Spurning dynastic urges, the very rich are instead disinheriting their kids and turning to philanthropy
Cancel the wild parties. Forget the mad business ideas and the string of failed marriages. Tell the therapists to find something else to do.
The poor little rich kid, a stock character used by novel and magazine writers, is set to become as archaic as the typewriter. The mega-rich are starting a trend of disinheriting their children. Recently, Berkshire Hathaway Inc. chairman Warren Buffett made headlines with his decision to donate 85% of his $44bn fortune to charities. The main beneficiary will be the Bill & Melinda Gates Foundation.
Most media coverage focused on the alliance forged between Bill Gates, the world's richest man, and Buffett, the second-richest. Yet underneath lurked an interesting question: why don't the rich want their money anymore?
After all, while the big winner will be Gates, the obvious losers were Buffett's three children. None will ever be short of money. Their own foundations receive some of their father's money. Still, they won't run the business or get the bulk of Buffett's wealth. And they won't have a family dynasty.
Buffett isn't alone in that choice. Sanford Weill, chairman emeritus of Citigroup Inc., has decided to give away his $1.4bn fortune in a "deal with God,'' he said in an interview with Citigroup Pursuits magazine. Others will surely follow.
Their actions are, of course, commendable. No one would disagree it's a lot better for the world that Buffett's billions will be poured into charity, rather than private jets and divorce settlements.
Still, set in any historical context, it is also very odd. After all, the dynastic impulse is one of the oldest and strongest known to humans.
There are three explanations for the wave of philanthropy. First, if you want your children to do well in life, education is probably more important than inherited wealth these days. In most mature economies, clever, well-schooled people can do pretty well for themselves. If they have the right doors opened for them, they can go even further. You don't need to give them billions of dollars to ensure prosperity.
Two, thank Sigmund Freud. The father of psychoanalysis may not be taken that seriously by scientists anymore, but pop psychology is more powerful than ever. Even billionaires have taken on board the idea that vast unearned wealth is a recipe for a psychological wreck.
Three, it's fashionable. We live in a meritocracy. Billionaires may not have to worry about the Bolsheviks putting them up before a firing squad anymore. Yet the flipside is that we prefer fortunes to be earned through hard work and imagination. Inherited wealth makes us feel uneasy.
The net result? The rich will be giving their money away more and more - and charities will do better and better. On balance, none of us will feel moved to complain about that.
by Matthew Lynn, Bloomberg News columnist
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