Individualism vs. Inheritance

Libertarian blogger Megan McArdle is in a contrarian mood, so she makes the case for a 100% estate tax as a nod to good ideas with a leftist slant:

Luckily, I have a bit of contrarianism that I’ve wanted to air, and a series of Kevin Drum posts on using estates to pay for Medicare that has inspired me to make (drumroll please) . . . the case for the 100% estate tax.

No, really, I’m serious. After all, why should kids be allowed to inherit? I know, you are about to say something along the lines of “I worked hard so that my kids could . . . ” That is a noble emotion. But at the point at which this question becomes relevant, you will be dead. And dead people don’t have rights. They don’t own property. They don’t get to make decisions.

This is one of those ideas which combines a leftist desire for leveling of economic and social classes with a strongly individualist line of thinking: Sure, your parents saved up a lot of assets, but what does that have to do with you?

In a world in which each person is a social atom, the idea of money or property being handed down through families is necessarily repulsive. If you didn’t earn it, why should you have it? Perhaps this is why this particular leftist idea has a certain appeal to McArdle’s libertarian sensibilities.

Although conservatives and libertarians often find themselves treading similar paths in the modern political landscape, this is a sensibility I find pretty unappealing. More appealing to me is the sort of economic aspirations one sees among Austen’s characters — building up and successfully stewarding a family fortune which allows a degree of stability and leisure for future generations. I’d much rather see people working to build a stable legacy for future generations than taking a “I’m going to make as much as I can and blow it all before I die” attitude.

This individualistic view is characterized with startling clarity in this paragraph later in McArdle’s piece, in which she considers whether the motive of “earning” an inheritance might encourage some socially desirable behaviors:

Plus, adults hoping to be left something in the will might be performing valuable services for society, like visiting Mom in the nursing home to make sure that they haven’t tied her to a bed and left her to die. (on the other hand, there are the rich people who get tied to a bed and left to die by their heirs so that they won’t be able to change the will. Which effect is more powerful?) The trend towards a society based more on interactions with strangers, less on kinship ties, is generally a good one. But the family still serves useful functions that we don’t want to get rid of. If we mess with inheritance, are we disrupting an institution that’s tremendously important to both individuals and to society? [emphasis added]

It strikes me that a mass society based primarily on interactions with strangers rather than kinship ties is precisely the sort of thing which results in all sorts of dehumanization and bad behavior of the sort that conservatives interested in subsidiarity seek to avoid. By chance, I read today one of the most egregious possible examples of the way in which large, centralized organizations and stranger-based interactions can lead to really undesirable and expensive results: The state of New York has been spending $1.8 million dollars per patient per year to put developmentally disabled patients into large state-run institutions which are so negligently run that hiring and re-hiring ex-cons is common and abusing and even killing patients is tolerated. The situation was exposed through just that thing we haven’t quite learned how to live without, kinship ties: The family of a patient killed by one of the people employed to take care of him and a whistle-blowing employee who was seemingly unique at her facility in wanting to actually help the patients because her own son suffers from developmental disabilities, and so she didn’t see the patients as the “retard” objects of ridicule and abuse which many fellow employees did.

Kinship in the broader sense is one of the most basic ways in which human beings are made to interact with one another. Instinctually, we look out for people to whom we feel kinship in ways that we don’t necessarily do for those whom we see as “other”. Thus, while it’s important to try to broaden this tendency and encourage people to look out for all those they interact with rather than having an exclusionary, tribal approach to social interactions — it’s invariably going to work a lot better to work with the human tendency to take care of kin than against it.

This doesn’t touch on the question of whether we should “let” people with assets stretching into the billions pass that money on to their heirs untouched, but the proposals which McArdle and Drum are talking about are much more wide-ranging: basically getting rid of all inheritance (even very small ones) in order to pay for Medicare. On the contrary, it seems to me that if one of our major problems in the economic realm is short term thinking, whether it’s people mortgaging their houses to the hilt or playing the stock market for short term gains, then going to a “use it or lose it” approach to wealth would only make things worse. The grandmother who’s hoping to leave a stable portfolio of investments and a paid-off house in the suburbs to help pay for her grandchildren’s college is going to be much more of force for social and economic stability than the high-living stock flipper who dutifully burns through all his money and dies in debt.

31 Responses to Individualism vs. Inheritance

  • Paul Zummo says:

    And dead people don’t have rights.

    Egads. In times like this it is worth quoting Edmund Burke.

    Society is indeed a contract. Subordinate contracts for objects of mere occasional interest may be dissolved at pleasure—but the state ought not to be considered as nothing better than a partnership agreement in a trade of pepper and coffee, callico or tobacco, or some other such low concern, to be taken up for a little temporary interest, and to be dissolved by the fancy of the parties. It is to be looked on with other reverence; because it is not a partnership in things subservient only to the gross animal existence of a temporary and perishable nature. It is a partnership in all science; a partnership in all art; a partnership in every virtue, and in all perfection. As the ends of such a partnership cannot be obtained in many generations, it becomes a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born. Each contract of each particular state is but a clause in the great primaeval contract of eternal society, linking the lower with the higher natures, connecting the visible and invisible world, according to a fixed compact sanctioned by the inviolable oath which holds all physical and all moral natures, each in their appointed place. This law is not subject to the will of those, who by an obligation above them, and infinitely superior, are bound to submit their will to that law. The municipal corporations of that universal kingdom are not morally at liberty at their pleasure, and on their speculations of a contingent improvement, wholly to separate and tear asunder the bands of their subordinate community, and to dissolve it into an unsocial, uncivil, unconnected chaos of elementary principles. It is the first and supreme necessity only, a necessity that is not chosen but chooses, a necessity paramount to deliberation, that admits no discussion, and demands no evidence, which alone can justify a resort to anarchy. This necessity is not exception to the rule; because this necessity itself is a part too of that moral and physical disposition of things to which man must be obedient by consent or force; but if that which is only submission to necessity should be made the object of choice, the law is broken, nature is disobeyed, and the rebellious are outlawed, cast forth, and exiled, from this world of reason, and order, and peace, and virtue, and fruitful penitence, into the antagonist world of madness, discord, vice, confusion, and unavailing sorrow.

    On second thought, maybe this belongs on the thread immediately below. ;)

  • Foxfier says:

    Hold up, that’s not “removing inheritance,” that’s “everything belongs to the government, unless you buy it, and then it reverts on death.”

    Strangers, smangers, that’s trying to set whoever gets to collect the death tax AS the family.

    Impulsive initial reaction: this is the kind of BS that someone who has no real idea what’s involved in a long term enterprise like farming or ranching comes up with, and takes things like “people won’t kill you to get the harvest, or to sell the tools for scrap metal” for granted.

  • Mike Petrik says:

    A case can be made for an estate tax, but not a confiscatory one such as this. It is imprudent to encourage families to blow resources on silly distractions rather than husband them for cross-generational family security. This rather stupid idea is not new and is usually grounded in a sense that it is unfair for some people to have unearned advantages over others. And it is unfair. Some people are born swift, others slow-footed; some smart, others dim-witted; some attractive, others ugly; and some to parents who are prudent and hardworking; and others to parents who are lazy spendthrifts. Parental investment in their progeny is socially beneficial; one would think that is obvious, but the obvious so often escapes ideologues.

  • RR says:

    What both you and McArdle lack is empirical evidence. Granted, McArdle admits this which is why she’s skeptical of her own proposal. Intuitively, it makes sense to me that a 100% inheritance tax would be disastrous but I could be wrong. It could be that inheritance, is more often than not, a windfall for heirs, rather than a socially valuable institution. It may be that a 50% tax on inheritances to a non-spouse over $1 million excluding family businesses wouldn’t erode kinship relations.

  • It may be that a 50% tax on inheritances to a non-spouse over $1 million excluding family businesses wouldn’t erode kinship relations.

    It may be, but to be clear: The case being made was for an absolute, 100% estate tax on any amount of inheritance at all by non-spouses, with the possibility of a fairly restrictive exception for family businesses on the condition that they’re not sold within five years.

  • Foxfier says:

    We do have evidence:
    look at those societies that tried to remove the ability for people to profit and pass it on to their kids. Basically, any place where you were put to work on the government’s land. How well did that turn out?
    Compare to most of human history, where you work it, you own it, and you can pass it on….

  • RR says:

    There must be a Laffer Curve for estate taxes and an estate tax would probably shift the Laffer Curve for income taxes as well. They may cancel each other out to a large degree. McArdle shouldn’t considered this.

  • T. Shaw says:

    Ms. McArdle really ain’t libertarian (does not believe in private property) and she ain’t so smart (a rational economic operator will ensure the government gets exactly zero when he die).

  • Mike Petrik says:

    T. Shaw is correct. While it may not always be possible to dispose of 100% of assets before death, few estates would have much left to tax. The naivety of folks like McArdle is stunning really.

  • Art Deco says:

    The naivety of folks like McArdle is stunning really.

    I think the idea of financing public expenditure through such a tax was Kevin Drum’s. I think Megan McArdle’s idea was to compel people to distribute their assets before death and levy income taxes on the beneficiares at the time of receipt (erasing the distinction between income taxes and gift taxes).

    About a generation ago, Michael Kinsley offered this observation of advocates of unadulterated meritocracy:

    “people who are smart, but don’t have much money, think that social practices should work to benefit people who are smart (but don’t have much money)”.

  • RR says:

    “Saving is even more problematic. Kevin doesn’t think that many people would spend down their estates to avoid his Medicare tax, but I think he’s grossly underestimating the chances… I think people will make very different decisions about spending, saving, and gifting if they know that there’s no hope of leaving anything to the kids. And our economy is already far too heavily biased towards consumption.”

    That’s McArdle pointing out some of the problems with the proposal. Too often those who accuse others of naivete don’t realize that they’re the naive ones.

  • To be fair, I don’t think that McArdle is being massively naive, I think she’s mostly enjoying playing with a “dangerous idea” which she thinks has at least some merit. (And I’ll concede that her consideration of the possible problems is extensive enough to almost make up for the progressivism of the idea itself.)

    The key thing that caused me to write a post about it was the comment about the desireability of society being based on stranger interactions rather than kinship interactions, which strikes me as nearly exactly opposite — though it fits well with a strongly individualist perspective. (And McArdle is, after all, a native New Yorker, almost completely secular, an MBA and a writer for the Atlantic — which in some ways makes the degree of conservatism and libertarian principles that she does have the more impressive.)

  • Foxfier says:

    What’s the difference between kinship affinity and tribalism?

    Generally, the emotional appeal someone is trying to make.

    Kinship affinity usually means “people love their families.”

    Tribalism, on the other hand, goes from “those outside of the tribe aren’t human” through “the tribe is generally better,” with heavy emotional weight on the first end.

  • RR says:

    What if I draw the circle of my family to include my entire ethnicity? That’s kinship affinity yet I think many would condemn it. By denouncing multiculturalism, don’t critics aim to destroy kinship relations? Sure, they may want people to develop a new kinship with fellow countrymen rather than actual kinsmen in the ethnic sense but it’s destroying kinship relations nonetheless.

  • Foxfier says:

    Culture isn’t kinship or family. Culture is a way of life that is sometimes transmitted via families.
    There are many reasons to denounce multiculturalism, but “to try to destroy kinship ties” is not one I’ve ever heard folks give. (Quite the opposite.)

    Are you trying to argue that we should not love our families, RR?

    And why do you go from family, a pretty broad but obvious group, to the rather shaky “ethnicity” angle?
    (Ethnicity being a very loose group that may or may not involve blood relations to a reasonable extent– a prime example being the President, who is “black,” but whose mother was “white;” we can agree that mother and child is a pretty solid family association, yes?)

    There’s a reason that Jesus used family metaphors a lot– it’s a basic, powerful and good force in human mental makeup.

  • RR says:

    When we talk about multiculturalism, we’re talking about ethnic enclaves, no?

    If you want to be super-technical, “family” can be “shaky” too. You can adopt a child. What about in-laws?

    Ethnicity is more or less concrete.

    I’m saying that if we want to retain kinship bonds, we should keep the family bonds AND the ethnic bonds that critics of multiculturalism protest. Unless you have an argument against ethnic bonds that doesn’t contradict the idea that we should keep bonds where they exist.

  • Foxfier says:

    When we talk about multiculturalism, we’re talking about ethnic enclaves, no?

    I generally have no desire to talk about multiculturalism, in part because it is nebulous– it means whatever the person using it wants it to mean for their purpose.

    If you want to be super-technical, “family” can be “shaky” too. You can adopt a child. What about in-laws?

    That’s not “super-technical.” Adoption means bringing someone into your family. In laws are part of one’s extended family, as is clear from the full phrase for their positions– “father in law,” “mother in law,” etc.

    I’m saying that if we want to retain kinship bonds, we should keep the family bonds AND the ethnic bonds that critics of multiculturalism protest.

    You’re free to say so, and to argue for it.
    You’ll just have to do a better job of it than trying to argue-by-declaration that “ethnicity” is the same as family, and you’d have to actually support the idea that not wanting to destroy family bonds is related directly and inseparably to culture.
    You’d also have to argue persuasively that “ethnicity” is inseparably tied to culture.

  • RR says:

    Ethnicity isn’t the same as family and there’s no need for it to be. First, I’m saying that ethnic bonds exist. I don’t think that’s debatable. Second, if we want to protect social bonds, we should preserve ethnic bonds. I’m open to opposing arguments.

  • What if I draw the circle of my family to include my entire ethnicity? That’s kinship affinity yet I think many would condemn it. By denouncing multiculturalism, don’t critics aim to destroy kinship relations? Sure, they may want people to develop a new kinship with fellow countrymen rather than actual kinsmen in the ethnic sense but it’s destroying kinship relations nonetheless.

    This is a pretty wide ranging set of points, depending on what your definitions are, but I’ll shoot for major points.

    If you mean “ethnicity” in the sense that it’s usually used in the US, such that it’s basically interchangeable with “race”, then to say it’s a form of kinship or family is a really stretch. According to such definitions I’m half “white” and half “hispanic” which would mean that if ethnicity is family I have some 250 million people in the US alone who are “family”, despite the fact that at a genetic level many of them are not much more closely related to me than those who are of other ethnicities. Ethnicity in this sense is so insanely wide a category that it would put Irish, Italians, Turks, Icelanders and Russians all in one group.

    It’s also such a large group that I don’t see how one could possibly do anything with the extent of bettering it. It’s conceivable that I would, having done well for myself, seek to to improve the future of my family (not just direct but extended), my parish, my neighborhood or my parish. It’s inconceivable that I would realistically expect to do anything at all to benefit “whites” or “hispanics” as a group. The most I could conceivably do is treat people who don’t fall in either one of these groups worse than people who do, on the theory that strangers who look less like me are more “other” than those do look more like me. Treating people badly for no very good reason is generally frowned upon, and this is why racism is not socially approved of.

    Indeed, I’d argue that ideas of “race” or “ethnicity” have mostly only come into play in mass societies in which people have tried to come up with a way to divide large, anonymous groups into groups which could be treated more and less like kin — and in the modern world people have at times sought to push ideas of national or racial ethnicity in order to achieve nationalistic loyalty to entities too large for people to have any feel for the whole of them. (For example, in the 1800s there was a just emphasis put on being “Italian” over being from one of the many regions of Italy, specifically in order to serve the needs of those who were seeking to unity Italy into a single political entity.)

    I think that ideas of family (again, in the extended sense — but not extended so far that you’re talking about people you don’t know) can serve as a real source of social cohesian, order, and mutual support in a way that ethnicity or nationality can’t. Family consists of a group of people who actually know, interact with, and rely on each other. Ethnicity does not.

  • Now to add, if you’re talking about ethnicity in a strictly cultural sense, I would agree that maintaining culture can add to social cohesion, in the sense that having things in common increases social cohesion.

  • Art Deco says:

    — but not extended so far that you’re talking about people you don’t know)

    I have an interest in my 2d cousins I do not have in others, even though I am acquainted with only a scatter of them.

  • RR says:

    In the real world, blood, land, and culture are intertwined. On ethnicity as a culture, we agree.

    The most I could conceivably do is treat people who don’t fall in either one of these groups worse than people who do, on the theory that strangers who look less like me are more “other” than those do look more like me. Treating people badly for no very good reason is generally frowned upon, and this is why racism is not socially approved of.

    What about preferring people from your hometown or alma mater? There’s an important difference in intent between doing harm and giving preference.

  • What about preferring people from your hometown or alma mater? There’s an important difference in intent between doing harm and giving preference.

    And within reason, I don’t have a problem with giving preference on these kind of things, so long as that preference isn’t so strong that it turns into actively marginalizing everyone else.

  • Foxfier says:

    Ethnicity isn’t the same as family and there’s no need for it to be.

    Good, we agree on that.

    First, I’m saying that ethnic bonds exist. I don’t think that’s debatable.

    Depending on how “ethnic” is defined, I may or may not agree. I don’t have bonds to even folks who are from the same county as my great-grandfather from Scotland, bonds with folks in the valleys I grew up in are based on “do I know you? Do I like you?” and the notion of “Navy” as an ethnicity is kind of silly. (Although it would be a cool story idea… do mil service, become a “Vet” as one’s ethnicity….)

    Second, if we want to protect social bonds, we should preserve ethnic bonds. I’m open to opposing arguments.

    Not all social bonds are automatically worth protecting– I know that family bonds are, and that’s what we were originally discussing. Without very good reason, I’d oppose trying to break down social bonds simply because it’s silly to try to destroy something for no good reason, especially when it involves other folks’ lives. Much better to try to build up new ones.

  • Thos. Collins says:

    You all might want to read Eric Frank Russel’s SFshort story “And Then There Were None” for its weirdly libertarian approach to property & inheritance.

  • T. Shaw says:

    The USA is careening toward national bankruptcy. Tax increases and/or entitlement/transfer payment cuts will be insufficient to avoid economic collapse.

    Sustained (measured in years and decades), 5%+ private sector economic growth is the best hope.

    The USA has not achieved such rapid economic growth since the Nineteenth Century.

    What do we need to do to achieve strong, sustained private sector growth?

    Hint.1: Obama and think progress aren’t into it.

    Hint.2: What has changed since the 1800’s?

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