Widgets Magazine


Liberty and justice for all?

Stanford is an institution that transforms bright, optimistic young people into the future leaders of tomorrow. But, the very mechanisms by which an elite institution like Stanford places students in positions of power and wealth are the same mechanisms by which social injustice is propagated across generations. Indeed, Stanford is an example of an institution that cements systemic privilege and disadvantage, precluding the existence of a just world.

When envisioning a world that is “just,” a quintessential question arises: Should the circumstances a child is born into affect the chances of success for that child? Social theorists like John Rawls and advocates of equal opportunity believe that the lottery of birth – being born into a particular race, class or with certain genetic predispositions – should not affect the opportunities afforded to individuals. Under this definition, a just world is one where personal effort and exertion is the only variable determining outcome.

In reality, however, systems of heritable advantage and disadvantage exist and, often, are a result of historical conditions and the effects of colonization. A Pew study has discovered that while recently the wage gap between African Americans and White citizens has been bridged significantly, the wealth gap remains very large. Scholars often attribute this gap in wealth assets, such as property and endowments, to the generational effects of slavery and institutionalized racism (e.g., crop lien system, Jim Crow laws, housing segregation) in America. For African Americans, the system of inherited disadvantage was created from a history of subjugation and discrimination, something that the individual born today has no control over.

The history of discrimination in America is representative of how social and environmental circumstances preclude equal access to opportunity. For example, studies surrounding the “vicious cycle” of poverty indicate that, in general in America, economic mobility has stagnated such that one is more likely than anytime within the past few decades to stay within the social class she was born into. In fact, research by the National Health Institute even demonstrates that chronic exposure to poverty and financial hardship can significantly reduce attention span, memory and mental strategizing in children. These shocking observations demonstrate how the inheritance of poverty and its associated stresses not only predict future success but also can change the very physiology and neurodevelopment of individuals exposed to it.

In fact, the very existence of inheritance as an institution precludes a “just” world as described above. The very concept of inheriting wealth from one’s parents already confers advantage or disadvantage depending on the financial status of one’s parents. If a true meritocracy is desirable, then one’s financial outcomes should only be based on his or her choices and the effort he or she puts into pursuing dreams. There is no room for wealth inheritance because the decisions made by a previous generation will heavily affect the next generation’s opportunities to succeed. And, while in reality, certain parents may spend more on tutoring, accessories and sustenance for their kids even without inheritance, at least the elimination of inheritance minimizes how a parent’s decisions and corresponding financial status affect a child’s outcome.

Stanford, especially, is guilty of perpetuating a system of inherited advantage. Described by the New Yorker as the “Get Rich U,” Stanford, whether intentionally or not, places its students in positions of power and wealth. A Stanford study of the class of 2012 reveals how most graduates end up in prestigious tech or business corporations, like Google and McKinsey. In fact, the average salary of a Stanford graduate midway through career is $126,000, which is the 2nd highest in the nation. Stanford sets up its students to be in a place where twenty years down the line, its students can bestow the benefits of wealth, power and influence upon their children and, thus, initiate a cycle of inherited advantage.

Many Stanford students might counter, claiming that Stanford admits a significant number of first generation, low-income students and provides them a chance to uplift their family and their communities. While such a policy mitigates the effects of inherited disadvantage, selectively choosing a few individuals to succeed from a disadvantaged community does not provide a systemic solution. A Princeton study indicates a strong trend in the past few decades of residential discrimination based on educational attainment. Individuals with college degrees self-segregate into more affluent neighborhoods away from those with high school diplomas. Likewise, providing the benefit of quality education to a few low-income scholars can create a brain drain where educated students leave their home communities in order to provide a higher standard of living for their family.

Alternatively, a redistribution of wealth through a 100% inheritance tax would drastically shift financial resources from affluent to underserved communities, equalizing access to opportunity. For example, new government cash inflows could improve the quality of education in underserved communities (e.g., better public schools, libraries) such that diversity admissions programs for low-income students will be less necessary at universities like Stanford.

While I realize that outlawing inheritance is an idealistic proposition, it is meant to provoke individuals to critically think about the root of inequality and how we, as Stanford students, will be perpetuating injustice by the very act of passing down our wealth to our children. If we agree that financial outcomes should only be a function of what we control – that is, the effort and choices we make – then we have to eradicate systems of inherited advantage and disadvantage. Doing so requires those with privilege to renounce it and support the greater good by ending inheritance.

Contact Neil Chaudhary at neilaman ‘at’ stanford.edu.

  • Eric

    Outlawing inheritance is equivalent to saying that a parent has no right to leave anything toward their child. It’s not idealistic – it goes against one of the fundamental rights of a parent to bestow upon their child all that they can give. It would affect more than just the wealthy: for example, could the adult children of the recently passed man in A Raisin in the Sun have been given $10,000 to buy a new house and leave their tenement if inheritance had been outlawed? And what about non-monetary heirlooms? Would I have to pay money to keep my Grandfather’s Bible, which he read from in all his years as pastor? Would I be at risk of losing the modest farmhouse that had been in my family for three generations? Banning inheritance harms more than the wealthy.

  • anonymous

    Neil, you lament that the system we have is imperfect. On that we all agree. But it’s the best one in the world for the rich and the poor (our poor are better off than the middle class in most countries).

    As for a 100% inheritance tax, you’d completely kill the American Dream of striving hard for a better life for your kids. That Dream is a huge driver of the effort and risk-taking that makes our economy the best in the world and draws highly motivated immigrants from the world over to our land of opportunity.

    And if you really want equal opportunity for kids, shouldn’t we have to give up our children to be raised by the state? I think we can also all agree that would be worse than today for those kids.

  • ’17

    Luckily, Milton Friedman has already schooled a naive Stanford student on the proposition of a steep inheritance tax: https://www.youtube.com/watch?v=MRpEV2tmYz4

  • Naive Stanford Students United

    ’17, I’m glad you shared this video but I would have liked it if you used your own mind to think about ideas before mouth-piecing Friedman. And don’t call people naive who you don’t know.

    Onto Friedman’s argument: It is based on the premise that people are motivated by the family unit above the individual. Friedman claims that the incentive to be productive stems from the desire to provide for the child.

    I would counter by challenging the notion that a 100% inheritance tax destroys incentives for a couple of reasons. Friedman is mixing up casualties. The desire to care for one’s children is not a result of inheritance; rather, inheritance is but one manifestation of a parent’s desire to see their children thrive. Claiming that removing inheritance would entirely destroy the parent-child incentive system is an overstatement (a “strawman” argument, if you will). In a world without inheritance, parents would still be motivated to be productive to provide for their children through income (spending more on them in terms of commodities), even if wealth can no longer be passed down the lineage.

    Even more important, rather than eradicating the parent-child incentive system, removing inheritance tax would shift how parents “care” for their children. Rather than the constant stress, anxiety, and financial struggle that families (especially working class families) must go through to amass enough savings to send their student to college or to provide comfortably for their children, parents no longer have to worry about transmitting financial wealth. Rather, they would have to worry about transmitting positive values (i.e., hard work, diligence, sociability) that would help their child succeed in a meritocratic society (one where the historical financial situation of a family does not influence a child’s success). This means spending more time with the family, developing stronger connections, and overall increasing the social cohesion of a society.

    Friedman argues that the eradication of inheritance will result in frivolous entertainment rather than investment, resulting in no economic growth as a society. If a rich businessman is about to die, yes, (s)he might squander all his or her wealth on things that have no long-term value. There are a couple of reasons that this will not stop economic growth. First, Friedman provides no support that individuals in such a position will squander their wealth (i.e., think Bill Gates who created a foundation for social good and will donate most of his wealth). Second, economic growth will not be slowed by a reduction in personal savings. Economic growth is driven first by capital accumulation (i.e., building more factories) and once capital accumulation reaches a steady state (i.e., more factories won’t produce more profits), then technological growth (i.e., a new machine in a factory that increases productivity). Capital accumulation and technological growth in the 21st century is driven by corporations and government sponsored research. Removing inheritance will actually increase government sponsored research (increased gov revenues from inheritance tax) and have a negligent effect on corporations (individuals will still invest in corporations for gains they will receive in income and for long-term retirement plans).

    Overall, removing inheritance would still be a positive idea for society. As per Neil’s argument, it removes systems of inherited advantage and disadvantage, creating a more meritocratic system. Second, it promotes a more pro-social society (encouraging parents to transmit values rather than money). Third, economic growth would still be viable.

    Please think critically before espousing someone else’s ideas.