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Dynasty Trusts - America Builds an Aristocracy
July 13, 2010 11:39 PM   Subscribe

Dynasty Trusts - America Builds an Aristocracy.
posted by MonkeySaltedNuts (74 comments total) 6 users marked this as a favorite

 
certainly if corporations have first amendment rights, then the wealthy should be taxed like corporations and pay no taxes at all.

free market, etc.
posted by Hammond Rye at 11:44 PM on July 13, 2010


But tax breaks are not the only special advantages that dynasty trusts provide. Even more troubling, they commonly include a “spendthrift clause,” which provides that trust assets cannot be reached by a beneficiary’s creditors. If a beneficiary causes a car accident, for example, the victim cannot be compensated with assets from the trust, even if they are the driver’s only resources.

How spendthrifty.
posted by mreleganza at 11:48 PM on July 13, 2010 [2 favorites]


I believe Robert Townsend said something along the lines of "Inherited wealth is a birth defect."
posted by ifandonlyif at 12:02 AM on July 14, 2010


Noted without comment:

"By Ray D. MADOFF"
posted by dersins at 12:19 AM on July 14, 2010 [1 favorite]


The problem with estate taxes is the English language. If we could rid the English language of the words "farm" and "death", politicians wouldn't be able to use phrasing to bully the passing of laws that benefit a small handful of independently wealthy individuals.
posted by Blazecock Pileon at 12:30 AM on July 14, 2010 [3 favorites]


A poor person can work hard, become rich and pass his money on to his children and grandchildren. But then, if those descendants do not manage it wisely, they may lose it. “Shirtsleeves to shirtsleeves in three generations,” the saying goes, and it conforms to our preference for meritocracy over aristocracy.

Yeah, Americans believe a lot of stupid things.
posted by Pope Guilty at 12:31 AM on July 14, 2010 [3 favorites]


certainly if corporations have first amendment rights, then the wealthy should be taxed like corporations and pay no taxes at all.

free market, etc.


The fact that a corporation isn't, right now, pulping my bones in an effort to discover a cheap alternative to baby powder is proof that the commun'sts have taken over.
posted by Uppity Pigeon #2 at 12:41 AM on July 14, 2010 [2 favorites]


Nah, it just proves they don't see a profit in it.
posted by Pope Guilty at 12:42 AM on July 14, 2010 [5 favorites]


Good point. They should be charging me.
posted by Uppity Pigeon #2 at 12:45 AM on July 14, 2010 [3 favorites]


Uppity Pigeon #2: "The fact that a corporation isn't, right now, pulping my bones in an effort to discover a cheap alternative to baby powder is proof that the commun'sts have taken over."

How would you like an exciting opportunity to put $50 into the hands of your loved ones?
posted by boo_radley at 12:48 AM on July 14, 2010 [8 favorites]


Noted without comment: Ray D. Madoff is the author of “Immortality and the Law: The Rising Power of the American Dead,” a book clearly about zombies.
posted by l33tpolicywonk at 12:57 AM on July 14, 2010 [8 favorites]


Republicans think zombies should be exempt from inheritance taxes.
posted by gerryblog at 1:07 AM on July 14, 2010


that's voodoo economics for you
posted by Hammond Rye at 1:07 AM on July 14, 2010 [4 favorites]


OK. Much as I love shitting on the rich...

1) Wouldn't beneficiaries pay income taxes on the received income?

2) Wouldn't creditors be able to garnish that received income from the trust?

Wouldn't it just be taxes are paid at point of distribution rather than transfer?
posted by Talez at 1:18 AM on July 14, 2010


"Wouldn't beneficiaries pay income taxes on the received income"

The whole point is that such a trust can pay a lot of living expenses such as housing & housing maintenance, vehicle use, education and medical care for you and your children without having to transfer the money to you first. Unlike housing benefits provided by a job that you have to pay taxes on, the whole situation is like living in your parents home and using their stuff, except that they are dead. The trust can even pay to startup a business and let you run it without any of the expenses passing through you.

Maybe part of the requirements for maintaining the "ancestral home" is that it keep a fully stocked bar and they don't mind if you liberate a case or two to take to a party.
posted by MonkeySaltedNuts at 2:04 AM on July 14, 2010 [3 favorites]


I don't know how these trusts interact with the tax system but...

Wouldn't it just be taxes are paid at point of distribution rather than transfer?

Not really. By deferring paying taxes until the money is distributed, the capital gains and income are allowed to build up tax free. It's true that eventually they may be taxed at some distant point in the future, but until then, the trust accumulates money tax free. It's like an interest free loan from the government
posted by I_pity_the_fool at 2:11 AM on July 14, 2010 [3 favorites]


well i think the article suggests that the wealthiest 1% of americans have engaged our politicians in a proper framework for financing the corporations that will someday build eternal superandroid brainspacesuits to explore the cosmos free of petty human class warfare
posted by Hammond Rye at 2:14 AM on July 14, 2010 [1 favorite]


Why not just form a corporation with a mandate to provide your heirs with "jobs" And why not headquarter that corporation in Dubai or something?
What caused state legislatures to abandon a rule that had existed since the late 1600s? Banking industry lobbyists persuaded them that it would be a lucrative move because it would bring business to their states.
If this is all dependent on the vagaries of state legislatures over the centuries, why not just remove the money from America? These families could pool their resources (facilitated by a for profit corporation, of course!) to create a collection of foreign corporations in several different countries operated by boards charged with keeping the offspring of these people in cash for eternity?

In fact, what's interesting is that I would bet that true aristocratic societies had to 'prune' their 'official' decendants. This would have been easy because the money would have been centrally controlled by the family itself. If you take the control out of the hands of the family, then people can't be "disowned" (or perhaps they need to be by vote or something). If there's no way to disown people, then over the course of several generations (assuming each person has two kids with one non-member) every human on earth would be a descendant of all the dynasties.

(In theory it would take 33 or 34 generations if the population stays between 8 and 16 billion)
posted by delmoi at 2:27 AM on July 14, 2010


eternal superandroid brainspacesuits

Sign. Me. Up.
posted by BitterOldPunk at 2:39 AM on July 14, 2010


By deferring paying taxes until the money is distributed, the capital gains and income are allowed to build up tax free. It's true that eventually they may be taxed at some distant point in the future, but until then, the trust accumulates money tax free. It's like an interest free loan from the government.

Trusts are taxpayers for federal income tax purposes. Taxes on trust income are not deferred. If the trust does not distribute the income it receives, then it pays the income tax due. The rate bracket for trusts is very compressed: a trust is at the highest marginal rate with only about $10,000 of income.

A poor person can work hard, become rich and pass his money on to his children and grandchildren. But then, if those descendants do not manage it wisely, they may lose it. “Shirtsleeves to shirtsleeves in three generations,” the saying goes, and it conforms to our preference for meritocracy over aristocracy.

This is not the case with regard to trusts. One of the primary purposes of a trust in estate planning is removing the responsibilities of the management of property from the beneficial owners of the property (the trust beneficiaries). If you have a bank or trust company acting as trustee of and managing a multimillion dollar trust, they can preserve the principal for generations and the successive beneficiaries of the trust may never have to work.

Wouldn't creditors be able to garnish that received income from the trust?

If you are a trust beneficiary and the trust owns your house and pays your bills, there is nothing to garnish. Moreover, even if you are receiving trust distributions which could be reached by creditors, the creditors can only get at those assets once they are in your hands and the creditors have to go to court every time they think you have received a distribution. Often, by the time the creditor has gone through the appropriate process to garnish your bank account, you've spent the money.

Finally, if you are a judgment creditor who is owed money from a tort suit (e.g. the beneficiary ran you over in his car, beat you up, defrauded you) chances are you don't have the resources to be ever vigilant and constantly go after the trust beneficiary to fulfill your judgment against him.

Bottom line: It is an enormous windfall in life to be the child or grandchild of wealthy individuals who engaged in extensive legal planning.
posted by SugarFreeGum at 5:06 AM on July 14, 2010 [4 favorites]


Meanwhile, the Wall Street Journal truly has its finger on the pulse of the nation in this urgent, important piece on whether or not the estate tax on millionaires will make Daddy Warbucks want to off himself so his heirs get 30 million instead of a paltry 15.
posted by availablelight at 5:08 AM on July 14, 2010


availablelight: "Meanwhile, the Wall Street Journal truly has its finger on the pulse of the nation in this urgent, important piece on whether or not the estate tax on millionaires will make Daddy Warbucks want to off himself so his heirs get 30 million instead of a paltry 15."

Not only will the top rate jump to 55%, but the exemption will shrink from $3.5 million per individual in 2009 to just $1 million in 2011, potentially affecting eight times as many taxpayers.

So what 8 people?:)
posted by MrLint at 5:16 AM on July 14, 2010 [3 favorites]


Any well-funded individual lacking suitable heirs are invited to contact the undersigned via MetaFilter.

I'm respectful to seniors, charming at dinner parties, know how to sail and I can rock an ascot.
posted by Artful Codger at 5:21 AM on July 14, 2010 [3 favorites]


The question is not whether income in a trust gets taxed, but whether capital gains get taxed. In Canada, capital goods held by a trust are deemed to have been sold for the purposes of taxing capital gains every 21 years; the article here seems to imply that, in some states, they're only taxed if they really are sold.
posted by jeather at 5:28 AM on July 14, 2010


The question is not whether income in a trust gets taxed, but whether capital gains get taxed. In Canada, capital goods held by a trust are deemed to have been sold for the purposes of taxing capital gains every 21 years; the article here seems to imply that, in some states, they're only taxed if they really are sold.

This is correct. Capital appreciation on a trust's assets (like an individual's assets) is not taxed until sold. But what is wrong with this? If you haven't sold an asset why should you be forced to pay income tax on the asset's appreciation? This could easily create a liquidity problem (i.e. you are forced to sell an asset in order to pay the tax on the asset). Moreover, this regime looks more like a property tax than an income tax (you are taxing the value of the property not the income realized by the taxpayer).
posted by SugarFreeGum at 5:38 AM on July 14, 2010


Okay, it may surprise some MeFites who have interacted with me in the past, but...

I think this is stupid and wrong.

The Rule Against Perpetuities was created for a reason, specifically that the legal system in early-modern England, not a time period exactly known for its anti-aristocratic activism, was finding that property was becoming increasingly encumbered by restrictions created by people who were long dead. I.e., in a society which was all in favor of aristocrats, the problems for society created by permitting people to encumber their property for generations to come was not worth the benefits such restrictions may have given to their heirs. Indeed, even the heirs sometimes found the restrictions burdensome, as they largely precluded any disposition of the property.

This was an obviously big deal when, as in the time when the Rule was created, most property is real property. All of a sudden that perfectly convenient plot can't be used for building anything, even if the landowner wants to, because great-great-grandad said it couldn't. Even if an heir stands to make an absolute killing on selling a bit of land, sorry, no can do. That's just No Good At All.

Most assets are no longer real property, but I can still see this creating problems today. The way trusts work is not just that they are distinct from the assets of their beneficiaries and thus unavailable to creditors. No, for them to function as trusts, they have to be free to some extent from the control of the beneficiaries. The courts are pretty good at spotting and invalidating "trusts" which are created purely for the purposes of tax avoidance but which impose no restrictions on their beneficiaries. If the beneficiary can spend the money at will, it's not going to be recognized as a trust.

This is significant because some assets will still be land, and if it isn't easy to dispose of, unless a municipality wants to use eminent domain--which has its own problems--the current use isn't likely to change, even if it no longer makes sense for an area. But even more importantly, economies grow because people take measured risks like starting businesses or at least lending to people who do. A trust which focuses solely on current income, which isn't a terrible way to set up a trust, wouldn't be able to engage in such potentially risky but essential activities. Neither would it necessarily be easy for it to switch its investment from one sector of the economy to another. The nineteenth-century railroad, oil, and steel fortunes are now small potatoes compared to the money to be made in newer technologies, and I see no reason to think that the current fortunes made in electronics won't be surpassed by currently unknowable advances in the future.* So we're potentially looking at an increasing percentage of the nation's assets tied up in these immortal entities which aren't as liquid as they might be and thus can't efficiently distribute their capital because their investment guidelines and restrictions were created decades or centuries in the past.

This isn't just bad for society, it's also bad for the rich people who think they're doing right by their kids. So while it may be a winning proposition for the rich for generation or two, even in the intermediate term it's a losing proposition for everyone.

*This, of course, involves the rather dubious but arguably essential assumption that the whole shebang isn't going to pot in the next decade or two. If that turns out to be wrong, none of this really matters though, so it isn't like there's another option.
posted by valkyryn at 5:53 AM on July 14, 2010 [3 favorites]


Receipt of a house is income.
posted by explosion at 5:53 AM on July 14, 2010


All of a sudden that perfectly convenient plot can't be used for building anything, even if the landowner wants to, because great-great-grandad said it couldn't.

I believe this is sometimes known as the "dead man's hand" problem, although Google isn't backing me up here at all.
posted by djgh at 6:11 AM on July 14, 2010


I think if the not-yet-born are full-fledged people in the eyes of the right wing, then we should conversely tax the dead.

Lazy, good-for-nothing corpses.
posted by grubi at 6:36 AM on July 14, 2010 [1 favorite]


Lazy, good-for-nothing corpses.

There is a story in the surprisingly excellent anthology "The Living Dead" about this.

It doesn't end well.
posted by The Whelk at 6:37 AM on July 14, 2010


There's a story about taxing the dead? And then they have an anti-tax uprising (from the grave)?

Zombaggers.
posted by grubi at 6:41 AM on July 14, 2010 [3 favorites]


mostly employing/enslaving the dead, kind of like the end of Shaun Of The Dead but not funny
posted by The Whelk at 6:43 AM on July 14, 2010


I believe that the way the word "aristocracy" is being used in this article is ahistorical. America has no aristocracy. Never did. Never will.

/historical nitpickery
posted by MarshallPoe at 6:55 AM on July 14, 2010


This shit is un-American. This is the land where you leave college debt free to take a job at your dad's law firm, not where a bunch of dandy's can romp about without having to do any work dammit.
posted by geoff. at 7:08 AM on July 14, 2010


just testing my reading comprehension with a question here:

100 billion dollars were moved to institutions in these perpetual trusts...

it would seem the best way to maximize the amount of money left to your heirs through these trusts is to buy life insurance..

so if this 100 billion dollars is pumped straight into the insurance industry, does the bank continue to lend out 100 billion dollars as if they had 100 billion dollars until that generation has expired, when the life insurance policies pay off and the bank now has 10 trillion dollars to loan? do the banks loan out 10 trillion dollars before any of these people die based on the assumption that the insurance companies OWE them 10 trillion at an unspecified later date?
posted by Hammond Rye at 7:13 AM on July 14, 2010


I believe that the way the word "aristocracy" is being used in this article is ahistorical. America has no aristocracy. Never did. Never will.

/historical nitpickery


Um... wrong. But it is a very convenient myth we like to tell ourselve because it makes us feel good.

Who Rules America?

/sociological nitpickery
posted by Pirate-Bartender-Zombie-Monkey at 7:16 AM on July 14, 2010 [5 favorites]


I believe that the way the word "aristocracy" is being used in this article is ahistorical. America has no aristocracy. Never did. Never will.

Aristocracy is alive and well; it's just de facto now, instead of de jure.
posted by Pope Guilty at 7:16 AM on July 14, 2010


America has no aristocracy. Never did. Never will.

If "aristocracy" is defined as "A class of people characterized by inherited wealth over generations," then the article is describing the emergence of what could arguably be called an "American aristocracy," as the creation of dynasty trusts creates the possibility for the preservation of family wealth eve more effective than the trusts which have kept the Rockefeller and Morgan families in various halls of power for a century.

If, on the other hand, you want to insist upon explicit and official political power within the definition of "aristocracy" rather than just the political power that inherently follows large sums of money, than you're probably right, but one is tempted to call such a requirement pedantic.
posted by valkyryn at 7:21 AM on July 14, 2010 [6 favorites]


Hey, it's Bastille Day.

Maybe someone will push a member of the Bush clan out of a window to celebrate.
posted by Pirate-Bartender-Zombie-Monkey at 7:37 AM on July 14, 2010 [1 favorite]


Who Rules America?

I know this one! It's Master Blaster, right?
posted by Pope Guilty at 7:44 AM on July 14, 2010 [9 favorites]


>Who Rules America?

I know this one! It's Master Blaster, right?


Don't make me stick you in the cage.
posted by valkyryn at 7:50 AM on July 14, 2010


I know this one! It's Master Blaster, right?

two men enter... one man leaves.
posted by Hammond Rye at 7:51 AM on July 14, 2010


I know this one! It's Master Blaster, right?

Don't make me bring out the whistle on you...
posted by Pirate-Bartender-Zombie-Monkey at 7:52 AM on July 14, 2010


Since the tax law change referred to in the article, seventeen states have repealed the rule against perpetuities. Most of these states are small or medium sized, with the exception of New Jersey, Florida and Illinois. Up to now, the largest states have kept the RAP, which has kept most of the trusts in this country from being perpetual. However, if either California or New York ever repeals their RAP law, expect to see the rest of the states move quickly to do the same.
posted by thewittyname at 8:16 AM on July 14, 2010


Perhaps the institutionalised aristocracy this creates can pave the way for Libertarian Monarchism.
posted by acb at 8:37 AM on July 14, 2010


I believe this is sometimes known as the "dead man's hand" problem, although Google isn't backing me up here at all.

Try "mortmain". It's depressing to realize exactly which aspects of my master's thesis research on medieval common law and dynasty formation is conceptually useful in the present.
posted by immlass at 8:51 AM on July 14, 2010 [4 favorites]


Dead man's hand

Wait... that's not just a poker reference? Neat.
posted by Pirate-Bartender-Zombie-Monkey at 9:11 AM on July 14, 2010


It is silly to say America has a "aristocracy" in any meaningful historical sense. Read Tocqueville. He knew what an "aristocracy" was because he was an aristocrat who was born in a real aristocracy. He came to the US and said, more or less without qualification, that America had no aristocrats and was not an aristocracy. That--the very absence of aristocratic ideology and practice--is what made the US distinct from France (and pretty much everywhere else in pre-modern times). He wrote "DEMOCRACY in America," not "ARISTOCRACY in America." By "Democracy" (as I'm sure you know) he meant "equality." He knew the doctrine of (non-spiritual) equality was very unusual. He was right. In almost all of human history prior to the 18th century (NB: I said "almost"; keep that in mind as you go Googling for exceptions), it never really occurred to any political thinker to say "All men are created equal." Quite the opposite--everyone from Aristotle on thought that all men were created unequal, that there were natural aristocracies in the strong sense.

America has an "aristocracy" like Democrats are "socialists" and Republicans are "fascists." It's a hackneyed way to say "I don't like X," but it bears no relation to historical--or sociological--reality. If you don't like inequality of wealth, or inequality of wealth passed through generations, or economic classes, just say so and explain why. The name-calling is just distracting.

/historical rant
posted by MarshallPoe at 9:22 AM on July 14, 2010 [1 favorite]


This is perfectly appropriate regressive tax policy for the end-stage empire form that we have adopted. Next we need to repeal the child labor laws or introduce indentured servitude for undocumented aliens.

As far as hereditary aristocracies go....

It's actually more of a caste society than it is bloodline aristocracy, but you get the drift.
posted by warbaby at 9:26 AM on July 14, 2010


The territorial aristocracy of former ages was either bound by law, or thought itself bound by usage, to come to the relief of its serving-men and to relieve their distress. But the manufacturing aristocracy of our age first impoverishes and debases the men who serve it and then abandons them to be supported by the charity of the public. This is a natural consequence of what has been said before. Between the workman and the master there are frequent relations, but no real association.

I am of the opinion, on the whole, that the manufacturing aristocracy which is growing up under our eyes is one of the harshest that ever existed in the world; but at the same time it is one of the most confined and least dangerous. Nevertheless, the friends of democracy should keep their eyes anxiously fixed in this direction; for if ever a permanent inequality of conditions and aristocracy again penetrates into the world, it may be predicted that this is the gate by which they will enter.
Alexis de Tocqueville, Democracy in America Book II Chapter XX
"HOW AN ARISTOCRACY MAY BE CREATED BY MANUFACTURES "
posted by Hammond Rye at 9:31 AM on July 14, 2010 [10 favorites]


It is silly to say America has a "aristocracy" in any meaningful historical sense.
Who has predominant power in the United States? The short answer, from 1776 to the present, is: Those who have the money have the power. George Washington was one of the biggest landowners of his day; presidents in the late 19th century were close to the railroad interests; for the Bush family, it was oil and other natural resources, agribusiness, and finance. But to be more exact, those who own income-producing property -- corporations, real estate, and agribusinesses -- set the rules within which policy battles are waged.

While this may seem simple and/or obvious, the reasons behind it are complex. They involve an understanding of social classes, the role of experts, the two-party system, and the history of the country, especially Southern slavery. In terms of the big world-historical picture, and the Four Networks theory of power advocated on this site, money rules in America because there are no rival networks that grew up over a long and complex history:

* No big church, as in many countries in Europe
* No big government, as it took to survive as a nation-state in Europe
* No big military until after 1940 (which is not very long ago) to threaten to take over the government

So, the only power network of any consequence in the history of the United States has been the economic one, which under capitalism generates a business-owning class that hires workers and a working class, along with small businesses and skilled artisans who are self-employed, and a relatively small number of independent professionals like physicians. In this context, the key reason why gold can rule, i.e., why the business owners who hire workers can rule, is that the people who work in the factories and fields were divided from the outset into free and slave, white and black, and later into numerous immigrant ethnic groups as well, making it difficult for workers as a whole to unite politically to battle for higher wages and better social benefits. This important point is elaborated on toward the end of this document in a section entitled "The Weaknesses of the Working Class."

Moreover, the simple answer that gold rules has to be qualified somewhat. Domination by the few does not mean complete control, but rather the ability to set the terms under which other groups and classes must operate.
/Sociological citation
posted by Pirate-Bartender-Zombie-Monkey at 9:38 AM on July 14, 2010 [1 favorite]


i fear i have taken tocqueville out of context.

again, i predict democracy will find its purest expression once man has realized eternal superandroid brainspacesuits and the concentration of wealth into the hands of the few is the best possible way to achieve this.

tocqueville could not have possibly envisioned such possibilities developing from an untitled aristocracy.
posted by Hammond Rye at 9:47 AM on July 14, 2010


Trust funds aren't foolproof. I remember the mother and daughter from Grey Gardens were getting by mainly on money from The Bouvier Trust Fund and when it dried up they were completely destitute. Somehow they retained the big house (I don't know how they paid the taxes) but there was no heating, no water, no repairs and the house was falling down around their ears when their niece and cousin, Jackie O, stepped up and paid for repairs.
posted by Secret Life of Gravy at 9:51 AM on July 14, 2010


So, the only power network of any consequence in the history of the United States has been the economic one, which under capitalism generates a business-owning class that hires workers and a working class, along with small businesses and skilled artisans who are self-employed, and a relatively small number of independent professionals like physicians.

Fits nicely into the theory (which, btw, I quite admire as I'm a fan of Mann), but, alas, doesn't really match the facts. No big (state) church doesn't mean that ideology (I'd call it "beliefs" or "principles") isn't important. Ideology is important, particularly in US history. Americans really believe in freedom, even the freedom to be filthy rich. They aren't (comparatively) bothered by huge disparities of wealth. So long as they can do pretty much as they please and "vote the bastards out," they don't care how much money the so-called "aristocrats" have because, in the American mind (and in fact), money does not equal power over the average, middle-class, American Joe or Jane. You might call this the "fuck-wad" theory of freedom: if you can walk up to the richest "aristocrat" in the land or even the highest elected official and call him/her a "fuck-wad" without fear of death, beating, jail, etc., etc., then Americans are very likely to say you are "free."

What kind of "aristocracy" is it when the aristocrats can't even prevent random "subjects" from calling them "fuck-wads?"
posted by MarshallPoe at 9:59 AM on July 14, 2010


Here's a better definition of untitled aristocracy to be found in "The Condition of England" by Frederick Engels
The sixteenth and seventeenth centuries had brought into being all the preconditions for social revolution, they had destroyed the Middle Ages, established social, political and religious Protestantism, created England’s colonies, sea-power and trade, and set up alongside the aristocracy a growing and already quite powerful middle class. Social conditions gradually settled down after the disturbances of the seventeenth century and acquired a stable form which they retained until about 1780 or 1790.

There were at that time three classes of landowners, the aristocratical landlords, still the only, and unchallenged, nobility of the kingdom, who leased their estates in parcels and consumed the income in London or while travelling; the non-aristocratical landlords or country gentlemen (usually called squires), who lived at their country-seats, put out their land on lease and enjoyed among their tenants and other local inhabitants the aristocratic esteem which was denied to them in the town on account of their humble origin, lack of education and unpolished country manners. This class has now totally disappeared. The old squires who ruled with patriarchal authority the country-folk of the district and acted as advisers, arbiters and everything rolled into one, are quite extinct; their descendants call themselves the untitled aristocracy of England, as regards education and fine manners, luxury and aristocratic demeanour they vie with the aristocracy, which has little advantage left over them, and all they have in common with their rude and unpolished forefathers are their estates.
posted by Hammond Rye at 10:06 AM on July 14, 2010


i posit that it is neither ahistorical or heretical to refer to a monied aristocracy as Engels did when he concluded:
[...]England is now split into three parties, the landed aristocracy, the monied aristocracy, and working-class democracy. These are the only parties in England, they alone act as driving forces, and how they act we will perhaps try to describe in a later article.

posted by Hammond Rye at 10:21 AM on July 14, 2010


anecdotally, recall the sad demise of the early 18th century french aristocrat once called a fuckwad.

the affront did cause him such faintness that smelling salts were administered.

the next day a sudden spasm of esprit d'escalier rendered him once again senseless. he never regained consciousness, and his heirs rejoiced in their good fortune. though his legacy was vast it was forthwith squandered at the whist table
posted by Hammond Rye at 10:40 AM on July 14, 2010 [2 favorites]


What kind of "aristocracy" is it when the aristocrats can't even prevent random "subjects" from calling them "fuck-wads?"

"Actual" aristocrats couldn't do this either. Why do you think they were always passing laws about it? If they could enforce their will effectively there'd be no need for increasingly strident and draconian restrictions on the population.

No, the ancient aristocracies exerted very little actual power over people's day to day lives. True, getting a good chunk of your already inadequate harvest taken every year sucked, and there was always the odd chance that you'd get carried off to fight a war halfway around the bloody globe. But the real problem was not these regular but infrequent encounters with the aristocracy. No, if you lived before the nineteenth century, you were far more concerned about the fact that the aristocracy were so ineffective that they could neither keep the roads safe for travelers nor prevent scary men with large axes from swarming over the next hill every other Tuesday.

Seriously. It wasn't until the nineteenth century that you could travel any reasonable distance with any confidence that you wouldn't get waylaid by criminals. You never traveled at night, and preferably in large groups. Robin Hood is a legend, and the whole rob-from-the-rich-to-feed-the-poor thing is a bit of populist fantasy, but it's based on the fact that for most of human history you could, in fact, set yourself up in the woods and prey on merchants and even official government business for years without anyone being able to do anything about it. The reach of the law was limited and ineffective, and hell, it wasn't until the nineteenth century that England had a full-time professional police force.

So don't give me any crap about the mark of a "real" aristocrat is that he gets his way. Today's "aristocrats" have more power than many an historical duke.
posted by valkyryn at 10:42 AM on July 14, 2010 [7 favorites]


America has no aristocracy. Never did. Never will.

Ha.

Keep repeating: You are free.
posted by Artw at 10:54 AM on July 14, 2010


So don't give me any crap about the mark of a "real" aristocrat is that he gets his way. Today's "aristocrats" have more power than many an historical duke.

Hmm.... In seventeenth-century Russia, if you were accused (not witnessed--no proof necessary) of saying a bad word of any sort about the tsar or a member of the high nobility, well, they hunted you down and tortured you for a while, and then, as punishment (torture wasn't considered punishment), they beat you with sticks ("batogi") until you were next to dead. If your offense was bad enough, they would just kill you without trial and then go after your family. These cases were not at all unusual (cf. slovo i delo gosudarevo).

If I call Bill Gates or Barack Obama a "fuck wad," nothing will happen to me. If I walk right up to them (assuming I can get close enough) and call them "fuck wads" to their very faces, nothing will happen to me.

These things are not the same. They are not both "aristocracies."
posted by MarshallPoe at 11:08 AM on July 14, 2010 [2 favorites]


so if this 100 billion dollars is pumped straight into the insurance industry, does the bank continue to lend out 100 billion dollars as if they had 100 billion dollars until that generation has expired, when the life insurance policies pay off and the bank now has 10 trillion dollars to loan? do the banks loan out 10 trillion dollars before any of these people die based on the assumption that the insurance companies OWE them 10 trillion at an unspecified later date?

Insurance money is pooled, so the premiums go into the pool, and the payout comes from the pool. It's not done on a lot basis, where money is tied to any one person. Actuaries spend a lot of time figuring out how high the premium should be so that the insurance company still makes a profit over time (and comes within regulation).

The thing that makes insurance attractive to the people who do sell it is the constant payments. Basically, on the corporate level it's about cash flow and investments. IIRC, the pooled money is invested, but regulations require minimum capital ratios like investment banks. Traditionally, these investments are conservative, although that may have changed with CDS/CDO derivatives.
posted by krinklyfig at 11:25 AM on July 14, 2010


These things are not the same. They are not both "aristocracies."

The difference is the propensity to violence?
posted by krinklyfig at 11:26 AM on July 14, 2010


Good job things eased up in Russia after they got rid of the aristocracy.
posted by Artw at 11:28 AM on July 14, 2010 [5 favorites]


I was under the impression it was access to power, not likelihood of being offended by curse words that defined the core of an aristocracy.
posted by grubi at 11:54 AM on July 14, 2010 [1 favorite]


In seventeenth-century Russia, if you were accused (not witnessed--no proof necessary) of saying a bad word of any sort about the tsar or a member of the high nobility, well, they hunted you down and tortured you for a while etc.

Yeah, the same was frequently true in England too. The catch was that they had to find you first, and in a society with no public records and no photo IDs where travel speed was limited to that of the horse, simply disappearing was really, really easy to do. If you weren't caught and punished right away, the odds that you'd ever be found were pretty damned low.

I'm not saying that ancient monarchial aristocrats didn't have powers that current robber barons don't, but the reason punishments were so harsh in the pre-modern period was because they were intended to act as a deterrent, and they needed to act as a deterrent, because the aristocrats, even in Russia, knew full well that they only caught a tiny fraction of the people who were doing things they didn't like.

Look, we're talking about a time where court was only held two or three times a year. You had a legal problem, you had to wait for that time, and if the opposing party failed to show up or was unable to be located, hey, there's always next year. Contrast that to today where you don't even need to be seen by a human being to get a letter in the mail fining you for running a red light or exceeding the speed limit and then tell me that the old aristocracies exerted more control over their populations than modern governments do.
posted by valkyryn at 12:23 PM on July 14, 2010 [4 favorites]


the wealthy should be taxed like corporations and pay no taxes at all.

It's not quite as dire as all that. Of large corporations (250 mill in assets, 50 mill in sales), only about a quarter pay no taxes. Small business are corporations too.

Another little sharp banking practice - consider a bank that runs mutual funds. Set up a trust with them and they will put the money in those, thus getting a cut for managing the fund as well as for managing the trust. Double dipping. (I see you struggling with conflicting emotions - stick it to the rich vs why those goddamn bankers!)

As to all this talk about Power, seems to me that money is not the issue. The issue is character and God knows you don't need to be rich to exercise power for evil over your fellow man. Think of every unhelpful shop keeper, bureaucrat, help line operator who has ever told you no when a simple yes would have done.

For the historically minded, a fun autobiography of an aristocrat is the memoir of Henrietta-Lucie de la Tour du Pin who escaped the guillotine and settled for a time on a farm in America, where the local Indians called her Great Lady, not for her pedigree but for her comportment and manners.
posted by IndigoJones at 12:31 PM on July 14, 2010


Hey MarshallPoe, is the Queen of England really a Queen? I mean, she doesn't have the same powers queens had five hundred years ago.
posted by Pope Guilty at 12:36 PM on July 14, 2010


Hey MarshallPoe, is the Queen of England really a Queen? I mean, she doesn't have the same powers queens had five hundred years ago.

I would say she is a queen in the same sense that so-called American "aristocrats" are aristocrats.
posted by MarshallPoe at 12:45 PM on July 14, 2010


Hey MarshallPoe, is the Queen of England really a Queen?

The way she dresses, real queens would say No.
posted by grubi at 12:50 PM on July 14, 2010


You are correct MarshallPoe. We don't have an "aristocracy" here in the US. That's against the law and against the way we feel about our country.

We have a plutocracy, which really isn't much different.

There are many examples of the justice system in our country working differently for rich and poor; there are many examples of inherited wealth passing from one generation to the next. The isolated examples of poor people making it big are just that: isolated; while the many examples of plutocracy having formed class based economic barriers to entry and a tilted justice system are endemic if people take off their blinders and look for them.

Lets try and fight for the USA you imagine: full funding for libraries, schools, mass transit and healthcare for all so that all Americans get a chance at the equality promised in the Declaration of Independence. Anything less is un-patriotic, and happening all over America today.
posted by GregorWill at 12:55 PM on July 14, 2010 [4 favorites]


if you really wanted to compare aristocrats of the past with the current rich, wouldn't the way to do it be a ratio of assets? Like, the median net worth of an American versus the net worth of someone like Bill Gates. Compared to average Roman / Crassus or average medieval brit / Henry VIII? I don't know the numbers, but I'd suspect Bill would be winning by that method. Sure, he can't legally torture you (unless you count Vista, hurf) but I'm sure an extremely rich enemy could destroy your life if he or she wanted to. Hell, look at what the RIAA does to accused file sharers.
posted by condour75 at 1:08 PM on July 14, 2010


Yes the liberal state/police state spectrum is a bit different from the democracy/aristocracy spectrum, though democracies tend not to be police states almost by definition since having laws against speaking out against the government doesn't make for a very vibrant political scene and makes elections easy to cheat and manipulate.
posted by Zalzidrax at 1:17 PM on July 14, 2010


Dr. Poe, it seems that you are equating "aristocracy" with "the ability to exercise arbitrary power."

I don't think this is appropriate, for a number of reasons.

First, unless you want to say--and your latest comment suggests that you might--that England no longer has any kind of aristocracy then there exists a counter-example to your definition, i.e. an aristocracy which cannot exercise arbitrary power.

But second, and more importantly, I think different treatment under the law is far more important than arbitrary power. And it's really hard to argue that Americans truly enjoy equal treatment under the law. I'm a middle-class* white male with an advanced degree. I'd have to do something egregiously stupid to get picked up by the cops for anything more serious than a speeding ticket, and even there, I'm vanishingly unlikely to be asked to get out of the car or to have my vehicle searched. Even if I were charged with a crime, I can expect my bail to be set at a reasonable amount, and can expect a jury to render a verdict which closely mirrors my actual guilt or innocence.

The same is obviously not true of young black men, regardless of their income, but it's even true of white men with less resources than myself. A poorer white guy even in my vastly majority white current city can expect to get hassled by the cops, get cut no slack by the judge, and be looked down upon by a jury.

But that's not even the worst of it. If I actually had money rather than owing Citibank more than I'll make in two years, I could reasonably expect that I could flirt with all sorts of illegalities that I couldn't even consider in my current situation. Drunk driving? Domestic abuse? Abuse of prescription medication and outright narcotics? Everybody knows that celebrities etc. do all of these things and the only really surprising thing is when they get punished at all for it. But even when they do, like the disreputable Ms. Lohan recently did, it comes after an extended period of flaunting the law with which us mere mortals could never expect to get away. If she were a normal person, she'd have been nailed after missing her first or second meeting and never been permitted to leave the country. But no, she's one of the elite. She gets special treatment.

True, Bernie Madoff is currently in prison, but all that proves is that when the victims of one of the largest and longest cons in history happen to be your fellow aristocrats that someone takes notice.

This, I contend, this difference of treatment under the law, is a far more significant definition of the word "aristocracy" than whether or not they can flog you for offending them. The ability to enforce petty preferences pales in comparison to the ability to ignore the law when it suits you.

Ergo, as sensationalist as the author of the linked article was trying to be, I'd argue that he's not as far off the mark as I'd like.

*More tenuously middle-class than I'd like, but middle-class nonetheless.
posted by valkyryn at 1:23 PM on July 14, 2010 [4 favorites]


Compared to average Roman / Crassus or average medieval brit / Henry VIII?

Interesting examples!

Crassus was actually from a plebeian family, not the knightly class, and it was money that got him where he was. (Hence the word crass.)

As to Henry, as the son of Henry VII was himself not so very far removed from obscurity and had a very dubious claim to the throne indeed - so, also, not so very aristo.

As the countess says and exemplifies, money can't buy you class.

posted by IndigoJones at 11:54 AM on July 15, 2010


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