Lamberto Frescobaldi sets two wine glasses atop a wooden barrel in the spacious cellar of his company's winery in a 1,000-year-old castle not far from Florence. Uncorking a bottle of Nipozzano, he takes a sip and nods. The red that his family supplied to Michelangelo and Pope Leo X still tastes pretty darn good.
To Frescobaldi, 53, directing the family business is something of a trust. It’s a way to preserve a dynasty that began with wool traders in about the year 1000 and made its money financing the English crown almost 200 years later.
“You have to feel that what you have inherited, you actually do not own,” he said, seated on a wine cask. “You only have to run it properly, and to carry on to something else.”
Maintaining inherited wealth has worked for generations of Frescobaldis over 700 years, and it has let the descendants of Jakob Fugger in Germany continue to run the social-housing complex the Emperor’s banker founded almost half a millennium ago. It’s less of a blessing for Europe as a whole, where family fortunes are more prevalent than in the U.S. or Asia. Their relatively high level is a sign of the continent’s low social mobility, keeping education, income and social connections from evolving over generations.
The richest Florentine families today were already at the top of the socioeconomic ladder almost 600 years ago, according to a recent study by the Bank of Italy. And research by the Organization for Economic Cooperation and Development shows that in many European countries, not only wealth and income but even occupations tend to be “sticky,” passed on from generation to generation.
More than one-third of Italy’s richest people inherited their fortunes, compared with just 29 percent in the U.S. and 2 percent in China, according to a 2014 study of the world’s billionaires by the Peterson Institute for International Economics. Germany has the highest share of inheritor-billionaires among developed economies, 65 percent. Overall, heirs and heiresses make up about half of Western Europe’s billionaires.
Europe’s income classes aren’t much more rigid than in the U.S. The lack of social mobility is more of a concern, though, because economic output and the number of available jobs are smaller. The U.S. has grown 9.9 percent in real terms since 2007; the comparable figure for the European Union over the same period, based on Eurostat data, is 2.8 percent. Gross domestic product per capita in the EU is almost one-third lower than in the U.S when adjusted for purchasing power; the unemployment rate is nearly twice that of the U.S.
Because America’s economy is expanding, “they need more engineers, more chemists, more economists, more analysts, more bankers than in Europe,” said Antonio Schizzerotto, professor emeritus of sociology at the University of Trento and scientific director of the Research Institute for the Evaluation of Public Policies in the same city. “The number of positions open is higher than the number of ‘sons and daughters of.”’
At a time when some European economies are stalling, wealth and social inheritance must be closely watched because if inequality reaches a certain limit, it can further constrain countries' ability to revive growth, Schizzerotto said.
For Frescobaldi, the family patrimony can be summed up in one word: wine. His first experience with red came at the age of six, when he got drunk and fainted at a summer party with vineyard workers.