Tuesday, September 9, 2014

Is Inheritance anti-Capitalist and anti-Merit?

In a letter titled Anti-Capitalist Bequests, published in the New Jersey Star-Ledger, Kerwin M. Lanz argues that inheritance is inherently anti-capitalist, and should be “eliminated.”

Lanz writes, in part:

America’s founders weren't fans of privilege by heredity. They advocated an aristocracy of merit driven by a system of rewards. Inheritance rewards without merit and undermines the incentive system that drives capitalism.

The counterargument is the idea of property rights, that a man may do what he chooses with his property, including giving it to his decedents. Is the property right as fundamental as our right to free speech or religion? A person’s assets becoming the property of the state is defendable beginning with eminent domain.

Consider the practical benefits in eliminating inheritance. Everyone will work to his potential, motivated by fear or enthusiasm. Our culture will benefit by rewarding the best and brightest of every generation through a fair start and equal opportunity. Economic activity would be stimulated since there would no longer be an incentive to hoard wealth, and perhaps there would be a more equitable distribution of assets.

Inheritance seems to be hurting our capitalist tradition.

I left these comments:

"Is the property right as fundamental as our right to free speech or religion?"

In fact, property rights are more fundamental than speech and religion, because your property is your only means of exercising, implementing, and enjoying your rights to life, liberty, and pursuit of happiness. If you think about it, without property rights, no other rights are practicable. For example, what good is your free speech, if the government owns all media companies—or religious freedom, if government owns all religious properties—which it eventually will if inheritance is abolished? Once you establish the principle that all property and assets not in the hands of the original producer reverts to government ownership, what other result would you expect? (Don't kid yourself that your property rights will be respected when you're alive, but only violated when you're dead. If you have no right to dispose of your property as you see fit when you die, you have no property rights at all.)

And to what end does the government seize your property? To dish it out to everyone else who didn't earn it? Why do others have a right to your property "without merit," but your chosen heirs do not? In what way does inheritance make "the chance of success unfair and the role of merit irrelevant?" How does your neighbor inheriting property inhibit your life? You want to tear other people down to increase your own "chance of success"? How is that "fair"? How is that succeeding on merit? And if the government doesn't dish it out, to what end does it keep your property? It would then come to own all business, "hoarded wealth" (investment capital and savings), industrial properties—i.e., the entire economy, including you, since you will be dependent on the government for your job, food, shelter, recreation, "opportunities"; everything. If you are totally dependent on government, you are not free. In fact, you are a slave.

A government that seizes all property is a totalitarian state—specifically, a communist state. Capitalism is the system of individual rights, in which all property is privately owned, and your rights, including your right to your property, are protected by government. Capitalism's so-called "aristocracy of merit," which in fact is not an aristocracy at all, is a consequential, not a primary, aspect of capitalism. Capitalism abolishes aristocracy of all kinds, and leaves each individual in control of his own life and property, by inalienable right. If there are no property rights, there is no capitalism. If there is no capitalism, there is no merit system. There is only an elite political aristocracy, under which people rise by political pull, rather than merit.

The Founders antipathy to inheritance (or "privilege by heredity") was antipathy to the inheritance of political title, position, and nobility, not inheritance of private property. In a capitalist country, there is no political inheritance. Neither "A person’s assets becoming the property of the state" nor eminent domain is morally or rationally defensible. Capitalism is the first social system to recognize that wealth is the product of individual effort coupled with voluntary trade, not a tribal "asset" to be "equitably distributed" by an omnipotent ruler.

How do we derive "a system of rewards" based on "merit" by denying everyone his rewards built up by a lifetime of work based on merit? Where does one derive "incentive" from a system without property rights? There may be a motive to work on some level, based on fear of the state. But there is no enthusiasm, as witness the rampant alcoholism and dreary dependence of the former Soviet communist system. It is the abolition of property inheritance, not inheritance as such, that is thoroughly anti-capitalist and anti-merit.

Related Reading:

Property Rights—Ayn Rand

"Equality of Opportunity": What it Really Means

Capitalism: The Unknown Ideal—Ayn Rand


Bongstar420 said...

Property rights are meaningless unless everyone has property.

Capitalism necessarily reduces the ownership of property to the hands of a few...therefore, it limits the rights of most people whether or not they "deserve" it

Michael A. LaFerrara said...

How so? First, remember property is what you have earned or received from someone who did (such as gifts or inheritances). Under full laissez-faire capitalism (the only kind there is), property is earned through trade. Trade is the exchange of value for value—property for property. When I bought my Dell computer, I exchanged my monetary property, which I earned in exchange for my labor, for the computer. Win-win. How can property ownership shrink when property is constantly expanded through production and trade in a system where everyone is free to produce and trade, and theft and fraud are outlawed? Capitalism is the only social system that protects the average man's property rights from exploitation and looting by a ruling elite, such as happens under socialism, the system under which the state owns or controls all property.