12 ms·

Success to the successful

96 points by vitabenes 3y ago

sublinear 3y ago
Missing from the diagram is when success of A is mismanaged and all its resources get slowly redistributed to C through Z in fragments until one of them becomes the next A.
derbOac 3y ago
Also known as the Matthew Effect: https://en.m.wikipedia.org/wiki/Matthew_effect https://en.m.wikipedia.org/wiki/Matthew_effect
- laratied 3y ago
  We have a better abstraction of this process in general: https://en.wikipedia.org/wiki/Preferential_attachment https://en.wikipedia.org/wiki/Preferential_attachment
- m463 3y ago
  aka "the rich get richer and the poor get poorer"
  - varjag 3y ago
    The rich could well be getting richer but the poor don't appear to be getting poorer.
    - laratied 3y ago
      It would be better to say that because of preferential attachment in a networked world that the rich get a massively out sized share of the booty. It is interesting to see this play out with NFL football podcasts. This use to be a space of random individuals but then former and even current players started podcasts. Now the Kelce brothers and Taylor Lewan have podcasts. They don't just have the name recognition with football fans relative to the average person but the subject matter expertise too. They also have a cool factor with who wouldn't prefer to work with a current NFL player about football than you or I? Not to mention 50 million dollar contracts so they have so much more capital to make things work. The average person and Kelce/Lewan can both just have their friends on the podcasts as guests but the NFL players friends are also NFL players that the average person has to do a nearly infinite amount more work to get on. This process applies to pretty much everything in every domain.
    - pedalpete 3y ago
      What makes you say the poor are not getting poorer? I think you need to take this from the perspective of what part of the world you are living in. I'm not sure how we can measure this in quality of life rather than just dollars, but let's consider it this way. In Australia, Canada, the US, the cost of buying a home has become out of reach for most people. Not even talking about the poorest people, just the average. Healthcare cost has far outstripped inflation over the last 30 years, and is a greater proportion of the average persons salary. https://www.thebalancemoney.com/causes-of-rising-healthcare-costs-4064878 https://www.thebalancemoney.com/causes-of-rising-healthcare-... Poverty comes with it's own health issues. https://www.aafp.org/about/policies/all/poverty-health.html#:~:text=Poverty%20and%20low%2Dincome%20status%20are%20associated%20with%20various%20adverse,14%20leading%20causes%20of%20death.&text=Individual%2D%20and%20community%2Dlevel%20mechanisms%20mediate%20these%20effects https://www.aafp.org/about/policies/all/poverty-health.html#.... Salaries have also been stagnant, apparently since the 70s according to this article. https://www.cnbc.com/2022/07/19/heres-how-labor-dynamism-affects-wage-growth-in-america.html https://www.cnbc.com/2022/07/19/heres-how-labor-dynamism-aff... So, I don't know how you can claim the poor are not getting poorer.
      - varjag 3y ago
        Poverty rates are falling globally by any metric you take. And for the poor, buying properties was never even on the radar. I feel there is some conceptual disconnect, poor isn't just someone who is not middle class.
        pedalpete 3y ago
        Globally you are absolutely right. Quality of life for billions is improving. If you look at the developed world only, the divide between the rich and poor is growing. Quality of life for those outside of the middle-class (and some would even say for the middle-class) is decreasing in these regions. We absolutely don't want to forget about the poorest globally, and need to ensure they continue to benefit and increase their quality of life, but we don't want to ignore the poor in developed countries.
        3y ago
    - RhodesianHunter 3y ago
      Perhaps they should just eat cake?
      - varjag 3y ago
        Sure Marie.
- slowmovintarget 3y ago
  Right, Jesus was telling this story two thousand-ish years ago.
andrewlgood 3y ago
This is what Malcolm Gladwell wrote about in his book, Outliers. His examples are more insidious as they can happen based on non-success based criteria such as birth dates.
thedudeabides5 3y ago
So success is increasing returns to scale, basically.
aj7 3y ago
“… A receives more resources from a (presumed) finite pool of resources, so B therefore receives less” No. If A is a big enough success, money can get thrown at a bunch of B’s. Resources can INCREASE. Most B’s will be unsuccessful.
- pc86 3y ago
  Resources will always be finite even if they increase over time. Won't A always receive more resources than any one B (if you're looking at them as individual companies)?
  - Cheezmeister 3y ago
    Define "resources". If we want to speak in absolutes, entropy cannot be reduced; we will only capture so much energy over time, and I refer you to http://www.thelastquestion.net/ http://www.thelastquestion.net/ If we get a little zen and allow for the ever-elusive human joy to be the ultimate resource, then I'm not sure we can necessarily say that it's finite. I guess without humans there can be no human joy, but why not machine/post/trans-human joy? Whoever dies with the most toys wins, right? :)
  - gretch 3y ago
    No because people allocate resources based on future expectations of success. Look at Tesla market cap (a measure of resources allocated) vs Toyota and look at how many cars they sell. Tesla definitely didn’t start out winning, but people saw the potential and started allocating resources away from old car manufacturers. If this model actually held then no one would have ever bet on them.
skybrian 3y ago
One limiting factor is that everyone dies eventually. (With current technology, anyway.) Organizations may or may not live on. Most businesses have shorter lives than people, but some have lived longer. Sometimes they change so much that they might as well be a different entity.
WalterBright 3y ago
[flagged]
- cjohnson318 3y ago
  That's one way to oversimplify it.
  - WalterBright 3y ago
    Now that you know about it, you'll start seeing it everywhere.
- keenmaster 3y ago
  More like “socialism” air quotes wink wink: Success at achieving surreptitious, non-explicit goals (e.g. funnel wealth to government cronies) => budget increase It’s for the people ;) :D
  - deleted 3y ago
    [deleted]
  - lasfter 3y ago
    Are you not thinking of capitalism as it exists today? Wanton military spending, bank bailouts, corporate tax cuts, etc. seem to be very common when money can buy legislators.
    - keenmaster 3y ago
      As true and as insidious as that is, the problem is much worse in allegedly “socialist” countries historically. Note that I am not really including Western Europe in my definition of socialist, even though they have larger social programs than the U.S. Having a democracy lowers the degree of shamelessness with which funds for a social benefit like free daycare or universal healthcare can be used for things other than their ostensible purpose with no consequence and for a long period of time. It’s all relative. Americans sometimes make bad analogies to their own government (“are we really that much better than X”) and take for granted how our government avoids a lot of egregious abuses that you’d find in socialist dictatorships, regardless of which party is in power. Of course I’m speaking only of internal politics - American foreign policy is another can of worms and we don’t even have complete information to properly assess it. Are we secretly propping up a dictator who is slaughtering his own people? Who knows, maybe we’ll find out when that information is declassified in a few decades, or never.
Nanana909 3y ago
To me, the authors opening remark seems misleading at best. But of course criticisms of capitalism must begin by ignoring their hypotheses under a different or past regime: > One of the most salient archetypes of our current period is called “success to the successful,” which fairly well describes twenty-first-century capitalism The implication being this is some new facet of our modern society, and not a part of past ones. I can’t think of a time period, especially when considering a global scale, when the authors claim of “success to the successful” was not true. In fact, I would say it is less true than ever before. Note that this isn’t the same as saying it does not apply now. Before the internet what opportunities existed for someone in say, rural Africa, to teach themselves skills to obtain success. Now? Marginal, sure, but absolutely present.
- nine_k 3y ago
  Indeed. Older societies ossified the success to a scale unimaginable under liberal capitalism. While it's not pronounced in the US due to its genesis, it's still well visible in the Old World. "Q: How to become wealthy in the UK? A: Try to be born to a family whose progenitor gained royal favor during the Norman conquest."
  - codexjourneys 3y ago
    Essay author here. Success-to-the-successful is a real feature of our current economic landscape, more than in the semi-recent past (yes, ancient feudal societies were way worse). Here’s Harvard Business Review: “… we find that large corporations are more and more likely to maintain their dominant positions, while small corporations are less and less likely to become big and profitable.” Link: https://hbr.org/2019/08/the-gap-between-large-and-small-companies-is-growing-why https://hbr.org/2019/08/the-gap-between-large-and-small-comp... Here’s economist Austan Goolsbee in The New York Times highlighting growing corporate concentration even pre-pandemic: https://www.nytimes.com/2020/09/30/business/big-companies-are-starting-to-swallow-the-world.html https://www.nytimes.com/2020/09/30/business/big-companies-ar... These are success-to-the-successful trends. Disruptive shocks (like when Google created a truly better search technology and dethroned AltaVista in the late ‘90s, or when the US gov broke up AT&T in 1984) can change those dynamics. That’s how Kodak, despite having lots of resources, lost dominance and eventually failed: they didn’t have the right non-monetary resources (innovative culture and support for change) at a critical time, so disruptive shock toppled them. Anyway, thanks for reading!
dmje 3y ago
I constantly ponder this as I look around my home town. We're in Cornwall and so house prices have gone fairly batshit to the extent that local teachers (in fact, local GPs too) can't afford rents or house purchases. Meanwhile, a patch of land sold a few years back for £1m. On it, the developer built a block of retirement flats. There are maybe 30 of them. They each sold for north of £500k. The property owner also charges £20k per property per year for "maintenance". It's simplistic but he's basically printing money. Out of his £15m turnover he had to spend £1m on the land, maybe £1m on building the flats - so £13m clear profit, and an annual of £600k. So then he goes on and buys the next piece of land for £2m, this time makes a clear £30m, annual of £1.5 etc etc. So, yeh, success to the successful. Who needs teachers or GPs anyway, right?
- jahewson 3y ago
  Fairly basic flats cost more like £400k each to build. The developer isn’t making all that much profit. That’s one reason why all you see are luxury flats nowadays.
- dvt 3y ago
  > It's simplistic but he's basically printing money. Upvoted you, but I disagree. This is classic survivorship bias. You see the 10% of cases where this works, and you don't see the 90% of cases where the owner goes into crippling debt, can't sell the land, can't sell the condos, or vacancies are at 50%+. There's no such thing as "printing money" in capitalistic markets and it's naïve to think there is. I'm not an efficient market hypothesis guy, but markets tend to be efficient. There are cases of problematic monopolies (e.g. telecom companies, energy distribution, steel, Google advertising, "too big to fail" banks, etc.) and maybe you could argue those actually do print money, but, imo, that's far and few in between.
  - waboremo 3y ago
    Where are you getting 90% failure rate for those with access to enough wealth to easily sweep up $1m land + development costs for several buildings? I can buy that for average folk, as they often do not have the expertise (nor the wealth to access the expertise) necessary to make better decisions for their business. For those substantially wealthier, it doesn't really make sense but maybe you're privy to more sources here that I would love to dive into.
pphysch 3y ago
A lot of words and yet somehow none of them are "feedback", the well-accepted term for this concept: https://en.wikipedia.org/wiki/Feedback https://en.wikipedia.org/wiki/Feedback
whack 3y ago
> One of the most salient archetypes of our current period is called “success to the successful,” which fairly well describes twenty-first-century capitalism or the late stages of the board game Monopoly It seems a stretch to describe this as "One of the most salient" archetypes. This would only be true if "resources" are "one of the most salient" factors for success. If two companies are almost identical in every other way, then sure resources are a great tie-breaker. But if one company is significantly better than the other in some way, I would expect that company to overcome a resource-deficit. See Google winning search over other earlier and larger search engines. Facebook winning social media over other earlier and larger social networks. OpenAI leading/co-leading the AI race despite being outgunned by so many other companies. AMD surpassing Intel in valuation despite an enormous financial deficit a decade ago. In fact, an abundance of resources can actually negatively impact success. See the resource curse: https://en.wikipedia.org/wiki/Resource_curse https://en.wikipedia.org/wiki/Resource_curse . Highly relevant in big tech companies that are so much slower and bureaucratic compared to startups. Today's world might possibly be the most startup friendly in history - there is far more VC financing available than ever before for any company that can demonstrate any form of competitive advantage in a lucrative market. Financing that provides just enough resources to avoid being handicapped, but not so much that startups are lulled into complacency the way more established companies are. It's easy to pick one model that seems intuitive, and use it to make sweeping statements about "twenty-first-century capitalism". In the real world there are many different models all operating at the same time, and the one that is most intuitive may not be the most salient.
austinl 3y ago
In U.S. policy debate, this is also known as “winners win”. In other words, if a resolution passes Congress successfully, the proponents of the policy are more likely to be able to pass another piece of legislation. Whether or not this is actually true in Congress is debatable. However, there are other systems where winners-win is more clear-cut. For example, college athlete recruits want to go to programs that are already successful (thereby increasing the likelihood that the team will continue to be successful), or F1 teams that do well in the constructors championship get a sizable payout (which helps them to continue winning).
rippercushions 3y ago
For to every one who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away. — Matthew 25:29 https://en.wikipedia.org/wiki/Matthew_effect https://en.wikipedia.org/wiki/Matthew_effect
hurtuvac78 3y ago
A lot of people find moral value in a meritocracy. This "success to the successful" shows the limits. A lot of people would agree that if someone is 5x smarter and work 5x more than someone else, then making 25x more money could be fair. My intuitive take is that our system rewards those people with a lot more than x25... this article seems to go in the same direction. If that is true, is it morally fair? What would be fair? Do we even care about fairness?
- trgn 3y ago
  Why do smart people need to be rewarded more? What's so special about being smart, that this is the main axis of merit? You never hear the same said about, say, being strong, healthy, patient, cold blooded (maybe this one), ... It's always "smart". "Smart" must be rewarded. Colleges must pick "smart". Not being facetious. I want to learn more about the origins and apologetics of the cult of smart. ("hard work" I can see. That certainly has pedigree - toiling the land to please god, that sort of thing, there's something virtuous about it).
  - ZephyrBlu 3y ago
    I assume people view it as more meritocratic because smart people tend to do more useful things (E.g. scientists, lawyers, doctors, etc), but I don't really think it's meritocratic. Generally "smart" = born with high intelligence and the right personality traits (I.e. conscientious). I see it mostly as lottery.
    - trgn 3y ago
      Thanks for chiming in. When smart becomes a catch-all term, it feels a little tautological, but makes sense to me in that context.
- mrpowelldev 3y ago
  If smarts follow a normal distribution, then someone 5x smarter than your average Joe is exponentially more rare. Supply and demand would suggest their compensation increase wouldn't merely be linear.
kayo_20211030 3y ago
Interesting. The example about resource allocation in education is instructive. The decision to allocate resources to G&T students at the expense of others is fundamentally a political decision. Those allocations can be influenced, changed, or even undone at that level. We could decide to allocate those particular finite resources to "lesser" students (see quotes) with a view to leveling-up. Let them all find their level later; but school isn't the place to put our thumbs on the scale. The best will always do better, without any emphasis.
- Cheezmeister 3y ago
  Gin & Tonic students? ... Gifted & Talented.
pessimizer 3y ago
Two thoughts: 1) It's not an accident that Monopoly looks like this. Monopoly was an intentional demonstration by a Georgist that if everyone starts in the same space with the same capital, eventually one player will own all of the other players. It originally had a second phase (Prosperity) showing that you could change the rules and have things turn out differently. 2) This model has invisible, magical "allocators," but there are material ways by which wealth attracts more wealth. If you're wealthy, you can buy heavily when prices are low and not buy at all (or even sell) when prices are high. You can also buy wholesale at all times, because large purchases/purchasers bring down costs for the seller. There's no doubt for me that most of the benefit of early success in a industry is that you can wait until new entrants are in a fragile, time-constrained situation, and just buy them. You can also buy from suppliers at a high enough volume that they don't even bother to sell to your smaller scale competitors. You can sell at a loss longer than they can. None of that is investors making decisions, it's just a natural consequence of wealth.
stan3223 3y ago
Australia's public education has this selective high school system. At the end of primary school kids could sit for an exam to enter academically more competitive selective high schools. So higher performing kids are being separated from others. During adolescence you are very much influenced and learn from your peers, so could think of it as resource being taken away from lower performing kids very early on.
- alangou 3y ago
  We've seen again and again what happens when you destroy academic standard setting with excuses like "oh, the smart students will help bring up their peers". Everyone ends up in one jumbled mass and excellence is dragged down by the average to form undifferentiated mediocrity. See Communist China before they re-implemented the Gaokao (their college entrance exam), many schools now in California, and once-prominent public schools like Dunbar High in the D.C. area (successful despite the poverty of the area in which it operated-see https://www.creators.com/read/thomas-sowell/10/16/dunbar-high-school-after-100-years https://www.creators.com/read/thomas-sowell/10/16/dunbar-hig...).
paulpauper 3y ago
Hmmm..isn't this the Mathew Effect? Let’s make this concrete and relevant to early 2023: we’ll say A represents a group of companies known as MMANGA (Microsoft, Meta, Apple, Nvidia, Google/Alphabet, Amazon), and B represents a group of all other companies in the US public markets (i.e., a broad-based index minus MMANGA). People could have said the same in the late 90s, but instead Intel, HP, Oracle, Cisco, IBM, etc. Only Micorsoft has bucked the trend of not fading, unlike the others.

96 points by vitabenes 3y ago

Missing from the diagram is when success of A is mismanaged and all its resources get slowly redistributed to C through Z in fragments until one of them becomes the next A.

derbOac 3y ago

Also known as the Matthew Effect: https://en.m.wikipedia.org/wiki/Matthew_effect https://en.m.wikipedia.org/wiki/Matthew_effect

laratied 3y ago
We have a better abstraction of this process in general: https://en.wikipedia.org/wiki/Preferential_attachment https://en.wikipedia.org/wiki/Preferential_attachment
m463 3y ago
aka "the rich get richer and the poor get poorer"
- varjag 3y ago
  The rich could well be getting richer but the poor don't appear to be getting poorer.
  - laratied 3y ago
    It would be better to say that because of preferential attachment in a networked world that the rich get a massively out sized share of the booty. It is interesting to see this play out with NFL football podcasts. This use to be a space of random individuals but then former and even current players started podcasts. Now the Kelce brothers and Taylor Lewan have podcasts. They don't just have the name recognition with football fans relative to the average person but the subject matter expertise too. They also have a cool factor with who wouldn't prefer to work with a current NFL player about football than you or I? Not to mention 50 million dollar contracts so they have so much more capital to make things work. The average person and Kelce/Lewan can both just have their friends on the podcasts as guests but the NFL players friends are also NFL players that the average person has to do a nearly infinite amount more work to get on. This process applies to pretty much everything in every domain.
  - pedalpete 3y ago
    What makes you say the poor are not getting poorer? I think you need to take this from the perspective of what part of the world you are living in. I'm not sure how we can measure this in quality of life rather than just dollars, but let's consider it this way. In Australia, Canada, the US, the cost of buying a home has become out of reach for most people. Not even talking about the poorest people, just the average. Healthcare cost has far outstripped inflation over the last 30 years, and is a greater proportion of the average persons salary. https://www.thebalancemoney.com/causes-of-rising-healthcare-costs-4064878 https://www.thebalancemoney.com/causes-of-rising-healthcare-... Poverty comes with it's own health issues. https://www.aafp.org/about/policies/all/poverty-health.html#:~:text=Poverty%20and%20low%2Dincome%20status%20are%20associated%20with%20various%20adverse,14%20leading%20causes%20of%20death.&text=Individual%2D%20and%20community%2Dlevel%20mechanisms%20mediate%20these%20effects https://www.aafp.org/about/policies/all/poverty-health.html#.... Salaries have also been stagnant, apparently since the 70s according to this article. https://www.cnbc.com/2022/07/19/heres-how-labor-dynamism-affects-wage-growth-in-america.html https://www.cnbc.com/2022/07/19/heres-how-labor-dynamism-aff... So, I don't know how you can claim the poor are not getting poorer.
    - varjag 3y ago
      Poverty rates are falling globally by any metric you take. And for the poor, buying properties was never even on the radar. I feel there is some conceptual disconnect, poor isn't just someone who is not middle class.
      - pedalpete 3y ago
        Globally you are absolutely right. Quality of life for billions is improving. If you look at the developed world only, the divide between the rich and poor is growing. Quality of life for those outside of the middle-class (and some would even say for the middle-class) is decreasing in these regions. We absolutely don't want to forget about the poorest globally, and need to ensure they continue to benefit and increase their quality of life, but we don't want to ignore the poor in developed countries.
        3y ago
  - RhodesianHunter 3y ago
    Perhaps they should just eat cake?
    - varjag 3y ago
      Sure Marie.
slowmovintarget 3y ago
Right, Jesus was telling this story two thousand-ish years ago.

andrewlgood 3y ago

This is what Malcolm Gladwell wrote about in his book, Outliers. His examples are more insidious as they can happen based on non-success based criteria such as birth dates.

thedudeabides5 3y ago

So success is increasing returns to scale, basically.

aj7 3y ago

“… A receives more resources from a (presumed) finite pool of resources, so B therefore receives less” No. If A is a big enough success, money can get thrown at a bunch of B’s. Resources can INCREASE. Most B’s will be unsuccessful.

pc86 3y ago
Resources will always be finite even if they increase over time. Won't A always receive more resources than any one B (if you're looking at them as individual companies)?
- Cheezmeister 3y ago
  Define "resources". If we want to speak in absolutes, entropy cannot be reduced; we will only capture so much energy over time, and I refer you to http://www.thelastquestion.net/ http://www.thelastquestion.net/ If we get a little zen and allow for the ever-elusive human joy to be the ultimate resource, then I'm not sure we can necessarily say that it's finite. I guess without humans there can be no human joy, but why not machine/post/trans-human joy? Whoever dies with the most toys wins, right? :)
- gretch 3y ago
  No because people allocate resources based on future expectations of success. Look at Tesla market cap (a measure of resources allocated) vs Toyota and look at how many cars they sell. Tesla definitely didn’t start out winning, but people saw the potential and started allocating resources away from old car manufacturers. If this model actually held then no one would have ever bet on them.

skybrian 3y ago

One limiting factor is that everyone dies eventually. (With current technology, anyway.) Organizations may or may not live on. Most businesses have shorter lives than people, but some have lived longer. Sometimes they change so much that they might as well be a different entity.

WalterBright 3y ago

[flagged]

cjohnson318 3y ago
That's one way to oversimplify it.
- WalterBright 3y ago
  Now that you know about it, you'll start seeing it everywhere.
keenmaster 3y ago
More like “socialism” air quotes wink wink: Success at achieving surreptitious, non-explicit goals (e.g. funnel wealth to government cronies) => budget increase It’s for the people ;) :D
- deleted 3y ago
  [deleted]
- lasfter 3y ago
  Are you not thinking of capitalism as it exists today? Wanton military spending, bank bailouts, corporate tax cuts, etc. seem to be very common when money can buy legislators.
  - keenmaster 3y ago
    As true and as insidious as that is, the problem is much worse in allegedly “socialist” countries historically. Note that I am not really including Western Europe in my definition of socialist, even though they have larger social programs than the U.S. Having a democracy lowers the degree of shamelessness with which funds for a social benefit like free daycare or universal healthcare can be used for things other than their ostensible purpose with no consequence and for a long period of time. It’s all relative. Americans sometimes make bad analogies to their own government (“are we really that much better than X”) and take for granted how our government avoids a lot of egregious abuses that you’d find in socialist dictatorships, regardless of which party is in power. Of course I’m speaking only of internal politics - American foreign policy is another can of worms and we don’t even have complete information to properly assess it. Are we secretly propping up a dictator who is slaughtering his own people? Who knows, maybe we’ll find out when that information is declassified in a few decades, or never.

Nanana909 3y ago

To me, the authors opening remark seems misleading at best. But of course criticisms of capitalism must begin by ignoring their hypotheses under a different or past regime: > One of the most salient archetypes of our current period is called “success to the successful,” which fairly well describes twenty-first-century capitalism The implication being this is some new facet of our modern society, and not a part of past ones. I can’t think of a time period, especially when considering a global scale, when the authors claim of “success to the successful” was not true. In fact, I would say it is less true than ever before. Note that this isn’t the same as saying it does not apply now. Before the internet what opportunities existed for someone in say, rural Africa, to teach themselves skills to obtain success. Now? Marginal, sure, but absolutely present.

nine_k 3y ago
Indeed. Older societies ossified the success to a scale unimaginable under liberal capitalism. While it's not pronounced in the US due to its genesis, it's still well visible in the Old World. "Q: How to become wealthy in the UK? A: Try to be born to a family whose progenitor gained royal favor during the Norman conquest."
- codexjourneys 3y ago
  Essay author here. Success-to-the-successful is a real feature of our current economic landscape, more than in the semi-recent past (yes, ancient feudal societies were way worse). Here’s Harvard Business Review: “… we find that large corporations are more and more likely to maintain their dominant positions, while small corporations are less and less likely to become big and profitable.” Link: https://hbr.org/2019/08/the-gap-between-large-and-small-companies-is-growing-why https://hbr.org/2019/08/the-gap-between-large-and-small-comp... Here’s economist Austan Goolsbee in The New York Times highlighting growing corporate concentration even pre-pandemic: https://www.nytimes.com/2020/09/30/business/big-companies-are-starting-to-swallow-the-world.html https://www.nytimes.com/2020/09/30/business/big-companies-ar... These are success-to-the-successful trends. Disruptive shocks (like when Google created a truly better search technology and dethroned AltaVista in the late ‘90s, or when the US gov broke up AT&T in 1984) can change those dynamics. That’s how Kodak, despite having lots of resources, lost dominance and eventually failed: they didn’t have the right non-monetary resources (innovative culture and support for change) at a critical time, so disruptive shock toppled them. Anyway, thanks for reading!

dmje 3y ago

I constantly ponder this as I look around my home town. We're in Cornwall and so house prices have gone fairly batshit to the extent that local teachers (in fact, local GPs too) can't afford rents or house purchases. Meanwhile, a patch of land sold a few years back for £1m. On it, the developer built a block of retirement flats. There are maybe 30 of them. They each sold for north of £500k. The property owner also charges £20k per property per year for "maintenance". It's simplistic but he's basically printing money. Out of his £15m turnover he had to spend £1m on the land, maybe £1m on building the flats - so £13m clear profit, and an annual of £600k. So then he goes on and buys the next piece of land for £2m, this time makes a clear £30m, annual of £1.5 etc etc. So, yeh, success to the successful. Who needs teachers or GPs anyway, right?

jahewson 3y ago
Fairly basic flats cost more like £400k each to build. The developer isn’t making all that much profit. That’s one reason why all you see are luxury flats nowadays.
dvt 3y ago
> It's simplistic but he's basically printing money. Upvoted you, but I disagree. This is classic survivorship bias. You see the 10% of cases where this works, and you don't see the 90% of cases where the owner goes into crippling debt, can't sell the land, can't sell the condos, or vacancies are at 50%+. There's no such thing as "printing money" in capitalistic markets and it's naïve to think there is. I'm not an efficient market hypothesis guy, but markets tend to be efficient. There are cases of problematic monopolies (e.g. telecom companies, energy distribution, steel, Google advertising, "too big to fail" banks, etc.) and maybe you could argue those actually do print money, but, imo, that's far and few in between.
- waboremo 3y ago
  Where are you getting 90% failure rate for those with access to enough wealth to easily sweep up $1m land + development costs for several buildings? I can buy that for average folk, as they often do not have the expertise (nor the wealth to access the expertise) necessary to make better decisions for their business. For those substantially wealthier, it doesn't really make sense but maybe you're privy to more sources here that I would love to dive into.

pphysch 3y ago

A lot of words and yet somehow none of them are "feedback", the well-accepted term for this concept: https://en.wikipedia.org/wiki/Feedback https://en.wikipedia.org/wiki/Feedback

whack 3y ago

> One of the most salient archetypes of our current period is called “success to the successful,” which fairly well describes twenty-first-century capitalism or the late stages of the board game Monopoly It seems a stretch to describe this as "One of the most salient" archetypes. This would only be true if "resources" are "one of the most salient" factors for success. If two companies are almost identical in every other way, then sure resources are a great tie-breaker. But if one company is significantly better than the other in some way, I would expect that company to overcome a resource-deficit. See Google winning search over other earlier and larger search engines. Facebook winning social media over other earlier and larger social networks. OpenAI leading/co-leading the AI race despite being outgunned by so many other companies. AMD surpassing Intel in valuation despite an enormous financial deficit a decade ago. In fact, an abundance of resources can actually negatively impact success. See the resource curse: https://en.wikipedia.org/wiki/Resource_curse https://en.wikipedia.org/wiki/Resource_curse . Highly relevant in big tech companies that are so much slower and bureaucratic compared to startups. Today's world might possibly be the most startup friendly in history - there is far more VC financing available than ever before for any company that can demonstrate any form of competitive advantage in a lucrative market. Financing that provides just enough resources to avoid being handicapped, but not so much that startups are lulled into complacency the way more established companies are. It's easy to pick one model that seems intuitive, and use it to make sweeping statements about "twenty-first-century capitalism". In the real world there are many different models all operating at the same time, and the one that is most intuitive may not be the most salient.

austinl 3y ago

In U.S. policy debate, this is also known as “winners win”. In other words, if a resolution passes Congress successfully, the proponents of the policy are more likely to be able to pass another piece of legislation. Whether or not this is actually true in Congress is debatable. However, there are other systems where winners-win is more clear-cut. For example, college athlete recruits want to go to programs that are already successful (thereby increasing the likelihood that the team will continue to be successful), or F1 teams that do well in the constructors championship get a sizable payout (which helps them to continue winning).

rippercushions 3y ago

For to every one who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away. — Matthew 25:29 https://en.wikipedia.org/wiki/Matthew_effect https://en.wikipedia.org/wiki/Matthew_effect

hurtuvac78 3y ago

A lot of people find moral value in a meritocracy. This "success to the successful" shows the limits. A lot of people would agree that if someone is 5x smarter and work 5x more than someone else, then making 25x more money could be fair. My intuitive take is that our system rewards those people with a lot more than x25... this article seems to go in the same direction. If that is true, is it morally fair? What would be fair? Do we even care about fairness?

trgn 3y ago
Why do smart people need to be rewarded more? What's so special about being smart, that this is the main axis of merit? You never hear the same said about, say, being strong, healthy, patient, cold blooded (maybe this one), ... It's always "smart". "Smart" must be rewarded. Colleges must pick "smart". Not being facetious. I want to learn more about the origins and apologetics of the cult of smart. ("hard work" I can see. That certainly has pedigree - toiling the land to please god, that sort of thing, there's something virtuous about it).
- ZephyrBlu 3y ago
  I assume people view it as more meritocratic because smart people tend to do more useful things (E.g. scientists, lawyers, doctors, etc), but I don't really think it's meritocratic. Generally "smart" = born with high intelligence and the right personality traits (I.e. conscientious). I see it mostly as lottery.
  - trgn 3y ago
    Thanks for chiming in. When smart becomes a catch-all term, it feels a little tautological, but makes sense to me in that context.
mrpowelldev 3y ago
If smarts follow a normal distribution, then someone 5x smarter than your average Joe is exponentially more rare. Supply and demand would suggest their compensation increase wouldn't merely be linear.

kayo_20211030 3y ago

Interesting. The example about resource allocation in education is instructive. The decision to allocate resources to G&T students at the expense of others is fundamentally a political decision. Those allocations can be influenced, changed, or even undone at that level. We could decide to allocate those particular finite resources to "lesser" students (see quotes) with a view to leveling-up. Let them all find their level later; but school isn't the place to put our thumbs on the scale. The best will always do better, without any emphasis.

Cheezmeister 3y ago
Gin & Tonic students? ... Gifted & Talented.

pessimizer 3y ago

Two thoughts: 1) It's not an accident that Monopoly looks like this. Monopoly was an intentional demonstration by a Georgist that if everyone starts in the same space with the same capital, eventually one player will own all of the other players. It originally had a second phase (Prosperity) showing that you could change the rules and have things turn out differently. 2) This model has invisible, magical "allocators," but there are material ways by which wealth attracts more wealth. If you're wealthy, you can buy heavily when prices are low and not buy at all (or even sell) when prices are high. You can also buy wholesale at all times, because large purchases/purchasers bring down costs for the seller. There's no doubt for me that most of the benefit of early success in a industry is that you can wait until new entrants are in a fragile, time-constrained situation, and just buy them. You can also buy from suppliers at a high enough volume that they don't even bother to sell to your smaller scale competitors. You can sell at a loss longer than they can. None of that is investors making decisions, it's just a natural consequence of wealth.

stan3223 3y ago

Australia's public education has this selective high school system. At the end of primary school kids could sit for an exam to enter academically more competitive selective high schools. So higher performing kids are being separated from others. During adolescence you are very much influenced and learn from your peers, so could think of it as resource being taken away from lower performing kids very early on.

alangou 3y ago
We've seen again and again what happens when you destroy academic standard setting with excuses like "oh, the smart students will help bring up their peers". Everyone ends up in one jumbled mass and excellence is dragged down by the average to form undifferentiated mediocrity. See Communist China before they re-implemented the Gaokao (their college entrance exam), many schools now in California, and once-prominent public schools like Dunbar High in the D.C. area (successful despite the poverty of the area in which it operated-see https://www.creators.com/read/thomas-sowell/10/16/dunbar-high-school-after-100-years https://www.creators.com/read/thomas-sowell/10/16/dunbar-hig...).

paulpauper 3y ago

Hmmm..isn't this the Mathew Effect? Let’s make this concrete and relevant to early 2023: we’ll say A represents a group of companies known as MMANGA (Microsoft, Meta, Apple, Nvidia, Google/Alphabet, Amazon), and B represents a group of all other companies in the US public markets (i.e., a broad-based index minus MMANGA). People could have said the same in the late 90s, but instead Intel, HP, Oracle, Cisco, IBM, etc. Only Micorsoft has bucked the trend of not fading, unlike the others.