Investment Immigration to the United States insights on Life in the U.S.: New York Times columnist Paul Krugman once wrote in the article "Wealth Over Work" that the United States is regressing to an era of "hereditary capitalism." Under such a system, the commanding heights of the economy are determined not only by wealth but by inherited wealth, making one's background more important than hard work and talent. Krugman's argument is that in 1979, the top 1% of income-earning households received 17% of corporate income; by 2007, this same group was receiving 43% of corporate income and 75% of capital gains. Six of the top ten wealthiest people in the U.S. are heirs to fortunes, not self-made entrepreneurs. Furthermore, the children of today's economic elite start with incomparable advantages.
Readers might be wondering, isn't this situation similar to China? Dr. Temperance Brennan, the forensic anthropologist and protagonist of the American TV series "Bones," often says: "Do not jump to conclusions." Before drawing any conclusions, let us analyze how Americans actually "rely on their fathers" (pin die).
An ancient Chinese saying goes: "Virtue passed down through generations lasts for over ten generations; farming and reading come next; poetry and books follow; wealth and status passed down rarely last beyond three generations." This led to the well-known Chinese saying that "wealth does not pass three generations." Similarly, as a "nation of craftsmen" built by self-made individuals, American tycoons have long understood the principle that "wealth does not pass three generations." Therefore, wealthy Americans do not teach their children like the "nouveau riche" in China—throwing money around, providing luxury cars and villas, letting them study if they want or play if they don't, and then handing them the family business upon adulthood. This Chinese-style "relying on one's father" is not a "sustainable" form of "relying on one's father," and the likelihood of the second generation squandering the family fortune is much higher than in the U.S.
Generally, American billionaires provide comfortable conditions for their offspring during their youth, but certainly not luxurious ones, ensuring they receive a good education and work experience. Taking New York real estate tycoon Donald Trump as an example, his approach to raising his children is to send them to business school and then have them work at his real estate company, starting from the bottom just like any other employee. If they don't perform well, they are let go.
As is well known, higher education in the U.S. is extremely expensive and unaffordable for the average urban poor. Due to limitations in scholarships and availability, most Americans have to pay for college out of their own pockets. While the average middle-class family can manage, poorer families often find it quite difficult. In 2005, former Apple CEO Steve Jobs confessed in his commencement speech at Stanford University that he did not want to spend his parents' life savings on four years of meaningless time at university, so he chose to drop out. Compared to Bill Gates' "dropping out to start a business," Jobs' reason for dropping out might be closer to the cruel reality.
American-style "relying on one's father" relies on better education, the better connections that education brings, and the greater experience provided by the older generation. Although this is slightly unfair to the poor, this "sustainable" model of "relying on one's father" ensures that American entrepreneurs can confidently entrust wealth and power to their descendants, allowing businesses to operate long-term, focusing on a single trade for decades or even a century, and striving for excellence.
"Relying on one's father" is actually a universal phenomenon, referred to in economics as "Intergenerational Earnings Elasticity." Canadian economist Miles Corak has suggested that in countries with high levels of inequality (such as the U.S., U.K., and Singapore), wealth has low intergenerational mobility. This means society tends toward inequality, where an individual's economic status is determined by their parents' status, and children are more likely to remain in their parents' economic class. Compared to the U.S., the gap in "intergenerational earnings elasticity" in China is not as large as one might imagine. Wealth inequality, or intergenerational wealth inequality, exists in both China and the U.S., so why do Chinese people harbor such hatred for the rich? A netizen once posted on a forum: "When I was young, I thought studying hard would lead to a good job; now I know that having a good background leads to a good job. When I was young, I thought hard work paid off; now I know that a little power pays off. When I was young, I thought good people were rewarded; now I know good people are mocked. When I was young, I thought one should be like a mountain; now I know one should be like water. When I was young, I thought saying sorry mattered; now I know that if you have connections, it doesn't matter." Although this joke is a bit extreme, it vividly reflects the deep resentment and disgust Chinese people feel toward the Chinese-style "relying on one's father."
The Chinese version of "relying on one's father" provokes public outrage mostly because it relies on a form of "hereditary public power." Of course, there is also an element of envy, jealousy, and hatred, as everyone wants to experience the superiority of being "covered by a famous father"—why is it you and not me who can drive a Porsche without working? In contrast, while the American version of "relying on one's father" is occasionally criticized by economists and intellectuals, it has not triggered widespread public hatred. Part of the reason, as mentioned above, is that the American version is not about showing off wealth, but about competing in wealth growth and business management capabilities; the education and economic support received by the wealthy naturally allow them to have better development. But this is only half the reason.
Taking a step back, an American who starts from scratch with no "father" to "rely on" will not live too poorly through their own efforts. Taking another step back, even if you don't have great ambitions and just want to be an employee or an ordinary white-collar worker in a company, you can still live a life in the U.S. that is not wealthy but is very decent—with a house, a car, private vacations, clean air, and clean water.
Returning to Krugman's point, the idea of "hereditary capitalism" might also be viewed from another perspective. What do the second generation rely on to inherit or create wealth, or to squander it? Is it the ability to manage businesses and create wealth brought by a good family background, or is it merely relying on monopolized power? The former can be said to be a social phenomenon, while the latter is a social problem.