So I've finally put to bed a sketch of how the relative economic importance of bequests has changed over the past five centuries. The more I think about it, the more I think that the central points--the stunning decline in the relative importance of inherited wealth with the coming of modern economic growth, and the way in which America initially defined itself as hostile to inheritance for equality of opportunity's sake--are very important. Thus I find myself frustrated: I think I have important things to say, but I don't think I've said them as well as they deserve.
Practically every major aspect of our system of inheritance today is less than two hundred and fifty years old. Two hundred and fifty years ago, inheritance proceeded through primogeniture--as if those leaving bequests cared not for the well-being of their descendants but only for the wealth and power of the lineage head. Before the industrial revolution, inheritance played an overwhelming and crucial role in wealth accumulation and wealth distribution that it does not play today.
Migration to the New World was accompanied by a rapid shift in the perception of the purpose of inheritance as the old patterns failed to flourish in a land-rich, rapidly-growing frontier-settler economy. By the start of the twentieth century inherited wealth was regarded with suspicion in America, with even some of the richest calling for estate taxes to keep the rich from diverting the public trust of their fortunes into the pockets of their descendants. Thus the coming of social democracy to America brought with it high statutory rates of tax on large estates, which nevertheless did not raise a great deal of revenue. Now we may be seeing another turn of the wheel, for if history teaches anything it is that even those elements of inheritance that we think of as most deeply embedded in fundamental human desires and economic laws are remarkably mutable over the centuries.
Posted by DeLong at June 23, 2002 02:25 PM
J. Bradford DeLong (2003, forthcoming), "Bequests: An Historical Perspective," in Alicia Munnell et al., eds., The Role and Impact of Gifts and Estates (Washington: Brookings Institution).