The driving spirit behind Growth in Capitalism is “Private Ownership”. Humans get inspired to deliver their max when offered the rewards of their success to keep for themselves. And despite owning enough for a life time, the hunger & excitement to own more is so overpowering that it keeps the momentum of growth on its full throttle. This leads to economic growth of the nation and thereby more opportunities to further create wealth. Of-course, too much of everything is bad and even here – too much can lead us into Crony Capitalism but avoiding this discussion for the moment.

When this same very wealth is passed on under inheritance – it has been found (high probability) that the new incumbent doesn’t carry the same fire as the predecessor. This means an inefficient ROCE (Return on Wealth employed). We witness this when we look at the list of top ten business houses drawn in every block of ten years – old ones simply disappear or give way to new ones. One can sign-off this fact as an outcome of “Darwinism”, but now we realize that it is not the complete story. Since we have termed it as Private wealth, it also comes to our mind that why should it concern us as outsider – but here we miss the fact that this wealth though private by definition – still belongs to the nation on a macro level. Underutilization of such assets bequeathed because of the ethos of “Capitalism” turns out to be speed breakers for the same nation which has been hitherto riding on the DNA of Private Ownership & resultant growth.

Certain times a lethal combination gets brewed when an inefficient next generation inherits huge wealth. They become “Rent Seekers” in the economy – a word coined for parasites in economic parlance. Not that I have a solution to remove this anomaly, but introducing “INHERITANCE TAX” might address this problem somewhat. This idea also gets supported when we all accept Dividend-tax as an acceptable norm beyond an annual limit. Dividend is an income which has suffered tax – but might still get further taxed in the hands of recipient beyond a point.