We asked people aged under 45, do you think you live in an inheritocracy in the UK? And overwhelmingly, the people that said yes, we do were those earning over $150,000. So those in the higher income bracket were the ones that said yes, we definitely do. And then you asked them, okay, are you a recipient of support from the Bank of Mom and Dad, or worse, the bank of your in-laws? And the majority of them were. So we've seen this really important disconnect where wealth is no longer defined by your wage.
Dr. Filby, where does this podcast find you?
South London, a place you know quite well, I think.
Let's bust right into it. Your latest book, Inheritocracy, opens with a very striking data point, and that is over 5.5 trillion sterling in property wealth will be passed from baby boomers to millennials in the UK over the next few decades. In the US, the equivalent figure is a $124 trillion dollar through 2048. Let's start with the basics. What is an inheritocracy and how did we get here?
Right. So I kind of deliberately chose this word, a provocative title that essentially I made up, right, as the antidote to a meritocracy, the idea that hard work led to reward. In an inheritocracy, it's a defeatist narrative in which basically your opportunities don't come from what you learn or what you earn, but whether you have access to the bank of mom and dad and eventually inheritance. And I wanted to explain what I felt was increasingly the narrative for young people, is this idea of we were pushed into the knowledge economy and encouraged to really work hard and build that sort of academic prowess and get into a career. But actually the truth is really since the 2008 financial crisis, it's really been an increasing tale of, you know, opportunity coming from your parents' wealth and generosity.
You've argued that the shift from a wage economy to a wealth economy left this generation worse off than their parents were at the same age. You've also said we've had over 30 years of overparenting, with parents more involved in their adult children's lives than ever. How much of this inheritocracy comes down to economics and how much of it comes down to more societal influences such as parenting?
I think that's such a great question because I think one impacts the other, right? I mean, we saw this narrative of we have to invest in our children. The deliberate use of financial language when we talk about parenting. Parenting becomes, I mean, Richard Reeves, your great friend, talks about this, you know, active, you know, proactive selection of and series of choices that we make in order to ensure that our children can succeed. And I think it really emerged in the 1980s and has intensified since the 2010s because there's no guarantee. In fact, the opposite is happening, that our kids will do, you know, as well as us or better than us. And I say that as a millennial who saw my parents invest in the property market in London, really build their wealth through that property surge, and I invested in my education, and certainly they did in my education, and that not generating the same return on that investment. And I think so, I think there is and has been this massive culture towards helicopter parenting, intensive parenting. You know, the average, you know, working mom now spends more time with their kids than stay-at-home moms did in the 1970s in America. And that's reflective of the insecurity that parents feel around, you know, what's best for our kids. How do we build children that turn into, you know, not just happy adults but like productive and, you know, secure families? And I think so, parenting is a reflection of the level of economic insecurity that we feel right now, and that's really been the tale since the 1980s. And so I think there is right now a real obvious narrative building: we have changed the economics of adulthood, but we've not changed the expectations.
So it feels like the perfect storm of an upward spiral for some people. And if you aren't on that spiral, you're just basic nutrition, if you will, for the people on the spiral. And that is, you can take care of their grandmother, or you can bring them their food, or take them in, you know, an Uber to where they're going. But the upward spiral, I'm going to try and describe the spiral. It starts at a very young age. Your parents have money, so they instill a sense of education in you, importance of education. And then by the time you're in high school, that you're part of the tutorial industrial complex, where on average someone from an upper income home scores 380 points above on the SAT, someone a lower income. They get into a quote-unquote elite school where they may or may not get a better education. I think the actual education is overrated, or the delta between good schools and great schools. What you get is proximity to other really rich kids who have their own contacts and want to do business with each other. And then so the upward spiral continues. And then because of tax policy, we've decided not to tax. The US has become much more like Europe. Europe used to be dynastic wealth: high taxes on income, low taxes on wealth. The US is now low taxes on both. And so there's this upward spiral of dynastic wealth that starts from a young age, where the most important forward-looking indicator of your wealth, quite frankly, is how wealthy or how rich your parents are. Has the US not opted for a caste system more similar to Europe and kind of the golden age of European power in the kind of, you know, 19th and 20th centuries?
I think you're absolutely right. I think the first thing to say there about what you've described and outlined is this idea that the bank of mom and dad isn't just something that is reflected in help with the down payment. It is also manifested in education, of course. It's also manifested in their networks. You've seen the rise of the LinkedIn parent, like literally networking on behalf of their children. We've seen the Bank of Mom and Dad not just be the springboard into adulthood, but quite often the safety net through the cost of living crisis. I think that it's really important to see the Bank of Mom and Dad in very holistic terms that impacts actually low-income, middle-income, and high-income families just to different and varying degrees. But on your point about the difference between Europe and America, you're so right. I mean, in the US, I always like, you know, I'm slightly struck by the openness, not only the way that you talk about money, but the proud sort of belief in the American dream and that idea of building generational wealth, right? And I think in Europe we have a much more sort of shy, particularly in the UK, frankly, where we like to assume that our aristocratic dominance is, you know, now confined to the TV in Hollywood in Downton Abbey, when in actual fact the data will kind of illuminate the fact that we have seen an extraordinary rise and a persistent level of control of those that own land, own property, own significant amount of wealth, and a real decline in social mobility and meritocracy. I think that actually in so many ways America is ahead of Europe in so many different ways, particularly on the economy, but on the rise in inheritocracy, I think it's probably slightly behind. We've been talking about the Bank of Mom and Dad in the UK really since around 2012, when in the aftermath of the 2008 financial crisis, we really saw, you know, assets appreciate and younger millennials being unable to get on the housing ladder. And so much of wealth concentration in the UK is around property, particularly in the London Southeast, and that really kind of concentrating this wealth and really concentrating those that had access to a core marker of adulthood, which is home ownership. Right. I think in the US you're beginning to have this conversation and beginning to actually use the word inheritocracy. And I think it's reflected in obviously kind of, you know, the whole culture and expense around college and how and the questioning of perhaps some of that expense in the age of AI. I think it's definitely starting to impact your property economy. You know, one in four Gen Zers now rely on a parent for a down payment. And I think, you know, generally speaking, the average American parent now expects to be funding their kid until the age of 30. And, you know, we have, as I said, you know, we've changed the economics of adulthood. And we berate young people for not, you know, gaining a foot on the ladder, not, you know, putting up, working their way up the ladder. But frankly, the economics of adulthood has changed. And people are relying on their parents to get that foothold on that ladder.
Yeah. So something I adopted from the UK was the members clubs, and that is, I mean, that's part, that is part of the spiral. When I socialize, I'm not going to meet a middle-class guy at a bar watching the Fulham game. I'm going to meet someone else from the caste, the upper caste at Maisonelle or, you know, whatever it is, or Five Hertford, right? The homogamy, I think it's called, only associating with people in your kind of social or economic weight class just creates further upward spiral. And I'm guilty of it. Well, it's too late for me, but I join, I basically, I never was admitted to any of these clubs when I was a younger man, so now that anyone invites me to anything, I join it.
So I'm a member of about five or six members clubs in New York, and I went to one called Casa Cipriani downtown, and I went with three buddies, and we ordered some appetizers and two rounds of drinks, and it was 800 bucks. And the manager, I was a new manager, and the GM came over to introduce himself, and I said, "So," I said, "Can I ask you a question?" He said, "Sure." And I said, "Okay, 800 bucks, whatever. You know, have at it. More power to you. Everyone here is either a woman in her 20s or 30s, they look like they're in their 20s, or a dude in his 30s, maybe his 40s." I said, "How is anybody paying for this?" And he said, "Well, one, no woman is paying for anything here." Okay, so Casa Cipriani is where feminism goes to die. And two, and two, he said, "Half the men here," this was what really struck me, "half the men here are, it's not their credit card, it's their dad's credit card, and they're mostly nepo babies from New Jersey." So that massive amount of wealth is now, you know, being pushed into, you're a hedge fund manager, worked for JP Morgan for 20 years, owned a series of car washes in Montclair, you were 10, 20, $30 million, and your son now has your credit card because the reality is your son, you want your son to have a good time, you want your daughter to have a good time, you want your daughter to pursue that great job in the city, you want your son to be social and, you know, move to San Francisco to pursue his dreams in tech. They can't afford it. It's just unrealistic. I moved to New York when I was out of UCLA. My mom lent me, I think, a hundred bucks for a suit. I was able to dance between the raindrops and make it. You can't do that now. You just can't.
Well, I just think so much of what you said is absolutely true. You know, this is where it's really important to recognize that that period from 45 to 79, 80 was the exception, not the rule, in terms of social mobility, but also mixing between the classes. You're so right about the siloing of classes and how did people used to mix through social clubs, really through the army. Like the army was the great social leveler and also education, right? And, you know, communities, I would say, were less siloed and more integrated than they are now. But I think you're so sort of on the money when you talk about this idea of, you know, parents don't, they're perhaps aware of the sort of term nepo baby, but also they don't want their kids to fall behind. They want to help their kids where they can. And like you say, in the major cities across the world, and it's not just New York, it's not just San Francisco, it's not just London, you know, increasingly it's Beijing, it's, you know, Shanghai, there are places all over the world now where unless you have that parental prop, you don't have access to those cities, let alone private members clubs. You don't have access to those jobs. You don't have access to that network. You don't have the, you know, and I think that the situation that we get into is that, and I did a lot of research this in the book, we asked, you know, we asked people aged under 45, do you think you live in an inheritocracy in the UK, right? And overwhelmingly, the people that said yes, we do were those earning over $150,000. So those in the higher income bracket were the ones that said, "Yes, we definitely do." And then you asked them, okay, do you, are you a recipient of support from the bank of mom and dad, or worse, the bank of, you know, your in-laws, right? And the majority of them were. So we've seen this really important disconnect where wealth is no longer defined by your wage. Okay? And so that's the first thing. The second thing to say is the ones that recognize, perhaps reluctantly and maybe never in public, the importance of the bank of mom and dad in order to build wealth, get on the springboard, make your way up, are often men in high-earning professions who have worked really hard, potentially earn a lot of money, but still in order to, you know, build a home, build a family in New York, have to rely on the bank of mom and dad, or as I said, the really emasculating factor, the bank of in-laws. And one of the things that you're really seeing is that disconnect between what I earn and what I'm able to build. And actually, what I'm able to build is really ever increasingly reliant on your parents and their capacity to help you build it.
It's so, I grew up, and by the way, Dr., I should hopefully the producers warned you that our guests are just a vehicle for me to talk about myself.
I love it, and I loved your book, by the way. I love it.
I appreciate that. So when I grew up, the general gestalt among all families was, if you were even wealthy families, I'll pay for my kids' college. Like my parents were in a, not in a position to, they helped a little bit, but they weren't in a position to pay for my college. If you're wealthy, the general American way was, I'll pay for my kids' college because I have money, but when they graduate, they're on their own. And not, not because they weren't generous, good people, but there was a general recognition that the need to make it on your own was key, was critical training from a character and from a finance standpoint. And they could do this. And not only that, but, and I know this as someone who didn't have money growing up, but has money now, I think I enjoy my money more than rich people or kids born with money. I didn't get to go to amazing hotels and fly business class. And now that I get to do those things, I just think it's amazing. I'm just, I'm kind of overwhelmed with joy at how amazing these things that money can buy you are because I didn't even know they existed when I was in my 20s and 30s, much less when I was a child. Having said, and so I grew up with, you know, when my kids were little, yeah, help them, give them what they need, you know, maybe loan them some money for their first house, pay for their college. Now, I wonder, the same thing has happened to all my friends. They, we all say the same thing. And then our daughter's a good kid and she wants to teach high school math and she can't live in San Francisco on $44,000 a year. There's just no way. But your kid's a good kid. They play by the rules. They got a degree. Even if they want to be a lawyer and they want to pursue their dream of law school, okay, that's half a million dollars to go to NYU Law School. They want to, they want to pursue their dream of acting. Okay, maybe that's a little bit more indulgent, but, or ballet. Your kid, your kid has studied dance their entire life. They're really good at it. They need to live in one of five cities. And every one of my friends, except for one, is still financially supporting their kids in some way, directly and indirectly. They don't send them cash. They let them stay at their house. They don't sell their house. They move and they get to stay in the house. And again, it creates more, that's the spiral.
But do you know what? I interviewed someone who was a 35-year-old actor, and he said to me in his own words, I had had a completely overparented, completely comfort-driven childhood. He grew up in very sort of leafy suburbs of London. He'd had a very smooth path through private school, Oxford University, and then his parents, who were both lawyers, had access to a central London apartment. He had that basically rent-free throughout his 20s, and they were both frustrated actors. He really wanted to be an actor. They put him through acting school, and by the age of 35, he had failed to become a successful actor. And as I was interviewing him, I was saying, you know, your parents just invested so much in you. You must be, you know, incredibly grateful for all of that. And his words were quite revealing because he said, "Yes, but I really wish they hadn't. I really wish they'd kicked me out at maybe 25, certainly not 32 when they eventually did, and say, 'Go and get a job. Go and make something of yourself. We've given you all we can. It's now time to basically be independent.'" And I think one of the questions that any parent should pose, and I have, I have a nine-year-old and a six-year-old. I'm not there yet, but certainly it's present at the top of my mind, is this is the question, right? When does support become disabling as opposed to enabling, right? And that's the great question because what you eventually want, right? The whole point of being a parent is to push them away, push them out of the nest. And you want them to be independent. You want them to grow. You want them to build their own thing and ultimately build a family, one would hope. And that is really difficult to do if all you've done is frankly overparent them and overly support them. And in this economy, that's a really hard call, right? That's a really hard call. And I commend anyone that has got that balance right. But I would say the more money that you have earned, actually the harder it is to make that call. And I lecture a lot of, you know, give a lot of lectures and a lot of talks to ultra-high-net-worth families. And one of the major challenges you see is if the father, and it is often the father, has made the money in their first-gen wealth, the disconnection between their childhood, right? Often, you know, growing up in poverty and making it compared to their own child's, like there's a total lack of relatability, first of all, but also they cannot understand why just by demonstrating hard work that they don't instill hard work in their children. And parenting doesn't work like that because quite often kids, you know, basically, you know, it's, they don't listen to what you say. They look at what you do. You know, phone usage is a classic example, you know. So it's like, it's a really difficult call to be able to kind of build, you know, financially independent kids when you have grown up in wealth. I would argue it's one of the curses of too much money.
Oh, sister, you have no idea. I mean, this is what, when my mom and dad got divorced, my mom, our vacuum cleaner broke down and we couldn't afford to get it fixed. And so we used to, we borrowed a rake from neighbors and we used to rake our shag carpet because it made it look sort of vacuumed. And I mean, it's not a sob story, we never went hungry, but I've said oftentimes, if I had what my kids have, I wouldn't have what I have. I was just so motivated. I mean, the biggest source of stress in my life growing up was not that my dad wasn't around or my mom was, you know, struggled a little bit with some issues, is that we didn't have any money. And so from a very early age, I'm like, oh, walk your dog for three bucks. Yeah, I'm in. Oh, get up at work two jobs so I can maybe afford to go on a date. Oh, wait, start working tomorrow after school lets out because if I don't save 2,800 bucks by fall, by September 1, I'm not re-enrolling at UCLA. I mean, those muscles, those muscles that build have served me well my whole life.
I totally agree. And in varying and very different degrees, I had a childhood that was very chaotic, and the drive and frankly the hunger I have to create a certain level of financial stability for my kids that I didn't have is the thing, and it's a curse as much as a blessing. And one of the things that I often go into companies and say is, you know, all I hear about is young people lack hunger. They lack the commitment. Why don't they put up and shut up and work their way up like I did? You know, that's the classic trope from a Gen Xer, right? And I was like, well, you do realize we're living in an economy where you're more likely to get on the housing ladder. Your younger folk are more likely to get on the housing ladder by being loyal to their parents than being loyal to their boss. So, you know, if you want hunger, right, you want that drive, find someone who is not supported by their parents, find that person who is supporting their parents. And, you know, that's quite, you know, 43% of lower-income millennials and Gen Zers have helped their parents. So we talk about the money cascading down the family tree, but it's also going up as well. And in an uncertain economy, you know, it makes a hell of a lot of sense for families to pull their resources together. And that's, you're seeing that more and more and more. You know, the rise of multigenerational households, you know, in the US, it's higher now than it was in the Great Depression, you know, and that tells you something, is that actually there's a huge amount of stability and solidarity that people are finding in bringing that generational sort of wealth together and pulling their resources.
There's so much, so much here. The, you know, I'll speak to senators on both sides of the aisle, and the Republican senators, when I talk about income inequality and how young people aren't doing as well, and we've weaponized, the incumbents have weaponized housing and college degrees and made it harder for younger people to, to kind of get on the ladder, if you will, and say, "Well, yeah, but the young people are about to inherit all this money." It just doesn't make for a healthy dynamic that your only means of buying a house is to kiss your parents' ass. It's just not, I mean, a lot of people don't have those parents, and it's also, and also quite frankly, our parents are living too damn long. Great, I'm going to get a house when I'm 80 and they're 100. I mean, it just creates, I find it creates an unhealthy dynamic.
