🎓 Why Redistribution Alone Doesn't Move People Between Social Classes

I recently read Treasure Island along with some eighth graders I tutor. For those not familiar with it, it’s a classic pirate novel in which an innkeeper’s son ends up with a treasure map and tags along as cabin boy when the wise local magistrate and remarkably foolish squire get together a crew and head off to claim it. Spoilers: the crew consists of pirates after the treasure map, including a chef named Long John Silver, who these days is famous mostly for the fast food chain.

My son enjoyed the graphic novel when he was little, and we listened to a bit of the audiobook together, but this year was the first time I ever read the original version. I was struck by two things. First, by the complexity of the language and the unfamiliar terminology — even after getting all the way through A General History of the PiratesI struggled a bit.

Secondly, by the epilogue:

“All of us had an ample share of the treasure and used it wisely or foolishly, according to our natures. Captain Smollett is now retired from the sea. Gray not only saved his money, but, being suddenly smit with the desire to rise, also studied his profession, and he is now mate and part owner of a fine, full-rigged ship; married besides, and the father of a family. As for Ben Gunn, he got a thousand pounds, which he spent or lost in three weeks, or, to be more exact, in nineteen days, for he was back begging on the twentieth.”

One of the fun things about reading books from 1883 is that the controversies of the time were just . . . so very different.

This failure of magic sky money to elevate someone out of poverty — which strikes me as somewhat obvious — is at the heart of a great many political debates today. My social media and newsletter feeds have been awash with arguments about some California tax that might cause Zuckerberg to sell stocks without a vote to pay some new tax, and while I don’t care to learn more about that political fight, a related discussion about the possibility of revolt and redistribution of wealth as a result of the age of AI economy popped up in one of my group chats.

I lack the expertise and personality necessary to make predictions about the likelihood of AI doom, but I do read a lot of history books. Recently my book club went through How Africa Works: Success and Failure on the World’s Last Developmental Frontier by Joe Studwell [note: these are Amazon Affiliate links]. It’s the sequel to How Asia Works: Success and Failure In the World’s Most Dynamic Region, which is more in Studwell’s wheelhouse and is frankly a better book. I’ve also read a stupendous number of Matt Lakeman’s articles about traveling in Africa, and so when my friend commented something along the lines of “working hard to earn money for your family presupposes that you’ll actually be able to keep the money, but if a violent revolt happens, redistribution will wipe all of that out,” the history nerd part of me perked up with some counterarguments.

This essay is not quite a distillation of the discussion that ensued, but it pulls together some research threads I’ve been tugging on for awhile.

Is winning the lottery actually bad for your family? What’s the difference between Asian and African attempts to kickstart a modern economy? Have revolutionary wealth seizures ever actually changed how social classes operate in a country? Sure, I’ve read a ton of book reviews explaining that hydrangeas vs. azaleas is a deeply meaningful signal about American social class, but just how stable is class, anyway?

What a windfall can and can’t get you

In Treasure Island, Gray got a bunch of money, and that money was necessary to his later success, yes. But he also put in a lot of effort on top of that, and leveled up in a profession he already had. The money bought him a stake in a ship, a tool of that profession, and it bought him the standing to marry and start a family.

Ben Gunn had spent three years alone on the island, and he arrived in Bristol without family or connections. His share paid for three weeks of spending, and he had no trade income waiting when the money ran out. Though he was able to survive on an island -- not the mark of a man without skills! -- he was not able to parlay those skills or that money into status.

Sure, this is fiction. Stevenson scripted the sailors’ choices and the story is a bit of a morality tale about vice and virtue.

In the real world, though, we can look at lottery winners. Sweden keeps administrative records good enough to follow lottery winners for years, and prizes there are assigned by chance. A study about wealth, health and child development found no evidence that a big change in wealth impacted winners’ mortality or health care use. Although winners’ children used more health care and may have had lower obesity risk, effects on most other child outcomes, including school performance, drug use, and skills, basically didn’t move.

To be clear, this is not a claim that lotteries are bad or that they have no impact. A separate study of the same lottery population found that large winners reported higher life satisfaction and kept reporting it more than a decade later. Money can absolutely buy comfort and security, and indeed lasting satisfaction. But this doesn’t seem to lead to a detectable change in the children’s schooling or in the family’s social status, which is to say the effect peters out after a generation.

If you’re anything like the guys in my group chat, you’re shouting into your screen “but what about the selection effects?”

So: the studies handle the selection bias problem by leaving out the general public entirely, only looking at the people who participated in the lottery. The variable is the size of the prize among people who already played: big winners are compared with small winners. The study is of course not perfect (few are) — it’s looking at lottery players, who in every country skew poorer than the population. This is part of why one of my college professors called them a poor tax. Also, Sweden is itself a wealthy country that already pays for everybody’s school and medicine.

So this doesn’t really generalize to stuff like universal basic income when we’re thinking about whether magic sky money can solve poverty, because despite social media discourse about European air conditioners and energy costs, no one in Sweden is by Treasure Island (or African) standards poor. We can debate the GDP impacts of socialized medicine and education and relative poverty all we want, but these lottery winners are not in Ben Gunn’s position of being literal beggars risking starvation, much less his previous position of being a castaway on a deserted island.

The Swedish study does however seem to indicate that a large cash transfer does not lead to a family going up a social class.

What About Revolution?

As the California taxes demonstrate, lotteries are hardly the only kind of wealth transfer out there. So let’s look at that other C — China.

In The Son Also Rises: Surnames and the History of Social Mobility, Gregory Clark tracks rare surnames through elite institutions across centuries, studying universities, medical registers, parliaments, and probate records. He “demonstrates how fate is determined by ancestry and that almost all societies — as different as the modern United States, Communist China, and modern Japan — have similarly low social mobility rates. These figures are impervious to institutions, and it takes hundreds of years for descendants to shake off the advantages and disadvantages of their ancestors.”

Bear with me, this isn’t my area of expertise, but as I understand it, the Communist Revolution confiscated the property of landlords and capitalists and the Cultural Revolution took aim at elite families themselves. The stated goal across both campaigns was to break the transmission of status from one generation to the next, by targeting schooling, jobs, social standing, and religious values.

Did it work?

Some economists (mostly from Harvard) digitized archival records from the revolutionary period and matched them to modern census and household survey data. And yeah, the revolutions had a pretty big impact! Wealth and education became far more equal (because the top had been pulled down toward the level of everyone else, Harrison Bergeron style). But it didn’t really last. After about fifty years, the grandchildren of the pre-revolution elite earned 12-16% more than grandchildren of non-elite households, and they had completed 11% more years of schooling.

So yeah, leveling destroyed most of the institutional advantages the elites held. Landlords’ grandkids aren’t ruling anyone. But they still earn a bit more than their neighbors, and even widespread executions couldn’t wipe out the human capital of the elite families. Families passed down human capital, which is to say their skills, knowledge, and values. Some of this was done by example, some by direct instruction, and I imagine some just by genetics and natural interests. Kinship networks also survived, not just in marriage connections and well-placed relatives, but in having a name and reputation other families remembered.

When China reopened its markets, family training had prepared kids to do well on examinations and qualify for credentials. Family members were able to supply introductions to employers and officials even after concentrated attempts to eliminate elite power networks.

In a similar vein, we have Russia, which is also not my area of expertise (insofar as I have one) so bear with me.

The short version of the relevant bits is that the Bolsheviks “expropriated” the great estates in 1917. In 1930, Stalin “collectivized” the countryside. Millions of peasants got deported and/or killed. As you might expect, the officials appointed to run the party-state (who did not officially own anything) controlled property by virtue of their positions, with privileged access to scarce goods and services, which enabled them to arrange good educations and jobs for their kids.

When the Soviet Union collapsed and property became available to own again, 61 percent of the new business elite and about 75% of the new administration came out of the nomenklatura themselves. So it is possible to create a new elite.

But what happened to the old elite?

Descendants of the educated groups (“estates” in French parlance) — nobility, clergy, merchants, townspeople, etc — formed the “old intelligentsia” by the late 1930s, thanks to that “home education” and that same sort of familial human capital training (and, again, presumably genetics). According to the helpfully titled paper, State violence and target group adaptation: Maintaining social status in the face of repressions in Soviet Russia, Communist repression did not interrupt intergenerational education persistence for the elite groups in Russia either; the status loss was temporary, and descendants resumed university education once the environment got friendlier.

Oh, it wasn’t a perfect recovery. Surname studies like the also helpfully named Social Mobility in Times of Revolutions and Regime Changes: Persistence of Elites in 20th Century Russia finds elite persistence at a rate of 0.5, which is lower than the 0.7–0.8 Clark found elsewhere, but it’s still pretty substantial.

The fact that these revolutions bent the expected success curve rather than flattening hints to me that there’s something going on in “upper class” families that not even incredibly repressive government regimes — which, I want to be clear, I do not consider California taxation to be — can stop.

What About Regular Government Seizures?

Speaking of repressive regimes in Russia, cities in German-occupied Russia (Soviet Union, whatever) developed smaller middle classes after WWII, and researchers associate the destruction with lower wages in those cities today.

I always hestitate to bring up Nazi Germany, because the arguments that result tend to shed more heat than light, but there’s some really useful signal in studies about the impacts of Nazi expropriation of Jewish property. Leaving aside the savings, houses, and businesses that were taken, there’s the human capital angle again: schoolchildren whose towns lost Jewish teachers and professionals finished with almost half a year less total schooling; the deficit followed that cohort into adulthood. The Nazis were able to transfer houses, shops, and savings to new owners, but they could not appropriate the training or relationships that made those assets productive.

To make a rather blunt metaphor, the government cannot simply take a modern tech company, turn it over to someone without useful training or connections, and expect it to continue to run as profitably as it does under current leadership. People expecting this sort of taking to result in the current elite to end up on the bottom of the social heap, in my opinion, unaware of how that sort of thing typically works out in real life.

Short of truly mass executions, my understanding is that elites will keep educating their children and making connections, and their grandkids will still be successful even if you take all their money and set it on fire.

Money, though, is different from land… which brings us back to How Asia Works.

After WWII, Japan, Taiwan, and South Korea carried out land reforms that took farmland from large landlords, paid for it in bonds worth less than the market price, and sold or gave it to the tenants who had been farming it. These were compulsory seizures, imposed under occupation and the threat of communist revolution, and on the design question they are the strongest evidence my friend has. The old landlord class in Korea (the top 4% of the rural population) lost about 80% of its income, while the bottom 80% gained around 25%. The gap between the rich landowners and the poor farmers closed a lot in Taiwan as well.

A key detail here is that this asset transfer went to people who knew how to leverage the asset; the farmers basically got their “own” land, and more motivation to use it efficiently. Results of this method have varied; when Zimbabwe revoked commercial farm titles and redistributed most white-owned farmland; three quarters of the value of commercial farmland evaporated, agricultural production fell sharply, and the banking and manufacturing sectors followed agriculture down. One difference is that land was allocated according to political lines — which to say to lots of the elite bureaucrats , another was that Zimbabwe didn’t offer the same sorts of training and credit structures East Asia did — and Zimbabwe’s farmers couldn’t leverage the same credit lines the previous owners were able to access.

That said, field surveys led by Ian Scoones found most small-scale recipients significantly better off than they had been before the transfer.

And, wait. Let’s look at who exactly benefitted from the redistrubition of Zimbabwe’s farmland.

Can it be that they were a combination of the bureaucratic elite and the previous aristocratic elite, just like Russia?

Basically, yeah. The medium-scale commercial farms went mostly to high ranking civil servants, army personnel (both retired and in service) as well as the politically-connected business elite — the bureaucratic elite, a class the post-1980 state created. The smallholder land, though, ran through the old aristocracy: traditional leaders such as chiefs and village heads were given bigger roles, which included the selection of the beneficiaries and the allocation of land on the smallholder resettlement farms. And they used the opening the way you would expect.

Scoones and his coauthors found chiefs taking advantage of the land reform to control over these new territories, which they claimed had been occupied by ancestors. In Zimbabwe, at least, chiefly families never actually left or lost their status. Power flows through families via rules of succession, and under colonial rule chiefs ended up as salaried officials in the Native Affairs Department, enforcing colonial policies — the British administered the countryside through the old elite instead of replacing them. The bloodlines that topped pre-colonial society were still at the top of African rural society after the colonial governments were kicked out.

But What About The Memes?

People on my timeline keep talking about whether to break up Amazon, or seize Zuckerberg’s wealth, or whether anybody else could have built Apple. After studying elite families throughout history, I have come to doubt that redistributing the wealth of Elon Musk would help anyone very much. America hasn’t had a farming economy in a long time, and California’s efforts to move the social needle via education have been more miss than hit.

The good news is that a rising tide tends to lift all boats, and despite the vibes, this is still the wealthiest, most peaceful time in history. It just wasn’t violent redistribution that got us here. In 1820 the global Gini coefficient (which is how we measure income inequality) was about 0.5, lower than today’s ~0.62... because nearly everyone on earth was poor. Inequality did rise for 180 years as the West got wealthier, peaked around 1990–2000, and has fallen since. One of the weird things about human is that relative status matters a lot more to to us than absolute status, but I think we should try to overcome this, because while we probably could get back to a society with flatter social classes, it seems like we’d get there Harrison Bergeron style — by cutting off our nose to spite our face.

And even then, the elites would probably pop back up in a few generations, like mushrooms. Or, if one is being poetical, tulips.

I wrote this article before election day in the USA, but deliberately scheduled it for after the election. I have not checked what happened with the California tax people have been talking about and don’t particularly intend to. The point I’m trying to make here is both broader than and orthogonal to the actual redistribution debates currently happening in the political sphere; this essay grew out of a nerdy aside in a speculative discussion, not an argument about voting. Please take it in that spirit.

This is now a general term for any entrenched, self-serving, or privileged ruling bureaucracy in post-Soviet states or similar political systems, but for our purposes I mean “the Soviet bureaucratic elite.”

Note: I’m skipping the French Revolution for length and because it was mostly one group of elites stealing from the other and I’m already coming up on 3k words.

It must be said that California is not uniquely bad at this. Scores have stagnated or fallen in most states, and math scores on the international PISA tests have fallen worldwide. The bright spot is Mississippi: after the state’s 2013 science-of-reading reforms, its fourth graders went from near the bottom nationally to surpassing the national average in 2024, the so-called “Mississippi miracle.” Even there the gains mostly stall out by middle school, which is something else to keep in mind when considering how much educational interventions (in either direction!) impact outcomes.

Tulips, as opposed to poppies (which are not bulb plants and come in both annual and perennial form), grow back after being cut down. At risk of overexplaining the metaphor, see also: the tulips, dandelions & orchids metaphor for resilience and vs tall poppy syndrome.