If you’re so smart, why aren’t you rich?

[dismal]

I will concede that one does have to have some skill and some diligence. But one does not need to be a superhuman genius or a superhuman Stakhanovite, and all I see from capitalist apologists is that being rich means that one is a Stakhanovite genius.

I don’t believe that’s a common argument at all. ...

How convenient. I've seen lots and lots of weeping from capitalism apologists about how hard their heroes worked.

Your last post was about super-human genius, not hard work.

 

[lpetrich]

Should I explain what a Stakhanovite is supposed to be?

 

[Loren Pechtel]

It’s not chance. If that were so, then we’d find people of low to average IQ with the same “chance” of being wealthy as those with high IQ. But we don’t. And just because a person has an above average to high IQ doesn’t mean they’ll be wealthy. Other factors are at play: tolerance of risk, personal preference, etc.

Exactly. That's enough to discredit this "research."

There is a substantial grain of truth here, though. For the super-rich luck is a major factor. To get on the Forbes list you need ability, drive and opportunity--and the latter is luck.

Furthermore, there are other factors at work here:

1) Money begets money. Many of those who make more invest and thus end up with more than just their income. A normal distribution of earned income will not translate to a normal distribution of total income or wealth.

2) An awful lot of high ability people aren't driven to accumulate great amounts of wealth. They're far more interested in the pursuit of knowledge in their field. Superwealth generally means the people get pleasure out of making business work. (Extreme example: Warren Buffet--pretty much a middle class life, yet up there on page 1 of the Forbes list. He doesn't need the money, he likes what he does.)

Note that we see the 80:20 distribution show up again and again in cases where luck obviously isn't the driving factor.

 

[barbos]

To be fair, "If you’re so smart, why aren’t you rich? Turns out it’s just chance." is the actual title of the article.

I found this paragraph interesting;

That may not be surprising or unfair if the wealthiest 20 percent turn out to be the most talented. But that isn’t what happens. The wealthiest individuals are typically not the most talented or anywhere near it. “The maximum success never coincides with the maximum talent, and vice-versa,” say the researchers.So if not talent, what other factor causes this skewed wealth distribution? “Our simulation clearly shows that such a factor is just pure luck,” say Pluchino and co.

Never coincides with the maximum talent ? Just pure luck ? I have my doubts about that claim. (Wait, isn't the researcher actually saying it is dumb luck after all ?"

Well, how many Nobel prize winners in science or medicine; or how many Fields medallists, have private jets?

And how many private jet owners win those academic prizes?

It's pretty clear that the overlap between people at the top of the financial standings, and people at the top of the intellectual standings, is zero.

We live in a world where nobody is even vaguely surprised by the fact that Paris Hilton and Kanye West have private jets, while Donna Strickland and Greg Winter do not.

It's unsurprising because we all know that riches don't come from the use of our intellect.

Well, earlier study determined that Nobel prizes are mostly dumb luck as well. They should be awarded Nobel for that study if you ask me.

 

[fast]

He who is smart enough to apply himself and does is smarter than he who is otherwise smarter that doesn’t, so certain variants of argumentum ad cruminum can kiss my ass.

 

[ronburgundy]

It’s not chance. If that were so, then we’d find people of low to average IQ with the same “chance” of being wealthy as those with high IQ. But we don’t. And just because a person has an above average to high IQ doesn’t mean they’ll be wealthy. Other factors are at play: tolerance of risk, personal preference, etc.

Exactly. That's enough to discredit this "research."

This "research" actually conducts highly systematic statistically analysis of the data that you two are vaguely speculating about. And the empirical result is that beyond the fact that if you are at the very low end of IQ, you're more likely to be at the very low end of wealth, there is almost no correlation between IQ and wealth, especially when the direct benefits of parental wealth and all it's advantages it's gives a person are controlled for. The very rich are not much more likely to be at the high end of IQ than people with median wealth, and those with the hightest IQs are not much more likely to be at the high end of wealth than the median.

There is a substantial grain of truth here, though. For the super-rich luck is a major factor. To get on the Forbes list you need ability, drive and opportunity--and the latter is luck.

Luck is the primary determinant of opportunity, but it plays a much bigger role than that. Luck heavily determines the outcomes of people at every level of wealth. Identical twins of the same ability, drive, can be given the same opportunity to invest their given wealth and skills into profit seeking opportunities and will still wind up with significantly different outcomes. This is because there are an infinite number of events occurring in the environment that serve as random contingencies determining what the outcome is for a given action at a given place in time. Those contingencies vary between every physical location and timepiont such that an identical action will produce different results from moment to moment and place to place. The complexity of the system means that almost all these contingencies are unknown, unknowable, and uncontrollable. These random contingencies are luck and they operate on everything. So, unless you want to invoke supernatural forces, it is pure woo nonsense to deny that most variance in wealth outcomes are primarily determined by luck.

1) Money begets money. Many of those who make more invest and thus end up with more than just their income.

Exactly, which is precisely why luck is such a huge factor. Luck creates differences in wealth at time 1, which in turn determines even greater differences in wealth at time 2, and so on. Which means that the effects of luck increase over time, carrying through to create ever increasing differences in wealth.

Plus, even though money does beget more money, how much money will be generated at time 2 by X dollars at time 1 is itself highly variable and impacted by random contingencies, aka luck.

It important to keep in mind that unlike ability or drive, "luck" is not actually a particular thing. Luck is everything, every force, every event, every factor within an infinitely complex system that is not systematically controlled by the small set of factors located within a object (the person) whose outcomes are being compared. For example, luck is every property and event in the history of the universe that leads to one particular person getting hit in a crosswalk and not someone else.

 

[Torin]

If anyone is interested, you can read the paper itself here (it's not a difficult read):

https://www.researchgate.net/public...he_role_of_talent_and_luck_in_getting_success

Correction: This appears to be a summary of the paper by its author.

 

[RVonse]

It’s not chance. If that were so, then we’d find people of low to average IQ with the same “chance” of being wealthy as those with high IQ. But we don’t. And just because a person has an above average to high IQ doesn’t mean they’ll be wealthy. Other factors are at play: tolerance of risk, personal preference, etc.

Exactly. That's enough to discredit this "research."

There is a substantial grain of truth here, though. For the super-rich luck is a major factor. To get on the Forbes list you need ability, drive and opportunity--and the latter is luck.

Furthermore, there are other factors at work here:

1) Money begets money. Many of those who make more invest and thus end up with more than just their income. A normal distribution of earned income will not translate to a normal distribution of total income or wealth.

2) An awful lot of high ability people aren't driven to accumulate great amounts of wealth. They're far more interested in the pursuit of knowledge in their field. Superwealth generally means the people get pleasure out of making business work. (Extreme example: Warren Buffet--pretty much a middle class life, yet up there on page 1 of the Forbes list. He doesn't need the money, he likes what he does.)

Note that we see the 80:20 distribution show up again and again in cases where luck obviously isn't the driving factor.

+1 Agree

And I would add one more to this:

3) When it is working correctly, capitalism rewards those who provide the most value to society. And it makes no difference to capitalism whether those rewarded people are dumb or smart. Capitalism holds no bias to skill, brains, or ability. It only cares about wealth creation.

 

[Koyaanisqatsi]

There's no great mystery to getting rich. If any of you had put just $100 into a Roth IRA when you were 18, invested it in an index tracking fund (set your dividends to reinvest) and added just $100 per month over the next forty five years and everything stayed the same, you'd be a millionaire by the time you retired.

The only key to it, of course, is discipline, but if you're single, live in say Chesterfield, Missouri (nice area; suburb of St Louis) making just $32K per year (median income per capita) then your take home pay every month is about $2,200.

Your monthly nut:
Rent: $850 (for a 1-2 bedroom)
Food: $150
TV/Phone/Internet/Entertainment: $300
Utilities: $200
Car (gas/insurance): $200
Clothing: $100

That leaves about $400 every month as a buffer for emergencies or vacations or gifts or the like, so saving $100/month out of that for one's future millionaire status leaves a $300 monthly buffer.

If you were smart, you'd make higher monthly contributions to your Roth (assuming you don't have a 401K, which would be the better option). An increase of just $50/month to the Roth would result in almost $2M after 45 years and still leave you with a monthly buffer of $250 assuming all things remain static and you don't ever get a raise or a bonus or a better job, etc.

 

[SimpleDon]

Turns out it’s just chance.

The most successful people are not the most talented, just the luckiest, a new computer model of wealth creation confirms. Taking that into account can maximize return on many kinds of investment.

The distribution of wealth follows a well-known pattern sometimes called an 80:20 rule: 80 percent of the wealth is owned by 20 percent of the people. Indeed, a report last year concluded that just eight men had a total wealth equivalent to that of the world’s poorest 3.8 billion people.

This seems to occur in all societies at all scales. It is a well-studied pattern called a power law that crops up in a wide range of social phenomena. But the distribution of wealth is among the most controversial because of the issues it raises about fairness and merit. Why should so few people have so much wealth?

The conventional answer is that we live in a meritocracy in which people are rewarded for their talent, intelligence, effort, and so on. Over time, many people think, this translates into the wealth distribution that we observe, although a healthy dose of luck can play a role.

I don't agree that it is just chance. One accomplishment of movement conservatism and the neoliberal policies of the last fifty years has been to reduce social mobility. The social structure is becoming more rigid. People who have rich parents are more likely to be rich, people whose parents are poor are more likely to be poor themselves. Much to the delight of the already rich, to the children of the rich and to the detriment of everyone else who isn't rich.

This decrease in social mobility turns the mantras repeated on this site by the conservatives and libertarians here on the mantras' heads freer markets mean that "anyone who is willing to work hard can be a success in America," "even the poor can save money to become rich, just don't buy a new iPhone," "free trade and globalization provide benefits to everyone in lower costs for goods, benefits that outweigh their costs," "taxes are theft and redistribution is evil socialism." (I might be paraphrasing a bit)

While neoliberalism, libertarianism and movement conservatism are American inventions we are not alone in the economic and political damage produced by them. Some in the UK believe that Brexit and especially so-called hard Brexit is being driven by the already rich in the UK wanting to convert the UK into a wealth-friendly tax haven like Singapore, Jersy, the Cayman Islands, etc. and to turn the NHS and health care into a fully capitalized, profit-making and extremely expensive endeavor like it is in the US; youtube-Brexit Endgame.

 

[SimpleDon]

The sad thing about the meritocracy argument is that even if it were true, which it isn't, nobody should be okay with wealth being divided that way, when wealth is what determines one's survival prospects and access to the benefits of living in a developed nation. Merit should kick in long after the basic necessities and even luxuries of human civilization are guaranteed to all. We all have family members and friends who aren't particularly smart or talented. And we love them, and want them to be okay, and want them to live happy and fulfilled lives. As long as wealth is the barrier for entry to those outcomes, meritocracy of wealth should be opposed everywhere except at the margins.

Agreed. This is why I think we should have a wealth tax, and not just an income tax.

I don't think it should probably kick in until one's net worth goes over some set value (say ~$5 million), which would still allow for some very opulent living, to be sure. Let the super billionaires whine about all they want. They can always move to the middle east.

But if all the greedy people leave, who will be left to create and sustain middle class employment?

I dont want them to leave. I just want the tax policy to encourage them to invest in more employment for everyone else instead of their own consumption.

The sad thing about the meritocracy argument is that even if it were true, which it isn't, nobody should be okay with wealth being divided that way, when wealth is what determines one's survival prospects and access to the benefits of living in a developed nation. Merit should kick in long after the basic necessities and even luxuries of human civilization are guaranteed to all. We all have family members and friends who aren't particularly smart or talented. And we love them, and want them to be okay, and want them to live happy and fulfilled lives. As long as wealth is the barrier for entry to those outcomes, meritocracy of wealth should be opposed everywhere except at the margins.

Agreed. This is why I think we should have a wealth tax and not just an income tax.

I don't think it should probably kick in until one's net worth goes over some set value (say ~$5 million), which would still allow for some very opulent living, to be sure. Let the super billionaires whine about all they want. They can always move to the middle east.

A wealth tax would only be possible if the rest of the world had a wealth tax or if you had some way of avoiding wealth flight. Neither is likely to happen.

The obvious time to tax wealth is when it changes hands exposed to the legal system. When it is inherited by the children.

When we don't tax inheritances we remove some of the incentive for the most highly educated people in the country as a group, the children of the rich, to work hard and to help build the nation. The more we tax inheritances the more incentive we will provide to the children of the rich, right?

 

[bilby]

There's no great mystery to getting rich. If any of you had put just $100 into a Roth IRA when you were 18, invested it in an index tracking fund (set your dividends to reinvest) and added just $100 per month over the next forty five years and everything stayed the same, you'd be a millionaire by the time you retired.

The only key to it, of course, is discipline, but if you're single, live in say Chesterfield, Missouri (nice area; suburb of St Louis) making just $32K per year (median income per capita) then your take home pay every month is about $2,200.

Your monthly nut:
Rent: $850 (for a 1-2 bedroom)
Food: $150
TV/Phone/Internet/Entertainment: $300
Utilities: $200
Car (gas/insurance): $200
Clothing: $100

That leaves about $400 every month as a buffer for emergencies or vacations or gifts or the like, so saving $100/month out of that for one's future millionaire status leaves a $300 monthly buffer.

If you were smart, you'd make higher monthly contributions to your Roth (assuming you don't have a 401K, which would be the better option). An increase of just $50/month to the Roth would result in almost $2M after 45 years and still leave you with a monthly buffer of $250 assuming all things remain static and you don't ever get a raise or a bonus or a better job, etc.

There is a LOT wrong with this analysis.

The biggest problem is that it fails to meet the actual goal - a millionaire is three or four orders of magnitude less wealthy than "rich".

But even if we accepted that mere millions were sufficient to qualify as "rich". the assumption that all 18 year olds can earn the median income is fucking crazy. Income tends to increase with age, at least into the 40s; So most 18 year olds are not even going to have CLOSE to the median income.

I didn't grow up in the USA, but my income was substantially lower than US$32K until at least my 30s. That's a long time ago, but I haven't forgotten what life was like - the idea that I could save money at all is a fucking joke - some weeks I didn't have enough to eat (and I can assure you I wasn't spending $300 a month on "TV/Phone/Internet/Entertainment" - of course, there was no Internet back then, but if there had been, I wouldn't have had it, because I couldn't have afforded it). The idea of saving $100/month before the age of 28, much less at 18, is a sick joke that could only be taken seriously by someone who had a very privileged early life.

So getting to the point of being comfortably wealthy in retirement can be seen to be easy, as long as you start out with a larger income than at least 50% (probably closer to 70%) of new entrants to the job market. Well, whoop-de-do. And even those who do have the good fortune to get such an easy start in life, end up three or four orders of magnitude less wealthy than the people the OP is actually talking about. IF they are highly disciplined in their saving and investment habits from a very young age.

So we now know how privileged and/or lucky people can avoid being poor. That tells us nothing about how ordinary people can get rich. Which still appears to be a matter of luck.

 

[Trausti]

He who is smart enough to apply himself and does is smarter than he who is otherwise smarter that doesn’t, so certain variants of argumentum ad cruminum can kiss my ass.

 

[bilby]

He who is smart enough to apply himself and does is smarter than he who is otherwise smarter that doesn’t, so certain variants of argumentum ad cruminum can kiss my ass.

This is survivorship bias. Obviously Coolidge was persistent; And he made it to the Oval Office. But before he spoke out on the benefits of persistence, he made no attempt to find out whether there were a whole load of equally persistent people who failed, despite their commitment and determination.

The slopes of Everest are littered with the corpses of highly motivated and persistent people; But only the survivors give interviews.

There's a lady in my local electoral division who has stood on the federal and state ballots at every election in the last thirty years. She has set up a couple of political parties; She joined one of the major parties, and tried to get selected as their candidate. She has been nothing if not persistent. She runs charity events, gets herself involved with local community groups, and lately has set up her own charity with the goal of protecting children form abuse.

She never gets far; She ran for the Senate at the recent federal election, and got 0.6% of the vote, or 0.0415 of a quota (so she needs .9595 of a quota to flow to her from other parties, under our single trnasferrable vote system, to win a seat).

Doubtless we will see her again at the next state election.

Persistence is a good rationalization, for those who are successful, but have no good explanation for why. But even if it is necessary (and it quite possibly is not, in many fields of endeavour), it assuredly is not sufficient, for success.

 

[lpetrich]

 Stakhanovite movement -- after  Alexey Stakhanov, who presented himself as an eager beaver, someone eager to do lots of work and be more productive.

Entrepreneurs, Chance, and the Deterministic Concentration of Wealth

In many economies, wealth is strikingly concentrated. Entrepreneurs–individuals with ownership in for-profit enterprises–comprise a large portion of the wealthiest individuals, and their behavior may help explain patterns in the national distribution of wealth. Entrepreneurs are less diversified and more heavily invested in their own companies than is commonly assumed in economic models. We present an intentionally simplified individual-based model of wealth generation among entrepreneurs to assess the role of chance and determinism in the distribution of wealth. We demonstrate that chance alone, combined with the deterministic effects of compounding returns, can lead to unlimited concentration of wealth, such that the percentage of all wealth owned by a few entrepreneurs eventually approaches 100%. Specifically, concentration of wealth results when the rate of return on investment varies by entrepreneur and by time. This result is robust to inclusion of realities such as differing skill among entrepreneurs. The most likely overall growth rate of the economy decreases as businesses become less diverse, suggesting that high concentrations of wealth may adversely affect a country's economic growth. We show that a tax on large inherited fortunes, applied to a small portion of the most fortunate in the population, can efficiently arrest the concentration of wealth at intermediate levels.

This is from increased wealth making it easier to acquire more, a kind of positive feedback.

 

[SimpleDon]

I will concede that one does have to have some skill and some diligence. But one does not need to be a superhuman genius or a superhuman Stakhanovite, and all I see from capitalist apologists is that being rich means that one is a Stakhanovite genius.

I don’t believe that’s a common argument at all. ...

How convenient. I've seen lots and lots of weeping from capitalism apologists about how hard their heroes worked.

The reality is that one of the main reasons that capitalism is so successful and so resilient is that you don't have to be very smart to do well. It is a simple concept that even the stupidest people can understand. If you think about it can't be true that you have to be smart to be successful. Then no capitalistic economy would ever exist. One-half of the people have below average intelligence.

The markets and capitalism are successful because they handle simple things. Government is hard and frequently is unsuccessful because it has to handle the complex things that don't lend themselves to making a profit.

Smart people pretty much don't go into business. They are pushed into the professions, doctor, lawyer, architects, engineers, teachers, etc. Professionals sit apart to varying degrees from the people that they work for and from making profits because they have a greater responsibility to their profession. Teachers are responsible to their students. Lawyers are responsible to the law. Doctors are responsible to their patients. Architects and Engineers are responsible to the public who will use their buildings and products.

Almost all government workers are professionals who are responsible to the nation first of all. This goes double for the military, police, and firemen who put their very lives on the line for the nation and an ungrateful public.

 

[Koyaanisqatsi]

There's no great mystery to getting rich. If any of you had put just $100 into a Roth IRA when you were 18, invested it in an index tracking fund (set your dividends to reinvest) and added just $100 per month over the next forty five years and everything stayed the same, you'd be a millionaire by the time you retired.

The only key to it, of course, is discipline, but if you're single, live in say Chesterfield, Missouri (nice area; suburb of St Louis) making just $32K per year (median income per capita) then your take home pay every month is about $2,200.

Your monthly nut:
Rent: $850 (for a 1-2 bedroom)
Food: $150
TV/Phone/Internet/Entertainment: $300
Utilities: $200
Car (gas/insurance): $200
Clothing: $100

That leaves about $400 every month as a buffer for emergencies or vacations or gifts or the like, so saving $100/month out of that for one's future millionaire status leaves a $300 monthly buffer.

If you were smart, you'd make higher monthly contributions to your Roth (assuming you don't have a 401K, which would be the better option). An increase of just $50/month to the Roth would result in almost $2M after 45 years and still leave you with a monthly buffer of $250 assuming all things remain static and you don't ever get a raise or a bonus or a better job, etc.

There is a LOT wrong with this analysis.

It’s not analysis, it was an example to illustrate the fact that, as I pointed out in the opening, there’s no great secret to getting rich.

The biggest problem is that it fails to meet the actual goal - a millionaire is three or four orders of magnitude less wealthy than "rich".

No True Richman? Again, the example was merely to illustrate how someone of modest means can nevertheless still provide for themselves upon their retirement without too much difficulty.

the assumption that all 18 year olds can earn the median income is fucking crazy.

How much indignant straw are you planning on stuffing? I simply picked the median income per capita as a majority starting point. Obviously those who have more and those who have less will have different issues, but as this wasn’t meant as an exhaustive analysis of every single income bracket, the median works just fine.

Income tends to increase with age, at least into the 40s; So most 18 year olds are not even going to have CLOSE to the median income.

No shit.

the idea that I could save money at all is a fucking joke - some weeks I didn't have enough to eat (and I can assure you I wasn't spending $300 a month on "TV/Phone/Internet/Entertainment" - of course, there was no Internet back then, but if there had been, I wouldn't have had it, because I couldn't have afforded it). The idea of saving $100/month before the age of 28, much less at 18, is a sick joke that could only be taken seriously by someone who had a very privileged early life.

Once again, the point wasn’t to argue the ALL 18 year olds earn the median income—just as the point wasn’t that everything stays the same throughout a person’s entire lifetime, a fact I also pointed out—it was merely to illustrate how someone earning a modest income could take a small portion of that income and set themselves up for retirement, not a method for solving world poverty.

Relax your fucking crack.

So getting to the point of being comfortably wealthy in retirement can be seen to be easy, as long as you start out with a larger income than at least 50% (probably closer to 70%) of new entrants to the job market. Well, whoop-de-do. And even those who do have the good fortune to get such an easy start in life, end up three or four orders of magnitude less wealthy than the people the OP is actually talking about. IF they are highly disciplined in their saving and investment habits from a very young age.

Read what I posted again. The example assumes everything stays the same throughout the person’s lifetime. Which of course, does not ever happen. Again, it was not meant as an exhaustive deconstruction of exactly how every person on the planet could become rich upon retirement. It was simply to illustrate there is no great secret to doing so.

And if you don’t consider a modest program starting out with $100 and ending up with $1.7m on retirement to be “rich” than congratulations. If you want to discuss how you can become Bill Gates rich, then that’s obviously a different matter.

 

[bilby]

It’s not analysis, it was an example to illustrate the fact that, as I pointed out in the opening, there’s no great secret to getting rich.

The biggest problem is that it fails to meet the actual goal - a millionaire is three or four orders of magnitude less wealthy than "rich".

No True Richman? Again, the example was merely to illustrate how someone of modest means can nevertheless still provide for themselves upon their retirement without too much difficulty.

the assumption that all 18 year olds can earn the median income is fucking crazy.

How much indignant straw are you planning on stuffing? I simply picked the median income per capita as a majority starting point. Obviously those who have more and those who have less will have different issues, but as this wasn’t meant as an exhaustive analysis of every single income bracket, the median works just fine.

Income tends to increase with age, at least into the 40s; So most 18 year olds are not even going to have CLOSE to the median income.

No shit.

the idea that I could save money at all is a fucking joke - some weeks I didn't have enough to eat (and I can assure you I wasn't spending $300 a month on "TV/Phone/Internet/Entertainment" - of course, there was no Internet back then, but if there had been, I wouldn't have had it, because I couldn't have afforded it). The idea of saving $100/month before the age of 28, much less at 18, is a sick joke that could only be taken seriously by someone who had a very privileged early life.

Once again, the point wasn’t to argue the ALL 18 year olds earn the median income—just as the point wasn’t that everything stays the same throughout a person’s entire lifetime, a fact I also pointed out—it was merely to illustrate how someone earning a modest income could take a small portion of that income and set themselves up for retirement, not a method for solving world poverty.

Relax your fucking crack.

So getting to the point of being comfortably wealthy in retirement can be seen to be easy, as long as you start out with a larger income than at least 50% (probably closer to 70%) of new entrants to the job market. Well, whoop-de-do. And even those who do have the good fortune to get such an easy start in life, end up three or four orders of magnitude less wealthy than the people the OP is actually talking about. IF they are highly disciplined in their saving and investment habits from a very young age.

Read what I posted again. The example assumes everything stays the same throughout the person’s lifetime. Which of course, does not ever happen. Again, it was not meant as an exhaustive deconstruction of exactly how every person on the planet could become rich upon retirement. It was simply to illustrate there is no great secret to doing so.

And if you don’t consider a modest program starting out with $100 and ending up with $1.7m on retirement to be “rich” than congratulations. If you want to discuss how you can become Bill Gates rich, then that’s obviously a different matter.

That's a very long winded way to say "I was wrong, and I apologize", but thanks anyway.

Or perhaps you were saying "I didn't even address anything relevant to this thread, so I can't be wrong, just irrelevant". In which case, again, thanks anyway, but the rest of us are trying to have a conversation.

The thread IS about how to become Bill Gates rich.

But if it were instead about a modest program starting out with $100 and ending up with $1.7m on retirement, your "analysis" (which you now resile from) is still wrong, for the reasons I pointed out, and your butthurt over that isn't a rebuttal to my pointing out your gross oversimplification.

Yes, it's easy to save for a comfortable retirement; IF you are starting from a position of privilege, and make a bunch of totally unrealistic assumptions. No shit, Sherlock. You're not handing down some esoteric and mysterious wisdom - I doubt that anyone here is unaware of the power of compound interest. But the interest on $0 is always going to be $0; And if you don't realize that a very large proportion of the population can only save that much, then you have lived a very sheltered life indeed.

 

[Koyaanisqatsi]

That's a very long winded way to say "I was wrong, and I apologize", but thanks anyway.

What the fuck are you talking about? I was not wrong about anything nor do I have any need to apologize to you because you did not understand my point or that the example was clearly not exhaustive, nor did it need to be.

Or perhaps you were saying "I didn't even address anything relevant to this thread, so I can't be wrong, just irrelevant". In which case, again, thanks anyway, but the rest of us are trying to have a conversation.

You mean a conversation about demonstrating that "chance alone, combined with the deterministic effects of compounding returns, can lead to unlimited concentration of wealth"?

The thread IS about how to become Bill Gates rich.... I doubt that anyone here is unaware of the power of compound interest.

So it's about "chance alone, combined with the deterministic effects of compounding returns" leading to "unlimited concentration of wealth."

And if you don't realize

Enough with the idiotic strawman. The point was (and still remains) that aside from anything else, even a modest amount of fiscal discipline (in my example, less than 5% of one's monthly paycheck) is all it takes for anyone with an income (which should go without saying, but my fault for assuming intelligence in a thread about wealth)--from idiot Trump supporters to Mensa geniuses--to accumulate wealth. Thus addressing the question of the OP.

ON TOP OF THAT, luck certainly plays a role as it does in anything else we do in life, but since "luck" is effectively in the category of "magic" and "destiny" (i.e., completely out of one's control or influence), then the point I was making about fiscal discipline becomes all the more relevant, so stick a fucking sock in it. Iow, it is something one can control, at least far better than anything else.

Obviously someone who doesn't have money is going to have to rely on some other means--like "luck"--to magically come to their aid, but for anyone else earning an income, once again, they need not just rely on chance to get them riches. Though, of course, investing is also about chance and risk, which is why the ultra-rich like Warren Buffett always recommend parking your money in an index tracking fund, because it minimizes the reliance on chance and risk. Hence my example intended to show how the average person making a modest income can nevertheless still become wealthy with just 5% of their paycheck every month.

 

[PyramidHead]

3) When it is working correctly, capitalism rewards those who provide the most value to society. And it makes no difference to capitalism whether those rewarded people are dumb or smart. Capitalism holds no bias to skill, brains, or ability. It only cares about wealth creation.

Yes, which is why it doesn't reward those who provide the most value to society but those who create the most wealth. They are not synonymous.

Capitalism doesn't reward innovation or societal value, it produces this: