For some at least, it’s “Once rich, always rich”

There’s some interesting news from Florence in Italy.

The richest families in Florence, Italy have had it good for a while—600 years to be precise.

That’s according to a recent study by two Italian economists, Guglielmo Barone and Sauro Mocetti, who after analyzing compared Florentine taxpayers way back in 1427 to those in 2011. Comparing the family wealth to those with the same surname today, they suggest the richest families in Florence 600 years ago remain the same now.

. . .

The study adds further evidence on how the rich remain rich. In England, researchers have previously demonstrated how a family’s status in England can persist for more than eight centuries, or more than 28 whole generations. It’s a trait shared by elite families in China, whose high status has persisted since the Mao years.

There’s more at the link.

I found this interesting, for several reasons.  One is a study done in South Africa during the 1980’s, which I’m sure has been replicated around the world in various ways.  A student at the Graduate School of Business at the University of the Witwatersrand (probably the premier business school in that country) wrote his thesis on the rise and fall of family-owned and -run companies.  His conclusion was that for most of them, it took three generations from “gutter to gutter”.  The founder would start the business and build it;  his son (usually the son, anyway) would continue it, and perhaps grow it a little more;  but his grandson would run it into the ground, either through lack of business sense and ability, or by spending the “easy money” that the business represented to him.  After all, he’d never had to work for it, so he took it for granted.

If that’s the case nowadays, was it different in earlier generations?  In the case of centuries-old noble families, with their traditional resistance to and distaste for “trade”, how did they stop their younger offspring from squandering their inheritance?  I’ve read of many cases where the latter happened, so how did those families that maintained their wealth succeed in doing so?  Is there a strong ethos in such families that their patrimony is held in trust for their successors, and this ethos is handed down from generation to generation along with the money?

I’d love to know more about this subject, but I suspect it’ll take years of research to get a handle on why this should be the case.  Sounds like an interesting history book project for someone with the time and interest to take it on.



  1. It is the culture of the family.

    Where the education happens, and who with that education occurs. Breeding, as it were

    Yes, I am talking elitism, but there is truth tho it.

  2. A mystery novel I read (One of Louise Penny's) looked into this; the motto quoted was "fear the third generation" – the idea being, as you said, the first generation were builders. The second generation was likely children during that "building" phase and they possibly saw the sacrifices their parents made, so they remain somewhat careful. The third generation, though, has only known comfort….and so they spend.

    I can see some parallels in this in my own family and in people around me.

    I will never be wealthy by "Big US City" standards (I am a professor in a STEM field), but I can pay my bills, my needs are met, and I have some of the things I want, which is probably the best situation in life, viewed realistically. And by global standards, the fact that I have running water and electricity and know where my next meal is coming from makes me wealthy beyond all imagination.

  3. Before the 1800s, the hierarchy was dominated by nobility.
    After the 1800s, the heirarchy was dominated by bureaucrats.
    There was a fundamental shift in breeding. There is a researcher named Woodley who did the research in the U.K. The Victorians appear to have been smarter than us.
    Revolution has been dysgenic, but the old regime was slowing improving the intelligence of the populace.

  4. Well Pete, it makes perfect sense to me. Driven men that break into the higher echelons of society can make the transition from the humdrum life of the poor or middle class to life in the fast lane. A lot of them though, don't understand that while they are living life in the fast lane – their kids are too. Kids have to be raised to handle that lifestyle or it destroys them. You can bet Trump, for example – is all over his kids training them and holding them to higher standards. Heck, he probly has people doing it for him. Those kids won't live the pampered life, I'll bet.

    Contrast that with the guy who had nothing, and looks at his own kid and wants to see him or her have everything he never had – and you produce a brat instead of a future matriarch or patriarch. We've seen this in the hollyweird culture time and time again.

    Just my theory.

  5. Hi Peter,
    I was taught the same thing in my business class. Three generations and the business would be gone, because of what others have already noted. The grandchildren have grown up with the silver spoon in their mouth, and don't see the need to make the effort their parents & grandparents did. [Paris Hilton provides an example of this, although I've read she's been disinherited].
    The way to get a business to last beyond the third generation is to build in a bureaucracy while building the business, preventing the third generation from destroying it.
    We studied Exxon as an example of this, where the Rockefellers put in a bureaucracy that kept Exxon going, regardless of what the Rockefellers did personally. Today, that organizational structure, along with the corporate values, forms what is called corporate DNA. Of course, this means that the founders are no longer controlling the corporation, but are instead, just associated with it

    — Steve

  6. Actually… the thing about noble families having a distaste for trade… looks like it's pretty much a British thing.

    Other places elevated successful tradesmen/industrialists into nobility, even. (Was a matter of policy in Imperial Russia, for example. Particularly if they managed to build an export industry…)

    The trick might be seeing the distinction between principal capital and interest (in the established British terms). It's a learned thing, and looks like it's best learned early. Old families make it a matter of important tradition, but, well…

    There's also the thing where social strata tend to persist for some generations despite changes in individual wealth and prestige, and thus it's easier for an already established family to regain wealth even if they'd lost it recently in terms of generations.

    Oh well. Grandpa used to say, (approximate translation) "live off the land, get rich off trade if you're lucky – and if you are, do consider investing in land" … well yeah.

    Also long-term planning. My family's been around for ~500 years (though we've never been "rich", nor noble in the hereditary sense) and we think 50 years is medium-term planning. I tried talking to some investment bankers and they thought 10 years was long…

  7. Works the same way in the political field. The first monarch of a dynasty is known as ___the Great because he pulled the country together.
    His successor is known as ___ the Good, because he held it all together and didn't have to kill as many people to do this.
    The third Prince is lucky to be known as ___ the Bald or the Fat and is just coasting. At this point maneuvering on the part of the Dukes begins in earnest for a favorable position in the hierarchy.

    The saving virtue of a bureaucracy is that it insulates ___ the Fat from the levers of power, hopefully in such a way as to minimize the damage he can do until one of the ambitious and more competent Dukes can move into the front office, or at least into the position of Trusted Advisor behind the throne.

  8. The case in Florence is different than the business families case usually made.
    One issue is that the great families of Florence made their money politically and through nobility, with land and other means of more-or-less fixed income, and not through building a business or trade. because of this, like the wealth of the British Royal family and peerage (who own large portions of London, among MANY other holdings), the family leadership doesn't have much affect on the family income, so it keeps rolling on for generations.

  9. I would suggest that there is a fundamental difference in culture between Florence and South Africa. There are cultures that made the shift to accepting the New Rich as legitimate and those that lionized the Old Money families. The former will be shirtsleeves to shirtsleeves in three generations, the latter will tend to foster dynasties.Obviously it isn't either-or. America embraced the Industrial Revolution more completely than Britain (where the social stigma of being 'in trade' hung on for far too long), consequently, America had far fewer 'chinless wonders' cluttering up the landscape than Britain.

    Sadly, elitism is a virulent disease, and any society can catch it. The degree of worship focused on the Kennedy family is worrisome. They have, for three generations now, been rewarded all out of proportion to any actual talent they may possess.

  10. I'm going to throw my two cents in (whatever their worth is these days).
    I think it's attitude. Ever notice that the "moneyed" people have a certain panache about them? They all seem to have that "I'm special" attitude. Is that breeding or genetics? Is that due to living in that rarefied atmosphere?
    I'm a third generation farmer; that broke the mold and now I'm in a white collar job. I'm not rich by any imagination. But, I'm a heck of a lot more well off then my forefathers.
    And yet when I look at all my high school classmates; all those that came from "well to do" families, they are light years ahead with their "wealth".

    And yeah, most of them still have that "attitude". Heh, asshats.

  11. During the mobilization of men during WWII, the question was asked: were you labor or management? If the man said "management" he was sent to officer training. If labor, he was enlisted. It really is all in the attitude.

    The question is what the business-owning father did with the son. If he was sent out to be successful somewhere else and did so, he was fit to run the family business one day. If all he knew was the family business he wasn't. Of course, giving the business to a drone happens, but that's not the thrust of this. The son will either have a labor or a management attitude.

    Like it or not, if one is looking at public school systems (most of which were modeled on the US public school system), one sees that in the words of the people who set the system up… the entire thing was designed to dumb down the students. The facts can readily be seen in such publications as "The Underground History of American Education" by John Taylor Gatto and "The Deliberate Dumbing Down of America" by Charlotte Thomson Iserbyt. Both available on the web for free if you're interested.

    It's really all about attitude and a public school education is designed to train labor, not management. Labor can get wealthy but isn't likely to keep it in the long term. It takes management (a management attitude) to run a business successfully.

  12. Part of this is cultural. In societies where there always has been an oligarchy and always will be, and lip service at best is paid to democracy, money and ownership of land is concentrated in the hands of the families who control the levers of power. When eighteen families control all the land, set all the taxes, collect the taxes, and distribute the ability to do anything in return for favours paid to them, they are going to remain at the top of the pile for as long as there is a pile.

    Given that they divide the culture sharply into "Our sort" and "Not Our Sort", and therefore marry into the same wealthy group, and place their own children and those to whom they owe patronage's children into the positions of control, the money remains tightly locked up, even when individual members of the family are wastrels.

    When someone from a lower class manages to break in through brilliance, innovation, or accumulation of money, it is assumed that their highest ambition is to join the ranks of the oligarchy – and often they, or their children, will be married into a family so that they can gain the acceptance of society, while the family profits from their labours.

    And then you have the USA. Our founders did their best to take what they could extrapolate from the Industrial Revolution's breaking of their world, as well as the unfolding consequences of the Magna Carta, and safeguard our government to prevent the rise of the oligarchy. The very notion of a government OF the people, BY the people, and FOR the people, instead of subjects to a crown, was radical. They enshrined property rights – which not only provides more incentive for people to do well, knowing they control what they have and keep what they've earned – but also keeps the government from redistributing land, factories, wealth, ownership, and power to whom it sees fit, and concentrating it in a few families.

    Pareto distribution: in countries where property rights are not strong, 97% of the wealth is in the hands of 3% of the population, and that's fairly static. In the US, it's skewed by the "middle class" owning a lot of land and property, and by our property rights allowing so MUCH wealth to be created that our wealthiest people (Bill Gates, Jeff Bezos, etc – people who built fortunes on new technologies, instead of controlling access to previously existing goods) truly skew the curve.

    However, freedom to create wealth is also freedom to lose wealth, and thus, the rags-riches-rags principle can strike and wipe out a fortune in a few generations. Some families attempt to delay this by going into politics and controlling patronage (Kennedy, Clinton). Others create business DNA that breaks the company loose of the need for their progeny to be as smart, dedicated, and hard working (Walton, Hilton). Still others sink the money into trusts that should fund their children comfortably without any business or business sense (you find a lot of this in New York publishing). But without the iron grip on the control of money and power, new names appear and old ones face away regularly.

    To this day, countries with weak property rights are oligarchies, whether

  13. You're also confusing things because you're making an equivalency where none exists.

    The three-generation rule holds in competitive environments where there is constant shifting going on centered on economic activities. The Florentines, on the other hand, were operating in an environment where they literally gamed the system in order to set the conditions such that their families and bloodlines would attain and maintain primacy as long as possible. It's a shit-ton easier to maintain wealth when you control all the levers of power, and are able to perpetuate things despite the effects of those "third-generation idiots".

    The real question to ask is "Would the wealthy Florentines still be wealthy if they had to play in a more fair environment…?".

    I would suggest that they might not. Aristocracies are basically ossified meritocracies, and prone to all the vices thereof.

  14. In citing bezos and gates, you are not making your point, that's third generation privilege thru education.
    Established privileged groups also have a cast system built in, first male, education, and birthright, second male, military, third education and more, but they all direct their energies to the family first. In marriages, the first and second marry for alliances, third can be either way, but the process is male offspring bound.

  15. I'd argue that when you have a family corporation mindset, like that of Renaissance Florence and Sienna, or the noble families of eastern and central Europe, the entire family can and will check the folly of the third generation. When resources are thought of as being the common property of the clan, to be used for the welfare of the entire family and enhancing all of their prestige and status, it seems to encourage limited toleration of fiscal folly by individuals. Yes, when trouble hits it can take out the entire extended kinship network, but in general it seems to incline more toward survival than destruction, at least until you get the 1900s and the government seizure of all property.


  16. There was recently an article about some house being sold in Los Angeles for an asking price of $250 million. The developer who built the house said flat out "I expect a new money billionaire to buy the place. Old money knows better than to spend this much on a house."

    It's also why parking valets are one of the more lucrative jobs in Vegas — someone who jut won a bunch of money has no problem tossing a $100 or $1000 tip to the valet to "share their largess."

  17. So why do Jews tend to be well over-represented in the professional classes, generation after generation, in every place where they exist? Perhaps the question should be 'how' instead of 'why'.

  18. Peter, you should read Fortunes Children: The Fall of the House of Vanderbilt. It tells the story of the excesses that lead to the rapid loss of the fortune created by Cornelius Vanderbilt.

  19. The Vanderbilt comment reminds me of a documentary called Born Rich.

    Trump's daughter was the only one of the group that seemed to have her head screwed on straight.

    But you also see they aren't exactly thinking like they would have if they existed before the Revolutionary period.

  20. As a preface, I'd just mention that I come from three different lines of disowned or exiled nobility, two French and one Italian. All impoverished, though not from running the family into the ground. Mostly as a consequence of being very devoted Huguenots. Nothing was worth a mass to them. And, on the Italian side, due to a Contessa falling in love with a Blacksmith. So I have some personal knowledge of the subject.


    1. Those Italian families they're talking about are not the atomic families of the study. Even the famous extended families of Italian immigrants (or the mafia) are too small-scale to work as models. Those Italian Noble Houses are more on the scale of, and work more like, Scottish Highland clans. Well, like Scottish Highland Clans that are fabulously wealthy. They never got run into the ground because no single individual could possibly do that. Even the Chief or Head or Capo or whatever didn't have exclusive claim to the main branch's funds. To say nothing of the various minor houses and cadet branches.

    2. Their wealth is based in more permanent things than those of the Arrivistes. It's not just the land. It's Capital whose value has been continuously maturing for half a millennium. Even a bust by some minor Renaissance artist that's been in their parlor for five hundred years is, even if they were otherwise flat broke, plenty of collateral to borrow start up cash.

    An industrialist's factory is valuable for their lifetime, if they're lucky. They have to be constantly upgraded. Investment portfolios have to be constantly managed by honest brokers. That's mayfly shit.

    These people? They have vineyards whose vintages were perfected over centuries, whose reputations were built over a thousand years. They have original works of Michelangelo and Botticelli, which their families actually commissioned from Michelangelo and Botticelli. Nobody knows how many. Those will always be worth more, with only the slightest effort of maintenance. Even if they get messed up they're worth at least a hundred grand. Can you imagine these people's borrowing power, just from the collateral value of the heirlooms they have lying around? Let alone the buildings, and god knows what else. Hell, they could probably maintain themselves just by charging universities for access to their ancestral libraries.

    How they got that way is by being that tiny minority that didn't fold in three generations, or a hundred. Somebody had to.

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