Thomas Piketty's book Capitalism in the 21st Century has introduced the world to the idea of "patrimonial capitalism" but to really see it in action just consider that Warren Buffett is going to be succeeded as chairman of Berkshire-Hathaway by … Warren Buffett's son:
At last year's annual meeting, hedge-fund manager Doug Kass asked, "Away from the accident of birth, how is Howard the most qualified person to take on this job?" Mr. Kass, whose fund has bet against Berkshire Hathaway's stock, had been invited by Warren Buffett to join a panel posing questions to him.
The elder Buffett responded that his son, having grown up at his side, was ideally suited to the role of watching over Berkshire's culture and values. Those include a relentless focus on shareholders and giving managers of its far-flung operations great latitude to make decisions.
The striking thing about this is that Buffett's response isn't crazy. It is 100 percent plausible that Berkshire-Hathaway can continue to be a successful company under the stewardship of its founder's not-especially-qualified son.
That in many ways is the moral of the story of patrimonial capitalism. If not-especially-qualified children of rich people were necessarily destined to be disasters in the business world, then the unfair advantages they receive as a matter of birth wouldn't be a huge problem. Those advantages would simply dissipate due to incompetence. But while building an enormous diversified holding company like Berkshire is really hard, simplypresiding over it without letting it collapse is a lot easier. Not idiot-proof by any means, but it's a lower bar. A reasonably intelligent, reasonably diligent person can do it. So maybe Howard Buffett can do it. Why not? But then again, why not any of the millions of other reasonably intelligent, reasonably diligent people kicking around in the United States?
Well, because Howard Buffett is Warren Buffett's son and you're not.