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There's way too much wealth worship in the US. Yeah most rich people are smart but not exponentially smarter than everyone else. A lot of wealth is luck. But w

There's way too much wealth worship in the US. Yeah most rich people are smart but not exponentially smarter than everyone else. A lot of wealth is luck. But wealthy people (like HN audience) don't like to hear that. I can't find a link but there's controlled studies that show the richer someone precieves they are, the more they attribute it to skill. Even in studies where outcomes are completely randomized. Usually it's something like this: grow up as a citizen of one of the richest countries in the world. Have fairly stable family situation where you did well in school. Family wealthy enough that you went to a good primary school too. Family wealthy enough to fix overbite, scoliosis, speech impediment, and most other things that would handicap you professionally. Money/connections/grades to get into a good college. Skin color, gender, and culture to not be dicriminated against. Enough intelligence to pick a well paying career (maybe top ~25%). "Gifts" from parents early in life where wealth has decades to accumulate. Things like gifted cars, college education, wedding costs, first house. Ability to take arbitrary career risks because you always have family and their gifts to fall back on. That probably describes more than half of people in well paying professions. And it's all 100% luck. The path to millions when you've already got so much going for you isn't so hard. You've already passed the barriers that stop 99% of people. Merit isn't wealth. Wealth is mostly luck and we shouldn't worship wealthy people like Gods, hanging on their every word. There's logical ways to measure class mobility and the US does badly compared to practically every wealthy country besides the UK

usaar333 6y ago
I don't really view the skill vs luck as a "moral" question. In the end, everything is luck - we're a product of our genes and our environment. What you do want to ask is what the proper incentives need to be to have a functional society. Fundamentally, we're just trying to define some social utility function and maximizing it.. but even ignoring political problems, it's hard to understand how wealth transfers (or any equity improving policy) alter incentives, potentially leaving society worse off if done wrong.
- throwaway189262 6y ago
  The socialist "nanny state" democracies in europe have much lower wealth inequality, and much higher social mobility than the US. To me, it's a clear blueprint to follow.
  - username90 6y ago
    The main difference is that the top 10% like software engineers and doctors earn much less and the bottom 50% earn more. So most people posting at HN would be much poorer while the top 0.1% are still very rich in Europe.
    - throwaway189262 6y ago
      That's just not true https://www.vox.com/2018/7/29/17627134/income-inequality-chart https://www.vox.com/2018/7/29/17627134/income-inequality-cha... > . In 2016, the top 1 percent in Western Europe had about a 12-percent share of income, compared to 20 percent in the United States
    - BoiledCabbage 6y ago
      > So most people posting at HN would be much poorer You have it completely backwards. Software Developer salaries would likely be higher, _yes higher_, in the US. The US has had very large GDP growth over the past 45+ years. But that's how much money has gone to capital vs labor since the 70s. The clearest way to think of software engineer salaries is: median software engineer salary as a multiple of median country salary. US is 1.38, France is 1.21, Germany 1.33. [1] Overall our software salaries are proportionally no more or no less than expected based on median labor rate / salary in major European countries. However, because all of the gains in wealth have gone to capital, overall salaries are actually suppressed. Salaries across the board in the US would be higher, if gains of the past ~45 years hadn't been siphoned off. Essentially if we had the same income distribution as we exited the 60s with, everyone today with a salary of < 200,000 would be making more money. So that covers the vast majority of software engineers. Even more so if you remove the 20% Cost of Living bump due to being in Bay Area. So even most FANG employees would be making more if the US still had a normal income distribution. [2] I think that's the largest thing people don't understand. Devaluing labor, devalues labor for everyone. Software engineering salaries are vastly underpaid, vs the revenue they bring in - it's incredibly skewed and goes to ownership / capital. It's half the mantra behind all of push for doing your own startups: working as labor in software you're being vastly undervalued. Might as well do the same thing and have a chance at ownership / capital. It's all the same issue. 1. http://swexperts.com/news/software-engineer-salaries-by-country/ http://swexperts.com/news/software-engineer-salaries-by-coun... 2. https://www.rand.org/blog/2020/10/a-25-trillion-question-what-if-incomes-grew-like-gdp.html https://www.rand.org/blog/2020/10/a-25-trillion-question-wha...
SwimSwimHungry 6y ago
I see this applies even moreso with the cryptocurrency fanboys on HN that feel that their newfound wealth (on paper) makes them paragons of financial wisdom and success, spawning serious Dunning-Kruger effects. I would argue the cryptocurrency crowd is even more driven by stupid luck than anything else. I wish they saw it primarily as an unregulated online casino and less of a serious replacement for M1 money supply, which it certainly isn't.
heckerhut 6y ago
Great comment. Thanks.
wegs 6y ago
I think OP's comment is different. It's demand-side, not supply-side. If a CEO causes 1000 employees to be 1% more efficient, that creates the same value as 1000 employees each being 1% more efficient. Ergo, if I'm an investor, if I believe a CEO will be slightly better than another CEO, it makes sense to pay a lot more. If I have a market of 7 billion people in the world, and my software saves everyone a dollar, I've created $7E9 of value in the world, and probably monetized $7E7-$7E8 of value for myself. 40 years ago, my market was the US -- roughly 300 million people. With globalization, it's 7 billion. If I'm making a search engine or webmail client, it's winner-takes-all. If I can hire two engineers, and I believe (statistically, per my lousy interview process) that one is 1% better than the other, I'll drop a shit-ton of money to hire them. See Mythical Man Month for why hiring an extra person with the "saved" money doesn't have the same effect. And so on... Economies of scale, winner-takes-all-markets, and zero marginal cost goods like IP fundamentally push salaries at the top up, even with small differences in performance, measured with noisy tools. I've worked with many CEOs. Someone who makes $10M isn't necessarily brighter than someone who makes $100k, but the demand-side economics still work out that way. The $10M salary often comes down to signalling; they've managed a big organization before, they have a nice elite university brand stamp, or they felt better the day of the interview. It STILL makes sense. My expected returns are STILL higher. Where things break down a little bit is corruption and misaligned incentives -- lots of places, if you pay more, you get less -- but I think that's under-acknowledged. Things also break down is Simpson's Paradox. Globalization means income inequality WITHIN countries is getting worse, but worldwide, is getting better.
- throwaway189262 6y ago
  Your assumptions fall apart of you consider that it's not all skill, part of it is random. You're falling into the same trap. You think someone is better when in all probability they got luckier. And you think that picking someone you think is better will statistically get you a better person when that's not true if credentials are highly luck based. It's like buying lotto tickets from a gas station that's produced more winners in the past. I'm saying your measurements aren't going to be any better than whatever percent of "skill" is randomness. CEO candidate 2 went to a better school but you don't know that it was his grandpa's alma matter who pulled some strings. Candidate 3 might be a multimillionaire but it's because he got a settlement from a malfunctioning ski lift when he was 10. A lot of the "signals" companies use to determine if somebody would be a good leader or employee are 100% luck based. You could statistically pick a worse candidate every time that looks betters if you're looking at the wrong signals.
jelliclesfarm 6y ago
i agree. thats why people shouldnt talk about other people's wealth. it is very rude and useless gossip. age, wealth and politics...it's just impolite to discuss or gossip or be nosy about these things. its personal.

usaar333 6y ago

I don't really view the skill vs luck as a "moral" question. In the end, everything is luck - we're a product of our genes and our environment. What you do want to ask is what the proper incentives need to be to have a functional society. Fundamentally, we're just trying to define some social utility function and maximizing it.. but even ignoring political problems, it's hard to understand how wealth transfers (or any equity improving policy) alter incentives, potentially leaving society worse off if done wrong.

throwaway189262 6y ago
The socialist "nanny state" democracies in europe have much lower wealth inequality, and much higher social mobility than the US. To me, it's a clear blueprint to follow.
- username90 6y ago
  The main difference is that the top 10% like software engineers and doctors earn much less and the bottom 50% earn more. So most people posting at HN would be much poorer while the top 0.1% are still very rich in Europe.
  - throwaway189262 6y ago
    That's just not true https://www.vox.com/2018/7/29/17627134/income-inequality-chart https://www.vox.com/2018/7/29/17627134/income-inequality-cha... > . In 2016, the top 1 percent in Western Europe had about a 12-percent share of income, compared to 20 percent in the United States
  - BoiledCabbage 6y ago
    > So most people posting at HN would be much poorer You have it completely backwards. Software Developer salaries would likely be higher, _yes higher_, in the US. The US has had very large GDP growth over the past 45+ years. But that's how much money has gone to capital vs labor since the 70s. The clearest way to think of software engineer salaries is: median software engineer salary as a multiple of median country salary. US is 1.38, France is 1.21, Germany 1.33. [1] Overall our software salaries are proportionally no more or no less than expected based on median labor rate / salary in major European countries. However, because all of the gains in wealth have gone to capital, overall salaries are actually suppressed. Salaries across the board in the US would be higher, if gains of the past ~45 years hadn't been siphoned off. Essentially if we had the same income distribution as we exited the 60s with, everyone today with a salary of < 200,000 would be making more money. So that covers the vast majority of software engineers. Even more so if you remove the 20% Cost of Living bump due to being in Bay Area. So even most FANG employees would be making more if the US still had a normal income distribution. [2] I think that's the largest thing people don't understand. Devaluing labor, devalues labor for everyone. Software engineering salaries are vastly underpaid, vs the revenue they bring in - it's incredibly skewed and goes to ownership / capital. It's half the mantra behind all of push for doing your own startups: working as labor in software you're being vastly undervalued. Might as well do the same thing and have a chance at ownership / capital. It's all the same issue. 1. http://swexperts.com/news/software-engineer-salaries-by-country/ http://swexperts.com/news/software-engineer-salaries-by-coun... 2. https://www.rand.org/blog/2020/10/a-25-trillion-question-what-if-incomes-grew-like-gdp.html https://www.rand.org/blog/2020/10/a-25-trillion-question-wha...

SwimSwimHungry 6y ago

I see this applies even moreso with the cryptocurrency fanboys on HN that feel that their newfound wealth (on paper) makes them paragons of financial wisdom and success, spawning serious Dunning-Kruger effects. I would argue the cryptocurrency crowd is even more driven by stupid luck than anything else. I wish they saw it primarily as an unregulated online casino and less of a serious replacement for M1 money supply, which it certainly isn't.

heckerhut 6y ago

Great comment. Thanks.

wegs 6y ago

I think OP's comment is different. It's demand-side, not supply-side. If a CEO causes 1000 employees to be 1% more efficient, that creates the same value as 1000 employees each being 1% more efficient. Ergo, if I'm an investor, if I believe a CEO will be slightly better than another CEO, it makes sense to pay a lot more. If I have a market of 7 billion people in the world, and my software saves everyone a dollar, I've created $7E9 of value in the world, and probably monetized $7E7-$7E8 of value for myself. 40 years ago, my market was the US -- roughly 300 million people. With globalization, it's 7 billion. If I'm making a search engine or webmail client, it's winner-takes-all. If I can hire two engineers, and I believe (statistically, per my lousy interview process) that one is 1% better than the other, I'll drop a shit-ton of money to hire them. See Mythical Man Month for why hiring an extra person with the "saved" money doesn't have the same effect. And so on... Economies of scale, winner-takes-all-markets, and zero marginal cost goods like IP fundamentally push salaries at the top up, even with small differences in performance, measured with noisy tools. I've worked with many CEOs. Someone who makes $10M isn't necessarily brighter than someone who makes $100k, but the demand-side economics still work out that way. The $10M salary often comes down to signalling; they've managed a big organization before, they have a nice elite university brand stamp, or they felt better the day of the interview. It STILL makes sense. My expected returns are STILL higher. Where things break down a little bit is corruption and misaligned incentives -- lots of places, if you pay more, you get less -- but I think that's under-acknowledged. Things also break down is Simpson's Paradox. Globalization means income inequality WITHIN countries is getting worse, but worldwide, is getting better.

throwaway189262 6y ago
Your assumptions fall apart of you consider that it's not all skill, part of it is random. You're falling into the same trap. You think someone is better when in all probability they got luckier. And you think that picking someone you think is better will statistically get you a better person when that's not true if credentials are highly luck based. It's like buying lotto tickets from a gas station that's produced more winners in the past. I'm saying your measurements aren't going to be any better than whatever percent of "skill" is randomness. CEO candidate 2 went to a better school but you don't know that it was his grandpa's alma matter who pulled some strings. Candidate 3 might be a multimillionaire but it's because he got a settlement from a malfunctioning ski lift when he was 10. A lot of the "signals" companies use to determine if somebody would be a good leader or employee are 100% luck based. You could statistically pick a worse candidate every time that looks betters if you're looking at the wrong signals.

jelliclesfarm 6y ago

i agree. thats why people shouldnt talk about other people's wealth. it is very rude and useless gossip. age, wealth and politics...it's just impolite to discuss or gossip or be nosy about these things. its personal.