Reading Capital... in the 21st Century (part 5 of x)

Another important contribution that Piketty has made to the study of economic inequality is to remind us all of the importance of gift-giving in the intergenerational transfer of wealth. This is made possible in part by the fact that France has strict laws requiring the registration and taxation of such fiscal transfers, dating back to the French Revolution, which have made it possible for Piketty and his collaborators to estimate, in a quite consistent time series spanning more than two centuries, how much inheritance takes place before death.

His data have led me in turn to reflect upon the role of such transfers in my own class standing. As I mentioned in my last post, in terms of both income and wealth my household is somewhere around the 10th percentile in the U.S. In both those metrics, the roles of hereditary class, education, race, gender, family dynamics, ability, effort, and luck overlap and are difficult to de-compose. They are a bit easier to de-compose in terms of wealth, though, for the simple reason that, while we have substantially more than most, we don't have very much.

My wife's family is as close as one could get to a pure example of the 20th century U.S. "patrimonial middle class" (to use Piketty's term). Her grandparents were white and Jewish in New York City, two generations removed from the immigrant experience, and worked union jobs in New York City at a time when that made it possible (for white ethnics) to buy and maintain houses in the outer boroughs. Her parents both attended Queens College when it was still both tuition-free and excellent. Her father, now retired, worked as a sociology lecturer at CUNY. (The job title "lecturer" means something a bit different in CUNY than it does in most U.S. institutions of higher education--at CUNY, it refers to a long-term, full-time, tenured member of instructional faculty who, however, does not have a PhD or other terminal degree. It's a job title that is being phased out.) By the time they set up household in the early-to-mid-1970s, NYC had gotten a reputation (among white ethnics) as "not a good place to raise a family," so they moved out to the suburbs. They bought a house in a relatively affordable town in the far north of Westchester County, from which my father-in-law made a two-hour commute 3-4 times a week for his entire working life, and never missed a mortgage payment.

My family's class background is more complex, due to my father's immigrant status, his entrepreneurial tendencies, and our overall dysfunctionality. A belated divorce has effectively re-proletarianized my mother, and left me no longer having to give a fuck what my father does with his life. While they were still married, their financial standing fluctuated wildly. At times, they were wealthier--on paper--than my in-laws, and at other times, they were broke, with near-zero income and negative net assets. My mother's upbringing in a Jewish, middle-class milieu on Long Island meant that I was raised with the expectation-cum-aspiration that a college education would serve as a path to a secure middle-class status, a status which she had neither the educational background nor the financial capital to sustain on her own.

So the fact is that, while by virtue of education, effort, whiteness and luck, my wife and I have been able to accumulate some wealth through savings--both of us have been working full-time, and constantly, since leaving graduate school--at key moments we received gifts from both my in-laws and (at times when they were relatively flush) my parents that we were able to leverage--again, with the help of some luck--into more significant accumulations than would be possible through savings alone. The most important examples were the gifts we received at our wedding (which helped my wife complete her second Master's degree without taking on any debt) and the gifts that, together with our savings, formed the down-payment on the Queens apartment we bought in 2003 and sold (for a significant profit, though not as much as if we had sold before the bubble burst in 2008) in 2012. To the extent that we own anything more than the balances in our pension funds--the equity on our house in Maine, the funds in our savings account, college funds for the kids--it has been made possible through the appreciation of that first asset, and the savings made possible by the reduction of our monthly housing costs through owning rather than renting. Without the well-timed intergenerational transfer of wealth through gifts, that would not have been possible.

This is worth bearing in mind any time you hear someone claim that "everything I have, I earned it through hard work." In some rare cases, it may actually be true. In many cases, it is an understandable illusion: The person making the utterance may well have worked hard their entire lives, and thus can deceive themselves into believing that such work is the sole cause for their possessions. Commodity fetishism takes advantage of the human ability to forget inconvenient facts and refashion oneself as the hero of one's own story. In most cases, however, it is largely bullshit. Each of us is born into an already hierarchized society, with parents or grandparents who have greater or lesser resources to provide not only in terms of money, but in terms of education, nurturing, and what educational psychologists call "self-efficacy," the necessary illusion that we can be the masters of our own destiny. For most people, wealth is a phenomenon with which they have no direct experience, a kind of inscrutable force of nature, effectively a lottery. Those of us who have something were born with much of that something. Luck and money follow one another closely, with sometimes one or the other leading. Rarely do they have much to do with virtue.