The New Nobles

Sambolin: Is that something you specifically found in what has been released to you?

Johnston: Yes. I have suspected this and written about it in my column that this is what happened, and last night, Brad Malt, the attorney for the Romneys, confirmed to Reuters that we were correct. They have not paid a penny of gift tax. That's because Congress allows a very tiny group of people—the Romneys by their income are in the top 1 percent of the top 1 percent—to not count as having any value the real source of their income, something called carried interest, if they give it to their children.

The request wasn't extravagant. His father, Eugene Lang, was on the way to becoming a multimillionaire as the founder of patenting firm Refac Technology Development. But rather than buy Stephen the toy, Eugene suggested they donate what it would cost to charity. It went to a boys' home in Queens.

"I was extremely upset at first," recalls Stephen.

But he says the gesture made an impression that remains with him today, and he doesn't seem to mind that his 87-year-old father intends to leave most of his wealth to charity.

When Warren Buffett pledged $31 billion to the Bill & Melinda Gates Foundation in late June, he rekindled a debate among the rich over inheritance: whether it's better to limit what you pass on and not spoil your heirs, or let them inherit the wealth and build on it. Buffett, 75, has often said that wealthy parents should leave their children with enough money to do anything they want but not so much that they are doomed to do nothing at all.

Eugene Lang shares those sentiments. Best known for creating the "I Have A Dream" Foundation, he has given away $150 million — more than half of his net worth — with much of the rest also earmarked for charity. After putting his three children through college, he says, he expected them to be essentially self-sufficient.

"A good education is to learn to be self-supporting so that they can build their own inheritance," Lang says. "I never believed in luxuries. I still pick up a penny on the street."

Wealthy people who don't plan to pass along most of what they have to their children are the exception, says Cisco Systems CEO John Chambers, 56. It strikes at the heart of parenthood. Even those in the middle class who have been made millionaires by homeownership risk spoiling their children, but Chambers says that won't stop most of them. He won't say how much he plans to leave his two children but indicates that it will be substantial.

Even though Wal-Mart founder Sam Walton continued to drive a pickup long after amassing one of the largest fortunes ever, he left behind a dynasty that will influence his heirs for generations. His four multibillionaire children are tied for fourth place among the richest people in America, behind only Gates, Buffett and Microsoft co-founder Paul Allen, according to Forbes magazine.

Forbes Editor-in-chief Steve Forbes, 59, is what Buffett would call a member of the lucky sperm club, a winner of the ovarian lottery. But Forbes says that this is an unfair double standard. Buffett may not have inherited his money, but, Forbes says, Buffett was endowed with genes and given an environment that made him smart and ambitious enough to succeed. Forbes sees passing down money as little different than passing down intelligence.

"Allowing children to build upon what you built is a good thing, not a bad thing," says Forbes, who was able to make two unsuccessful runs for the presidency because of the $400 million inheritance from father Malcolm Forbes of Forbes magazine fame.

People who believe that the aristocracy rightfully dominates society because of its intrinsic superiority are conservatives; democrats, by contrast, believe that they are of equal social worth. Conservatism is the antithesis of democracy. This has been true for thousands of years.

The defenders of aristocracy represent aristocracy as a natural phenomenon, but in reality it is the most artificial thing on earth. Although one of the goals of every aristocracy is to make its preferred social order seem permanent and timeless, in reality conservatism must be reinvented in every generation. This is true for many reasons, including internal conflicts among the aristocrats; institutional shifts due to climate, markets, or warfare; and ideological gains and losses in the perpetual struggle against democracy.

In some societies the aristocracy is rigid, closed, and stratified, while in others it is more of an aspiration among various fluid and factionalized groups. The situation in the United States right now is toward the latter end of the spectrum. A main goal in life of all aristocrats, however, is to pass on their positions of privilege to their children ...