Giving Lots of Money to Your Kids

The best thing about taping Oprah Winfrey’s show a few days ago was the I had the good fortune to meet another of her guests – a young woman named Nicole Buffet. Turns out Nicole is the granddaughter of Warren Buffet, the second wealthiest man in the United States. Here’s the kicker: Nicole doesn’t have health insurance. She can’t afford it. She’s a struggling artist, and she works for every penny she has. Now, you might ask yourself (as I did), what’s the granddaughter of the second-richest man in America doing so poor? The answer is Warren isn’t giving his children or his grandchildren a dime of his huge wealth. He put them through college, and then told them they were on their own. He doesn’t believe in wealthy parents giving their descendants great gobs of money in trusts and other devices used to skirt the estate tax and set them up for life. He thinks everyone ought to work for what they get. Well, Nicole is as lovely as she could be. She’d prefer having enough money from her granddad to be able to afford health insurance and a few other small amenities of life, but she respects his decision. Within the next twenty years, there will be the largest transfer of wealth in the history of the world – from rich Americans to their children and grandkids. The wealthiest 1 percent of Americans have by now accumulated more money than any small group has ever accumulated in history – roughly equal to 40 percent of all the wealth in the nation. This top 1 percent won’t live forever. And right now, unlike Warren Buffet, they’re planning to pass it on to their children and grandchildren, who will presumably live like kings and queens and then pass on the rest to their children and grandchildren. As wealth becomes ever more concentrated in fewer hands at the top, this great trasfer means that in a few generations a large percent of America’s wealth will be under the control of people who never worked for it. In other words, we’re on the way to putting control of a big chunk of our economy into the hands of a group of people who are not entrepreneurs or inventors or businessmen and women, who have no talent or insight whatsoever, who may be the least capable people of all when it comes to wisely investing this load of money. Meanwhile, the Bushies are busily trying to eliminate the estate tax, which hits only the wealthiest 2 percent of Americans, and hits them very gently. Three cheers for Warren Buffet. I wish more wealthy Americans shared his wisdom.