Inheritance makes people rich
An elite researcher explains what the richest Germans have in common
Many people wonder how to get rich. But the secret of most rich people is very simple: they won't get rich. They were there when they were born.
Two thirds of the 100 richest Germans are heirs. Many families are known through a company of the same name: The families Oetker, Siemens, Bosch, Henkel, Liebherr, Bahlsen, Schaeffler and many more. What are the heirs? And how do they influence politics and society?
A call to Michael Hartmann. The elite researcher is a retired sociology professor at the Technical University of Darmstadt and a book author. In his academic career, he has dealt with the rich and powerful. His new book “The Abyssed. How the elites endanger democracy ”was published by Campus-Verlag.
Business Insider: Mr. Hartmann, can you put it this way: In the 1950s there was the founding generation, today there is the heir generation?
Michael Hartmann: “I believe that there were already a large number of heirs back then. Most of those in the richest hundred are third, fourth, fifth or even sixth generation companies like Merck or Henkel or Benteler. There are of course examples like the Otto family, whose company was founded after the Second World War. I suspect that the share of heirs was lower then than it is today, around half, but it will be higher than is generally assumed. "
BI:If we look back on the first millionaires list in Germany from 1911, we find many names of families on it that are still rich today. Why have so many years of change and two world wars had so little impact on the rich?
Hartmann: “Because this wealth of the rich comes from productive assets, that is, essentially consists of productive companies. The German population, including the wealthier part, has always suffered the greatest losses in the great inflations, as in 1923 or after the currency reform in 1948. That means: everyone who only had money at the time was considerably poorer afterwards.
"If something goes wrong, it's not a drama"
But if you have owned a company or a property, basically nothing has changed for you. The foundation is therefore relatively stable - as far as you can understand how to diversify your assets and react to new trends. But when you have a large fortune, that too is easier. If you invest and something goes wrong, it's not a drama. There is still enough capital. A medium-sized entrepreneur or even an ordinary citizen does not have the financial reserves for it. Of course, entire companies or even industries can go under, but that is the exception. "
BI: Does the old money phenomenon also apply in other countries?
Hartmann: "Yes. In Germany we have a particularly high proportion of family businesses. One in two of the 100 largest companies is controlled by a family or an individual. But it is also one in three in France and Italy, and one in four in the USA.
Great Britain is giving up a little, it's only one in ten. In the UK, money is traditionally less in the corporate space. The rich either belong to the old nobility, like the Earl of Grosvenor, who owns large areas of London, or they own private banks or they have long been out of business and have invested their money somewhere. But the basic constellation is the same everywhere: There are very rich families for very long periods of time. "
BI: Why are the super-rich in Germany so closed? Every German knows Bill Gates, Donald Trump, Mark Zuckerberg, Warren Buffet. But nobody knows what the Aldi founders Karl and Theo Albrecht looked like. There are only blurry old photos of them.
Hartmann: “I think it plays a big part in avoiding the discussion about wealth. In Germany, unlike in the USA, there was no reliable data at all on the distribution of wealth for a long time. These were all just estimates. Today the data situation is a little better. But when data is available, there is also a discussion about whether the distribution of wealth is justified.
In the past there was also the fear of kidnappings, as with Reemtsma or Albrecht. That only reinforced this trend. But if you compare it with the USA or France, where there is absolutely no secret of wealth, I do believe that in Germany you want to avoid the discussion above all. "
BI: What does it mean for a society in which such a large part of the business elite is also born rich?
Hartmann: The key is that they perceive reality differently. That is also the core thesis in my new book. The rich are just as likeable or unsympathetic as other parts of the population. What makes them different is perception.
"Rich people don't know normal problems"
For example, I spoke to a very rich woman in early summer; her fortune was probably over 100 million euros. She classified herself quite naturally in the middle class because her comparison was the very, very rich.
Normal problems and worries, such as not finding an affordable apartment or whether there is enough money, are unknown to someone like that. Our studies have shown time and again that such people perceive social inequality very differently. Because they themselves never got to know social inequality as a personal problem, they also perceive it as a social problem much less than rich people who were born less rich, and above all differently than the average of the population.
BI: Is there a certain contempt for such problems?
Hartmann: The slope is very strong. Most wealthy heirs have learned that they work hard themselves, that their fathers and grandfathers worked hard too. And that results in the conviction that you have worked hard for your money. You don't realize that other people work just as hard and have far less money. And if you don't make it, you haven't worked hard enough from their point of view.
So you ignore the fact that your own starting conditions were much better than the average of the population or even the poorer part. And there are a number of studies, for example by my Bielefeld colleague Wilhelm Heitmeyer, which show that especially among the wealthy in recent years there has been an increasing tendency to look down on the lower classes and accuse them of not trying hard enough.
BI: In your book you write that the elite endangers our democracy, also because the elite is so aloof and privileged. But US President Donald Trump is also very rich and the top of the AfD consists largely of academics. Why do they benefit from the anger at the aloof elites?
Hartmann: “It is crucial that these people can stage themselves as outsiders. Who in Germany knows that Alexander Gauland's father was police chief in Chemnitz? Who knows that Alice Weidel comes from a middle-class background? With a few exceptions, nobody knows that.
"In practice, right-wing populists make a policy in favor of the rich"
Trump knows he's a billionaire. But he is an outsider among his own kind. He always has been. The others turned up their noses. The Koch brothers, who pump more money into election campaigns than any other US billionaires, didn't give Trump a cent because they didn't want him. Trump was able to use this fact for himself: Look, I am not one of them, I am not from the establishment! I'm rich, but I did it myself.
In addition, a significant proportion of right-wing populist voters who do this out of protest actually only want one thing: They want to annoy “those up there”. In practice, however, right-wing populists make a policy in favor of the rich. You can see that in Austria. The FPÖ will seriously disappoint the part of the electorate who voted for it in protest against the Social Democrats. This also applies to the USA or Italy, wherever right-wing populists are in government. Trump's tax reform will take a long time to make itself felt, however. I hope that this will also have an impact on the election results. "
BI: Do you think it is unfair that two thirds of the richest Germans are heirs?
Hartmann: “Yes, that's unfair, because they were just lucky. You don't just inherit wealth, you inherit certain abilities as well. If you have been in such a milieu since childhood, then you just know what is important. That person has much greater chances accordingly.
Not only can he possibly join his own company, but he can also get into top positions in another company. One has better prerequisites to achieve high educational qualifications. You know the right people. That all adds up. It is not just because of their great heritage that they are in a much better starting position than others. "
BI: How could you change that?
Hartmann: “My conclusion would be to withdraw at least part of those who inherit materially on a large scale through taxes and make it available to the general public. I don't think it would hurt them seriously. The latest inheritance tax reform will ensure that most family businesses can be inherited or given away largely free of inheritance tax. Here, insanely large sums of money are inherited. I cannot understand why the law was not at least partially corrected after the criticism of the Federal Constitutional Court. "
BI: The building contractor Christoph Gröner once said in the “Zeit” magazine that he could throw his money out the window and it would come back in through the door. Is this the reality for many rich people that they cannot become poor at all?
Hartmann: “The likelihood of becoming poor for the really very rich is not very great. The money is invested so broadly that there are still reserves. There are, of course, entrepreneurs who have gone bankrupt, but then certain assets are transferred to their children or spouse beforehand. They do not go from being wealthy to being poor or even normal; they are staying wealthy. The very rich stay rich. Most of them even stay very rich because it is very difficult to finally destroy really large fortunes. "
BI: What influence do the rich have on politics?
Hartmann: “On the one hand, the political influence goes through money, but that varies greatly from country to country. This plays a very important role in the USA because American election campaigns are extremely expensive. The last elections in 2016 devoured more than six billion dollars, compared to the German federal election cost 200 million euros. These are completely different dimensions.
To be elected in the USA without being able to raise a lot of money is the exception. Most of the time you need a lot of money and that usually comes from the rich. The Koch brothers invested nearly a billion dollars in the last election because they wanted the Republicans to win. While they did not support Trump, they supported a number of Republican candidates at the individual state level. It was worth it because it determined the occupation of the Senate and the House of Representatives. "
BI: And in Germany?
Hartmann: “In Germany, party donations play a comparatively minor role. But there is a second way to gain influence. This is done through direct contact. If there is anything to do with the German automotive industry, one can assume that the Quandt heirs or the Porsche and Piech families have direct access to the Chancellery or to other important decision-makers in politics. This is a path that is completely closed to ordinary people.
"The rich threaten politics to invest elsewhere"
Take the diesel scandal, for example: The Porsche family has risen to become one of the ten richest this year. She was able to increase her wealth by a third. One could also have said: If you control VW, why don't you give part of your assets to compensate diesel drivers? So far it has not been done because there is no pressure on them. "
BI: What are the arguments of the rich?
Hartmann: “They often threaten politicians with investing elsewhere. I am convinced that the threats often cannot be put into practice. BMW cannot be relocated from Munich to somewhere else so easily. You can do that with individual factories, but the core of the company is tied to a certain infrastructure in cities like Munich or Stuttgart. But politics can always be strongly influenced by it. "
This article was published by Business Insider in October 2019. It has now been reviewed and updated.
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