Inheritance is mostly overrated as a reason for wealth

Inherited money seldom lasts long

Perhaps more than ever before, people claim that almost the only way to join the ranks of the rich is through inheritance. Apparently, in the good old days, it was still possible build a fortune from the ground up—but not anymore. Such claims discourage people who have set themselves the goal of becoming wealthy as entrepreneurs or investors. The message, whether explicit or unspoken, is as clear as it is sad: “Don’t even bother trying—those days are long gone.” There are even so-called classism researchers who criticise the media for reporting on people who have ascended from humble beginnings to become rich. Such articles, the researchers claim, only perpetuate a false illusion that capitalism, in reality, can never live up to.

67% of The Forbes 400 Are Self-Made

Forbes has proved that this is simply not the case. In fact, the opposite is true: In 1984, less than half the people on The Forbes 400 list of richest Americans were self-made. By 2018, in stark contrast, this same figure had risen to 67%! Forbes’ analysis is based on a scoring system in which each member of The Forbes 400 is given a score on a scale from 1 to 10. A 1 is awarded to people who have inherited their entire fortune and have done nothing to increase their wealth. A 10 means that someone has pulled themselves up by their bootstraps to build their incredible wealth in the face of substantial obstacles. Anyone on The Forbes 400 who merits a score of between 6 and 10 is rated as having truly made it on their own.

The Buddenbrooks: An Exemplary Tale

The importance of inheritance is overestimated because, in reality, most heirs are unable to preserve let alone expand their assets. In 1901, the German writer Thomas Mann published one of his most celebrated novels, Buddenbrooks: The Decline of a Family, which tells the story of how a rich merchant family, the Buddenbrooks, slowly but surely squandered its fortune over the course of four generations. As is so often the case, fact mirrors fiction, as demonstrated by the scientists Robert Arnott, William Bernstein and Lillian Wu in their research paper “The Myth of Dynastic Wealth: The Rich Get Poorer.” Their key findings include the following: “The average wealth erosion for the 10 wealthiest families of 1930, 1957, and 1968… was 6.6 percent, 5.3 percent, and 8.7 percent, respectively. These figures correspond to a half-life of wealth—the length of time it takes for half of the family fortune to be redistributed within society through taxation, spending, and charitable giving—of 10 years, 13 years, and (remarkably) 8 years, respectively.”

Great Ideas And Personality Traits Are Not Necessarily Passed On To The Next Generation

One glance at the list of the richest people in the world is enough to see that the vast majority—insofar as they have not inherited their wealth—have earned their fortunes as entrepreneurs. And according to the findings of entrepreneurship research, successful entrepreneurs become rich because they have a very specific combination of personality traits. However, these personality traits cannot simply be passed on to the next generation. The super-rich became rich because they had incredibly good ideas. Why is it that Jeff Bezos, Bill Gates, Mark Zuckerberg, Sergej Brin and Larry Page are among the richest people in the world? Because they had great ideas, founded Amazon, Microsoft, Facebook and Google and knew how to turn them into extremely profitable companies. It’s very unlikely that their children will have the same personality traits or such brilliant ideas.

The Secret Weapons Of The Super-rich?

Left-wing economists, such as the Frenchman Thomas Piketty, believe that the rich have access to particularly profitable investments—some would even call them a license to print money—which allow them to automatically increase their wealth even without their own entrepreneurial ideas. Just like left-wing anti-capitalists, family offices that earn their money by promising to increase the wealth of rich families have a vested interest in maintaining the myth that there are secret, extremely lucrative investment opportunities that are reserved only for the super-rich. This is, after all, the basis of their entire business model. But there are very good reasons to doubt that this is the case. It is more likely that most of these exclusive asset managers deliver even worse results for their super-rich clients than an average investor would achieve by investing in an index fund. For example, hedge funds have enjoyed an almost legendary reputation as the super-secret weapons of the rich for many years. And yes, some hedge funds have achieved extremely high returns, for which they have received a great deal of celebratory media attention. On average, however, they have performed worse than an index fund that absolutely anyone can buy on the internet.

In 2007, Warren Buffett entered a million-dollar bet with fund manager Protége Partners that the S&P 500 Index would outperform a portfolio of hedge funds over the next ten years. Buffett was right and donated his winnings to Girls Incorporated of Omaha. The S&P 500 Index fund in which he invested delivered a compound annual return of 7.1%, outperforming the return on the funds selected by Protégé Partners (2.2%). The extent of the difference is really put into perspective when you compare the actual monetary returns: Anyone who invested a million dollars in hedge funds before 2008 would have made a profit of $220,000 by 2017. S&P 500 investors, on the other hand, would have collected $854,000. So much for the supposed license to print money and “secret weapons” of the super-rich.

How People Inherit Money And Lose It Again

Many rich heirs could actually live very well off their inheritances if only they followed the advice Warren Buffett has already given his wife for when she inherits (a minor part) of his fortune: Simply invest the money in an index tracker fund. But most people think they are smarter and believe they can make particularly canny investments—which all too often turn out to be flops. Or they inherit a company but do not have the entrepreneurial talent of their predecessors. Others overestimate themselves, start new companies and lose money. Still others go through expensive divorces or simply spend far more each year than their inheritances would sensibly allow. There are countless examples that show just how difficult it is to manage an inheritance. Many heirs have more in common with lottery winners who, by a stroke of luck, win massive fortunes, but lose them again because they lack the requisite skills to handle money.

Welcome To The Self-Made Billionaires’ Club, Jay Z

In reality, the chances of getting rich, even at a young age or as someone who comes from a humble background, have never been so good. Recent headlines have trumpeted the fact that Jay Z, who was raised by a single working mother, has become the world’s first hip-hop billionaire and the latest member of the Self-Made Billionaires’ Club. Of course, very few people will ever make it quite so far. But what helps more? Telling someone “You have no chance anyway. If you don’t inherit money, you’ll never get rich,” or, “Forget it! Capitalism only makes the rich even richer.” Or saying, “You probably won't become a billionaire, but look at the people who started out at the very bottom and made it to the top. Seize your opportunities!”

SOURCE 

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The Left vs. Law Enforcement
   
While the border crisis continues, the American left is becoming more violent, and its enablers in Congress and the courts resist efforts to stem the crisis. Here are the latest developments from the weekend.

In Tacoma, Washington, police shot and killed an Antifa anarchist who attacked a detention facility in an apparent effort to kill the guards there. The attacker, Willem Van Spronsen, had been arrested during a protest at the same facility last year.

Several friends indicated he sent a manifesto promising something big. The governor of Washington blames the incident on the atmosphere President Trump has created.

At an ICE facility in Aurora, Colorado, demonstrators took down the U.S. flag and replaced it with the Mexican flag. They also took down and defaced a Blue Lives Matter flag with the words “Abolish ICE” and raised another flag that said “F—k Cops."

Late in the evening, a squad of armed guards was finally able to remove the Mexican flag and restore the American flag to its rightful place.

Former Colorado Gov. John Hickenlooper, who is running for the Democrat presidential nomination as a supposed moderate, defended the flag desecration as "free speech.” Wrong!

It is not free speech to trespass onto federal property to destroy federal property. It is free speech to burn your own flag. You cannot tear down or burn someone else’s flag.

I’m glad we have Gov. Hickenlooper on the record on this incident. Every Democrat presidential candidate should be asked about their views of what happened this weekend and whether they support raising the flag of a foreign nation in the place of the American flag.

All over America this weekend, elected Democrats ran to microphones to profess their loyalty to illegal immigrants. Eric Garcetti, the mayor of Los Angeles, posted a video with the police chief standing next to him and declared, “Your city is on your side, and rest assured, here in Los Angeles we are not coordinating with ICE.” Garcetti may come to regret that decision. (See next item.)

Who’s on the side of law-abiding U.S. citizens? And why isn’t the LAPD cooperating with federal law enforcement?

It was the same thing in Chicago, where authorities showed more interest in protecting illegal immigrants than protecting Chicago residents from the mass violence that results in dozens of people being shot every weekend.

Leftists were on bicycles in Hispanic neighborhoods warning illegal immigrants of any law enforcement efforts by ICE. Why aren’t they going through those neighborhoods warning kids of gangs and drug dealers?

A few weeks ago, various left-wing spokesmen called for the public harassment and “doxing,” exposing personal information online, of those who guard our borders. Go to their homes, go to their kids’ schools. Shame them publicly, the left insisted.

This weekend, Sen. Elizabeth Warren upped the ante by threatening to prosecute Border Patrol guards. She told the radical Netroots conference, “On my first day, I will empower a commission in the Department of Justice to investigate crimes committed by the United States against immigrants.”

While she pursues policies that make it impossible to detain illegal immigrants, now she’s threatening to target those guarding the border. This is how extreme the left has become.

In stark contrast, President Trump issued an executive order giving “voice” to the victims of crimes committed by illegal aliens, crimes that never should have happened but did because liberal politicians refuse to secure the border.

By the way, only 33% of voters think the government is “too aggressive” when it comes to deporting illegal immigrants.

SOURCE 

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A good rationale



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Sen. Cruz Introduces Measure to Designate Left-Wing Antifa a 'Domestic Terrorist Organization'

Given the radical, left-wing Antifa group's well-documented history of violence, Sens. Ted Cruz (R-Texas) and Bill Cassidy, M.D. (R-La.) introduced a resolution on July 18 that condemns Antifa's "violent acts" and calls for the designation of the group as a "domestic terrorist organization."

"Antifa is a group of hateful, intolerant radicals who pursue their unhinged agenda through aggressive violence," said Sen. Cruz in a statement. "Time and time again their actions have demonstrated that their only purpose is to inflict harm on those who oppose their views."

"The hate and violence they spread must be stopped, and I am proud to introduce this resolution with Senator Cassidy to properly identify what Antifa are: domestic terrorists," he said.

Sen. Cassidy, a medical doctor, said, "Antifa are terrorists, violent masked bullies who ‘fight fascism' with actual fascism, protected by Liberal privilege."

"With bullies, they get their way until someone says no," he added. "There must be courage, not cowardice, from the elected officials who allow violence against the innocent."

The two senators noted the recent attack by Antifa members on photojournalist Andrew Ngo in Portland. Ngo was taking pictures at a June 29 demonstration when he was beaten by Antifa members. He suffered a brain hemorrhage and a torn ear lobe.

Antifa, which is an abbreviation of the word "anti-fascist," is a radical, left-wing group with members across the country. Antifa group members engage in direct action -- intimidation, brutality, and violence -- targeted often at conservatives and supporters of President Trump, as well as against private property.

Antifa's actions are face-to face but also online, and through other digital or technical means to harass and intimidate people. Antifa also sometimes engages in action against the police.

The resolution from Sens. Cruz and Cassidy reads:

Title: Calling for the designation of Antifa as a domestic terrorist organization.

Whereas members of Antifa, because they believe that free speech is equivalent to violence, have used threats of violence in the pursuit of suppressing opposing political ideologies;

Whereas Antifa represents opposition to the democratic ideals of peaceful assembly and free speech for all;

Whereas members of Antifa have physically assaulted journalists and other individuals during protests and riots in Berkeley, California;

Whereas in February of 2018, journalist Andy Ngo was intimidated and threatened with violence by protestors affiliated with Antifa;

Whereas on June 29, 2019, while covering demonstrations in Portland, Oregon, journalist Andy Ngo was physically attacked by protestors affiliated with Antifa;

Whereas employees of the U.S. Immigration and Customs Enforcement (referred to in this preamble as "ICE") were subjected to doxxing and violent threats after their social media profiles, phone numbers, and home addresses were posted on the Internet by left wing activists;

Whereas according to the Wall Street Journal, an ICE officer was followed by left wing activists and "confronted when he went to pick up his daughter from summer camp", and another "had his name and photo plastered on flyers outside his home accusing him of being part of the ‘Gestapo'";

Whereas the ICE office in southwest Portland, Oregon, was shut down for days due to threats and occupation by Antifa members;

Whereas Rose City Antifa, an Antifa group founded in 2007 in Portland, Oregon, explicitly rejects the authority of law enforcement officers in the United States, and Federal, State, and local governments, to protect free speech and stop acts of violence;

Whereas Rose City Antifa rejects the civil treatment of individuals the group labels as fascists, stating: "We can't just argue against them; we have to prevent them from organizing by any means necessary."; and

Whereas there is no place for violence in the discourse between people in the United States, or in any civil society, because the United States is a place where there is a diversity of ideas and opinions: Now, therefore, be it

Resolved, That the Senate-

(1) calls for the groups and organizations across the country who act under the banner of Antifa to be designated as domestic terrorist organizations;
(2) unequivocally condemns the violent actions of Antifa groups as unacceptable acts for anyone in the United States;
(3) expresses the need for the peaceful communication of varied ideas in the United States;
(4) urges any group or organizations in the United States to voice its opinions without using violence or threatening the health, safety, or well-being of any other persons, groups, or law enforcement officers in the United States; and
(5) calls upon the Federal Government to redouble its efforts, using all available and appropriate tools, to combat the spread of all forms of domestic terrorism, including White supremacist terrorism.

SOURCE 

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