[lumost]

You may have a vision for your children, they may not follow-through. Most family businesses fail upon generational transfer. Most children I know who believe they are inheriting money don't bother to work, the children of wealthy children are usually far enough removed from wealth creation as to believe utterly irrational things about money.

If wealth is large enough, then useful incomes can be maintained in perpetuity - meaning the great, great grandchildren are still living off of the wealth created centuries ago.

The latter case was common in Europe, but relatively rare in the US due to the estate tax. Historically, landed gentry were rarely bastions of wealth creation and innovation - and are usually more focused on fending off threats to their inherited wealth than creating more wealth.

[bko]

Reminds me of the quote:

"My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel."

Wealth dissipates very quickly especially with the nature of dilution as a bloodline grows exponentially. If you notice most inherited wealth that's more than a few generations is in authoritative states. I don't think its due to the estate tax as there are always ways to get around it.

[lumost]

An alternate way of viewing this is that large productive resources are channeled into providing consumption for an exponentially growing bloodline rather than re-invested for general profit.

There was a general practice that samurai funded positions for the children of their servants. By the time of the meiji restoration the number of servants a Samurai supported had grown by nearly an order of magnitude. Meanwhile the productive land remained fixed.

Unfortunately this lead to the productive assets of Japan being directed to support an increasingly capital inefficient consumption system. There is no natural reason to assume that an estate would be obliterated with time.

[dsq]

Wouldn't the problem be self correcting, then? Incompetent inheritors waste their ancestors hard earned wealth on Lamborghinis, bad investments, casinos etc. The money returns to the wider economy (Lamborghini engineers, real estate taxes, tips for cocktail waitresses). After 3 generations the problem solves itself. Those families who remain rich may be the most intelligent ones.