6 ms·

Why not btw? I mean, why is it worse for somebody to have power because he worked and invested for decades and made optimal decisions (and probably some luck) t

by smsm42 4y ago

Why not btw? I mean, why is it worse for somebody to have power because he worked and invested for decades and made optimal decisions (and probably some luck) than for somebody to have power because he was born into the right family, knows all the right people in The Machine, has nice hair and is able to conceal his rampaging cocaine habit long enough to make himself too big to fail? I get that "wealth gets power" is not ideal, but the alternatives we can see around don't seem to be much better. Somebody will have the power, and we as a society would need some proxy to use so that it won't lead to a disaster. Being able to create and run successful businesses (yes, I know not all rich people are self-made, etc. - it's an imperfect proxy, but to a large measure a working one) doesn't look that bad, compared to "being born with right last name" or "being born with the correct facial features"...

xapata 4y ago
> (and probably some luck) I'd reverse the skill and luck relationship. Success at that magnitude is almost entirely luck (and probably a little skill).
- smsm42 4y ago
  When one becomes rich because of one IPO that went right - ok, let's say it's luck. When one creates several successful businesses in a row - no, sorry, I can't say "it's just dumb luck" anymore, it's more realistic to assume there's something else involved.
  - nemothekid 4y ago
    Taleb has a more succint way of putting it[1], but no it can still be luck just like hitting black in roulette several times in a row can also be luck. [1] https://mobile.twitter.com/nntaleb/status/1534172773580513280 https://mobile.twitter.com/nntaleb/status/153417277358051328...
    - Domenic_S 4y ago
      Hitting black multiple times in roulette is always luck (barring cheating). What the tweet is saying, and it seems right, is that looking at a probability graph the only way to get the billionaire-like outcome/outlier is to dramatically increase volatility, i.e. bet on long odds. If everyone went to work, maxed out their 401k, bought blue-chip stocks, and called it a day, basically nobody would have outlier net worth. But some people choose to increase the volatility of their money (buying crypto, starting a company, options trading, whatever) and as you'd expect 99.9999% of them don't get rich and the rest of them get uber-rich.
      - smsm42 4y ago
        > buying crypto, starting a company, options trading, whatever I think these activities are quite different however. Saying starting a company is the same nature of activity as betting on an extremely volatile asset ignores all the work that goes into successfully creating a working company. Surely, there's no guarantee this work will bring result - but it's still not the same as just betting on random high-volatility assets. Even options trading is not (always) just betting, and for more successful traders probably involves certain amount of knowledge in addition to luck. But I don't think describing creating a company as completely probabilistic activity makes any sense.
        Domenic_S 4y ago
        The tweet (and me) aren't saying creating a company is "completely probabilistic", just that they're risky. Risky meaning there is an outsized chance vs. an established company that the new one doesn't exist in 5 years and the established one does (where "chance" means looking at outcomes in retrospect, not a roll of the dice). The tweet is saying that founders becoming massively rich is a natural outcome of probability distribution -- huge payoffs require either huge bets at a smaller win multiplier (less "risky") or comparatively smaller bets at a huge win multiplier (more "risky").
  - Johnny555 4y ago
    Yeah, after the first successful IPO, the traveling IPO CEO has contacts at investment banks, media houses, etc and is on a first-name basis with many key analysts. That's why they keep getting brought in to help a company IPO, after you've done one, the subsequent ones are easier.
  - xapata 4y ago
    Why? A good reputation and wealthy, powerful friends are very helpful. "When you're rich, they think you really know." Further, how many people were nearly identical after that first success, but then failed to continue with a second?
whimsicalism 4y ago
There's no such thing as too big to fail in democratic politics and it is not a deterministic process of knowing people in "The Machine." FWIW, most wealthy people are wealthy because of inherited holdings and 60% of all wealth in the US is inherited.
- fallingknife 4y ago
  > 60% of all wealth in the US is inherited Source? This fails the sniff test, as the amount of wealth has grown at such a rapid rate this seems almost impossible.
  - whimsicalism 4y ago
    https://www.washingtonpost.com/us-policy/2019/02/06/people-like-estate-tax-whole-lot-more-when-they-learn-how-wealth-is-distributed/ https://www.washingtonpost.com/us-policy/2019/02/06/people-l...
    - smsm42 4y ago
      As I suspected, it counts dollars. Moreover, it attributes any subsequent income for somebody that received an inheritance as "inherited" (up to certain exponential boundary). I.e. if you received an inheritance of $1000, spent it, and in 30 years since you became a millionaire, then the amount of wealth you have up to what you could have if you invested $1000 at certain rate would be still counted as "inherited". I am very far from being qualified to understand the dense math in the underlying article (http://www.piketty.pse.ens.fr/files/AlvaredoGarbintiPiketty2017.pdf http://www.piketty.pse.ens.fr/files/AlvaredoGarbintiPiketty2...) but with such assumption, I imagine we could arrive at 60%. But it doesn't mean what you think it means.
      - whimsicalism 4y ago
        > As I suspected, it counts dollars. What do you mean? It counts ownership stakes & stocks as well. > I imagine we could arrive at 60%. But it doesn't mean what you think it means. It means exactly what I think it means - if you get bequeathed $1 million dollars and get 8% returns from investing this, it doesn't mean you "self-made" $3.66 million more 20 years later.
deleted 4y ago
[deleted]
guelo 4y ago
> has nice hair and is able to conceal his rampaging cocaine habit long enough to make himself too big to fail? You are indoctrinated into believing that democracy cannot work and good government is impossible.
- rglullis 4y ago
  > good government is impossible. At the scale of continental countries like US (or any BRIC country), it is. The decision makers are simply too far removed from the people who get to live with the policies.
- smsm42 4y ago
  I am indoctrinated by the reality I am observing daily. And before you are tempted to tell me "oh, it's because $not_my_favorite_political_party prevents $my_favorite_political party from achieving its true potential as the paragon of democracy" - this happens regardless of your tribal squabbles.
  - guelo 4y ago
    $not_my_favorite_political_party_1 wants to destroy government besides police and military. $not_my_favorite_political_party_2 wants to increase welfare spending. Neither party is focused on good government. Mostly that is because voter dissatisfaction with government is channeled into the two competing ideological camps so that obvious, practical improvements never happen.
    - smsm42 4y ago
      There's no party that has anybody elected to Congress (or to a state Congress afaik either, though there I may be missing one or two persons) that wants to even reduce substantially, let alone destroy, government. TBH, let's not be cute and drop "substantially". No major party wants to reduce the government at all. Didn't for a long while. The only disagreement is about how fast the government will be growing and who gets the benefits of the wealth transfers that would follow from that and who gets to control these trillions and get the goodies that come from controlling trillions of other people's money. There are disagreements on other subjects, but on the subject of Big Government the consensus is clear and present. No agency ever gets reduced power (or, the horror, disbanded!) whatever party is in power, the worst could happen is that one party's functionary would temporarily disrupt the implementation of other party's schemes.
Philip-J-Fry 4y ago
I don't think anyone who says a billionaire shouldn't have power also believes that someone born into the right family should have power. Ideally those in power should be democratically elected by the people they hold power over and be protected from lobbying attempts by wealthy individuals. Someone like Elon Musk having political influence is a bad thing because he's raging capitalist that can, will, and does exploit those below him. It's why he has such a love for his Chinese labour force. They have less rights and they will work 16 hour days in his factory making the cars that make him money. Elon Musk is great as a wealthy private businessman, that's where capitalism firmly belongs. But he has no place in any sort of politics. Countries aren't run like businesses.
tomonl 4y ago
> made optimal decisions Optimal decisions for themselves, not for the country.

by smsm42 4y ago

xapata 4y ago

> (and probably some luck) I'd reverse the skill and luck relationship. Success at that magnitude is almost entirely luck (and probably a little skill).

smsm42 4y ago
When one becomes rich because of one IPO that went right - ok, let's say it's luck. When one creates several successful businesses in a row - no, sorry, I can't say "it's just dumb luck" anymore, it's more realistic to assume there's something else involved.
- nemothekid 4y ago
  Taleb has a more succint way of putting it[1], but no it can still be luck just like hitting black in roulette several times in a row can also be luck. [1] https://mobile.twitter.com/nntaleb/status/1534172773580513280 https://mobile.twitter.com/nntaleb/status/153417277358051328...
  - Domenic_S 4y ago
    Hitting black multiple times in roulette is always luck (barring cheating). What the tweet is saying, and it seems right, is that looking at a probability graph the only way to get the billionaire-like outcome/outlier is to dramatically increase volatility, i.e. bet on long odds. If everyone went to work, maxed out their 401k, bought blue-chip stocks, and called it a day, basically nobody would have outlier net worth. But some people choose to increase the volatility of their money (buying crypto, starting a company, options trading, whatever) and as you'd expect 99.9999% of them don't get rich and the rest of them get uber-rich.
    - smsm42 4y ago
      > buying crypto, starting a company, options trading, whatever I think these activities are quite different however. Saying starting a company is the same nature of activity as betting on an extremely volatile asset ignores all the work that goes into successfully creating a working company. Surely, there's no guarantee this work will bring result - but it's still not the same as just betting on random high-volatility assets. Even options trading is not (always) just betting, and for more successful traders probably involves certain amount of knowledge in addition to luck. But I don't think describing creating a company as completely probabilistic activity makes any sense.
      - Domenic_S 4y ago
        The tweet (and me) aren't saying creating a company is "completely probabilistic", just that they're risky. Risky meaning there is an outsized chance vs. an established company that the new one doesn't exist in 5 years and the established one does (where "chance" means looking at outcomes in retrospect, not a roll of the dice). The tweet is saying that founders becoming massively rich is a natural outcome of probability distribution -- huge payoffs require either huge bets at a smaller win multiplier (less "risky") or comparatively smaller bets at a huge win multiplier (more "risky").
- Johnny555 4y ago
  Yeah, after the first successful IPO, the traveling IPO CEO has contacts at investment banks, media houses, etc and is on a first-name basis with many key analysts. That's why they keep getting brought in to help a company IPO, after you've done one, the subsequent ones are easier.
- xapata 4y ago
  Why? A good reputation and wealthy, powerful friends are very helpful. "When you're rich, they think you really know." Further, how many people were nearly identical after that first success, but then failed to continue with a second?

whimsicalism 4y ago

There's no such thing as too big to fail in democratic politics and it is not a deterministic process of knowing people in "The Machine." FWIW, most wealthy people are wealthy because of inherited holdings and 60% of all wealth in the US is inherited.

fallingknife 4y ago
> 60% of all wealth in the US is inherited Source? This fails the sniff test, as the amount of wealth has grown at such a rapid rate this seems almost impossible.
- whimsicalism 4y ago
  https://www.washingtonpost.com/us-policy/2019/02/06/people-like-estate-tax-whole-lot-more-when-they-learn-how-wealth-is-distributed/ https://www.washingtonpost.com/us-policy/2019/02/06/people-l...
  - smsm42 4y ago
    As I suspected, it counts dollars. Moreover, it attributes any subsequent income for somebody that received an inheritance as "inherited" (up to certain exponential boundary). I.e. if you received an inheritance of $1000, spent it, and in 30 years since you became a millionaire, then the amount of wealth you have up to what you could have if you invested $1000 at certain rate would be still counted as "inherited". I am very far from being qualified to understand the dense math in the underlying article (http://www.piketty.pse.ens.fr/files/AlvaredoGarbintiPiketty2017.pdf http://www.piketty.pse.ens.fr/files/AlvaredoGarbintiPiketty2...) but with such assumption, I imagine we could arrive at 60%. But it doesn't mean what you think it means.
    - whimsicalism 4y ago
      > As I suspected, it counts dollars. What do you mean? It counts ownership stakes & stocks as well. > I imagine we could arrive at 60%. But it doesn't mean what you think it means. It means exactly what I think it means - if you get bequeathed $1 million dollars and get 8% returns from investing this, it doesn't mean you "self-made" $3.66 million more 20 years later.

deleted 4y ago

[deleted]

guelo 4y ago

> has nice hair and is able to conceal his rampaging cocaine habit long enough to make himself too big to fail? You are indoctrinated into believing that democracy cannot work and good government is impossible.

rglullis 4y ago
> good government is impossible. At the scale of continental countries like US (or any BRIC country), it is. The decision makers are simply too far removed from the people who get to live with the policies.
smsm42 4y ago
I am indoctrinated by the reality I am observing daily. And before you are tempted to tell me "oh, it's because $not_my_favorite_political_party prevents $my_favorite_political party from achieving its true potential as the paragon of democracy" - this happens regardless of your tribal squabbles.
- guelo 4y ago
  $not_my_favorite_political_party_1 wants to destroy government besides police and military. $not_my_favorite_political_party_2 wants to increase welfare spending. Neither party is focused on good government. Mostly that is because voter dissatisfaction with government is channeled into the two competing ideological camps so that obvious, practical improvements never happen.
  - smsm42 4y ago
    There's no party that has anybody elected to Congress (or to a state Congress afaik either, though there I may be missing one or two persons) that wants to even reduce substantially, let alone destroy, government. TBH, let's not be cute and drop "substantially". No major party wants to reduce the government at all. Didn't for a long while. The only disagreement is about how fast the government will be growing and who gets the benefits of the wealth transfers that would follow from that and who gets to control these trillions and get the goodies that come from controlling trillions of other people's money. There are disagreements on other subjects, but on the subject of Big Government the consensus is clear and present. No agency ever gets reduced power (or, the horror, disbanded!) whatever party is in power, the worst could happen is that one party's functionary would temporarily disrupt the implementation of other party's schemes.

Philip-J-Fry 4y ago

I don't think anyone who says a billionaire shouldn't have power also believes that someone born into the right family should have power. Ideally those in power should be democratically elected by the people they hold power over and be protected from lobbying attempts by wealthy individuals. Someone like Elon Musk having political influence is a bad thing because he's raging capitalist that can, will, and does exploit those below him. It's why he has such a love for his Chinese labour force. They have less rights and they will work 16 hour days in his factory making the cars that make him money. Elon Musk is great as a wealthy private businessman, that's where capitalism firmly belongs. But he has no place in any sort of politics. Countries aren't run like businesses.

tomonl 4y ago

> made optimal decisions Optimal decisions for themselves, not for the country.