Posted by: luvin | August 23, 2010

The Rich Philantrophist

I never knew this, not until I read from Peter Lynch, that wealthy american are not allowed to pass on to their children (or relatives) their fortune. If they do so 55% of it will go to the state. So when I replace Carlos Simms at the top, expect me to become a philantrophist, too.

In America, unlike in some poor countries like the Philippines where the wealth of the rich (including their haciendas) are perpetually transferred to their children, and children’s children, they find the passing of wealth unconscionable as experience by Cornelius Vanderbilt when he left all his wealth to his son William. He was “cursed as an aristocratic ingrate who gave nothing back to the people whose sweat had built….his fortune.” How could he be so greedy?

Well, the poor will never understand how difficult it is to become enourmously rich, and how difficult it is to let go of those tons of gold dust they have gathered over time. If it is difficult to become rich, it is even more difficult to hold on to it. In business as in sports, the one on top will eventually be vanquished. So their maxim is to have more to hedge themselve for the time of their fall. This is their perpetual stuggle.

How did they? The first trick is to raise the prices as much as they can for the same product. If there are competitors, they talk…they formed a cartel to control the price. When cartel was disallowed by the govenment, they formed a trust (and eventually become the monoplies that controlled everything). And when the anti-trust law was passed, they side step it by forming a holding company……… The cycle will go on forever. On the positive side, they form philantrophic arms, that are still under their control.

Which ever way people go, the rich and the powerful could find a way to protect themselves.


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