Inheritocracy: How Parental Wealth Creates a New Class Society

The concept of an 'inheritocracy,' where inherited wealth, not ability, dictates success, is a global phenomenon impacting economies worldwide. This is particularly evident in South Korea, where the gap between those who receive parental financial support for housing and those who don't has become a stark indicator of life trajectory. The article highlights that the sum of gifts and inheritances relative to national income has surged in Korea over the past two decades, underscoring how parental financial backing is now a crucial factor for entering the middle class, as wage growth fails to keep pace with asset appreciation.

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We live not in a meritocracy where effort is rewarded, but in an inheritocracy where family wealth is the catalyst for success.

This phenomenon is not unique to Korea. British historian Eliza Filby points out that the baby boomer generation has significantly transferred wealth to millennials through 'lifetime gifts,' solidifying class divides. This intergenerational wealth transfer, often facilitated by parents acting as 'mom and dad banks,' became a critical safety net during economic crises like the 2008 financial crash and the COVID-19 pandemic. The article notes that this reliance on parental wealth can lead to a sense of entitlement among millennials, who increasingly view inheritance not as a windfall but as a right.

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The 'parental safety net,' known as the 'mom and dad bank,' was used more crucially than any social safety net during the crises of the 2008 financial crisis and the 2019 COVID-19 pandemic. For 'some' millennials, that is.

The implications of this 'inheritocracy' extend beyond finances, influencing aspects of life such as relationships, marriage, and caregiving. The article touches upon the 'spending the kid's inheritance' (SKI) trend in Western countries, where adult children expect to benefit from their parents' wealth, sometimes even before their parents' passing. This can create intergenerational tension, as seen in the anecdote of a millennial lamenting their parents' global travels while they live in rented accommodation. The article also references the political backlash against a proposed 'dementia tax' in the UK, illustrating the societal resistance to policies that might tap into inherited assets for public services.

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Homeownership today is an inheritance privilege.

Ultimately, the article, drawing from Filby's work, calls for a societal shift away from a system where parental wealth predetermines a child's destiny. It advocates for creating a society where inheritance plays a less significant role, challenging the notion that education alone guarantees upward mobility and highlighting the paradox of a meritocratic ideal giving way to an inheritance-based social structure. The Korean context, with its intense focus on education and property, serves as a potent example of these global trends.

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The aspiration of the father generation to send their children to 'Oxbridge' overlaps with the reality of Korean society represented by the 'Cho Kuk incident'.