The Cycle of Wealth and Poverty

Some years ago, a very wise gentleman told me of a saying that succinctly describes the decline and fall of family fortunes, which happens to cycle in approximately four generations. “Khattu, Nikhattu, Udharichand, Baychumal”.

It begins with the generation that works hard (Khattu) and builds up the family fortune. It is followed by a generation that is lazy (Nikhattu) and lives off the wealth. The third generation becomes more lazy and lives off borrowings (Udharichand) against the remaining assets. Finally, the fourth generation ends up selling the assets and ends up poor.

A version of this cycle must apply at larger scales too, that of societies and nations. It could be a global phenomenon and if so, other societies must have recognized the phenomenon and therefore also have similar sayings. And indeed they do. Here are a few from around the world. I got them off the web.

In Portuguese, they say “Pai rico, filho nobre, neto pobre”, meaning “Rich dad, noble son, poor grandson”. Among the French, they remark that “the first generation builds, the second strengthens, and the third spends it all.” Another version goes, “Le grand-père était un aigle; le père était un faucon; le fils est un vrai con”, meaning “The grandfather was an eagle; the father was a hawk, and the son is a real jerk.”

The Irish recognize the decline but also add something more to it: “The first generation is poor, the second is poorer, and the third gets robbed by the British.” Getting robbed by the British is what the Irish have in common with Indians (and a few dozen other nations.) For India, I think it would be “The first generation is rich, then the thieving British makes the second generation poor, and then the Indian Congress leaders who inherit the British raj leave the third generation destitute.”

The Americans put it tersely, “Blue collar to blue collar in three generations.” The Germans appear to agree and with the Americans. “Der Vater erstellt’s, der Sohn erhält’s, dem Enkel zerfällt’s.”: “The father creates it, the son receives it, the grandson ruins it.”

A quote from Otto von Bismarck: “Die erste Generation verdient das Geld, die zweite verwaltet das Vermögen, die dritte studiert Kunstgeschichte und die vierte verkommt vollends.” The first generation earns the money, the second manages the wealth, the third studies history of art, and the fourth degenerates completely. In Swedish the saying goes, “Förvärva, ärva, fördärva”. Acquire, inherit, ruin. In Dutch, that goes “verwerven, erven, verderven”.

In China, they say that wealth does not pass three generations. In Korea, it’s difficult to remain wealthy beyond three generations. In Japan too, they say “from rice paddy to rice paddy in three generations.”

I suppose the Arabs also have their saying on the matter. The former Prime Minister of the United Arab Emirates, Râshid bin Sa`îd Âl Makṫûm recognized the grand cycle and said, “My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel.”

Fortunes do not last forever. But that’s because nothing lasts forever. Anicca or impermanence is a basic feature of the world. That same impermanence is characteristic not just of family fortunes but also of firms. Cardwell’s Law derives from it. The essential implication of that is that no country can maintain its technological dominance forever. There’s churn among firms for leadership, just as there is among nations, societies and families. That’s the fractal nature of the universe.

C’est la vie.

One thought on “The Cycle of Wealth and Poverty

  1. That was really interesting and the pattern does seem to be recognized world-wide. In our case, 1. I was born in the depression and the family suffered,
    2. The family rose with the world war 2 boom where families
    prospered, traveled, bought homes and expected their kids
    to go to college.
    3. There is a decline in the middle class as more people make
    less money, and many young people cannot afford college.
    There are more clashes and hate builds and people take
    sides against each other.
    4. Democracy fades as less people vote or are prevented from
    voting and feel burdened and hopeless. I see the country
    becoming controlled by those in power through extreme
    wealth, education, guns, and other means of control.

    There will be likely some event that equalizes the world
    again.

    Thanks for helping us look into our lives and considering the future.
    Gran

    Like

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