited by the eldest son. America intentionally abolished primogeniture, precisely to prevent the perpetuation of the aristocracy or the creation of a new one.
This is a bit confusing to read, but I think what you mean is that America abolished the way to enforce primogeniture on your descendants? But you could still have a custom where each generation voluntarily wills their estate to a single child.
That is indeed the case, you can fully legally do anything you wish with your assets in death, including giving it to one child (or pet). Granted, it's also not unusual for lawsuits to fly if you leave everything to one child rather than spreading it out. That happens from time to time with the super wealthy in cases of feuding.
In the US it became custom to more or less equally distribute assets in death to all of the children, rather than concentrating it to one controlling heir. That's still the overwhelmingly common custom to this day.
For example with homes, when grandparents died in the 80s/90s a home was sold at a modest value and split among 3-5 heirs. Which amounted to very little per family after taxes.
Nowadays you have millennials set to inherit homes that are overvalued in the $1MM+ range and split among 1-2 heirs. Which can be a life changing sum of money. I personally know of people who feel little pressure in their lives because they know they stand to inherit a $1.5MM home plus whatever else their parents have at some point in their life.
I doubt there is a significant portion of Americans with parents who have $1M+ mortgage-free houses. Maybe a few in CA and the other hotspots in the west and around DC, but most people are not set to make any life changing amounts of money from their parents dying.
You might be surprised at the scale of it. Tens of millions of Americans are going to get an immense wealth transfer in the coming decades.
There are currently around 11 to 13 million millionaire households (excluding primary residence value) in the US.
Credit Suisse claimed in 2015 that there were 15.7 million individual millionaires in the US, so perhaps that figure is approaching 18 to 20 million today. Per that report, the US had about ~47% of all the world's millionaires (since that was 2015, China has no doubt climbed further). In that report, they listed that nearly half of all people on earth worth more than $50m were in the US (around ~60,000 in the US, plausibly quite higher now).
There are 1.35 million households worth between $5m and $25m. And 172,000 households worth over $25m.
The stock market move in 2017 alone added 700,000 new millionaires for example.
The US has about five to six million high net worth individuals, that control at least $20 trillion in wealth.
Tens of millions of Americans are going to get an immense wealth transfer in the coming decades.
You're right, but not in the way you think. It won't be the children of those old people who get the money; it'll be the people who provide services for the elderly. People are living much longer and they often don't have pension provision that scales well, so as they get older they have to rely on selling assets to pay for things like healthcare.
It doesn't have to be a significant portion...just a visible one. Think of all the people who work in tech or other high paying professions and own places in NYC, Boston, SF, etc. A lot of them don't have kids, or have at most 1, maybe 2. These are homes that the kids may want to keep rather than sell, locking the "wealth" within a family.
I'm about to give up, and let history repeat itself.
Yes--if an child inherits a house, they can inherit the property tax their parents paid, if they fill out the paperwork within 120 days-- I believe. Multiple children usually inherit the family home, with the eventual angry sale. The home goes back on the market, and full property taxes are paid.
Most kids aren't inheriting mansions. The're usually track houses in need of repairs. Most of the kids had blue collar parents, and never thought their bungalow would be worth a million dollars.
It's really getting old. If the younger set had any idea how politicians wasted that Prop 13 money; we wouldn't be blaming our current problems on Prop 13.
Blame your boss who who just has to live in the best neighborhood, with the best climate.
I guarantee if Prop 13 was repealed REITS, rich foreigners, and Zuckerburg types would swoop in and buy up most of the stock, and rent it back to employees.
Person who didn't see their dad crying at the dinner table, "But at least we would have more tax money?". Look at how your county spends your property taxes now; Not so good?
> I personally know of people who feel little pressure in their lives because they know they stand to inherit a $1.5MM home plus whatever else their parents have at some point in their life.
Unless said parent(s) get clever with reverse mortgaging, and spend all the cash on travel or whatever ;)
Or they give it to charity to spite thier kids. There is no reason to assume that elderly people plan on giving anything to thier children. The days of that societal norm are long over.
Grossly generalizing a whole generation, but chances are, those Baby Boomer parents were in debt up past their eyeballs, and that $1.5MM home is going to get sold along with all their other assets in order to square everything up. This generation may be having fewer kids, but it's going to be leaving fewer net assets behind.
I gotta say that one of my goals in life is to maximize my debt at death :) It's a delicate thing, of course, because dying with no cash or credit would suck. But hey.
Be very careful. Elderly without children to check in on them are seen as ATM's.
Extract as much money as possible and don't care about the person. Drug them so they don't complain, and schedule as many medical procedures as possible. Use providers that give you kickbacks, and charge very high rates for things like haircuts, or even drug delivery (why buy in advance, when you can deliver, and charge for it, that same day).
All this changes when they have children who check in on them, ideally every day.
> because dying with no cash or credit would suck.
That all depends on if you retained your mental faculties until the end.
If yes, you are going to want lots of cash! You will need to pay someone to do so many things you used to do yourself.
If no, then any remaining cash will rapidly be taken from you anyway, so there's no point in holding on to it.
My advice? Have children and love them. You will be much happier as an elderly person if you do that.
Here in the UK, medical care is free at the point of use. Prescription medicines are free to to anyone over 60, including delivery if needed. Residential care homes are not automatically free, but your costs will be fully paid by the local authority if you lack the income and capital to pay the fees yourself. All care homes are regulated by the Care Quality Commission.
If you lose the capacity to make your own decisions and have not granted someone lasting power of attorney, the Court of Protection may appoint a deputy to supervise your affairs. If you have no suitable friend or relative to act in this role, a panel deputy will be chosen; these deputies must be approved by the Office of the Public Guardian. All deputies must file an annual report with the OPG, listing and justifying every financial decision they make. If these decisions are not in the best interests of the individual, the deputy can be removed or criminally prosecuted.
I'm not saying that elder abuse is non-existent in the UK, but a lot of the issues you mention are failures of government rather than facts of life.
You seem to be arguing that a) old age in the US is a horrifying nightmare of financial exploitation and b) everything about the US system is fine and dandy. Which is it? Is financial exploitation of the elderly by legal guardians a relatively rare occurrence that public bodies are doing an effective job of preventing, or are there grievous systemic failings in the US health, social care and legal systems?
Yes. I have also worked as a welfare advisor, with direct involvement in cases involving issues of mental capacity, legal guardianship and residential care.
>It's not any different.
Clearly it is very different. There's no financial incentive here for over-treating elderly patients - NHS trusts are not paid per treatment. If a doctor or hospital chooses to administer unnecessary treatment, they have less money in their budget and their performance targets are negatively impacted. A service provider cannot arbitrarily rack up fees, because that's not how we fund health or social care.
In many states in the US, a completely unvetted person can apply for guardianship of someone they have never met. In many states, there is effectively no oversight of legal guardianship due to a lack of funding. In many states, guardianship is administered by local courts with no specific expertise.
I did. On the first page of results I found some tabloid news articles, a Scientology front group and an NHS summary of the research paper they were all citing. The paper concluded that, while neuroleptic drugs are prescribed more frequently in care homes than in community prescribing, it is not clear whether that is due to inappropriate prescribing or selection bias.
I am not arguing that the UK is a utopia, but I cannot reconcile "Elderly without children to check in on them are seen as ATM's" and "Extract as much money as possible and don't care about the person" with my knowledge and experience of elderly care in the UK. Parts of our system are chronically under-funded, we have unreasonably long waiting times for many services, there's a shortage of care workers, but I've seen nothing to suggest that elderly people are being used as cash cows.
You have a point, to an extent. Coverage and welfare state benefit programs have continued to move considerably higher however. The US is now at the OECD middle on its welfare state spending as a percentage of GDP.
Half of Americans receive coverage via the government in some form. 70 million Americans are on Medicaid & CHIP (~22% of the population). Then you have Medicare, VA, SS disability, numerous state & smaller federal programs, and then partial subsidies via the ACA.
If you make minimum wage in the US, you're going to qualify for free healthcare in nearly all states via Medicaid. Via the ACA, the cost with subsidization when you're a little bit higher economically still comes out to tens of dollars per month (which is not a terrible price given how expensive healthcare is in the US, although the coverage is still not what it should be).
The bottom 25% is mostly able to get free or cheap healthcare. The next 25% bracket gets frequently royally screwed, they're stuck in a bad spot and often bounce in and out of having coverage. The top ~50% are covered by their employers commonly.
But I'm not the trusting sort. I have guns, and I know how to use them. And I'm planning to kill myself before I lose it completely. I have a cache of morphine and phenobarbitol. So maybe I'll die alone, but with luck, not exploited.
> And I'm planning to kill myself before I lose it completely.
This is a common plan, but it doesn't work. When that moment arrives when you would want to, you no longer have the mental faculties to do it.
Before then, you'll be feeling like everything is going just fine, so why end it?
Assisted suicide or DNR's don't really work without family members to enforce them. Medical providers are incentivized to keep you alive: Both morally and financially (you can chose which counts for more depending on how cynical you are, but either way the two motives are in sync).
But re medical providers, why would they keep me alive if there's no money left? It's a pretty good bet that even AmEx would start declining charges, at some point.
It's for people who are destitute. They insist you spend all your own money first, and then you are covered fully for everything, with a small monthly allowance from social security.
Providers are happy to help you spend all your own money, and then be fully covered.
That reminds me of something Old Bill Burroughs wrote about in his last trilogy. But then, he had some outlandish fantasies about reincarnation through simultaneous suicide and conception. Or asexual spiritual materialization. So it was best to die in prime health.
I thought ppl sold their homes at around the age where they can no longer clean and walk stairs, and spent the lot travelling or just paying for living in some home for the elderly. At least that's what my parents did :D
And with people living longer, much of this wealth won't be just parent to child but also grandparents to grandchildren in roughly a 1:1 ratio. 4 grandparents wealth going to 4 grandkids
Potentially a very low floor. If villages far away from major population centers die out, people may still want to immigrate, but those people may not be wealthy or willing to pay a decent sum.
In Japan anyway, unless the deceased left a will, the assets are split between spouse, children, then other living relatives (in that order)[0].
If the estate is valuable (ie. a large land plot in Tokyo bought before the boom years), the heirs often can't afford to pay the hefty inheritance tax and thus the property is sold and then subdivided.
Even with a very fast rate of halving the population every generation, to effectively consolidate wealth then each generation has to not even spend most of the money they inherit. You need pretty huge amounts before that starts to happen, so the consolidation effect would be limited to a very small porion of the population. Are the set-for-life rich's birthrates even following the same trend?
Japan's second-hand boom is not caused by a sudden spiritual uplift to not be mottainai, but by 20-30 years of economic stagnation and a growing underclass of poorly paid temp workers who can't afford anything else.
That's without question a big part of the story. In 30 years they've gone from having a higher GDP per capita than the US, to being in a position where they have to increase it by ~57% to catch up. It's roughly where it was in 1993 in USD terms, before adjusting for inflation.
The US is well known for having a high output economy. It took the US until 2005 to catch up to where Japan's GDP was at in 1995 per capita (~$43,000). Or to lend another perspective, their GDP per capita in 1995 was about 40% higher than Germany, and now it's below Germany.
It would probably be fair to say they've seen a real loss of at least 1/3 of their standard of living in a quarter century. It was artificially inflated from the asset bubbles they had in the late 1980s and early 1990s, however that's still a painful drop and a long stretch of time to stagnate.
They went through truly massive public works spending that entirely failed to spark big economic productivity gains or greater output. A savings rate that dropped to nearly zero. A public debt so high it's 2x that of the US as a percentage of GDP. Debasing the Yen became their only means to try to escape the towering debt, once the population could no longer afford to lend the government any more money (as the savings rate plunged). With the Yen debasement went their extraordinary standard of living. The challenging part, is that they're nowhere near done needing to debase the Yen, they still can't afford their debt at all.
As part of their magic central bank economy solution, the BOJ has even taken to juicing the stock market directly by slowly nationalizing it (buying up nearly 4% of the market directly).
The beat feeling I had helping clean up after my mother in law's death,was the sense of enganegmeny and gratitude for good usable things in the op-shops. They said they don't appreciate the trash dumping but when stuff is generally usable and given in good faith, they love it as much as I did. It's a huge release of burdens to take somebody 's stuff and pass it on.
> More seriously, she worries that low-cost Chinese-manufactured goods are starting to offer real competition to secondhand goods in developing markets.
And this is what I worry too. Not just in developing markets, but everywhere. I buy a very large amount of used tools and electronics, but recently new tools and electronics have gotten so cheap it usually makes much more sense to buy new.
You can get a slightly older phone used for about $200 or so, but there are plenty of great brand new options around $200 as well. You can get someone's old angle grinder used for $10, but you can buy a new one with a warranty for $14.
I personally don't care about scratches or heavy visual damage on my stuff, so buying used usually makes sense for me. But nobody wants to sell their old stuff for as cheap as Chinese new products these days. Even if they do, the Chinese stuff comes with a warranty and a promise of support and refunds.
That's what worries me: at some point, manufacturing new stuff just gets so cheap that it outweighs buying used even for the most hardcore thrift shopper like me. I recently bought a nice looking pocketknife with a pretty wood handle for $3.49; in a thrift store you'd see a used one for maybe $10. I recently got a used angle grinder for $10, but it broke, leaving me wishing I had bought a new one from a local store for $14 (including disks and a 2-year warranty!)
The worst thing is that because of lower-quality manufacturing for decades, many used things have very little inherent value. When every particleboard table cost $25, a used one was worth maybe $7. But now that you can get a new particleboard table for $5, the same used one is worthless. The same goes for a billion other things, from calculators to drills to speakers. In the past, when cheap new things weren't available, the used low- and mid- quality versions of those things held value. Now, anything that's not high quality does not hold value. When you can buy a used calculator for $3 or a brand new one with a warranty for $4, nearly everyone will pick the new one.
TLDR: When cheap Chinese products are available, used low & mid quality products become worthless and only used high quality products hold value. This will cause enormous amounts of unnecessary waste to be produced.
That $50 angle grinder was also a $5-10 chinese one (unless it's from the 60's when stuff was made elsewhere), there was just more middle men and more markup. The internet just placed you 1-2 steps away from the chinese factory, whereas the hardware store in the 90's was maybe 6 steps away from the factory. It's a disappearing problem: soon the used ones will also those $14 angle grinders, so you can get a used one for $4 or a new one for $14.
It's hard to buy anything new today and expect it to last more than 5 years. This includes cars, tools, appliances, all kinds of electronics, furniture. You have to buy old if you want long term reliability. My rough rule of thumb is: If it was made before 1980 (maybe before 1990), it will probably last as long as you need it. If it was made after that, expect it to break.
Plenty of manufacturers give a 7 year warranty for new cars. In addition, there's no sign that new cars depreciate faster than older cars (when comparing current depreciation for historic depreciation). In markets where cars are driven for many, many years and kilometers (e.g. Finland), there's no evidence that new cars shouldn't be expected to last more than 5 years.
Seven years is not a long time for a car. My family's last car was kept for almost 30 years. My aunt has never bought more than one car in her entire life -- a toyota camry. Man, if you toss out your car after seven years, you will end up buying almost seven cars(!!!) in your lifetime. That's insane.
I think the key point you left out is Finland. Long drives, harsh winters, and corrosive salt do a number on cars. 5 years is a long time for a Finnish commuter. It's not very long if you typically use it for Sunday family trips to the ice cream shop in Southern California, however.
I really wonder with angle grinders, for example, how many are bought to do a one-off job and then set on a shelf for 20 years, versus being used daily until they break. Maybe Harbor Freight is just selling something appropriate for it's real customer base.
While this is applicable to a lot of things such as appliances and cheap furniture, I wouldn't apply it so broadly as a rule. Plus, many new things just haven't been around long enough to tell. 5 years is absurdly short for a car, most seem to last between 15 and 30. I have several working computers, cell phones, and game consoles between 5 and 20 years old.
The trend of making computers and phones nigh-unrepairable glass sandwiches is awful though, as soon as the battery or other major component is toast the device is practically worthless. It's infuriating how far backwards we've gone in that aspect.
Really depends on the manufacturer and target market. A 10 year old car Honda Civic for example is still cheap to maintain.
Generally if you are willing to pay 80’s prices inflation adjusted you can still get high quality appliances you just end up with the washing machine Apartment complexes use etc.
It might be grim but I wonder if you could setup a system where people bid on the contents of a home..... digging through a stranger's things could be an interesting, even if morbid thing.
I've helped clean out a few homes. All but one had housed relatives, and that was OK. Sad but also nostalgic.
But when we bought a house with contents, sold by the estate, that was just plain grim. They had no children, and a distant relative had inherited. They first held an estate sale, for the most valuable stuff. And we got the rest. With price tags :(
But damn. Clothes. Personal papers. Photos. Home movies. It was overwhelming. But much of that, I admit, was projection. In that I have no children, either ;)
Actually, I burned it all. This was a rural property. So I just went old-school, with a large steel drum, with holes punched around the bottom. And then buried the ashes. We did a little ceremony.
I did keep some stuff. That old pair of scissors that I've mentioned. Some antique tools.
I don't understand these things. I've gone to a few estate sales thinking maybe I can get some cool stuff for a decent price. But no, every one I've gone to they were asking insane prices for everything.
Usually they expect you to negotiate and these are 3-day events over the weekend, where every subsequent day there are sharp discounts applied for anything unsold previous day.
It’s s shame so few things hold enough value to be considered for the second hand market, which is mostly the philipinnes.
Evenso, the cost of landfills makes some things worth recycling.
It’s also telling that Ikea (furniture) is held in such low esteem from a second hand market, that there is no market for it. That highlights to me that Ikea is detrimental to the environment since it means these thjngs end up in the dump.
On a side note, at least that apartment had very poor natural lighting coming in.
I think Ikea is great! It is engineered to last exactly as long as most people want for cheaply made furniture. I think you overestimate the market for second-hand, used furniture in old styles. I can't count the amount of well-made furniture that goes unsold in consignment stores and estate sales. Simply because it is well-made doesn't mean that people desire it.
In addition to being extremely contemporary, which contributes to not fitting into future trends, Ikea is made of cheap synthetic materials with the aid of lots of chemicals.
Classical furniture can last longer can fit in a variety of design languages and in the least the component materials can be recycled. For example well made mid century modern furniture can be in heavy demand. Moreover, antique furniture stores offer good furniture, if at times, at unaffordable prices.
That said, maybe Ikeas product is no more environmentally impactful than traditional furniture.
>In addition to being extremely contemporary, which contributes to not fitting into future trends
We hardly have any such trends anymore. It's the post-modern era, which unlike past design eras can potentially forever (since it's all about having immediate access to styles and information from every other era).
Most of what IKEA sells wouldn't look out of place in a 1930 modernist design shop for example, and still here it is 80+ years later.
Yes, the hassle of storing and moving (or disposing) often exceeds its value. I had a good experience donating my old furniture to a charity that supplies impoverished or recently-homeless people.
What do you mean by “On a side note, at least that apartment had very poor natural lighting coming in?”
Do you mean that “at least one apartment in Japan has poor light” or do you mean “the article/the person’s life/something else was bad but on the other hand it’s good that the apartment had poor light”
> It’s also telling that Ikea (furniture) is held in such low esteem from a second hand market, that there is no market for it.
Huh? I never had problems selling Ikea stuff second-hand. Just last week, I gave away a Lack side table via Ebay Kleinanzeigen (Ebay Classifieds, known as Kijiji internationally). Multiple people were interested in it.
The environmental cost of Ikea furniture is probably mostly the transports. It's mostly wood, so as long as it ends up where it should (i.e. in the wood bin, not a landfill) it should be ok.
This reminded me of a thought I had the other day. I was watching a documentary with a terminally ill person and they had a small set of plastic drawers on their dresser. It was ghastly. Then I realised just how much more plastic is going to end up in landfill in coming decades.
People used to have wooden furniture that got passed down for generations. Now if someone dies everything they own that's made of plastic will be dumped. None of it has any value. There must be so much plastic accumulated in the homes of living people. It's scary.
In past generations, where it was common for a successful person to have six, seven, or eight heirs, even a large inheritance was quickly dissipated over a few generations.
In a shrinking population, the opposite is true. A single child often inherits the wealth of two working adults. And childless couples will commonly leave anything remaining to a niece or nephew. This could have a consolidating effect on wealth distribution.