Stuart K. Hayashi
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| A photo of me next to a bust of Ayn Rand. The organization that owns this bust does not endorse this blog post; I speak only for myself. |
The Inheritance of Wealth Precludes Capitalism From Being a Meritocracy?
A clichéd rejoinder to what I said in the previous blog post — what I said about Mark Zuckerberg being richer than I am as a peaceful consequence of our each having made different choices — is that it is unfair of me to attribute the disparity in wealth between billionaires and myself mostly to the benign results of our having made different choices. The objection is that many of these billionaires were born into much more advantageous circumstances from the outset — they had a “head start” over me — and no one chooses to be born into an advantageous or disadvantageous situation.
Bill Gates was born into wealth — if his parents were not millionaires, they were close to it. Steve Jobs did not grow up wealthy, but he was raised in a Californian environment where computer engineers were common. His classmates’ fathers were Californian engineers. He therefore he had a much easier time recruiting well-trained people for Apple than I would have if I tried to start my own computer-related business. Therefore, goes the rejoinder, the consideration that some people were already born with a “head start” over others nullifies any credit they might deserve for profiting from their own independent business decisions.
The profits earned by Zuckerberg and Jobs and Gates might indeed have resulted from genuinely wise and beneficent choices on their own parts, goes the rejoinder, but they were already in a position to make such choices. This was as they were born into a privileged position over which they had no choice. Worse, the objection continues, even if every billionaire who got this head start makes profitable choices that were entirely benign in themselves, such billionaires having the freedom to endow their children with their own already-large fortunes will grant even bigger “head starts” to subsequent generations. That perpetuates and ultimately exacerbates the ultra-rich’s mega-advantage. Inequality would worsen over the course of every generation. I am told that this consideration means it is shallow for me to attribute market-based wealth inequality mostly to differences in people’s benign financial choices — respect for individuals’ choices pales in comparison to the “head starts.” I am told this morally justifies collectivist redistributions in wealth after all.
A known political philosopher who has said as much is Pierre Proudhon, a contemporary and frienemy to Karl Marx. Proudhon, too, expressed a version of You-Didn’t-Build-That.
Talents is a creation of society rather than a gift of nature; it is an accumulated capital of which the recipient is only the guardian. Without society, without education and powerful assistance which it gives, the finest nature would be inferior to the most ordinary capacities even in the rare as where it ought to shine.
Actually, The Ability to Bestow Inheritance Does Reward Merit
That rejoinder fails. Neither (1) the justness of these billionaires being wealthier than I am, nor (2) the wrongness of the State sending armed agents to the billionaires to redistribute their wealth, hinges on everyone starting at the same place in life, no one having a “head start” or financial “privilege” over anyone else. Choice still matters. Consider how Steve Jobs’ classmates grew up in the same environment as Steve — with them even having Californian engineers as parents. Those classmates didn’t co-found Apple or become billionaires; Steve did. That is properly attributable to Jobs and his classmates having made different choices even as they had many cultural advantages in common.
Moreover, even though many people, such as Bill Gates and Paris Hilton, are born into families much richer than my own, their being far richer than I am is still the result of benign choices. Haters like to say that wealth is not subject to choice because Paris Hilton did not choose to be born into a billionaire family. It is said that her inheriting hundreds of millions of dollars is a reward to her for doing nothing. Actually, Paris Hilton inheriting that much money is indeed the result of benign choices: the benign choices of her great-grandfather, Conrad Hilton.
Conrad became a multimillionaire because the lodgers in his hotels had consented to paying for his services, valuing his services more than the monetary sums they exchanged for such services. If those lodgers valued the money more than they valued what Conrad provided to them, they wouldn’t have given Conrad repeat business. And freedom of choice means not only making financial choices and experiencing the peaceful results of those choices, but also being free to dispose of one’s own earnings as one peaceably chooses. That entails that you be free to transfer ownership of your rightful earnings to whom you choose. That applies even if other people judge the recipient of your largess to be unworthy.
Freedom of choice means Conrad Hilton be free to will his earnings to his children, grandchildren, and great-grandchildren. Paris Hilton inheriting that fortune is not a reward to Paris for having done nothing. Nay, it is Conrad’s customers voluntarily rewarding Conrad for his having made choices that these customers judged to have been of benefit to them. And insofar as the State threatens to send armed agents to Paris if she does not relinquish a chunk of what Conrad chose to bequeath her, that is the State trying to quash the peaceful consequences that Conrad desired of his benign choices — consequences that would have been fully and benevolently realized if not for the State’s intrusion.
Say you are a billionaire and you try to transfer your wealth to your designated heir. Then say the State takes some of that money from your heir and hands it to me. That would be an instance where freedom of choice is denied not only to your heir but denied to you yourself.
The short version of the above paragraphs: that some people are born into more financially “privileged” positions than others does not negate the fact that forcible wealth redistribution is an exercise in collectivism antithetical to the individual’s freedom of choice.
Where I First Read a Version of My Argument About Inheritance
I first got the idea for the argument above from a book review that Roger Donway, an associate of Ayn Rand, had written of a work of Malcolm Gladwell’s. In Outliers, This review was “Luck and Pluck — A Review of Malcolm Gladwell’s Outliers: The Story of Success,” The New Individualist vol. 4 (nos. 6–8, Summer 2009): 82–89. Gladwell gives the usual spiel about how Bill Gates did not truly earn his wealth because he, unlike everyone else, was sent to an exclusive private school, Lakeside, that gave him early access to what was then a state-of-the-art computer. Donway quotes Gladwell,
We are so caught up in the myths of the best and the brightest and the self-made that we think outliers spring naturally from the earth. We look at the young Bill Gates and marvel that our world allowed that thirteen-year-old to become a fabulously successful entrepreneur. But that’s the wrong lesson. Our world only allowed one thirteen-year-old unlimited access to a time-sharing terminal in 1968. If a million teenagers had been given the same opportunity, how many more Microsofts would we have today?Donway’s review then disabused me of the misconception that Gates’s opportunity here was a reward to him simply for having been born to the right parents. As Donway pointed out on page 89,
Of course, Malcolm Gladwell does not doubt that a free society secures more rewards to the competent and industrious than to the incompetent and the lazy. What he laments is that the competent and industrious who have opportunities secure more rewards than the competent and industrious who do not have opportunities. This is anathema to him because he thinks it means that “rewards” tend not to be apportioned according to “merit.”The argument in those final three sentences really stuck with me all these years — especially in the absolutely last sentence.
But Gladwell is mistaken. The rewards reaped by those blessed with opportunities do tend to be the rewards of merit in a free society. They are the rewards of the merit exercised by those [in Group B] who exploit their opportunities, combined with the merit of those [in Group A] who earned the wherewithal to provide the opportunities [to their heirs in Group B]. The good education a son gets at his father’s school is the combined product of his own merit and his father’s merit.
On Monday, May 26, 2025, I added the section quoting Roger Donway.. On Monday, June 9, 2025, I added the quotation from Pierre Proudhon.
