The article (and some comments here) seem to conflate luck and what I will call lot. "Luck" I define as random happenstance during one's life. You can manage luck. Doing so is the central theme of many board games. You can increase your luck "surface area" by taking more chances. Entire industries (e.g. insurance) exist to manage luck.
Your "lot", on the other hand, I define as what you were born with. How you were raised, where you grew up, what kind of education you got -- everything you can't control that does have a significant impact on your life's outcomes. You can work to improve your lot, or minimize its impact on your life, but it's very difficult.
Of course there's some correlation: those with a good lot often learn early how to manage luck, and those who manage luck well can negate a poor lot.
Hence I begrudge no-one with seemingly good "luck": often (possibly more than not), their fortune is simply a byproduct of how they managed their luck. Good for them!
But those born into a good lot? They're the true "lucky" ones.
I've seen lots of examples of luck. This is not to suggest that tenacious people wouldn't succeed in some way or another but only that their current positions would be different.
Some good examples: Ed Catmull in his own book mentioned all the luck he had becoming Pixar. Pixar was a computer hardware division at ILM. ILM wanted to get rid if them. They almost got sold to a computer company (lucky they didnt). They got bought by Steve Jobs who bought them to make computers. He spent $70 million dollars on them for them to make computers which they failed at. They then pivoted to animation. It's pretty lucky to find some person willing to blow $70 million on you and you don't have to earn a dime.
Bill Gates is a smart guy but being president of Microsoft that makes the OS for the majority of PCs seems like lots of luck. Luck that he was in the right place at the right time to sell MS-DOS. Lucky that none of his competitors shipped something more popular. From that piece of luck the rest follows. Without that luck he could just have easily been like the president of Lotus or the president of Borland.
IIRC Howard Lincoln, the first President of Nintendo of America got the job because he met the president of Nintendo at a layover in Chicago O'Hare Airport. The president of Nintendo said effectively, "Hey, I need someone to head up my USA division, how about you?" Without that luck Howard Lincoln would probably have just been a successful lawyer we'd never heard of.
In my own life I know a guy that was just a game designer. The founders of the company he was working for sold out and he was made president. He's done very well but jees that's some serious luck. There was no struggle it was just handed to him.
The head of the Chamber of Commerce in HK had the 3 guys above him leave. He was like 28 and inherited the job.
Google, tried to sell to Yahoo. Where would they be if that had happened?
Where would Facebook be if Friendster hadn't failed?
I'm not in any way suggesting you shouldn't work hard to increase your chances of success. But there is also tons of luck in most big success.
Bill Gates is a good example for OP's lot and luck point:
"In 1980, [Mary Maxwell Gates] discussed her son's company with John Opel, a fellow committee member and the chairman of International Business Machines Corporation (IBM). Opel, by some accounts, mentioned Mrs. Gates to other IBM executives. A few weeks later, IBM took a chance by hiring Microsoft, then a small software firm, to develop an operating system for its first personal computer." [1]
Just an anecdote, but I like OP's point with lot and luck.
I would have liked to see what would Gate would have managed to do if he was born in the slums of India not in Seattle, a lawyer as a father and a person in the board of directors of a bank holding as a mother.
Interestingly, most of your examples are about exposure rather than luck. These guys weren't picked at random. If he wasn't flying (not everyone gets to fly and layover at O'Hare, and probably the executive lounge), he would not get the chance to make the connection.
I always assumed that Startups at Silicon Valley are neither lucky nor skilled people (or the most skilled/fit people for the job to be correct). They just happen to be in a place with strong exposure to Capital.
If you are smart, have lots of experience, and hard-working; but lack the ability to fly to SV then your odds of getting funded by a VC are slim to none.
It's more probability than luck. Anyone with moderate intelligence and who is willing to make a commitment to building wealth can say, make 5 or 10 million in life. It might not be easy nor quick, but from what I've seen, it's definitely achievable (i'm not there yet). You do however need to build up a specific skillset.
At least 90% of the population is either 1) not interested in acquiring wealth, or 2) not willing to put in the effort. Becoming a billionaire, on the other hand, is obviously something completely different.
Half the trick is making sure your money works for you. Once you have, say, $5m, it's not all that hard to turn it into $10m. All you need is time.
I've seen guys make hundreds of millions (and lose it all) through great and bad investing. But a commitment to making money is probably the most important thing you need.
> Anyone with moderate intelligence and who is willing to make a commitment to building wealth can say, make 5 or 10 million in life.
This definitely isn't true for "anyone born in the world", and doesn't ring true to me for "anyone born in the US" either. Maybe it's true for "anyone born into the middle class in the US". (But that middle class is rapidly shrinking.)
Unfortunately, starting conditions still matter a lot.
Man, some people here just cannot picture life outside their bubble. It's amazing to me that someone flippantly dismisses making 5 million dollars as an average thing. I'm from a country where only 68,000 people out of 45 million make at least $1,000 per month[1]. That's 0.15% of the population. Where you were born is probably the biggest single factor in success
Did I say it's an average thing? I said, if you want to dedicate 20 years of your life to it, not focusing on other things, living in a Western country, you can do it. Nowhere did I say it's a common thing.
Second, there are plenty of people who manage to make $10,000+ a month online, regardless of where they live. Probably millions.
Also, even in impoverished countries there must be opportunities to make money and do deals. If you keep looking at what others are making, then you will never make any money. Different setting, different opportunities. The average person, regardless of the country he or she lives in, will never be wealthy. €100 in Europe might get you less than $10 in South Africa. Location matters as well in terms of purchasing power.
> I said, if you want to dedicate 20 years of your life to it, not focusing on other things, living in a Western country, you can do it.
I'm really sorry to quibble, but you didn't say any of those things in the comment I replied to. I mean, there just literally isn't anything about "20 years" or "Western country" in there.
> Second, there are plenty of people who manage to make $10,000+ a month online, regardless of where they live. Probably millions.
Citation needed!
> Also, even in impoverished countries there must be opportunities to make money and do deals.
Why "must" there be? This just sounds like wishful thinking. There is no natural law stating that opportunity is shared globally, and in fact this is mostly not the case in practice.
Luck is when random things do or don't happen regardless of skill. You can manage it to an extent. Bad luck through being careful and various types of insurance, good luck mostly through participating. Buying bitcoin 3 years ago and selling at great profit now is pure luck. Maybe you influenced the market to grow, probably it was pure luck.
Fortune is the result of stochastic processes. You can do a thing, invest your skill and knowledge, and it can work out or not. Sometimes it works better, sometimes less. For instance, you launch a product that can do between $2k/month and $5k/month and it hits $4.5k/month instead of $2k. That's fortune. Your input affects your chances, but nothing is ever certain.
With time, fortunate events compound and the more often fortune works out for you, the higher your chance that it will continue to do so.
Or as Peter Dinklage says: "I hate that word—’lucky.’ It cheapens a lot of hard work. Living in Brooklyn in an apartment without any heat and paying for dinner at the bodega with dimes—I don’t think I felt myself lucky back then. Doing plays for 50 bucks and trying to be true to myself as an artist and turning down commercials where they wanted a leprechaun. Saying I was lucky negates the hard work I put in and spits on that guy who’s freezing his ass off back in Brooklyn. So I won’t say I’m lucky. I’m fortunate enough to find or attract very talented people. For some reason I found them, and they found me."
A. The rewarding part of your craft, e.g. the flow you get into when deeply programming all night.
B. The sacrifices your craft requires, e.g. the living in the unheated apartment.
One thing the hard work people forget is that it isn't very impressive to just do type-A enjoyable work for sustained and or even super human periods. Other people would pay for that experience.
I think this separation opens up a few interesting ways of viewing those who are "too lazy" to do the hard work. First, different people flow in different tasks and so even if you gave Peter Dinklage a chance to work for openAI on any project he wanted, he might find it tiring and burn out. This is obvious, but by induction, there's this whole class of school-type activities that many people seem to mentally resist.
Second, there seem to be different expectations on how much of B-type work one has to do in order to get the A-type work they crave. I think people perceived as lazy are those who doubt that almost any amount B-work they contribute will earn them their goal, only more the same. This is excellent when it discourages the average thirteen year old from pursuing pro sports as a career, but I think it also might be the largest reduction to productivity in our economy we have today, as discouraged people tend to lower output and cause problems for their company. And that's only the economic side, the social side of hopelessness and lack of meaning is way worse!
This is a very interesting comment, articulated better than I have been able to explain to others.
I've always been fond of saying showing up to work on time and working your butt off is the low bar to success. All this does is buy you entrance to the ride, and opens up doors of opportunity for you which are worthless unless you take advantage of. Just working hard at some dead-end job 9-5 doesn't get it done, there are millions of people who can successfully do this and get nowhere in life.
Finding someone who understands the 'B' work is by far the most important part of their career is rather rare. I've called the lack of motivation to do this from the vast majority of people "laziness in thought". It's much harder to gain discipline and do well in this part of your career than simply showing up and doing what you're told as well as you can.
It also doesn't help that the school system more or less trains you almost exclusively for the "A" type work, and actively encourages ignoring the "B" and letting someone else handle it for you. This is a very hard attitude to break as taking control of your own path is rather scary.
"Saying I was lucky negates the hard work I put in and spits on that guy who’s freezing his ass off back in Brooklyn." - of course you can't tell people how they should take your comments. But saying that you/he/she was lucky does not negate the fact that they may have worked hard. Saying it was ONLY luck does.
Working hard of course put you in a position where you could gain from the luck. You won't suddenly end up as a world renowned producer if you work as a fireman. You invest in your future with a lot of hard work and then perhaps you are one of those who make it.
A lot of people work hard on whatever they have put their mind into. A lot of people are talented and great at what they do. But a lot of people from both groups never really gets the recognition/success/financial breakthrough as others of similar and perhaps even objectively less hard-working/talented people. They just had a little extra "luck".
That's my whole point. When you position yourself to take advantage of opportunities and it works out, that's fortune. Like building a lottery ticket that wins.
Luck is when it just happens without any hard work. Like buying a lottery ticket that wins.
The Peter Dinklage bit annoys me, as this is precisely the issue - survivorship bias.
I happen to have a few actor friends. All talented, harder working than me, and dedicated to their craft. And no-one is interviewing them because they haven't made it.The talent and hard work pays off because you also get the lucky break.
Exactly. Fuck Peter Dinklage. Even Louis CK is at it - he was so humble for so long, and then when he got really big he started with the "I've put in the time" schtick, and feeling like he deserves it (which he does, but he's not successful because he deserves it)
nit: seems like OP's definition of luck is roughly your definition of fortune. s/fortune/luck/rg in your post and I think you say the same thing.
Creating a new bucket to qualify things that happen regardless of skill seems redundant with the definition of lot. "Lot" in the context of OP's post happens despite skill.
I think there's a difference between lot and luck though. Lot is what you have before, luck is what you get during.
To crib from Warren Buffet [1], imagine a coin flipping contest. Everyone bets $1 and calls the flip of a coin. Miss and you're out. Betting pool is distributed among everyone else.
20 rounds in, there are 215 people with a few hundred thousand dollars made from a $1 investment and some time.
It's pure luck. They weren't even the one flipping the coin so couldn't have influenced the 50:50 chance even if they tried. That's luck.
Fortune is when you both bet and flip the coin and find a technique to influence the flip to be 40:60 in your favor and it works out.
Lot is when your dad gives you $100k to start a business.
It's not just risk mitigation; it's expectimax optimization, which sometimes involves absorbing additional risk rather than just mitigating or minimizing it.
When we examine the path others took to achieve extraordinary success, this isn't even what we're doing.
Instead, we're often looking at companies and people that took outrageous risks that will nearly always fail, and luckily ended up in just the right academic path, met just the right collaborator, entered just the right industry, had nobody else bother to compete with them, had an opponent make a fatal mistake, were noticed by just the right person, avoided the ubiquitous pitfall, et cetera.
Luck has an enormous influence on what actually ends up on top. You can do deliberate optimization, and many of these people/orgs did some, but post-hoc reasoning that everything Amazon or Einstein were doing on their path to greatness must indicate radically greater decisionmaking powers than all others is extremely incorrect, and worse (because we think in narratives) extremely misleading/convincing.
Many times, what got people to the top are high-risk, high-reward options. Buying lottery tickets (or the equivalent).
A slight nitpick but I think the luck you manage in boardgames is risk and there's also the category of uncertainty which you can't manage (because you don't know the probability distribution or the fact that something is possible/could happen at all).
See "Risk, Uncertainty, and Profit" by Frank Knight for a much better explanation of risk vs. uncertainty than what I can muster. I think it's noteworthy that entrepreneurship theory from economics tends to be build around the idea that it is indeed handling uncertainty (and not risk) that yields entrepreneurial profits.
My father and I have somewhat productive political conversations: He's fiscally conservative, I tend towards the liberal side of the scale.
Drilling in to find what we really disagree about, it seems to boil down to two concepts: (1) I view success as a matter of luck that your effort can make better or worse. He views effort as the single most important deciding factor in success in life (2) I'm willing to tolerate an amount of "unfairness" in people getting help they "don't deserve", while he finds this very offensive.
I honestly feel that if considered luck to be a larger factor and effort to be a lesser factor, his political stances would change pretty dramatically. (same applies to me in reverse). I wonder how much the social willingness to accept luck as a factor impacts popular political positions. (Perhaps not much, as the author in the article promotes a consumption tax, which is generally seen as more regressive)
There is also the biggest luck factor of all, that being how/when/where you were born. Most of us were born in the US into a family. We did nothing to deserve that but it already makes us in the top 1% richest people globally. What would our path look like if we had been born in rural Nicaragua instead?
I'm not "woe is me" but I was raised in a super conservative family, taught to avoid risk and that a steady paycheck was the ultimate success. It has taken many many years to break out of that mindset and be willing to take calculated risks.
The really hard questions arise when you start talking about what people deserve. Who is to say? We all have a unique frame of reference and experiences that have shaped us.
In the end, the only middle ground we're likely to reach is the mindset of helping people help themselves. To me, the fairness question is more about the opportunity to improve you and yours. Having no opportunities is unfair and must be fixed. The question is always going to be who decides how much is fair?
This is a big point that Robert Frank makes in "Success and Luck" (the book this interview is about). Being born in a developed country is one of the luckiest things you can have happen to you. He talks about his time in Nepal for the Peace Corps and a man who worked for him, who was one of the most talented people he's ever worked with. He was also illiterate and living in a developing country, so his prospects were vastly reduced.
This is kinda a weird thing to call "luck" though. "You" could also have been born a duck, a 1000 years ago, in the future or in another universe (maybe). But then "you" would have been somebody else and hence, not "you" at all.
In other words, "you" had 100% chance of being you. No luck involved.
I definitely agree. The universe being almost certainly deterministic, there is also a 100% chance of everything that has ever happened happening.
It's still useful to think as if different people could have been born in different circumstances. You could think of it as a mental shorthand for the idea that differences between human beings are arbitrary, and it makes no sense to argue that a human inherently deserves an impoverished life over another human.
I still think you're making a categorical error. "being human" isn't a privileged class that inherently deserves something. That way of thinking becomes really messy fast in terms of drawing concrete rules.
It also seems a bit homo-centric coming from a human.
BTW, I think we do have genuine subjective probability, even though the universe is deterministic.
And what event or circumstance are you talking about? Nothing happened to you when you were born - because you are an emergent entity that is defined by your life.
This isn't like flipping a coin: it could come up heads or tails.
You must be thinking of some kind of immortal soul.
But doesn't that require us all to agree that life is provably better for people in developed countries? We have the highest rate of anti-depressent usage in the world, and also happen to be the richest nation in the world. I reject the concept that simply being born into a wealthier country or wealthier family automatically means your life is going to be "better" than someone who was born poor.
I think this thread was really about opportunity. The original comment was about whether people's opportunities for success were based more on "luck" or their hard work. "Better" is a lot like "fair", who is to say? People would be exchanging one set of problems for another to go from poor/undeveloped to rich/developed.
I've often heard that it's lucky to be born in a certain place to certain parents, but I think this is a really narrow view of luck.
It may be individually lucky to the person born somewhere (i.e. they had no involvement or choice in where they were born and to whom) but I'm not sure why you would isolate luck to the individual level.
That persons parents made decisions about when, where and how their child would be born. Some parents move countries in search of better opportunities, some were themselves "lucky" to be born where they were. When you zoom out a little it becomes a lot less "lucky" and more of the result of intergenerational decisions and priorities.
Rawls suggests that you imagine yourself in an original position behind a veil of ignorance. Behind this veil, you know nothing of yourself and your natural abilities, or your position in society. You know nothing of your sex, race, nationality, or individual tastes.
I think the disagreement is even more fundamental than that. Even if you consider luck to be a major factor in determining success, there's still the question of what the government should reward.
I'm socially and fiscally liberal, but I don't think it's absurd to think that the government should reward hard work even though luck is more important. It just so happens that you can motivate people to work harder, and can't motive people to be luckier.
Agreed that the government should reward hard work, but I'm always uncomfortable with the discussion around what is hard work.
Some poor people I know, they work harder than most of us desk monkeys, because they're doing back-breaking labor day after day. Holding down two, three jobs, shuffling around town on the bus to work 60, 80 hours a week for very little money.
This is not even an uncommon story. People working damn hard for not a lot of money.
Is that the hard work we want the government to reward? If not that, then what?
It's just too open-ended, and too easy to overlook a lot of people who work really hard, without really talking about it more.
This often is a euphemism for "making money is good". Except for the worst cases of rents (or scams), if you're making money, this means someone found what you do valuable, so hey, you're creating value. The tacit corollary is, if you're not making money, you're not creating much value (not logically correct obviously, but here it goes).
So one should define how you measure value, and what cost (social, externalities etc.) we should be ready to accept for each type of value.
So, what value is a hospice worker or a nurse creating to the world?
What value is a grade school teacher creating?
Hotel rooms need to be cleaned, and your coffee needs to be made. What value is that hotel room cleaner bringing into things? Or the dude framing drywall in your house?
To me, to be honest, "value creation" sounds more like "the stuff I like to think I'm doing" than a real thing.
This can be very hard to nail down though at the large scale. For instance Trump managed to secure the largest tax break in New York history in the 80s by convincing the government that his buildings for the Uber rich would be very valuable to the city.
It also tends to over-reward those who create value by having a strong negotiating position (usually due to coming to the table with lots of capital) and under-reward those who create value through labor. This is better than crony-ism, but it's not at all a panacea.
Over-reward? By what measure? If capital amplifies negotiating power then it means that capital is more important. One who can acquire capital to use in negotiation is using the most leverage to create value.
Labor's value is exactly what someone is willing to pay for it.
By the measures of hard work and value creation being discussed in this thread. I'm sure you disagree. I'll try to save some time by stipulating that this is a value judgment, I likely disagree with your disagreement, and I am happy to agree to disagree.
A single-payer healthcare system is your government mitigating the effects of your bad luck. Giving you a tax break for gains on certain kinds of investments is your government rewarding your work. (That's not traditional "hard work" in the sense of expending physical energy, but deciding what investments to make is certainly work.)
When I said "simultaneous" I mean to apply it to a government, not a particular program.
In any case though, any government program that gives equal resources to everyone and isn't means-tested to hell can do both. For example, an UBI both mitigates luck (by giving everyone a set amount of resources) and rewards hard work (because better workers will get far better returns with the income they've been given).
Sure, UBI doesn't completely negate the value of work, but UBI decreases the value of hard work because everyone gets something without having to do any work.
There is a saying about seniority type systems that goes: The longer you live with the seniority system, the more you grow to like it. I think it applies somewhat here in that you are more likely to believe that effort always yields rewards if you were were always rewarded for your efforts.
I think by demographics, your father was likely in a generation that was much more often in a position to be consistently rewarded for their efforts. The generation that was at certain ages in the Great depression, or the dotcom crash, and more recently the Great Recession has a different formative experience than experiences in the Baby boom generation.
The idea that success is based on effort is fundamentally... wrong. For every famous singer, there are thousands of other people putting in years of effort who cannot even earn a salary. For every Facebook, there are thousands of other products or companies who have put in heaps of effort but just didn't have the right timing, or that special something, that let Facebook take off.
For every well thought out or engineered piece of software, there's a more successful one that did the minimal work necessary to get their barely working code to market.
And we can easily find counterexamples on the other side, wealthy or successful people who needed very little effort and simply chose the right product, the right timing, were born to the right family.
I might even go so far as to say that in the Real World, and not some libertarian utopia, that effort is irrelevant (or orthogonal) to success.
I wouldn't go as far as saying effort is irrelevant - just not the only, possibly not even the dominant factor that contributes to success. I view it as something like 40% effort/motivation, 60% luck
I don't even feel that it is necessary for success - whenever discussions like this come along, people will say things like "you make your own luck" or "luck provides opportunities, hard work takes advantage of them", and I agree - to a point. That point is usually far less than others would say.
Using myself as an example, I don't feel right saying that I'm a hard worker. Sure, I wasn't at the lowest end of possible effort, but I'm far from the high end as well. Figuring out if I'm above/below the 50% mark requires a lot more understanding of what is actually normal than I have, but I believe I'm close to average, probably a bit below.
Despite this, I've had a ton of luck and success. And when I look at people that are more successful (wealthy, at least), some of them have worked harder...and others have had just more luck.
I had a great high school which let me coast through college. Because I didn't have the GPA to get the degree I wanted (restricted admissions), I ended up with a "make-your-own" degree. (Which was good because I had accrued so many electives out of general curiosity that I'd have been in college for years extra to qualify for any other degree). I had a 75% tuition discount, which meant that even though I could afford student loans, I didn't need any.
I fell into a profession just as it was becoming hugely in demand. I don't program because it makes big bucks, I program because I've always wanted to. It just happened that as I entered college the Web went mainstream.
My first job out of college was working on coldfusion (which I didn't know) on an NT environment (which I hated), all because I had fired off an email telling them I could show them how to use Perl on Linux, and they had just switched to Oracle on Linux (unbeknowst to me) and wanted someone with some Linux experience. You could argue that that email was "work" on my part, but really it was just a punch-drunk sarcastic email sent after a couple of hours of putting out legitimate applications. Total luck.
3 months later I got a contracting job for the state at double the salary (3 months post-college experience apparently counts for a lot). It was a 6 week contract that I stayed at for 7 years (at that point I got hired full time and stayed for another 5 years). The job was easy and I learned a ton because they had no real work for me, so I just did what I wanted. Work? Some, but mostly just luck. Certainly a ton more luck than other people that were working harder.
It goes on and on like this. And I'm not as lucky as some: I could have been born into a rich family, where I'd have to work hard NOT to make money. (Heck, we've seen that someone can have multiple failing multi-million dollar enterprises and still roughly match the market).
I'm not saying I didn't do ANY work...I'm saying that my success (and the success of many others) owes far MORE to luck than effort. In fact, I'd go so far as to say the majority of people I know that are successful are so because of luck. Many of them work harder than I do...but not harder than other people that are less successful. I don't think that's because the less successful people have had BAD luck (though some have), I think it's because the successful people have had more luck than the less successful people, by and large.
Yet in discussions like this people always want to emphasize the effort. I don't know if that's because my judgement is wrong, or because people are really uncomfortable facing the prospect that their effort counts for so little in the wider scheme of things.
I agree. I talk with a number of business owners in a more traditionally conservative industry (agriculture). Many of them feel that America's problem is that we let people "get off the hook" for not "putting the work and smarts into something" like "we do." Many of these people are quite smart and run their business extremely well, and put in long hours, though many of them inherited businesses, or at least knowledge and support about a particular line of business.
Their view appears to be heavily reliant on meritocratic outcomes, which of course assigns a low weight to luck. I would think that this world view would not be supported by a higher weighting to luck, but I do not know if the low assignment to luck is a result of cognitive dissonance with respect to their own hard work and long hours to sustain their success.
I am not sure why mortgage interest deduction gets such a bad rap. It allows a lot of people to be able to afford homes which they couldn't otherwise. It helps the housing market/industry and banking industry.
Apart from that a lot of other countries has it. If I had to change something I would actually add a rental deduction to help those who can't afford to buy housing instead of removing mortgage interest deduction.
>I am not sure why mortgage interest deduction gets such a bad rap. It allows a lot of people to be able to afford homes which they couldn't otherwise. It helps the housing market/industry and banking industry.
No, it doesn't. The prospect of getting the deduction drives up demand for home purchases and therefore the price (relative to income). If we got rid of it, the same mortgage would take more money out of your income, but you would need a smaller mortgage to get any home.
(The effects don't exactly cancel, of course, but it's not some big dealbreaker like you suggest.)
In addition, it's not unreasonable to make this kind of distinction, between:
1) Free money for failing/misfortune/doing nothing (welfare policies)
vs
2) "Free" money that you have to earn through positive work somehow. (production subsidies, government jobs, innovation awards)
Food stamps and the interest deduction are the same, in being intended as subsidies, but for the the second you at least have to be productive, earning an income, approved for a house, make all the necessary commitments, etc, and then you get some of it defrayed.
That's not to say the distinction is justified, but it shouldn't be hard to at least understand why people would put them in a different bucket.
I wouldn't be so sure that removing mortgage interest deduction would do anything to help pricing in home markets.
People owning rental properties get to deduct interest on financing used for the property. If we eliminated the mortgage interest deduction for home owners, we would be strongly favouring rent seeking behaviour - literally.
That's why you also have to tax away all capital gains associated with land (not structures) value appreciation beyond the real inflation rate. Land (outside of reclamation edge case) is not created by humans, and when land becomes private property it is necessarily depriving the public of the use of that land, thus the land owner owes the public for the right to deprive them of the land in the form of land tax, and since the land owner did not create the land, they are not entitled to any appreciation in the value of the land, that belongs to the public. The land owner is entitled to the returns of their productive investment, i.e. building structures etc. Land price then is largely set by what sort of productive return it can generate, not by the supply of credit and lending standards and supply of greater fools.
If capital gains were taxed away, that would counteract the situation where mortgage tax breaks feed directly into increased prices.
What I suggest above will be very very unattractive to many people, as real estate speculation represents one of the best 'money for nothing' speculations most people can engage in, but speculation is by definition unproductive, and it would seem to be a good idea, if unpopular to engineer a system that discourages real estate bubbles.
Let's say someone takes out a loan to buy land with a set of apartments built upon it. After subtracting loan payment costs (including interest on the loan), they're making a positive cashflow. How much of that cashflow is from the land and how much is from the apartment structure? Perhaps it's just that I'm unfamiliar with the split you're proposing, but it seems really naive to think that one can simply "tax away all capital gains associated with the land" when there doesn't seem to be any clean way to differentiate what comes from land.
The mortgage interest deduction distorts the market in several ways. Making credit more available does allow people to spend more on homes, but this is then priced into the market. As you hint at, the subsidy is net neutral for homeowners, as it ultimately benefits the housing and banking industries. People who owned suburban land at the implementation of the deduction also benefited hugely, but now that prices are artificially inflated, any removal of the deduction would take money away from homeowners.
Additionally, it makes paying cash for a home unrealistic, making the housing market (more) dependent on banks and their attendant federal regulations. Over time this has had numerous negative effects on land use patterns and urban health by encouraging car-oriented sprawl and devaluing urban mixed-use neighborhoods. There's also the whole race-based redlining thing. The worst of these policies have been mitigated in the recent past, but they still pose obstacles to certain kinds of development (that are highly desirable lately) and would not have existed in the first place without government intervention in home mortgages.
The main reason for the mortgage interest deduction is that for corporations various expenses (like interest on debt) are in fact deductible from income for tax purposes, because we tax profits, not revenue.
So if there were no mortgage interest deduction for individuals that would simply be incentive for people to form a corporation they are sole shareholders for, for the specific purpose of buying the home. This would be especially true for people who are contracting or otherwise self-employed anyway and hence can have totally legitimate income for this corporation...
Now having the mortgage interest deduction but no imputed rent income due to the owner-occupancy, that part is arguably weird.
"It allows a lot of people to be able to afford homes which they couldn't otherwise."
That may be true, but if it's having that effect for a lot of people, then surely it's also contributing to higher housing prices, which of course negates (at least in part) the supposed increase in affordability..
That's like saying you don't understand why the government just sending Altay a $1billion check with the pre-condition that he spends it all gets a bad rap.
There's no reason to favor home ownership -- look at home ownership rates in Germany vs S. Europe. Then look at the health of their economies and living conditions.
I would rather the government do more to actually balance the system, than just throw a bone to too-poor homeowners.
I would rather every middle class worker simply have a much higher paycheck, so that the mortgage interest deduction could be eliminated without anyone feeling a thing.
If you're willing to criticize the mortgage interest deduction, are you also willing to criticize property taxes? Both are unfair advantages/disadvantages given to homeowners.
As a Georgist, I would say that most unearned wealth ultimately results from private ownership of natural resources (namely land).
When homeowners claim valuable land and hold onto it for decades, without paying the correct market rate for that land (which, of course, they didn't create the value for), they get the benefits of owning this resource without the responsibility.
In short, property taxes are much too high for the actual structures we build, but should be much higher on the underlying land. It's a sane revenue source that would unburden the load placed upon income tax, etc.
> Mortgage tax deductions are only on a primary home, so they don't apply to owners of rental units.
Mortgage interest on a rental unit is deductible against the rental income on that unit for obvious reasons: it's a business expense for the rental business and hence taken out of gross revenue for that business to figure out the (taxable) profits.
Specifically, for US individual federal taxes in 2016, see Form 1040, Schedule E, line 12. This is the form you use if you haven't actually formally incorporated your rental activity as a business.
Note that you can also deduct your spending on repairs to the rental property, insurance on it, property taxes (line 16 on that form), and so forth, for the exact same reasons: income taxes on business-like activity are levied on net income, not gross income.
The only people who can't take a mortgage interest deduction are people who have a second home that they are _not_ renting out.
And importantly, only enjoyed by homeowners who got the mortgage before the benefit of the tax deduction started getting capitalized into the value of the house.
wait, what? There's a $250k capital gains exemption for sale of primary home lived in 2 of past 5 years, so isn't capital gain basically irrelevant to anyone but very wealthy? Do you know something I don't? (reasonably likely)
What he means is that the deduction has been "priced in" to the price of homes/mortgages. In a similar story, a company I used to work for once offered employees a $x incentive to live close to the office. They then found that the price of homes in the area immediately went up by $x.
Got it, of course! Capitalized could be a formal tax term in this case, but it was just meant in terms of actual plain capitalization generally.
Yeah, mortgage tax deduction, like all incentives that encourage borrowing more money, ends up being a transfer of wealth from new homebuyers to whoever had owned property outright (whether older long-term homeowners or developers or real estate investors).
The liberal view of this issue may have the virtue of being correct, but it's very counterproductive from the individual's standpoint.
I know that the ideology espoused on sites such as dailykos.com were very detrimental to personal drive and success in my college years of 18-22.
That ideology kept pounding home the idea of the unfairness of the economy, of the lower share of the pie allocated to labor vs capital and the increasing inequality of American society.
All of those things were true no doubt, but they were not useful for someone who had been hacking since 4th grade.
I file it under bad luck that the same people that had a correct analysis and opposition to the great mistake of that time, the Iraq invasion and occupation, also had such a neurotic and self-limiting and destructive view towards work, productivity and the modern economy, and that I was too inexperienced in the ways of the world at the time to understand this very important concept.
I tend to look at it this way: hard work improves the probability of financial success, but it is neither a necessary nor sufficient condition. So yes, people benefit on average from hard work, but because of the uncertainty of the situation you can't take the contrapositive and say that poor people are lazy.
That's interesting. That view, of the essential unfairness of the system, had the opposite effect on me: it motivated me lots. Just not to buy into the American dream stuff.
It motivated me to understand my own values, and learn more about the system, and figure out what I wanted to do to try and change the system for the people who'd never luck out and get a desk job, the people in coffee shops, cleaning hotel rooms, and the like.
Guess we can take different things from the same thing.
You're right if you assume that people don't work as hard when they're pessimistic. People (like me) who work harder when they are pessimistic, however, certainly benefitted from the liberal view.
We systematically waste the human capability of millions of people because the system essentially randomly gives much better opportunity to some over others.
Why can't you both be right? In my experience I've seen a lot of lucky failures because they had no work ethic. I've also seen a lot of hard working amazing people fail because they weren't lucky.
"Luck favors the prepared [mind]" is the perfect middle ground on your positions.
I'm willing to tolerate an amount of "unfairness" in people getting help they "don't deserve", while he finds this very offensive.
To be fair, you both are willing to tolerate unfairness, the difference is likely from where that unfairness originates.
In other words, he believes in a just world, in providence, and you don't (in other words, he's religious and you're not). I think this is the crux of most of these arguments.
Being religious or not has nothing to do with believing that effort is the dominant factor affecting success. I'm an atheist who also believes that effort reigns supreme. That doesn't mean that I don't believe that what we call "bad luck" can't come along and derail you, but I firmly believe - based on my own experience - that you "make your own luck" through effort and the decisions you make.
I grew in dirt-poor in white-trash / redneck-ville rural NC, but I've managed to work my way into a pretty good career in software development, living in a nice neighborhood in Chapel Hill. A lot of my high-school peers are still living in bumfuck, doing drugs, working fast-food, whatever. Was I just "luckier" then them? I don't think so. I think the primary factor is that I was more ambitious, harder working, and made better decisions. And I've had much "luck" along the way... man, it was minor and hard to notice. Because from my subjective perspective, I've busted my balls for everything I managed to achieve.
I still remember working midnight shift waxing floors for a grocery store, leaving work at 6:30am, heading to an 8:00am class (Discrete Math of all things!), suffering through 3 hours of classes, then going and crashing on a couch in the library for an hour or so, then grabbing lunch, hitting my 1:00pm class, then driving the hour home from school, to fall alseep, wake up, and go back to work at 10:00. Lather, rinse, repeat.
Some people will suffer through that shit, some won't. I don't see a whole lot of luck in the equation.
You're an atheist, but you somehow believe that the good guys mostly win in the end. I call this religious, no insult intended, I'm speaking of a turn of spirit, not of actual religion. I think that the fundamental philosophical and political dissent lies there, that the irreconcilable point is that: either you think that the world is totally unjust, may crush you even if you're hard working, nice, polite, and let Pol Pot die peacefully in his bed, or you don't.
You want to believe, I dare say, maybe because of all the hard shit you had to go through. But there is somewhere in Aleppo or elsewhere someone who went through all the same hardship as you, and worked hard, and was nice and all, but who died miserably after having being tortured by jihadists or whatever and having seen his whole family beheaded. In fact, there are millions upon millions of people that did everything right but were unlucky to be born in Uganda or Syria or Libya or Bangladesh, and got fucked in the end, like most of the thousands who were drowned in the Mediterranean last year. Luck trumps merit. That's the whole point of the original article.
I agree with you if youre saying we should acknowledge that bad luck can trump effort, but i don't agree this is a healthy attitude to carry over in your day to day life. Effort is something I can control. Could I fail no matter how much i try? Yes absolutely. Ask Hillary. But you won't know until you try.
Is it inconsistent to believe that the world is totally unjust and, yet, also believe that individuals who put forth more effort are generally more successful? I think not.
The world itself may be totally unjust; physics shows no partiality for individuals who possess a greater "morality" or work ethic. However, we do not only live within the world. We also live within various frameworks, such as a culture, society, company, etc. These frameworks are not governed merely by physics, but by other humans. And these other humans do, almost by definition, show partiality. Therefore, I argue, that you can increase your chances for success through your own actions. This is not inconsistent with claiming Pol Pot and torturous jihadists "won"; they could have simply assessed their situation and, by their own effort, maximized their chances for success.
What about all the people that work hard but are not successful? I know people that no matter how hard they try they won't be software developers (not that this is the only well paying job). They do all those things you are talking about but they have to pick much less lucrative work. There is no big promise of high paying job. Those people are essentially being rewarded less for the same effort no? One of my close friends is in this position. He is working towards being a small business owner. He puts in so much more effort than I do. There is no doubt he'll eventually make it... but I still will get paid more because my skill-set is currently in much higher demand.
That's great. I'm genuinely happy for you that you got out of rural NC, and I think your work ethic is to be commended greatly.
You worked hard, bettered your situation.
I still want to live in an America where no one needs to work that hard to have a comfortable life. Not luxurious, but comfortable. Anyone willing to put in 40 hours of work a week, they should be able to afford shelter in their region, have nice things every once in a while, have meat on the table regularly, etc.
Probably, the difference of opinions from the 1st point is due to different experience. I suppose your father started his career in those great times after the II World War, when the world was developing so much that there was space for almost everyone. So it's that generation of people, who did work hard, but as the circumstances were so favorable, their efforts automatically translated into success. Now, we have to slow down due to increased competition - not only related to the reason indicated in the article, but also to the growth of Asian economies. And this makes people notice that with bad luck your efforts mean so little...
The amount of success one finds in life is probably some combination of luck, effort, smarts, and appetite for risk / ability to take risks. I think most would agree that you can determine how much effort you put in and you can study hard to get at least some amount of domain expertise. It seems like your father likely ignores that people do not get to choose what family situation they are born into, what skin color they have, or what gender they are. All of these factors affect things like your economic level of support and your ability to take career risks, which in turn has a big effect on your ability to be successful (assuming we define successful as making a lot of money).
I see luck even within those fundamentals. I'm pretty successful, and I'm aware of how generally lazy and procrastinating I am. Perhaps it's Imposter Syndrome, but while I can point to some areas where my work ethic or effort is greater than some, I definitely don't think these are better than some other friends and peers that I'm clearly more successful than. I just got lucky, more than once.
This also suggestsa subtle long term strategy for shifting people's political persuasions. Convince them that luck or effort has more or less to with outcome, and perhaps their political convictions will soften or harden to match.
While I agree that luck vs work is a key distinction between people that seems to drive political differences. I think that desires regarding the future are even more fundamental.
Looking to the future, I would like to see cancer cured in my lifetime. I'd like to see aging cured or at least I'd like to get a lot more quality years out of my life. I'd like to see a real cure for my failing knees, eyes, and memory.
None of that is going to happen if we throw up our hands and rely upon luck. Because no matter what "reasonable" ratio you put on the luck to work formula for success, work is non-zero.
BTW, might want to get your dad that book the interview was about (Robert Frank: "Success and Luck"). It's a good read, and you'll have something more to discuss :-)
Have you ever tried to frame "help people don't deserve" as being a selfish act? Ie. I like social programs not because I want to give out free help but because I want to increase the demographic of who can buy my products, reduce who may try to hurt me, etc.
That would require faith in the assertion that giving free help to those people will actually result in those things happening. A lot of people's skepticism about free help is the lack of hard evidence that it actually improves people's lives. For instance, if someone is the type of person who is willing to physically harm other human beings, it's unlikely that more money is going to change their mind about that.
I would tend to favor your father's position; I'm a libertarian. I put in the context of some are our industries brightest and best have had some remarkable ideas and luck but how many times did it take them to get there? Like an old Ted Turner story about his smart quotes and the remarks of just how many bad ones it took to get there.
the issue with this in society is the ability of people to have enough bad outcomes to arrive at the good one. can we level that playing field or do we first need to find out why so many don't have the drive to try? Do we discourage people too early in life, do we give some the excuse they need to not try?
Your ability to handle the consequences of either making bad choices or being unlucky is dependent in large measure on factors like financial resilience (can you afford to take a risky project without running the chance of being homeless?) and social support (will your partner be prepared to support a change of direction, do your parents recognise the value of trying and failing at difficult things, will your country help you retrain if things go wrong?). These things are not evenly distributed.
I'm now in some senses on my third career (I'm 35). Each of those decisions to change direction, take risks and grow as a person were made a lot easier because I had a good enough salary to put money aside to cover the risks, and a wife who happens to be both adventure-loving and locationally-flexible. Not to mention that the most recent career change (moving into academic research) basically required a self-funded MSc as a preparatory to funded PhD study (I was moving into quite a different field, and there's basically no funding for taught Masters courses in the UK). That's more than half the people who could benefit from it priced out from the start.
I didn't downvote, but: there are plenty of entrepreneurial people you could bring up with regards to this, but Ted Turner went to prep school & collage in an age when most people didn't go to college. His parents were well off business owners who presumably not only set him up as a good position in life, but more importantly - and this is to your point - was a safety net so he even COULD fail over and over again.
The vast majority of the population are not put in a position to be able to fail over and over again like Ted Turner was, so since you used him as your example the answer to your question should be obvious.
I think this touches upon one of the biggest weaknesses of the current economic system. We systematically waste the human capability of millions of people because the system essentially randomly gives much better opportunity to some over others. Meritocracy somewhat exists but mostly to the extent that people can maximize the opportunity they've drawn as their lot in life.
I like the idea of Basic Income, but it's a somewhat limited solution to capping how far down someone can fall in society - what would really supercharge a future economy is opening up avenues to truly distributing equal opportunity. Wealth inequality suppresses this strongly, when people receive better margin of income over the absolute minimum economic allocation of their wages, they can then allocate their own wealth from their personal outlook in multiple ways - including starting businesses which may change the world.
We systematically waste the human capability of millions of people because the system essentially randomly gives much better opportunity to some over others.
We don't do anything. The nature of reality is that there is not equal distribution of [anything]. The universe is a dynamical system - portions of the system will through probability always get stuck at local/global minima.
Sure, but the universe is also a place where it rains on your head, and then the sun burns your skin off, and wolves casually stroll in and eat your children. That's what the universe does when left to its own devices, and we don't like that, and we change it.
"It is the way it is because it's natural" is a pretty naive fallacy.
The universe is a physical dynamic system, we humans overlay our own social dynamic system which inescapably lives within physical bounds. But that overlay may or may not accomplish things that we desire from a human perspective by the laying of those additional social constraints. We should always question the bounds our own social system because it really is the most arbitrary set of rules that we've laid upon ourselves.
In the current system, yes, properly implemented, UBI would end poverty in America while still allowing for massive inequality. It sets a floor, not a ceiling.
I'm not sure that inequality is necessarily the thing to be fixed.
I suspect that when most people talk about inequality, what they mean is, "a few people are doing really good and a lot of people are doing really bad". If you can lessen or remove the "doing really bad" part, whether through UBI or some other means (progressive taxation to fund other programs, whatever your ideology prefers), then statements of inequality start to mean just "a few people are doing really good" and I think there are far fewer people that are bothered by that.
I also think these conversations tend to get stuck on the definition of poverty. Some people say, "well, it can't be poverty because they all have smartphones", and other people say, "well, it's poverty because they lack any opportunity". I think that if these discussions are going to get anywhere we have to start by convincing people that the definition of poverty is allowed to change and that we shouldn't in the 21st century be defining poverty in 19th-century terms.
>I suspect that when most people talk about inequality, what they mean is, "a few people are doing really good and a lot of people are doing really bad". If you can lessen or remove the "doing really bad" part, whether through UBI or some other means (progressive taxation to fund other programs, whatever your ideology prefers), then statements of inequality start to mean just "a few people are doing really good" and I think there are far fewer people that are bothered by that.
I'd say the problem with inequality is something else entirely than "some people doing really good" vs "lots of people doing really bad".
It's that there are resources in the world, and some people have way more access to them.
This can hold even when all people are out of poverty: of the potential and resources of the world, still some people could take the lion's share to the exclusion of others, regardless of whether everybody has a house and food on their table.
And this inequality (with the true sense of the word, not mere poverty vs richness) is also related to opportunities and squandered potential (as in: yeah, we all have UBI, but this dumb mega-rich person could pay his way to Harvard, whereas some other with much larger potential -- e.g. smarts, inventiveness, etc-- had to settle for some lesser school, and didn't get as far in their career).
There's a scale of ideology here from, "everyone should be guaranteed to get exactly the same as everyone else regardless of luck and effort" to "life should come with no guarantees and everything is down to luck and effort".
It sounds like you're further to the left of that scale than I am, which is fine, except that it's harder to convince people to the right of me on that scale to move that far left.
Poverty is a problem, obviously, but inequality is a problem in itself.
* inequality subverts the democratic process
* inequality subverts the rule of law
* I'd argue it even threatens human dignity
* in economics, my utility function typically only takes my well-being/wealth/consumption/circumstances into consideration, not my neighbour's. That's a simplification, so that one can do economics. It's pragmatic and expedient - it is certainly neither descriptive nor normative. Although there is a tendency in libertarian/"economism" circles (google James Kwak "economism" if you don't know what it means) and even others (skeptic Michael Shermer, for example) to consider it the rational thing to do.
I don't see why. Yes, if I get 10$ more, and all my neighbours get $10000 more, I will be cranky and unsatisfied, utility function bla bla my ass.
Inequality also depresses human happiness.
TL;DR: excessive inequality jeopardizes democracy, the rule of law, human dignity, peace, and happiness.
Assuming you implemented UBI, and changed nothing else, what would prevent the market from adjusting overall price levels (upwards) until those living only on an UBI again end up below the (now increased) poverty line?
In other words, I believe that without penalizing the upper end, too, things will just "adapt" to define a new lower end, if only the only change is to give everybody a little bit of money. To some extent, Germany has been doing something close to UBI for quite a while now ("Grundsicherung", "Harz IV", etc.). It certainly helped prevent that a few people fall into some nasty global minimum with zero income, so its probably better than not having it. But I don't think that only clamping the lower income end alone had a society-transforming impact in Germany.
I see poverty (and UBI) as fixing the problem of people not even having enough to live on, but inequality having a much wider range of impact. Maybe UBI could lead to fixes in other areas - but there is this other problem economically, of people making rational decisions based upon the limited resources they have to draw upon (capital, experience, network connections, family fallbacks, etc). How may good ideas are never explored because someone has an idea that is a 0.001% of success, but could benefit the world 1000x over? Then they look at their personal resources and just push that idea away? This isn't a problem just on an individual basis.
For instance, I sometimes idly wonder how many fairly sharp and/or self-driven people ended up working for the illegal drug industry vs how society (and those individuals) could have benefited had other paths been available to them. Maybe we've missed out on many exceptional CEOs because they were taken up by the illegal drug industry, became drug lords then somewhere along the line locked up or killed.
Or the looming Automation issue. We may take care of many basic economic activities by automation, and now many people will be out of work - we see that couched as a "jobs" problem, but looked at another way it's and extension that our economic system really doesn't know how to harness human capability. Our current economic system says only give people just enough resources - any excess is pulled away from people who lack leverage (like many who exchange labor for income). And increasingly I think the fact that allocating for leverage != allocating for potential is unbalancing our economy. Now most wealth has accumulated at the top to a very few - and, from world economic growth numbers, that group basically doesn't know how to more productively allocate it on a world-wide scale (or maybe doesn't want to to preserve the accumulated wealth, or some mix).
Poverty and inequality are two sides of the same coin.
Massive inequality is driven not by productivity but by compounding debt and other forms of rent-seeking. This always spirals out of control eventually leading to poverty, default or both.
Absolutely right, but it's important to be aware of why it always spirals out of control: it's because part of people's decision making is based on their expectations about the future, and part of those expectations are the result of the societal rules that are in place at the time. So people get used to planning, for example, on the basis that they can expect an annualized 8% return from the market. It has been that way for decades, so why should it not continue to be that way? Well, the reason is that it cannot continue to be that way. An 8% return is not sustainable. Exponential growth is never sustainable in the long run. Even if we colonize the stars at the speed of light with 100% efficiency, that only allows quadratic growth in the long run.
So when we start to hit the limits of growth, one of two things can happen. Either everyone accepts that things are slowing down and agrees to accept less than they were expecting based on the exponential projections, or some people don't accept this and use their political power to change the rules so that they can continue to live according to their expectations, which necessarily comes at the expense of everyone else at that point.
To transition smoothly from a period of exponential growth back to a steady state, or even just sub-exponential growth, -- heck, even to exponential growth with a smaller exponent! -- requires a degree of cooperation that is very difficult to achieve in human societies.
Rather than considering whether an 8% return is "reasonable" perhaps we should be considering whether distributing unearned income unequally is a good thing at all.
>but it's a somewhat limited solution to capping how far down someone can fall in society
That's welfare's job. UBI is to provide a living wage when its not possible or difficult to do so (depressed areas, automation taking jobs, etc).
As a social safety net UBI does nothing welfare doesn't, and in most cases does worse. Welfare can be controlled via food stamps that stop people from wasting their money on alcohol, cigarettes, lottery tickets, and casinos. UBI is just a cash handout which absolutely will go to those things as well as illegal drugs and other vices. Why shouldn't it? Forcing people to spend responsibly is not solved with UBI. As someone who has lived in Chicago's not so great neighborhoods, this is a common sight. Cash handouts do not suddenly make good people.
>including starting businesses which may change the world.
If the government guaranteed me $100k a year I wouldn't work. I mean I'd "work" but at being a rock musician or comic book artist or a non-practical technical pursuit. I think UBI would lead to leisure lifestyles, not nose-to-the-grindstone business stuff that we're used to in the startup world. Look at the wealthy who don't run their own businesses and who live off their investments or trust fund kids in general. Sure a few engage the business world and do interesting things, but its mostly do nothing lifestyles of learning to paint, kinda sorta finishing that phd, being an 'author' or 'photographer', etc. In fact, I know several people like this.
One of the things UBI advocates don't like to talk about is that the carrot approach isn't usually effective. The stick gets most of the results. In capitalist society the stick is failing economically and living a poor and unsatisfying lifestyle. People work to stay out of the ghetto, if not more so, than for nice things.
Middle-class life is pretty nice. If UBI lets me keep mine, I really see no incentive to work and I suspect many agree with me. A UBI society will be a lot of things, but it will not be productive or innovative like modern society is. I think that's just something you need to accept if you truly advocate for UBI.
Not to mention, how price gouging will match UBI. If the poor go from making $8,000 a year to $50,000 then their rent and cost of food, etc will go up to match. So you can't have an 'income floor' where everything 'just works.' Unless you want to move into a command economy with authoritarian control of all pricing and labor. At that point you've just re-invented authoritarian communism, which history has shown absolutely doesnt work.
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The system won't let me post (posting too much?), so here' my reply to novia:
>Why are you so opposed to allowing people to spend money on mood altering substances?
Because many are physically addictive and when money runs out the rational move is to rob/murder your neighbor for more. Addiction is that powerful. The idea that all drugs are perfectly fine and addiction doesn't happen is naive fairly naive. I don't think we can assume that a UBI society will be people just smoking pot and doing shrooms the same way modern drug use is not just those things.
>And maybe your artistic pursuits would help make others happier and motivated and inspired to work on their projects that would qualify as real "work" to you.
That's fine, I made that argument I believe, but productivity and innovation will absolutely not be the same. We'll make great strides in 3 chord rock and super hero storytelling, but not much else. In the off chance we do better in any realm, it will be the Arts, which is nice but not nice for the guy waiting on a parkinson's or alzheimer's treatment. The gal who would have cured it is instead a harp player and romance novelist. Or maybe she did try but where are the billion dollar investments for her startup going to come from when everyone lives in what is going to be like a retirement arts community because of UBI?
I don't think we can assume there are no tradeoffs with UBI. I think you need to accept a certain level of lack of innovation. The capitalist system works as-is because of many incentives and disincentives which will largely disappear with UBI. I'm not sure why we're assuming that innovation, investment, and progress will be exactly the same. It seems very unlikely. The culture and system UBI brings may not be to our liking at all, especially those of us who saw so much progress and innovation in our lifetimes.
>Welfare can be controlled via food stamps that stop people from wasting their money on alcohol, cigarettes, lottery tickets, and casinos. UBI is just a cash handout which absolutely go to those things and drugs.
Why are you so opposed to allowing people to spend money on mood altering substances?
>If the government guaranteed me $100k a year I wouldn't work. I mean I'd "work" but at being a rock musician or comic book artist or a non-practical technical pursuit.
And maybe your artistic pursuits would help make others happier and motivated and inspired to work on their projects that would qualify as real "work" to you.
For example: Lots of people listen to music to get in the groove when they are working on something that requires them to block out the distracting real world.
By definition, a UBI must be insufficient to finance a middle-class lifestyle. It provides an income floor.
The most important effect of UBI on the poor is that it gets rid of the welfare trap. Even the poorest paid part-time job will increase your income. At the same time you can walk away from a shit job without becoming destitute.
> food stamps that stop people from wasting their money on alcohol, cigarettes, lottery tickets, and casinos
Are you certain they are effective at that? It isn't hard to imagine that a secondary market for food stamps could exist wherein they're traded for cash at some reduced rate.
It "stops" it within a margin of error. Of course, no system is perfect. Just because there's abuse doesn't mean that handing out cash is just as good. The same way murder is illegal but still happens, but no one wants to live somewhere where murder is legal.
There will naturally be tradeoffs; where we differ is whether those tradeoffs will be worth it.
There already is a secondary market for welfare benefits, to the point where someone who wants to squander it is able to do so, and worth mentioning that the end result to someone who burns their benefits irresponsibly is the same either way, crime or starvation.
Administering the bureaucracy necessary to enforce these controls (of varying effectiveness) carries a very real cost outlay.
With that in mind, UBI carries the promise of significantly less overhead with the idea of identical societal goals.
The alternative is a great ramp-up in the scope and size of welfare systems, like what you might see in the Nordic countries. This idea also has its proponents, but I don't think it would fly in the USA.
Debating the actual importance of luck seems a lot less important than developing the proper attitude towards luck.
Pretending luck doesn't exist can lead to arrogance and a lack of empty for people who haven't succeeded. On the other hand, believing that luck controls everything can lead to fatalism.
It might seem best to find a happy medium, but being wishy washy about this whole thing just gives you opportunities to blame your own failure on circumstances outside your control, while continuing to take credit for success. In the general case, looking for balance between opposing ideologies makes no guarantee that you'll walk away with the best parts of both instead of the worst.
In practice, it's probably best to drop the determinism/indeterminism dichotomy completely and just focus directly on the desired end attitudes.
On a side note, the reason American society is obsessed with meritocracy has nothing to do with a belief about the nature of luck. Denying luck as the path to success is just a way to make people work harder.
I think you need to view luck the same way you view misfortune: it's random, and there's nobody to thank/blame for it. That way, you're not spending your time feeling like you need to grovel at somebody's feet because something went your way, nor do you need to spend your time punishing someone for the bad things that happen to you in your life.
In other words, you don't sweat it and instead focus on the parts of your life that you do have control over (which is more than most people think).
A few days ago my kid asked me if I believe in luck. It was obvious he was thinking of it as some sort of force or an attribute a person/object has or something equally magical. I think a lot of people get stuck on that meaning. We already have "fortunate" as a word to describe what I think "luck" should mean and since "luck" more easily invokes the magical sense of the word in people I try to avoid it.
Another commenter used the phrase "luck surface area", which I think plays well into the concept that everything is hinged on an element of luck, where harder workers and people with better birthright generally have larger "surface area".
While I agree that you can increase you "luck surface area" (e.g., by taking more chances), that doesn't mean it will help. It implies you also are increasing you "unlucky surface area", so if you "somehow" attract (?) more good/bad luck, you might as well just end up being far more miserable than if you had not. In other words, I don't believe luck to be a variable, it seems much more of a constant that you've been born with.
Yes, but what is "bad luck"? For most people "luck" really means "how wide have I spread my net" -- how many people are willing to give me opportunities? When we say "luck surface area" I don't think we mean legitimate zero-sum odds, because we're only talking about luck idiomatically. You don't have much to lose by putting yourself first in line for as many opportunities as possible.
It's certainly true that you need to be very lucky to become a billionaire - generating wealth at that level usually involves tremendous numbers of other people loving whatever business you have decided to create. But if you're reasonably intelligent, at least in the US, it's quite possible to become a millionaire without much luck, through decades of hard work and discipline.
Examples: software engineers at large companies that stick around for decades (usually through options), doctors (at least specialists, such as cardiologists and anesthesiologists), and lawyers that go to the best schools and are able to land jobs at top-flight firms. Even tradesmen that stick to their craft, such as master electricians or plumbers, can quite reasonably expect to achieve millionaire status over the course of their lifetime assuming that they manage their money well.
So yes, luck plays a huge role in the creation of enormous sums of wealth. But if you live in a country with abundant economic opportunity such as the US, there's no reason to be poor unless you have been extremely unlucky (health problems, accidents, etc have befallen you), you are unwilling to work, or you've made extremely poor life/financial decisions.
You are ignoring the fact that someone born into a poor family in an inner city like has an underfunded, underachieving public school, overwhelmed and inexperienced teachers, a below average guidance counselor, no role models who have gone to college, parents who do not know anything about applying for scholarships or financial aid, a diet of fast food, and few examples of other people in similar roles who became millionaires. In a lot of cases, the best chance of success for people in these situations is to be LUCKY and win a lottery to get into a charter school. Or, to be LUCKY and have the physical tools needed to get a sports scholarship.
an underfunded, underachieving public school, overwhelmed and inexperienced teachers, a below average guidance counselor, no role models who have gone to college, parents who do not know anything about applying for scholarships or financial aid, a diet of fast food, and few examples of other people in similar roles who became millionaires
That sounds like my life except for the inner city part. Substitute "redneck-ville" though, and it's the same basic principle. And I will say that I think the idea that these things mean you need massive amounts of luck to become "successful" (depending on exactly how you define successful) is bullshit. I never had any particular amount of luck that I can identify, relative to my peers who were born in similar circumstances, and while I'm not a millionaire (but I'm still working on it), I've been what most people would call reasonably successful. In my experience, what it takes is mainly insane work ethic, an indomitable attitude, dogged determination, and relentless pursuit of your goals.
First off, congrats on getting to where you are today. It sounds like your hard work is really paying off. I would just note that one of the points of the article is that it is difficult for a successful person to recognize the lucky events in their life. Perhaps in one of your job interviews you hit it off with the interviewer because you went to the same college or were both from "redneck-ville." Another person with equal skill and work ethic could have not gotten that job because they weren't form the same background and didn't have the rapport with the interviewer. I think you can say in that scenario one person got lucky and the other was unlucky. No one is saying it is bad to be lucky. It just helps with empathy when you take the world view that not every outcome is completely fair and logical.
I don't see anybody really saying that "every outcome is fair and logical" though. My issue is just all this luck talk is counter-productive. I mean, if you convince a group of people that life is nothing but luck, how have you helped them? Why bother working hard at all, if you don't believe it can possibly pay off?
The talk about luck is meant to encourage empathy and understanding. If your world view says that success is based only on your work ethic, then you will assume that all people who are not successful did not work hard. With that logic it is pretty easy to conclude that we should not help people out or support unsuccessful people because it's solely their own fault that they were not successful. Some would argue this is the wrong world view and that we should acknowledge that many unsuccessful people work really hard and just got dealt a bad deck of cards. These different world views lead to different priorities in public policy among other things.
If your world view says that success is based only on your work ethic, then you will assume that all people who are not successful did not work hard. With that logic it is pretty easy to conclude that we should not help people out or support unsuccessful people because it's solely their own fault that they were not successful.
I'm not saying anything about you specifically, but that sounds a lot like a kind of "anti-libertarian" straw-man argument I hear a lot. Certain people like to claim exactly that libertarians believe "that all people who are not successful did not work hard", which is far from true.
I think everybody understands that some people work very hard and still fail to achieve "success" (depending on how you define success). But what I think should be taken into account is that:
Some people who fail to achieve "success" do so because they didn't work hard enough.
Hard work, good decisions, etc., do play an important role in the amount of success you attain.
Obviously reality falls somewhere in between "luck is everything" and "hard work is everything", but I get the sense that some people promoting the "it's all luck" mindset have an agenda in terms of denigrating the fundamental idea that effort and initiative count at all. Again, not saying that's you, and I'm probably just over-sensitive on this subject.
This thread is very important to the discussion, because it highlights an apparent opposite mindset of the article.
As I posted elsewhere in this thread already, I think the real issue is that the ideas of Robert Frank are not about these "regular" cases in the middle income range at all. (At most, I'd conclude that the interviewer asked questions that would touch persons in that range, too, and who likely form the majority of the site's readers.)
If you are doing OK-ish on the upper end or OK-ish on the lower end of the middle income strata of a Western (!) society, your "lot" should be quite tolerable. And nobody would deny that with extremely hard work and discipline you can move from the lower end of middle income to the upper end of middle income. However, if you are doing really bad and are below the poverty line or really well and are in the top 1% range, that certainly requires a good portion of (possibly: bad) luck. It already starts at conception, with your "birth rights". And the aim of the article (or rather, of Mr. Frank's theories), as I interpret it (them), is pointing that out that we need to find measures how to smooth those extremes, not about figuring out if some middle income person had a bit more or less luck, or if it even mattered.
Because people working hard in aggregate can improve the situation of _all_ people in the system if the system equally distributes rewards. The problem is we don't live in such a system. So I (and others in this thread) will continue to try to convince people to have more empathy until we do have such a system.
Sure, the system doesn't _have_ to be that way for people to work together. But sooner or later they'll come to the same conclusion you have - what's the point if they're not seeing equal returns? Who knows what will happen at that point - I'd rather fix the system before we get to that point.
And sure, you can have some empathy even if you don't have all of the empathy. But those are definitely not orthogonal concerns. Being able to empathize fully with someone's situation IMO includes recognizing that everything truly is luck. Like down to your genetic makeup. Hell, being alive is lucky.
Being able to empathize fully with someone's situation IMO includes recognizing that everything truly is luck. Like down to your genetic makeup. Hell, being alive is lucky.
That seems like a content-free and useless definition of "luck" to me. What value do we gain from pointing out that "being alive is lucky"? We're deep into "shit nobody can do anything about" territory here.
Again, I don't dispute that different people start from different positions in life, but my position is that we should focus on doing things to broadly expose opportunities for everyone, and then providing support for the the truly unfortunate who are not able to take advantage of any opportunity. But I have NO problem with unequal returns in terms of relative achievement between people who start in similar positions. Some people simply do work harder, and create more value. I don't see any reason they shouldn't benefit from that.
what's the point if they're not seeing equal returns?
I don't see why anybody should expect equal returns, especially not in terms of lockstep "moment in time for moment in time" comparison. Success won't come at the same time for everybody. We should also keep in mind that "success" is not a binary operator... it's more of a continuum - not to mention somewhat personal and subjective anyway.
Sure, you can have empathy with that mentality. But, when you assume everyone less successful than you is less smart and/or doesn't work as hard as you, it's not as likely that you will.
Since people from "easier" backgrounds don't need those things to succeed, isn't it reasonable to suggest you are "lucky" to have the attitude and determination that made you the exception?
Edit: I think it might be productive to society for the exceptional cases to ask how a better attitude could be encouraged in their former peers. Do the ones who fail lack faith that their efforts would pay off, or do they just not care?
I added some more in an edit, but I'll restate my question a bit differently here. I think a lot about the many paths people take through life and where they can and cannot lead, so this is a genuine question. Where did you get your successful attitude? Was it innate, or were you exposed to media or people that encouraged it?
For me personally, I think positive-outlook TV shows like Star Trek TNG had a bigger influence on my attitudes toward life than I might want to admit. So I'm really curious where others who take a significantly different path from their peer group derived their motivation to succeed.
Where did you get your successful attitude? Was it innate, or were you exposed to media or people that encouraged it?
I don't think there's any way for me to answer that. My attitude has been shaped by 43 years of various influences... parents, friends, TV, books, movies, and FSM knows who/what all else.
If your assumptions were true, then software engineers, medical doctors, or persons with whatever well-payed jobs there are at a given point in time should always end up on the bright side if they are hard working and disciplined.
To that I can counter that I have met many hard working persons with excellent higher education (IT, medicine, engineering, science, no matter) in my life, but then bad luck struck and destroyed it all. Their kid died and they didn't overcome it. They had to flee a country in war and are now 50+ and unemployable. An extreme example a lawyer told me: An entrepreneurial woman with a great company stopped to help a person in an accident; Along comes a crazy car, crashes into all of them, and the woman looses both arms in the incident - now she's in deep dept and the company in ruins. And so forth...
The opposite, good luck, is just as prevalent in middle income strata, too. Take software engineers: There are usually hundreds if not thousands of persons applying for a job. Certainly there are several in most cases that would be a match. But will you be the lucky one who got picked? Etc. The article itself also has some examples, like getting an career boosting promotion earlier than normal. Yet, in the end, all (first and second world inhabitants only, and only if you were not born to some miserable parent(s)!) striving for that job and not being struck by some bad incident might end up just fine. [As I should add: But not doing maximally great either, unless being struck by one or - more likely - quite a few really lucky incidents.]
In other words, luck plays an always present role in all strata of society, not just the extremes. Only, it might not be that obvious right there, "in the middle." But whatever, the whole point of the article is about the extremes, smoothing those cases with exceptional bad or good luck, not about those in the mid ranges doing just fine...
Then why is poverty concentrated geographically in inner-cities and rural areas instead of evenly spread out? Obviously location and environment affect opportunity, including the perception that breaking out of poverty is even possible to begin with.
Because breaking out of poverty is a hard thing to do. It is certainly possible, beginning with a focus on achieving at a high level early in school (which can be a difficult task when dealing with life issues imposed by poverty). Doing extremely well in high school, which can lead to college, scholarships, etc. is one of the few exits on the freeway to adult poverty for impoverished children. Once that ship has sailed, they could go into trades, such as electrical and plumbing/heating. Most, won't, instead bouncing from job to job with no hope of ever improving their station in life, and will have their own children, instantly worsening their own financial situation and continuing the cycle.
But none of that means it's impossible or that it requires luck to break out of (again, assuming they live in a country with abundant economic opportunity). It requires hard work, discipline, and perhaps most importantly, an understanding that the limits their parents ran into that resulted in their impoverished upbringing are not insurmountable.
I would disagree with your luck statement. I broke out of poverty. My parents were both unskilled labor, we were on assistance at least once that I can recall.
Part of what allowed me to escape is luck. Yes it required that I developed early and so was ahead of my peers in education. It also required hard work to capitalize on that lead. However, what kept more than one of my cohorts from escaping was bad luck. A family member had a health issue, a legal issue, whatever. Their need to care for their family caused them to miss an opportunity (Get a job rather than go to college).
Unless you're advocating living life as a sociopath and ditching people as 'dead weight', luck is absolutely part of escaping poverty.
In my original comment, I said that there's no reason to be poor, with a couple of exceptions - including bad luck. With hard work and discipline, you don't need to have especially good luck to break out of poverty, but yes, any bad luck can wreak havoc on the life of anyone in almost any socioeconomic circumstance. This is why it's still important to have social safety nets, even if the general public doesn't like the fact that these nets will save both the very unlucky and irresponsible people/those that simply don't want to contribute to society.
Luck is luck. Whether you call it bad luck that they had an adversity to overcome that I did not, or good luck that I did not have that adversity, you're still talking about fortune.
In any case, whether you say it is that the parents are poor or that they are drug addicts or don't care or whatever, you're talking about things outside the control of the individual. I cannot choose the parents I was born to.
Progressive consumption tax is ridiculous. It requires your tax rate at the point of sale to be dependent on all your purchases to that point in time. That's just not practical. Or it may require every purchase you make to be recorded for tax-time when you then pay the taxes. Either way it requires the government to know every purchase you make, or at least the price. This is not something anyone should want.
There are plenty of ways to scam such a system. For example, you could create a phony investment fund which always collapsed at the end of the year creating a loss which hid your expenditures.
That might be true. I don't actually know how much more auditing of funds and brokerages than what goes on already would have to happen in order to prevent that sort of thing.
I don't think the problem is obviously insurmountable, though.
There are three mechanisms for implementing a progressive consumption tax outlined here[1] and none of them involve keeping track of all purchases. I would imagine that Robert Frank also has a sane proposal.
Those aren't even purely consumption based. Also, the whole thing is an attempt to remove taxes on interest. The author talks a lot about how terrible it is to "tax savings" which we don't do - we tax interest. The problem is if you remove tax on dividends and interest you will split to world in short order into those who have savings and those that don't.
Typically people opposed to this will point out that everyone spends money, but only people with assets have extra income from their assets. So someone who spends 100 percent of his income is going to be taxed on 100 percent of his income, while someone who has the same income and spends the same amount but happens to have a million dollars collecting rents will pay tax on a substantially lower portion of his "income". To that the response is always that it needs to be a progressive tax or offer a rebate for those poor people. At that point it's just a way to fuck the middle class, keep the poor working paycheck to paycheck, and let the rich increase their fortunes through rents.
These guys need to run simulations to show how a closed system works - you'll quickly see a bifurcation under those circumstances and they know it.
I think this part of the discussion is really interesting. After all, this is about discussing an actual solution to the problem of "extreme luck" (good or bad).
I don't see your point, however. The authors explicitly say it should be a progressive tax and that income tax should be removed. That does not include removing tax on capital gains.
So I understand the idea as taxing consumption after it reaches some minimal threshold, and otherwise only tax income from wealth. I don't see how that would affect the lower ranges of income other than that they suddenly would be relived of all tax burdens, and in particular, of their by far highest tax rate: the VAT. I also don't see how that "fucks the middle class" - for them, these changes should be mostly transparent. That is, for them, VAT and income tax will just be called differently, but the overall rate still should be about the same.
The real problem arises with the rich, naturally, because their VAT will suddenly skyrocket. In other words, as the rich and powerful rule the world, this is yet another proposal that can't happen without some pain...
Not necessarily. Just tax things that are not needed for daily life with a VAT that grows progressive in proportion to how far removed from "life support" it is.
For example, tax yacht's and private jets, and fancy cars with some really insane rates, while tax something that is a limited resource but necessary to live with a very low tax rate or none at all. Tax first homes lower, second homes much higher, and third+ homes at insane rates. ASF.
I.e., I really see no need of keeping track of actual spending beyond what we are doing already. Plus, after removing income tax, the IRS only needs to keep track of your capital gains, not your income. So the savings from that in and of itself should bring a boost to the economy.
Although, this decreases money supply which makes everyone's savings worth more at the expense of slowing economic growth. Slower growth may be undesirable to many, especially startups, but could have positive environmental effects.
There are other approaches though – you could charge a sales tax for all purchases and institute a universal rebate, which would have the same effect with the addition that people underneath the spending threshold would have an effective negative sales tax rate.
Maybe I wasn't clear – rebate doesn't need to be connected to purchase amount. A flat, fixed-value rebate serves a similar purpose if it is appropriately set, and individuals who don't meet a particular threshold will receive more money through rebate than they pay in sales tax.
Only the consumer needs to do so in this case, not the government, and if you don't keep track of your own purchases, no problem, you just don't get the rebate.
Tracking purchases requires time and skill, both of which are often lacking in the poorest. Rich would hire a person to do it. (and also to game the system)
Not really, no. Or rather, the ability to do that is not so much tied to wealth as education and upbringing: you have to be functionally literate and numerate in order to do that, and many of the people who would need the most support aren't.
Many more have the basic numeracy but lack the background to plan finances at all. The UK government recently changed the way they pay rent for people with housing benefit. Instead of direct to the landlord they pay a lump each month, while rent is typically due weekly. Many have fallen into arrears as a result: they didn't want to be given the money, and they don't know how to deal with having a balance in their account that they must budget.
Perhaps you might consider someone unable to cope with that change unworthy of support, but when there's a whole class of affected people I don't think it's helpful to write them off as a group, rather than trying to understand the reason why they find it hard and trying to set up the system to mitigate those difficulties -- just like if your users fail to understand a feature in your project, you'd be wise to redesign it to be usable. Only with somewhat higher stakes.
Proving "average spending" to the government is going to require informing them of all your purchases - which is what I was complaining about and you were supposed to refute. You also brought income back into the picture, followed by UBI.
Veil of ignorance. There's a significant part of the upper end (wealth wise) of the population that like our classist society just the way it is, or maybe that it should be more classist. Everything should be a rent, there should be no public lands, everything is to be exploited, and if you're on the short end of the stick it's merely unfair, not a wrong or a failure of society. Or the more extreme versions of this, higher class folk have better money, better ideas, better genes, make and sell better things. They are better than others. Democracy and socialism are threats to these notions.
Maybe I'm naive, but I don't think any one denies the role luck plays in one's success or not. However, to completely discard effort and determination is selling everyone short. I'm running a successful company partially because of "luck", I happened to start it at the perfect time, but also because I pour every ounce of money and time I have into it. My nights and weekends don't exist. Some people aren't willing to put in the time to turn luck into success.
Telling people that success is just a matter of luck will only reinforce the thoughts of unsuccessful people to believe they're "unlucky". You are able to make your own luck to an extent.
This is exactly what the article is talking about. You're not acknowledging how much of your success comes from luck, you see yourself working hard and you don't like being told you're lucky. You're not only lucky because you started your business at the correct time, you're also lucky because you had the resources and connections to be able to start a company in the first place. Most people never have that opportunity.
I have no doubt that you work hard and put in the hours. But part of the reason that you do that is because you've been lucky. I'm sure you know that most business ventures fail. Some of those businesses, maybe the people there didn't work hard enough, and that's why they failed. A lot of them did work really hard, though, and they failed anyway, for myriad other reasons. Many people work hard and fail anyway. That doesn't exactly encourage further hard work. You're lucky that your hard work is turning into success.
The position that "You are able to make your own luck to an extent" is one of extreme privilege that can't exist without having already had loads of luck that you didn't make yourself. You wouldn't tell people starving in Africa and India that they're just not working hard enough to make their own luck, would you?
Just like when people are trying to sell you something, they call it an "investment"; people trying to implement government spending programs call it "spreading opportunity".
Some government programs really do spread opportunity, but that requires close examination and criticism; I don't just buy into it because a politician calls it opportunity. Is college an opportunity? It can be a huge opportunity to get ahead in life; but it can also just subsidize a partying lifestyle and a phony major for four years. It depends on the college, the student, and the structure of the opportunity.
It's hard to tell the difference between spreading opportunity and spreading results. It often requires looking at the details, measuring along the way, and it is often different for different people.
Yeah, probably one of the strongest arguments for both Progressive Tax and Basic Income is that the current system is deeply broken, and despite doing a lot of good, carries a solid amount of waste along the way.
I do think it's important to remember that a lot of mess of social spending programs happened, at some point, for good reason. You can give everyone $12k/year, but it won't take long for people in SF to ask for an extra housing subsidy to counteract real estate prices, followed soon by rallies against eugenics when lower income Americans don't get extra children subsidized.
I'm not at all against social spending, or necessarily against any of it's alternatives, but as a software engineer, I sometimes have difficulty remembering that problems like this don't exist in a closed system and resist top-down design.
It's not just that it creates financial waste. Phony opportunities are dead ends that take other opportunities off the table.
If you have only a few plausible opportunities, you are likely to make them count. If you have a hundred but 50 are phony, you will waste your time, feel entitled to results (hey, I went to college, I deserve a good job!), and become discouraged.
Quite optimistic thinking, some kids might not have ANY opportunity at all and the 1 shot at college will change their world and ours for the better, or not, but at least there was an opportunity.
I wouldn't call college, or any person educating/bettering themselves, a waste/phony, I think it pays dividends throughout life. Does it immediately help? Not likely, but life is long and a right educated mind (or humbled person) will turn it to good for them and the people around them the best they can in most cases.
An educated populace leads to more opportunity I believe across the board and smarter authorities as people question more. However, we love those short term metrics and calling out single failures that overpower the successes.
It's a dynamic system and everything depends on everything else. Of course.
But some people have the opportunity at time t-10, another at t-9, ..., t, and then still have no results at time t+1.
Or, labelling a huge category like "college" as an opportunity ignores the details about how good of an opportunity it is versus other things that could be done eith those resources.
>> It can be a huge opportunity to get ahead in life; but it can also just subsidize a partying lifestyle and a phony major for four years. It depends on the college, the student, and the structure of the opportunity.
Agreed but that really is like an investment. Typical returns investors are looking for are 10x their investment. Investing in 10 companies 9 might lose money while one makes money and covers the rest. VC use this to spread risk and accept failure as part of some investment, so should spreading the opportunity and subsequent results of any plan. There are lessons in success and more lessons in failure which make them better, same with people in many cases.
With allowing people an opportunity to go to college who want to, you probably get 1 in 10 or even 1 in 100 that might end up bring more opportunity and economic benefits than all the others combined, just like investment in companies. If some part of their success was luck, luck is spread around more.
The problem is people focus on the failures and not the successes or the dim spots and not the bright ones, same thing happens when you talk about welfare, healthcare and others, we focus on the failures not the successes.
I guess it is a glass half full or glass half open sort of thing. I tend to think that people that get an opportunity that they might not have otherwise had, do very well or try to and have some responsibility to make good on that help. On the flipside, a bunch of entitled kids get the benefits and may not have the same drive to do good in life as they haven't seen the bad enough.
There might be 9 out of 10 opportunities squandered but just one has to be successful that can pay for the others and make the others worthwhile. It is good to criticize but also may not be something that is obvious in the short term regarding success rates.
Luck plays a factor into the outcomes quite heavily but lack of opportunity usually ends how we expect it, better to have some chance of improvement than none.
I think a lot of people do not realize that you are lucky if you are born into a middle class or upper class family. Having parents with some savings allows you to take extra career risks because you know that you can likely get help from your parents if none of the risks pay off. It is more difficult to make the decision to work at a startup or buy a house if you are totally on your own when things go south.
This reminds me a little bit about one of my favorite philosophers, Alain de Botton. Sometimes, he discusses meritocracy and meritocratic societies.
Basically, in a meritocratic society, such as the US, people tend to believe everyone's lot in life is deserved; luck is not considered a big factor. This creates a problem where the poor believe the rich made it through their hard work, while the rich believe that poor people deserve to be poor because they are lazy or stupid. People are where they are because they deserved to be there.
I used to place a high value in the concept of a meritocratic society, but experience is convincing me that the lack of compassion that such societies experience is not worth trade off.
I think a lot of people are emotionally unable to deal with a world that is as dramatically unfair as ours is, so they fall back to the childish notion that people who have fallen on hard times deserve it and successful people controlled their own destiny to get there, because the alternative is too uncomfortable to think about.
Yeah, that's probably part of it, but remember also that the people controlling narratives are by definition in power, and that people in power have strong incentives to justify their position.
I just mean that people have benefited from the existing system will naturally be incentivized to legitimize it. In this case, that entails promoting the narrative that we live in a meritocratic society where talent and hard work rises to the top.
That's true, but I think of people saying "You're so lucky!" in the same way that I think of people asking "How are you?". There isn't any actual meaning behind it, it's just the airy rituals of small talk.
It's evolving as I learn more on this topic but I think you could pick almost any demographic trait and find easy evidence of unfairness (race, gender [especially for people who don't fit into a culturally imposed gender binary], age, etc)
A common argument I've seen relating to fairness is that "government/society should ensure equality of opportunity, not equality of outcome" but we don't even do that:
"Are Emily and Greg More Employable than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination": http://www.nber.org/papers/w9873
Instead of developing empathy, we cultivate and celebrate ruthlessness. In my opinion, the widespread lack of empathy is the root of most societal ills.
And these examples and opinions are just about the developed world (obviously, similar forms of them exist in all societies). Imagine the "luck" and "opportunities" you would have if you happened to be born into an impoverished nation or conflict area.
If you get a chance to experience an "exit", where a number of people suddenly have much more wealth than others around them who are essentially doing the same things but joined the company at a different time, you will get to see all the different ways that people internalize that event (both positively and negatively).
Luck is very much a part of success and a big part of the way that Vikings talked of sailing with successful leaders ('they have a lot of luck'). And most importantly luck has no bearing character. But internalizing that can be hard when someone you despise gets rich, or someone you really care about fails to get the rewards that others in the same place have.
In the United States, at least, poverty tends to be concentrated geographically in inner-cities and rural areas instead of being evenly spread out. This would seem to indicate fairly conclusively that location and environment affect opportunity and wealth more so than an individual willingness to work hard. In fact, being born into an environment of concentrated poverty like this molds your mental state and perception of the world, to the extent that the idea of breaking out of poverty may not always even appear as a possibility, thus discouraging you from even believing that hard work might pay off.
> Then at the end students got a bonus for their participation experiment and they were told that they could donate some or all, any fraction of their bonus, to one of three charities, their pick, just by saying so to the experimenter. What she found was that people who had listed external causes of the good thing happening donated about 25 percent more of their bonus to a charity than the people who had listed things they had done to cause the good things to happen. The control group was somewhere roughly in the middle of those two.
> There have been many experiments that have shown if you prime people to feel the emotion of gratitude, they become much more generous toward others, much more willing to pay forward to the common good.
> If you want people to think about the fact that they’ve been lucky, don’t tell them that they’ve been lucky. Ask them if they can think of any examples of times when they might have been lucky along their path to the top.
That's the gist of the article. People get defensive when you say "you're lucky", because they interpret this as "you don't deserve your success". By reframing the message and asking people questions about times where they were lucky, then this can make them feel more generous.
Very practical advice for anyone who is delivering a speech at a fundraiser.
Tangentally related, I find it interesting that we often call people lucky when something very bad happened to them, but they somehow managed to survive the situation or land on their feet. We aren't as keen to describe people as lucky who avoided danger entirely.
Lone survivor in a plane crash? Lucky. Took a cruise instead? Meh.
Personally I think it's preferable to not be in the crash, than to have survived it.
This isn't much of a leap -- it's the difference between an independent and a dependent variable, of which in these situations, most people have a good intuitive notion of.
Given a disruptive event that happened to the person and they were able to avoid a worse fate that befell others in the same event (e.g. others died in the same plane crash) is more strongly perceived by people as an instance of "overcoming the odds" than when someone did not experience that event at all. By the time the disaster is past the event horizon (e.g. the plane is, say, in an unrecoverable stall and plummeting toward the ground), the odds of avoiding lethal shock, injuries, or dismemberment seems fairly low.
It's perhaps a perversely named 'survivorship bias', where all victims -- survivors or not -- got into that situation as a cumulative result of all of their (and others') choices leading up to that moment, and that altering their plans ahead of time (by deliberately changing travel plans) would have invalidated the conditions required for their participation in that particular event. Interestingly, though, merely "missing the flight" is often considered to be very lucky, despite often not guaranteeing that the outcome would've been identical.
When people talk about "luck", they mean a absolutely random event that cannot be influenced in any way. A chaotic event can become less chaotic by controlling or reducing some of the parameters.
I'm a strong determinist. Effort, hard work and skill is irrelevant (any relevance comes from the fact that you're already in your statistical band for expected success and are trying to maximize within that). I believe most of your success is determined before you even take one step on this planet. Step one is acknowledging the truth: your initial circumstances dictate your future. Once this is acknowledged, we as a species can begin focusing on making the initial conditions ideal for everyone.
Note: I am not saying you shouldn't work hard. I am just saying that it's not doing as much as you think. Individual examples of success (I've done decently despite two parents who didn't finish elementary school, live in inner city, etc) are not of relevance for planning the future of the human race. The world is chaotic, so there will be outliers in spite of the "determinist property" of the world.
Parents' own desperation to "set their children up" for success is anecdotal confirmation of this fact.
I would rather believe in Existentialism. I come from a very poor background. Much of my childhood friends are either dead, in prison or working minimum wage. If I would have "acknowledged" the truth, like most of them did, I would have ended in the same position.
Humans are not animals. We can evolve of our own free will. Statistics do not apply at the individual level.
And what caused you to not acknowledge the so called truth. Determinism implies that even this acknowledgment was beyond your control, even though you feel like it wasn't.
I do accept that there is some "determinism" in life. You do not choose the game, you do not choose the board and you do not choose the pieces.
However, you are playing the game. To say that you have no control and that the game is playing itself is to have "mauvaise foi".
Life might limit your options but only you can make choices.
To wait until life cuts out all options but one is not letting life make choices for you. It's deceiving yourself. No choices are made, options are simply slowly getting removed from you. That's not having no freedom, that's not acting on your own freedom.
Hardcore existentialists will even say that the act of not acting on your own freedom is an act of freedom itself. You are free to let life take all options from you.
Suppose I could show you a "Raphmedia" response that I calculated, held aside while you were making this post, then showed you my calculated responses (top-5). If we compared the corpus to what you wrote, would you think differently about determinism and who you are? Maybe right? This presuppose I know a lot about Raphmedia, I'm thinking brain scan type detail (Google does pretty well with the search bar autocomplete using a lot less info).
I sort of feel like Raphmedia could be encoded, same here as well. Still, I enjoy the chats :)
"What is meant here by saying that existence precedes essence? It means that, first of all, man turns up, appears on the scene, and, only afterwards, defines himself. If man, as the existentialist conceives him, is indefinable, it is because at first he is nothing. Only afterward will he be something, and he himself will have made what he will be."
I believe I understand the arguments against freewill, but that doesn't answer the question of why people fighting for purpose and meaning.
> Step one is acknowledging the truth: your initial circumstances dictate your future. Once this is acknowledged, we as a species can begin focusing on making the initial conditions ideal for everyone.
The "we as a species can begin focusing on..." part seems to be framed like a choice. But if the choices of the species as a whole are the weighted sum of the choices of the individuals comprising it, and if the individual choices are strictly determined, then the future of the species is strictly determined too (that is, it is the result of society's strongly determined responses to a chaotic environment).
And I'm not saying it isn't (I don't know one way or the other). Just curious if this is what you meant.
There's no way to know what the outcome is until the end. Perhaps all of our suffering is necessary for us to realize something akin to what I said, and then we'll all be elevated.
Also, yes, I do believe our species future is determined. Since no one knows the future, all we can do is hope. Some people think determinism gives rise to fatalism, but I think the opposite -- determinism means everything matters but you (I do see that there's a contradiction here).
There's little downside. I guess we could improve the initial conditions of everyone for nothing :/ [1]
When you say "determinist" do you mean in the physical sense or some abstract social sense? Because if you mean in the physical sense, that has no bearing whatsoever on the role of hard work.
Shouldn't the arrow that connects psychology to ability also pass through factors like effort, hard work and skill, if you expand that connection? Doesn't that imply the opposite of what you said? That effort, hard work and skill do cause success, but they just aren't the "ultimate" cause, whatever that means?
Yeah, that's completely irrelevant. Even if the universe is deterministic, having a particular brain configuration (which we call "work ethic") correlates with being successful later. Determinism or stochasticism has no effective bearing at this high of a level of abstraction.
Yeah, I don't think the article is trying to make a claim about the existence of physical causality, it's about what attitude we ought to take to take.
Maybe. The article is talking about luck, without talking about what exactly "luck" is. If luck is defined as favorable circumstances, then the article really is talking about initial conditions cascading into good opportunities. I believe talking about the good opportunities without talking about the conditions that gave rise to them is harmful. It creates the illusion that you can just create the good opportunities without the appropriate conditions.
I am anti-determinist and Soren Kierkegaard (founder of existentialist thought) so inspired me that I named my son Soren. The fight between the two parties of thought is huge and bigger then Windows vs OS X.
> Jean-Paul Sartre:
"What is meant here by saying that existence precedes essence? It means that, first of all, man turns up, appears on the scene, and, only afterwards, defines himself. If man, as the existentialist conceives him, is indefinable, it is because at first he is nothing. Only afterward will he be something, and he himself will have made what he will be."
Society sees luck in terms of fairness. This article used the word fair or fairness zero times. Fairness is a HUGE issue in deterministic thought especially dealing with how we perceive others around us.
> The whole process of constructing life narratives is biased in ways that almost guarantee that people won’t recognize the role of chance events adequately.
This is also a cultural thing. Here in Sweden it is easier that people dismisses their achievements to not look like they are bragging and to accept that chance is part of life. I do that myself. And I feel better and less stressed recognizing that luck is part of why I have what I have.
So I work not too hard - that can be bad for my health and a bad long term investment - not too little - work is needed to achieve anything and you have to do your part to not let other down. So you work lagom.
So if I believe in luck I will be more inclined to pay high taxes? I don't think that's how it works.
I mean of course people with money who realise not everyone who is poor is poor because they're lazy bums will be more inclined to help a "poor person" than they would if they believed all poor are lazy bums. But does that mean they will accept high taxation? Say I am rich and narcissistic, I believe I'm better than everyone and that my skill put me on top. I then realise that other who are skilled are poor and I want to help them become richer. Do I believe that paying the government to use my money for welfare to be the most effective use of my money to fulfil this end? Probably not in that case.
Furthermore some people are lucky, some unlucky. This does not mean that no effort but mere luck goes into building an empire. If luck was the only factor then sure, this argument or taxation might hold. But there's a lot more than luck to it, which is much more in the control of the individual.
If you can't see luck as deciding factor in being extremely rich or poor, your world-view will dictate that hard work and discipline can get you out of poverty. Therefore, there is no need to help other people and the only tax you need to pay is the minimum needed to keep the nation state you depend on afloat. If you see luck as a factor, then you either understand that those with good luck need to give a bit more (=pay more tax) so that those with bad luck are better off, or you are a cruel person and just say "well, unlucky you, go to rot, I don't care." So yes, accepting luck as a factor in life plays a fundamental role, including your (possible) willingness to pay tax. At least, if you posses some kind of empathy.
> Furthermore some people are lucky, some unlucky. This does not mean that no effort but mere luck goes into building an empire. If luck was the only factor then sure, this argument or taxation might hold. But there's a lot more than luck to it, which is much more in the control of the individual.
The point here again is that for the extremes the luck factor becomes dominant over anything else: If you are among the very worst off, you probably didn't just accrue that due to being lazy (or, in fact, anything within your control, assuming you are not somehow mentally handicapped - which is bad luck, again...). And similar for the opposite end: There are a significant number of persons with nearly the exact same abilities and ambitions as the very top performers, so the final "selection" of who gets to be the top performer depends far more on luck than on those skills (as the article outlines, by the way).
No.This was exactly the response I was expecting and giving more does not equal pay more taxes.
Putting an equal sign between helping your peers/being altruistic and paying taxes is the logical flaw in my opinion.
I argue that paying taxes is not the most effective way of helping others and therefore whether I believe becoming rich is a matter of luck or not becomes irrelevant in regard to whether rich should pay high taxes or not.
Though of course not everyone will have my views on that matter and therefore a subset, however big, will follow your line of thought instead, meaning the number of happy-to-pay-tax people would increase if their perception of luck changed as proposed in the article.
However what I'm arguing against is that A >necessarily< leads to B. As it does depend on other factors too.
Ben Franklin has a great line on this topic - "Diligence is the mother of good luck."
The author illustrates this major point with an example of the "TOP" cellist in the world:
"One [cellist] earns eight or nine figures a year while the cellist who is almost as good is teaching music lessons to third graders in New Jersey somewhere. . . The person who is eventually successful got there by defeating thousands, maybe tens of thousands, of rivals in competitions that started at an early age. . . [but] the luckiest one . . [is] that person who is going to win the contest most of the time."
EG - you need to put in the hours of preparation & subject yourself to competition of the highest order to even have a chance at being the "luckiest" in your field.
This just pushes the question back one step. How many people have the opportunity to buy a cello at a young enough age to practice enough hours to become the best?
I'm not saying it always ends in luck, actually I just don't think this is the right line of reasoning. Frank's point is about the importance of luck in the real world, but also about taking the appropriate attitude towards it. As weird as it might sound, those two points aren't necessarily related.
There is a pretty good book that addresses some of the business aspects of this... "Competing Against Luck" by David Duncan and Clayton Christiansen (the same guy who wrote "The Innovator's Dilemma"). I'm not done with it yet but so far it goes into some interesting detail about how to reframe everything people pay for as jobs... and that building a successful business is about understanding the job to be done and mastering it.
I've read the book and the title still makes no sense to me. I was expecting a book about how to 'rectify'(in the electrical engineering sense) chaos in business.
It seems like "Jobs That Need Doing" or "Products Have Jobs Too" would have been much better titles for the book.
Agree, I think the title is more about marketing the book than accurately describing the content. That said I think there are a lot of people (me included sometimes) who make interesting things without thinking carefully about what the user really wants to achieve... so the book has some value.
A few of the commenters here mention meritocracy, and it seems to me that they value it, or think that it is something we should strive for. I would just like to point our that the term "meritocracy" originally carried a negative connotation, with a very elitist endgame[1].
the first thing that impacts your future success is the luck of the conditions of your birth. you have no control over this. hard work MAY make up for this, however having a "better" birth condition plus this same hard work does not negate the value of that first starting position.
this is lost on many successful people who wrongly attribute the entirety of their success to their own efforts and presume that anyone who is not successful has simply not worked hard.
huge success may have luck, but it is always in combination with greed.
The average worker and entrepreneur wannabe in Silicon Valley has nowhere near the requisite and absolute focus on pure self interest that Larry Ellison, Bill Gates, Steve Jobs, etc. have/had. Look to how Woz or Paul Allen was treated by them.
A lot of this "luck" can be traced back very easily to causes like "had two parents who gave a damn" or "had enough to eat eat growing up." The people pushing this narrative that you're not really responsible for your failure / success want it both ways. They want to make you admit that you benefit from living in a peaceful stable society with infrastructure, while also not wanting to hold parents accountable for having too many kids too early, or admit that impact that divorce has on young children. It always comes down to pushing some narrative that is meant to justify further state intrusion into our lives and the dismantling of the family unit, all with pseudo-scientific (see "the gray sciences") justifications and emotional appeals. Spare me the bullshit, I aint buying it.
EDIT -
Looking for another example of this obvious propaganda? Try the latest episode of RadioLab:
Though this is really just giving people the opportunity to down vote me twice, I feel the need to expand on this:
The war on self-determination, and promotion of the notion that you're not really responsible for your lot in life is an ongoing narrative. Basically the introduction are always the sanest arguments: There's a history of racism / sexism that people are still struggling to overcome. The benefits of having a safe society with infrastructure. Of course the implications they then allude to are that if you question the wisdom or effectiveness of any particular conclusion or prescribed policy they advocate for, then you are racists and hate public roads (this should sound awfully familiar to any libertarians). Also the hypocrisy of saying that others are just ignorant of all the hidden things that helped them succeed, while also ignoring things like single-motherhood and having large numbers of children as being obvious causes for failure (both for the parent(s) and children) is particularly glaring.
What it comes down to is basically not wanting those who succeed to feel like they are in any way superior to others, by giving all credit to institutions that the modern neo-marxists (who now call themselves progressives) support (such as public school systems), while also not wanting those who fail to feel like they are in any way inferior to others, by giving all credit to institutions that they dislike (like law enforcement). Also the benefits of institutions they dislike are also completely ignored (family, religious communities, etc...)
Make no mistake, this is a lie meant to justify stripping you of your individual freedom by asserting that you are not in fact an individual capable of any sort of self-direction, but a predictable causal robot of the society in which you live. The continuing inability of the social sciences to make reliable testable claims is merely in an inconvenience to their demographics as destiny mentality. That such an ideology, which attempts to shackle you to easily sorted "identities" bills itself as transcending these barriers, is some sick form of double think that is now spread as gospel by public educators (the priestly caste in this faith that refuses to admit that it is one).
I urge those of you who are have children, and are concerned for their well-being to make sure you expose your children to the insanity of this philosophy in the same way that you would seek to vaccinate them from the virus of religious BS. Because make no mistake, if you don't tell them about it with the appropriate criticism and skepticism, others will do it for you, but in an attempt to sway your child to giving up their self-determination to a nanny-state, and embracing a perverse view of justice called "social justice" where the individual reaping what they sow is of no consequence, and all that matters are peoples not people.
I recently saw a very enlightening video on the subject of individualism versus collectivism that somewhat echoes your thoughts: https://www.youtube.com/watch?v=sNB38U04sNM
Your "lot", on the other hand, I define as what you were born with. How you were raised, where you grew up, what kind of education you got -- everything you can't control that does have a significant impact on your life's outcomes. You can work to improve your lot, or minimize its impact on your life, but it's very difficult.
Of course there's some correlation: those with a good lot often learn early how to manage luck, and those who manage luck well can negate a poor lot.
Hence I begrudge no-one with seemingly good "luck": often (possibly more than not), their fortune is simply a byproduct of how they managed their luck. Good for them!
But those born into a good lot? They're the true "lucky" ones.