lord and serf | on wealth and inheritance, freedom and meritocracy

Vinschgau, IT

It is worth thinking about the long-term effects of too lax inheritance taxation on a society, both on the levels of meritocracy and on the health of a democracy. You see, it only requires a few generations living in a period of relative peace and prosperity, such as the decades after WWII in Western democracies, for a large portion of the population to build up significant (inheritable) possessions. The dynamics of inheriting and increasing wealth all but accelerate over time (sky-rocketing real estate prices are an example), with those that are not blessed with such non-earned gifts finding it increasingly difficult to build up wealth. Putting it bluntly, half of society inherits and owns (without otherwise being necessarily rich), while the other half pays rent. For the few that possess and/or inherit fortunes, there is the additional issue of wealth and its potential to give more weight to the voice of some over others, thus undermining democratic principles.

So even the staunch liberal will at some point probably agree that it is in the interest of individual freedom and meritocracy to more strongly cap inheritance and wealth, while wealth creation could be taxed more lightly. 

Any chances of this becoming a reality? Very few. Sentimentality ("but it has been a family business for a century!") would have to be overcome, and since a large portion of the population inherits, they will be naturally against such suggestions. Thus, middle-class societies, such as post-war Germany, will become increasingly disparate, with large ownership and tenant classes and reduced permeability among them.