Incompetent, rich people are more likely to get ahead than smart people with no money

[Trausti]

Bill Gates got lucky by having rich parents.

And he inherited their genes.

Every kid inherits their parents genes. Not every kid is born into a rich family.

Does it suprise you that high functioning parents tend to have high functioning children?

 

[ZiprHead]

Every kid inherits their parents genes. Not every kid is born into a rich family.

Does it suprise you that high functioning parents tend to have high functioning children?

Lots of people have high functioning parents and high functioning kids. The vast majority of them don't get rich.

 

[Trausti]

Every kid inherits their parents genes. Not every kid is born into a rich family.

Does it suprise you that high functioning parents tend to have high functioning children?

Lots of people have high functioning parents and high functioning kids. The vast majority of them don't get rich.

But few “rich” people had poor functioning parents. It’s almost as if that Mendel guy was right about heredity.

 

[barbos]

Lots of people have high functioning parents and high functioning kids. The vast majority of them don't get rich.

But few “rich” people had poor functioning parents. It’s almost as if that Mendel guy was right about heredity.

Most people are functioning. And Trump and his kids are not in this majority, yet look at them.

 

[bilby]

Hard work and perseverence can make a poor person into a comfortable person. But wealth - serious wealth, Bill Gates wealth, get interviewed about how you got there wealth - is a lottery.

Yes, Bill also got very lucky too. But luck and ability to handle risk are two separate things. The risk I am talking about is when Bill decided to skip college and go out on his own. Most anyone else would play it safe, stay in college, and work for someone else to basically live an average life.

That is the kind of risk that I am talking about. Entrepreneur risk to start ones own firm from nothing. And also consider the tycoons like Howard Hughes or Donald Trump who already have money, but still are willing to put everything on the line for more airplanes or hotels. Its not everyone who will take that kind of risk. But that is the kind of risk that always seems to be overlooked by people who think riches come entirely by luck.

The vast majority of people who take that kind of risk FAIL.

If you only look at the small number who succeed, you will get a completely unrealistic idea of how important risk taking is, and you will completely miss the degree to which luck is important. It's called Survivorship Bias.

The soldier who credits his speed and reflexes in getting to a dugout as the reason he was the only man in his company to survive an artillery bombardment is another example of this. Perhaps there were dozens of other men who had the same reflexes, but died anyway, because they chose a dugout that got a direct hit. But nobody interviews them - because they're dead.

 

[bilby]

Every kid inherits their parents genes. Not every kid is born into a rich family.

Does it suprise you that high functioning parents tend to have high functioning children?

Lots of people have high functioning parents and high functioning kids. The vast majority of them don't get rich.

Indeed. And if the parents were so high functioning, why weren't THEY billionaires?

 

[Derec]

The key factor - indeed the ONLY factor - in making oneself wealthy is luck.

While luck does play a role, pretending that it's ONLY luck is ridiculously false.

 

[Derec]

The inhertitance that matters is genes, not wealth. Unless you have the smarts to handle and maintain wealth, you’ll lose it.

Both play a role, as does upbringing.

But if your family is wealthy they can cushion more and bigger screw-ups than a poor one. But at the same time, pretending that genes do not affect behavior, including intelligence, work ethic etc. is ignorant as well.

 

[ZiprHead]

The inhertitance that matters is genes, not wealth. Unless you have the smarts to handle and maintain wealth, you’ll lose it.

Both play a role, as does upbringing.

But if your family is wealthy they can cushion more and bigger screw-ups than a poor one. But at the same time, pretending that genes do not affect behavior, including intelligence, work ethic etc. is ignorant as well.

Good thing no one's doing that.

 

[Playball40]

I have repeatedly pointed out the book The Millionaire Next Door that soundly refutes this. At least in the USA most millionaires are self-made. (Perhaps in your neck of the world the government keeps anyone from becoming wealthy.)



"Wealthy" covers an awful lot more than Bill Gates level wealth. And note that there were a lot of people who could have done the same thing. Bill Gates had the skill to recognize and take advantage of the opportunity.

Which is why earnings over a million bucks a year should be taxed into oblivion. You didn't earn that, you don't deserve it, and there are plenty of people more deserving and more needy who have a stronger moral right to eat every day than you have a right to a third gold-plated Lear jet.

You're assuming people didn't earn it. If you create $10 million in value due to improving efficiency how is it wrong to get $1 million for doing that?

There is no such thing as "self-made"

 

[Playball40]

EXACTLY. Really EASY to take risks when you know you can still eat. Really EASY to take risks when you know if you fail, you can start over. Really EASY to take risks when it's someone else's money footing the bill.

Bilby is right - it is RANDOM LUCK first and foremost.

Hard work and perseverence can make a poor person into a comfortable person. But wealth - serious wealth, Bill Gates wealth, get interviewed about how you got there wealth - is a lottery.

Yes, Bill also got very lucky too. But luck and ability to handle risk are two separate things. The risk I am talking about is when Bill decided to skip college and go out on his own. Most anyone else would play it safe, stay in college, and work for someone else to basically live an average life.

That is the kind of risk that I am talking about. Entrepreneur risk to start ones own firm from nothing. And also consider the tycoons like Howard Hughes or Donald Trump who already have money, but still are willing to put everything on the line for more airplanes or hotels. Its not everyone who will take the kind of risk. But that is the kind of risk that always seems to be overlooked by people who think riches come entirely by luck.

Bill Gates got lucky by having rich parents.

 

[Trausti]

And the politics of envy continues. Anything to justify taking from others.

 

[Loren Pechtel]

I have repeatedly pointed out the book The Millionaire Next Door that soundly refutes this. At least in the USA most millionaires are self-made. (Perhaps in your neck of the world the government keeps anyone from becoming wealthy.)



"Wealthy" covers an awful lot more than Bill Gates level wealth. And note that there were a lot of people who could have done the same thing. Bill Gates had the skill to recognize and take advantage of the opportunity.

Which is why earnings over a million bucks a year should be taxed into oblivion. You didn't earn that, you don't deserve it, and there are plenty of people more deserving and more needy who have a stronger moral right to eat every day than you have a right to a third gold-plated Lear jet.

You're assuming people didn't earn it. If you create $10 million in value due to improving efficiency how is it wrong to get $1 million for doing that?

There is no such thing as "self-made"

"Self-made" as in they didn't get it by inheritance, lottery or the like. It was due to their efforts.

 

[bilby]

I have repeatedly pointed out the book The Millionaire Next Door that soundly refutes this. At least in the USA most millionaires are self-made. (Perhaps in your neck of the world the government keeps anyone from becoming wealthy.)



"Wealthy" covers an awful lot more than Bill Gates level wealth. And note that there were a lot of people who could have done the same thing. Bill Gates had the skill to recognize and take advantage of the opportunity.

Which is why earnings over a million bucks a year should be taxed into oblivion. You didn't earn that, you don't deserve it, and there are plenty of people more deserving and more needy who have a stronger moral right to eat every day than you have a right to a third gold-plated Lear jet.

You're assuming people didn't earn it. If you create $10 million in value due to improving efficiency how is it wrong to get $1 million for doing that?

There is no such thing as "self-made"

And we are talking about billionaires, not millionaires.

This conversation comes up frequently, and every single time the supporters of the idea that anyone can get rich conflate getting wealthy enough to live comfortably with getting wealthy enough to massively distort the economy, and refuse to contemplate the possibility that they are different things. And then they declare that their equivocation fallacy constitutes a refutation of your position.

Few people are opposed to the idea that a poor person can become comfortably well off. But the idea that hard work and/or talent is a major contributor to becoming as well off as a small country is utter nonsense. Nobody deserves billions of dollars; But if you point that out - even if you explicitly say that you are talking only about incomes of in excess of $1million a year, the loonies pop up and claim that you are suggesting that nobody should be allowed to earn $1million.

Anyone who can earn $1million a year should be allowed to do so. But nobody needs, earns, or deserves billions.

 

[Alcoholic Actuary]

If you’re more sociable, you’ll probably have more success regardless of how smart you are. An example would be the two Steves of Apple. Woz had much more technical smarts than Jobs. But without Jobs’s social skills, Woz’s creation would have collected dust in a garage.

Agree.

Also risk tolerance is extremely important and always overlooked. Usually more intelligent people have less risk tolerance than people who are not smart. Yet the ability to tolerate risk is a key factor to making oneself wealthy.

This is the entirety of the argument WHY luck is more important than skill at acquiring wealth. Idiots gamble all the time and pass it off as genius instead of luck.

aa

 

[Horatio Parker]

And also consider the tycoons like Howard Hughes or Donald Trump who already have money, but still are willing to put everything on the line for more airplanes or hotels. Its not everyone who will take that kind of risk. But that is the kind of risk that always seems to be overlooked by people who think riches come entirely by luck.

Those aren't good examples. Hughes inherited the Hughes Tool Co. and his biggest financial windfall came when the court ordered sale of TWA came at the stocks zenith.

Trump has never risked his own money. Not only born into wealth, Trump Sr's political connections and loan guarantees made his early deals possible.

 

[ronburgundy]

Does this result surprise anyone?

It should surprise most economic conservatives who regularly make arguments that presume wealth acquisition is primarily the result of skill, talent, and hard work.

 

[SimpleDon]

We have been here before.

There seem to be two camps here. One side is "they deserve the millions them because anyone can die a millionaire if they work hard and save their money." And on the other side, "they lucked into it primarily by choosing the right parents." As always the truth is more complicated than either.

I see the following categories of new millionaires in the US. Obviously, there is some overlap between them and many new millionaires fit into two or more categories.

1. Inherence millionaires.
2. Those whose salaries put them over, Hollywood, sports, and the largest category, corporate executives and financial services to the already wealthy.
3. The 401K millionaires.
4. The stock market millionaires.
5. The real estate millionaires.
6. The corporate buyout of a good idea patented millionaires.
7. The IPO millionaires running their own companies.

I am not feeling especially insightful today. If you can think of other categories of new millionaires please tell me. But I bet that whatever categories I have missed that the following is true for them too.

In all of the categories above they all share one characteristic, with the exception of Hollywood and sports salaries. They owe the size of the wealth obtained to our current income inequality, and to the reason for that inequality, neoliberalism, the idea by both the conservative and moderate Democrats and the Republicans that the economy is starved for investment, that the economy is still led by supply, that we must pursue the self-regulating free market and free trade, that only the wealthy know how to handle money because they invest it. That the non-wealthy spend whatever money that they get on frivolous consumption. All that we have to do so that everyone shares in the bounty of our economy are to give all of the money to the already rich and they will invest it providing jobs and money for everyone.

The only problem is that no matter how many times we try this it never works out, leaving some of us to believe that maybe what is obvious to us is closer to the truth, that the wealthy want all of the money to satisfy their greed and that they are probably wrong about the economy being starved for investment and that it is led by demand, not investment, that we don't have to pursue the self-regulating free market or free trade because the economy that we have is capable of providing for everyone if we let it and we use the existing economy to distribute the gains from the economic surplus more evenly than we do now.

 

[Derec]

And we are talking about billionaires, not millionaires.

I do not think the OP limited itself to the extremely wealthy. Why do you always limit it to such outlier cases?
But even there your thesis that it's ONLY luck is wrong. Yes, somebody like Bill Gates had a lot of luck, but he also made decisions that shifted the probabilities more in his favor.

 

[Trausti]

To reach Utopia, we need to ensure that you don’t do better than your neighbor.