An interesting thing happened to me a few weeks ago. A reader of MR just outside of London asked my opinion of book by Ken Costa entitled THE 100 TRILLION DOLLAR WEALTH TRANSFER (2003, Bloomsbury Continuum). By amazing coincidence, a Canadian reader from the Maritimes asked me the same question a few days later. The Brit loved the book and found it profound while the Canadian dismissed it as nonsense.
As you might expect, I came in somewhere between these two extreme positions. Hence this post.
Demographics have been a big part of my beat both personally and professionally for decades. This book, which has not gotten tremendous attention, raises issues that I found to be very interesting.
Ken Costa is a well-known investment banker in the City of London (think British Wall Street). Since his recent retirement, he has focused on intergenerational issues.
The basis thesis of the book is that Baby Boomers (born between 1946-64) will pass on 100 trillion dollars to their heirs. Some 84 trillion will come from the US, 5.5 billion pounds in the UK, and the remainder across the world.
He lumps together Millennials (born 1981-96) and Generation Z (1997-2012) and refers to them as Zennials. Somehow, Generation X (1965-80) gets short shrift.
Costa is quite the optimist, and positive reviews tend to describe the book as “hopeful.” He stresses that capitalism will not disappear but rather that the Zennials will engage in “socially energized” capitalism. There will be greater cooperation and harmony among generations.
He defines the new capitalism as CO which is “a shift from the radical individualism of post-war generations to a prioritization of collaboration, comparison, community and collective experience.”
There will be more co-working, co-leading, co-owning, co-creating, co-investing, co-funding in this new world.
It all seems a bit too perfect to me. I agree strongly that the Zennials will overwhelmingly want to do something very strong about climate change. To a lesser but meaningful amount, they will also want more action on income and wealth inequality.
Interestingly, I ran Ken Costa’s thesis to a few acquaintances. The first was an erudite woman well into her seventies. Her response was that with the cost of elder care in the US, and people living longer these days, she doubted that many boomers would leave as much as Costa was projecting to their heirs. Candidly, I had not considered that angle.
I was floored a day later when I posed the same issue to a young entrepreneur. The independent thinker told me that some of what he said might work in Europe but, in the US, healthcare and expenses in the last few years of life would probably wipe out much of the expected seven figure inheritances. It might be true in certain provider state countries but not in the U.S.
Also, in the U.S. the first $12 million (as I type) is exempt from federal inheritance tax. And many well to do families have their wealth tied up in trusts that often eliminate that tax. Look up how few American families pay inheritance tax. It will surprise you!
One point that he does not cover is that people, particularly the affluent, are living longer lives. So, many who inherit these trillions will be in their sixties when they get their windfalls. It is hard for me to see people that mature changing their attitudes.
The book is interesting, and I recommend it BUT it strikes me as way too altruistic. As that great American philosopher Groucho Marx famously said, “When you get rich, you get Republican.”
If you would contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.
