6 ms·

I think the distinction the politician tried to make, was that you don't "earn" a billion dollars the same way the vast majority of people make their money. You

I think the distinction the politician tried to make, was that you don't "earn" a billion dollars the same way the vast majority of people make their money. You become a billionaire by company ownership, not getting cold hard cash. The hierarchy of wage looks something like: 1. hourly pay (how many hours you can work sets the maximum possible salary) 2. base pay + cash bonus (the cash bonus starts to increase your earning potential. Sometimes the bonus can be huge, for traders, salespeople, etc.) 3. base pay + stock options (the stock options can outsize your base pay by big margins) 4. stock ownership (almost all your wealth is tied up to the stocks) The vast, vast majority of people are stuck at (1), and will never move to (2). Nearly all billionaires are at (4). The average worker will work around 100k hours in their lifetime. If you started working today, with a 2% inflation rate, you'd have to start getting paid close to $6000 / hour in order to reach a billion dollars (pre-tax) in total income by the time you retire 50 years from now. Another factor to consider, is that salaried workers can't use leverage to increase their earnings. A startup founder can find investors and raise money, which works as rocket-fuel for their company. You can practically outspend your competition. That is simply not possible for regular workers, without breaking rules (as in outsourcing your job, taking on several jobs and outsourcing those, while collecting).

systemf_omega 4mo ago
You say "stuck at (1)" as if most people actually desire this kind of wealth and are trying to become entrepreneurs. The simple truth is that many people don't want to step into that kind of intensity and uncertainty, or lack the skills to succeed in a cutthroat industry. The idea that founders are somehow "cheating" is hilarious to me. Anyone in the developed world can easily become a founder, why don't you try it?
- TrackerFF 4mo ago
  I'm saying "stuck" in the sense that their earning potential is completely dependent on how many hours they put in, and how much their annual raise is. While many don't necessarily value pay as #1, it is important to people. If a regular worker receives a 20% pay increase, that's huge compared to not getting anything, or something which barely covers inflation. Even though the dollar amount may not be much compared to others.
- twoodfin 4mo ago
  Also: Kansas City Chiefs quarterback Patrick Mahomes is well on his way to being a billionaire, assuming he’s not already there. He has natural talent, to be sure, but so do successful startup founders or successful bankers or successful lawyers. He didn’t “earn it”?
- jmyeet 4mo ago
  The idea that people don't want financial security or independence is absurd on its face. If you look at people who have founded billion dollar companies, you see that those people aren't a representative cross-section of society. You see factors such as: 1. Coming from a relatively affluent background (eg Bill Gates's father was a successful lawyer); 2. Social status. For example, Sundar Pichai came from a relatively modest socioeconomic background but he's also upper caste; 3. Even having access to a top-tier education (eg Stanford) generally shows a lot of privilege, Social connections, financial security, probably access to a quality education prior, tutors and so on; 4. Even just being white in the US means your family had access to create generational wealth that minorities didn't. The post-WW2 GI Bill famously discriminatory in providing cheap mortgages (as well as subsidized college eduation). One cannot overstate the opportunities available to you if you are "free to fail". If your family can support you or even you can live at home then you have the option of starting a company and being unpaid for a long period. As for founders "cheating", well that's a different story but also objectively true. Many companies extracted value by essentially breaking the law and getting large enough before enforcement caught up with them, which allowed them to buy those changes. AirBNB and Uber are good examples of this. The myth of meritocracy has been so successfully propagandized it's no wonder that so many people see themselves as "temporarily embarrrassed millionaires".
  - WalterBright 4mo ago
    > Even just being white in the US means your family had access to create generational wealth that minorities didn't. My grandfather's business operated out of an 8*8 shack. After my dad passed away, I was shocked to discover that my first salaried job paid more than his last salaried job. These days, anyone can get a free K-12 education, and then loans for college. Generational wealth is not required.
    - paulryanrogers 4mo ago
      > Generational wealth is not required. Freedom from generational poverty is required. A lot of PoC in the US grow up in dire straights which weighs on their mental health. Their chance at a university education drops rapidly when they have a network that depends upon them working from adolescence onward. My grandfather worked selling cookies for decades and retired with a pension. My father worked as a professional engineer and midlevel manager at least as long and had less to show for it. I'm trying to work my way into upper management and will likely retire later and with less than either of them. People feel the walls closing in on them. Telling them to buy more lottery tickets, albeit in the form of founding companies, isn't an answer that scales.
- paulryanrogers 4mo ago
  > Anyone in the developed world can easily become a founder, why don't you try it? Because most of us have families and can barely afford rent and healthcare. Those of us with a bit more success are finding that extended family are falling into poverty and need help (thanks inflation and transition to lower wage jobs!). They cannot work more than 2 jobs and also found a company. Most newly founded companies fail, so it's an expensive process unless you've a network of FFF or VCs to draw from. Many founders get nothing out of the process but stress and bankruptcy.
oreally 4mo ago
Add to that, if there exist individuals who have enough of the resource of highest utility, it can become a liability for society. One bad way is that they use it to suppress others, through lobbying or buying out media companies or whatever. The other is how vultures react to them, pushing up the prices whenever the billionaire individual is involved and pricing out others.
DonsDiscountGas 4mo ago
Even if you're "stuck" at 1, a person with a reasonably high salary can buy equity in the public stock market and start capturing exponential growth. And if they can outperform the market by even ~5% that can really add up[0]. Not to billionaire status but maybe it's okay to not be a billionaire. [0] Big "if" obviously but so is a 15% monthly growth rate in revenue.
- WalterBright 4mo ago
  Put the robinhood app on your phone and start investing in stocks for less than $100.
  - xboxnolifes 4mo ago
    Did you build wealth that way? $100 fund and stock trading?
    - WalterBright 4mo ago
      I started investing in stocks at my first job at Boeing, on an entry level salary.
      - xboxnolifes 4mo ago
        That's not the question.
WalterBright 4mo ago
> salaried workers can't use leverage to increase their earnings Of course they can. They can invest, say, 20% of their income into stocks. They can borrow money to invest into stocks, too.
- paulryanrogers 4mo ago
  Plenty of workers have to take loans just to pay rent or healthcare. And even if they did borrow to invest, they can't sell without paying CG. And what if they bet wrong?
  - WalterBright 4mo ago
    When I couldn't pay the rent, I acquired a roommate. Very few young people need to see a doctor. As for CG taxes, they don't apply if you don't sell, and no CG taxes are owed if the gains are less than $49,000. > And what if they bet wrong? Everything in life is a risk. The idea with stocks is to diversify, which you can do by buying an ETF.
- TrackerFF 4mo ago
  I'm talking about the direct work output. As in your main income. Obviously many people can afford a mortgage, and maybe the house is worth much more in the future. Or stocks, or bonds, or other financial instruments. But the work you produce - not so much, for many common professions. If you're working on a assembly line, your work input/output curve (transfer function) will look linear in the productive zone. If you work 20 hours producing 20 units, 40 hours producing 40 units, then working 60 hours will likely yield 60 units. But once you start moving up after that, it might not be very linear - fatigue will set in. There's some saturation point. On the other hand, the difference between some entrepreneur working 20 hours and 60 hours will likely make all the difference. Even going up to 80 hours can make or break it (and I'm not saying this as someone who's glamorizing long hours). Throw in external forces like investor money, and your input could generate some factor N output. You could give some factory worker a million bucks, and it would not increase their work output. Sorry for the ramble, my point was just that the work people do is different. But you are of course correct that spending your resources on different kind of work will yield more. Investing your money in ownership (stocks, real estate, etc.) can (will) increase your wealth.

systemf_omega 4mo ago

You say "stuck at (1)" as if most people actually desire this kind of wealth and are trying to become entrepreneurs. The simple truth is that many people don't want to step into that kind of intensity and uncertainty, or lack the skills to succeed in a cutthroat industry. The idea that founders are somehow "cheating" is hilarious to me. Anyone in the developed world can easily become a founder, why don't you try it?

TrackerFF 4mo ago
I'm saying "stuck" in the sense that their earning potential is completely dependent on how many hours they put in, and how much their annual raise is. While many don't necessarily value pay as #1, it is important to people. If a regular worker receives a 20% pay increase, that's huge compared to not getting anything, or something which barely covers inflation. Even though the dollar amount may not be much compared to others.
twoodfin 4mo ago
Also: Kansas City Chiefs quarterback Patrick Mahomes is well on his way to being a billionaire, assuming he’s not already there. He has natural talent, to be sure, but so do successful startup founders or successful bankers or successful lawyers. He didn’t “earn it”?
jmyeet 4mo ago
The idea that people don't want financial security or independence is absurd on its face. If you look at people who have founded billion dollar companies, you see that those people aren't a representative cross-section of society. You see factors such as: 1. Coming from a relatively affluent background (eg Bill Gates's father was a successful lawyer); 2. Social status. For example, Sundar Pichai came from a relatively modest socioeconomic background but he's also upper caste; 3. Even having access to a top-tier education (eg Stanford) generally shows a lot of privilege, Social connections, financial security, probably access to a quality education prior, tutors and so on; 4. Even just being white in the US means your family had access to create generational wealth that minorities didn't. The post-WW2 GI Bill famously discriminatory in providing cheap mortgages (as well as subsidized college eduation). One cannot overstate the opportunities available to you if you are "free to fail". If your family can support you or even you can live at home then you have the option of starting a company and being unpaid for a long period. As for founders "cheating", well that's a different story but also objectively true. Many companies extracted value by essentially breaking the law and getting large enough before enforcement caught up with them, which allowed them to buy those changes. AirBNB and Uber are good examples of this. The myth of meritocracy has been so successfully propagandized it's no wonder that so many people see themselves as "temporarily embarrrassed millionaires".
- WalterBright 4mo ago
  > Even just being white in the US means your family had access to create generational wealth that minorities didn't. My grandfather's business operated out of an 8*8 shack. After my dad passed away, I was shocked to discover that my first salaried job paid more than his last salaried job. These days, anyone can get a free K-12 education, and then loans for college. Generational wealth is not required.
  - paulryanrogers 4mo ago
    > Generational wealth is not required. Freedom from generational poverty is required. A lot of PoC in the US grow up in dire straights which weighs on their mental health. Their chance at a university education drops rapidly when they have a network that depends upon them working from adolescence onward. My grandfather worked selling cookies for decades and retired with a pension. My father worked as a professional engineer and midlevel manager at least as long and had less to show for it. I'm trying to work my way into upper management and will likely retire later and with less than either of them. People feel the walls closing in on them. Telling them to buy more lottery tickets, albeit in the form of founding companies, isn't an answer that scales.
paulryanrogers 4mo ago
> Anyone in the developed world can easily become a founder, why don't you try it? Because most of us have families and can barely afford rent and healthcare. Those of us with a bit more success are finding that extended family are falling into poverty and need help (thanks inflation and transition to lower wage jobs!). They cannot work more than 2 jobs and also found a company. Most newly founded companies fail, so it's an expensive process unless you've a network of FFF or VCs to draw from. Many founders get nothing out of the process but stress and bankruptcy.

oreally 4mo ago

Add to that, if there exist individuals who have enough of the resource of highest utility, it can become a liability for society. One bad way is that they use it to suppress others, through lobbying or buying out media companies or whatever. The other is how vultures react to them, pushing up the prices whenever the billionaire individual is involved and pricing out others.

DonsDiscountGas 4mo ago

Even if you're "stuck" at 1, a person with a reasonably high salary can buy equity in the public stock market and start capturing exponential growth. And if they can outperform the market by even ~5% that can really add up[0]. Not to billionaire status but maybe it's okay to not be a billionaire. [0] Big "if" obviously but so is a 15% monthly growth rate in revenue.

WalterBright 4mo ago
Put the robinhood app on your phone and start investing in stocks for less than $100.
- xboxnolifes 4mo ago
  Did you build wealth that way? $100 fund and stock trading?
  - WalterBright 4mo ago
    I started investing in stocks at my first job at Boeing, on an entry level salary.
    - xboxnolifes 4mo ago
      That's not the question.

WalterBright 4mo ago

> salaried workers can't use leverage to increase their earnings Of course they can. They can invest, say, 20% of their income into stocks. They can borrow money to invest into stocks, too.

paulryanrogers 4mo ago
Plenty of workers have to take loans just to pay rent or healthcare. And even if they did borrow to invest, they can't sell without paying CG. And what if they bet wrong?
- WalterBright 4mo ago
  When I couldn't pay the rent, I acquired a roommate. Very few young people need to see a doctor. As for CG taxes, they don't apply if you don't sell, and no CG taxes are owed if the gains are less than $49,000. > And what if they bet wrong? Everything in life is a risk. The idea with stocks is to diversify, which you can do by buying an ETF.
TrackerFF 4mo ago
I'm talking about the direct work output. As in your main income. Obviously many people can afford a mortgage, and maybe the house is worth much more in the future. Or stocks, or bonds, or other financial instruments. But the work you produce - not so much, for many common professions. If you're working on a assembly line, your work input/output curve (transfer function) will look linear in the productive zone. If you work 20 hours producing 20 units, 40 hours producing 40 units, then working 60 hours will likely yield 60 units. But once you start moving up after that, it might not be very linear - fatigue will set in. There's some saturation point. On the other hand, the difference between some entrepreneur working 20 hours and 60 hours will likely make all the difference. Even going up to 80 hours can make or break it (and I'm not saying this as someone who's glamorizing long hours). Throw in external forces like investor money, and your input could generate some factor N output. You could give some factory worker a million bucks, and it would not increase their work output. Sorry for the ramble, my point was just that the work people do is different. But you are of course correct that spending your resources on different kind of work will yield more. Investing your money in ownership (stocks, real estate, etc.) can (will) increase your wealth.