This book is just amazing. I may not agree with all the conclusions, but I admire a mixture of economic models accompanied by illustrations from Jane Austen, Balzac, Titanic and Dirty Sexy Money. I LOVE provocative fusion and unexpected resemblances and weird associations. I wish one day I write something like this (probably with different conclusions). It’s not your average Malcolm Gladwell meets Adam Smith Freakonomics series. You may not like it, but it’s hard to ignore the facts.
There is so much to think about. For example, I was strongly convinced that inheritance completely lost its relevance in the modern life. It sort of exists, but far-far away. Like slavery or instant coffee. Not so much. There are reasons to believe that about 1/4 to 1/3 of all the wealth accumulated by my generation (born between 1970 and 1980 and living in Europe) is coming from inheritance. Because of the two world wars and recurring political turmoil in the first half of the 20th century, many fortunes in Europe were lost and never really recovered. Baby boomers (our parents’ generation) were the first ones who managed to save something to be able to pass it on to their children. Yes, large multi-billion estates are rare, but there are many small bequest of 100-200-500k euros, mostly in form of real estate, and those dowries somehow determine if or when people can buy their own apartment, how much they save, how often they travel and where their kids would go to college. Statistically the role of inheritance our your living standards is becoming more and more significant.
There is a middle class, but unfortunately my idea of middle class was way off. My perception of middle class was “a family where both parents work making together about 150k a year, owning a house and 2 cars, spending winter vacations in Asia, skiing in the Alps in spring and sun-bathing in the south of France in summer… with a modest savings account and a half-paid mortgage”. Well, apparently it’s only possible if they inherited a mortgage-free house. A middle class in Europe is a family with a total income of 70-80k, rarely owning a house and with very limited savings.
The good news that among the top 10% of the wealthiest people in Europe, 9% are working professionals (managers of large corporations, doctors, lawyers, actors and other “superstars”) and only 1% are wealthy hires. Statistically speaking, it’s absolutely possible these days to come from nothing and earn a very nice living and do it fast. Though, it’s only possible for 9% of the population, which is no so bad, in my view. Our modern society rewards “superstars” or “supermanagers”.
Interestingly enough, the author compared income evolution of people in the Forbes top list for the last decades. Turns out, the fortune of Bill Gates has been growing at the same pace (10% a year on average) as those of Liliane Bettencourt (L’Oreal heiress), who never worked a day in her life. I’d expected more of him, but I guess, when you hire the same financial advisers and invest into blue chips, it is what it is.
We all know that Europe on average is more egalitarian than US. I never realized though that US inequality now is the same as it was in Europe about 150 years ago (remember Jack London?), middle class is about the same as in Europe, but the poor are almost in poverty and rich are really affluent in the US comparing to Europe. I have many colleagues, who come here from the US and notice how Europe looks more “clean, balanced and respectable” without striking social gaps. (Just for the record, they were not talking about Sweden).
I haven’t been to the US since 2007, but I’ve grown wary of London over the last 10 years – precisely because of it’s increasing social divergence. Based on the book, UK is somewhere between the US and continental Europe in terms of income inequality, trending towards more inegalitarian society. In the beginning of the 2000s, London was my center of civilization with its career opportunities, private schools, theaters, museums and shops. Nothing there bothered me at all and my former colleagues were very happy. These days I here more and more about impossible commute, ridiculous housing prices and crime. If I were to choose a weekend somewhere, I’d choose any European capital over London. It doesn’t mean I can’t enjoy London or appreciate what if has to offer, it just means that there is too much of a hassle to overcome. I’m going to Seattle in June, it would be interesting to test this hypothesis from the other side of the Atlantic.