The book The Millionaire Next Door provided data to support "Seek wealth, not money or status".
The book was written by finance professors who examined the characteristics of actual millionaires. They found a lot of people who appeared to be millionaires did not actually have a net worth over a million dollars.
High status professional are expected to drive nice cars and live in a big house. It's harder to be a millionaire if you're spending a lot of money.
The authors were surprised to find that a lot of the Americans with a net worth over a million did not fit any of the "millionaire stereotypes" at all. They drive an old pickup truck and drink Bud Light.
I like the Tweet thread, but prefer the Millionaire Next Door cause it's backed up by actual data. It also seems like the Tweet thread is focused on advice that'll get you a net worth in the top 0.1%. The central premise of the Millionaire Next Door is a lot of people have "regular jobs" and get rich (depending on your definition of rich). See the janitor that amassed an $8 million dollar fortune: https://www.cnbc.com/2016/08/29/janitor-secretly-amassed-an-...
I sometimes seriously wonder if you born around the 1960s, how didn't you become a millionaire?
Rents were lower, wages were higher, safe investments like T-bills and CD had higher yields, homes exploded in value, education and health care were a fraction of the cost. If you worked at even a minimum wage job you were on track to being a millionaire just by putting money in the bank.
I asked my parents about this recently and it turns out they actually are millionaires... I knew the were well off, but thought they had a third or a quarter of that, I literally had no idea.
Often the first trick is having children. It turns out to be a good way to spend a lot of money. Especially having relatively more children. Other ways are avoiding good investments (it’s already easy today and was even easier 40 years ago when brokerages were more high touch and it was harder to find good information. Another aspect is being bad at investing in the typical way: switching from equities to bonds when there’s a market crash), avoiding investing at all (eg just putting money in a savings account), just spending a lot of money on depreciating assets and not saving, and not earning so much money in the early years when compounding pays off the most or the later years due to seeking out things other than high pay.
> Often the first trick is having children. It turns out to be a good way to spend a lot of money.
After hearing this for years, I assumed we’d be hemorrhaging cash once we had kids. As it turns out, kids have been surprisingly much cheaper than I thought.
It’s very possible to spend exorbitant amounts of money on children, but it’s not a necessity. Obviously, plenty of families are raising kids at the median US income which is vastly lower than what we can make in tech careers.
The internet narrative that kids will destroy your finances has been greatly exaggerated for those of us in tech careers. I suggest everyone considering children take some time to talk to actual prenatal around them rather than assuming the worst from internet anecdotes.
From what I've read, a decent portion of the cost is in additional housing expenses. If a couple is planning on having children, those housing costs will most likely come at prior to actually having kids, moving into a larger space in preparation. As a result, the cost difference at the time of having kids isn't as much of a jump.
(At least, that's my interpretation of the available data as I put together estimated budgets for the next 5/10/20 years.)
Child care is crazy expensive if you have two working parents with full time jobs. Most schools or day cares let out around three. If you normally get home between six and seven like most people do then you still need to figure out a few hours of care which means hiring someone. But finding a good person who only wants those hours is hard. And even if your daycare has late hours many people don’t want their kid in daycare for that long, since they don’t get individual attention and if you can afford it you probably don’t want your child in daycare from 8-6 every day. So unless you have family nearby who help you raise kids, it can cost a fortune.
> Child care is crazy expensive if you have two working parents with full time jobs.
Childcare is expensive, but it's still a fraction of the after-tax compensation of most professional jobs. Recent tax changes have made it even more affordable.
> Most schools or day cares let out around three. If you normally get home between six and seven like most people do then you still need to figure out a few hours of care which means hiring someone.
Every daycare we toured was open until 5-6PM. I don't know anyone who hires additional help for a couple hours in the afternoon. If you're in tech, it's not hard to find a job that allows both parents to stagger their working hours so that one can pick them up.
Around here, it's very common for parents of young children to come into the office early and leave early to pick up kids. It's a common practice and plenty of companies support it.
> So unless you have family nearby who help you raise kids, it can cost a fortune.
Again, this hasn't been my experience nor that of any of my parent friends. Also keep in mind that kids grow up fast and daycare isn't something you need to do forever.
Frankly, most non-parents I know have vastly overestimated how expensive and painful it is to raise kids. This is especially true of those who grew up reading Reddit, where angry /r/childfree posts used to hit the front page with regularity.
As a dad, I Aagree 100%. To be honest I don't know how people actually manage to spend those reported fortunes on their kids. For example, kids often show more interest in pine cones than expensive toys. Or play ancient worthless but still good musical instruments. etc etc. I think a lot of people think they need a gigantic car when they have kids. Just tell 'em when you go away on holiday you can only take a few toys. Seems to work, everything will still be there when you come back. ;)
Well said. There is too much being made about how difficult and expensive it is to bring up kids... and sometimes by people who spend thousands on their pets!
Right but if you’re in a typical high-paying tech career (and you don’t want to send your children to private schools) then spending a more typical amount on your children means spending proportionally much less of your income than the average American (remember, this thread was about why more Americans born in the 60’s aren’t millionaires). It will be especially affordable if you get e.g. some level of childcare as a work benefit as this is often one of the biggest expenses to ordinary middle class Americans (either directly or in opportunity cost to parents who have to take more time off work)
We lived happily in an 800 square foot apartment, paid nothing for child care, both held well-paid full-time professional jobs, and saved nothing towards college funds.
All of those changed in some way or other once we started planning to have kids.
It’s also been totally worth it, but that’s beside the financial impact.
Even if the best case scenario is cheaper than you thought it's still a huge gamble. What if your kid is born with a condition that requires lifelong expensive treatment? What if your kid turns out to be a clumsy driver, or never moves out of your home?
Bay Area child care: $1,800-$2,000/child. Then factor additional rooms with housing at $1,000-$1,200/sqft. A couple of children easily add expenses of $8-$10k/month is pre tax income.
Raising multiple young children with their own individual bedrooms in one of the most expensive cities in the country is an edge case.
That said, it's entirely doable, especially in an age where FAANG companies are paying huge compensation in that area anyway.
Obviously, it doesn't make sense for someone with a median non-tech salary to try to raise multiple kids in one of the most expensive areas in the country. For tech people working tech jobs, it still works out fine though.
> The internet narrative that kids will destroy your finances has been greatly exaggerated for those of us in tech careers.
That's a pretty dangerous suggestion to anyone contemplating this.
Kids are brutally expensive (in the US at least). Love my kid more than anything in the universe but let's not pretend it's cheap. Current spend is about $30K-$40K per year. Post-tax money of course, so that's ~$80K off the top from gross salary.
And then there's future university costs, which are trending to be more than my entire gross salary per year so not sure how that'll work out.
The thing about raising children is that the sky is the limit when it comes to spending money, time, and resources on them. It's not hard to find stories about people who spend their entire incomes on child raising. The catch is that these stories can be seen at every level of income, from $30K to $300K or more. Expenses can and will balloon to exorbitant amounts if you're not careful.
It helps to know parents with more traditional income levels to see how they function. If you're only surrounded by people spending $80K/year on their kids, it starts to feel like spending that much is the only option. It's not.
School alone is ~$20K. Babysitter costs vary based on hours, but it's never less than $1K/month. So those two make up ~35K/year. Add food, toys, camps, etc and it gets to 40K.
I’m assuming this means private school? Considering only 10% of K-12 students attend private school, it already skews the numbers.
If you talk about how expensive it is to own a 6k sq.ft. home, that can be true as well but both seem to speak towards lifestyle inflation rather than the norm.
Yes, private school. Because public schools around here aren't so great. That's the cheapest private school in the area, everything else is way more expensive.
The irony is that if I could afford a 3Ksqft home (forget 6Ksqft, I can't imagine anyone other than a few CEOs could afford that) I could live in an upscale area where the public schools are great.
People could also end up with extended periods of unemployment.
Inflation was brutal around 1980. (~14%)
Software development barely existed as a career option and you almost certainly needed a degree to land a job.
When I graduated from engineering grad school in 1981, my highest offer was $27K and that was a sector (oil biz) which was pretty high-flying at the time. That's about $80K today which is certainly not nothing but probably on the low end of what a lot of software developers expect. (I had the good timing to go back to grad school--which had been in the plans anyway--just as the oil biz was entering one of its cyclical downturns.)
> Software development barely existed as a career option and you almost certainly needed a degree to land a job.
I graduated in 1979. Both statements are quite incorrect. Software was paying well at the time, and was remarkable as more than a few in it had no degree, and certainly not a CS degree.
I had a friend who barely knew anything about software, but was fairly motivated. He was offered $40k in 1980. At the sane time, I was making $28k with a PhD in Physics working on lasers. We were young guys, it ruined our relationship.
I don't know what things are like at Microsoft today, but in the 90s they had not only developers with no degree, they even had dev leads with no degree.
"When I graduated from engineering grad school in 1981, my highest offer was $27K and that was a sector (oil biz) which was pretty high-flying at the time."
Hey, I remember that! My mother was retired from the bank she worked at for 40 years when the oil biz blew up in the late '80s.
This was in about 1984. But I was also in the offshore drilling business which was especially sensitive to oil prices given that offshore drilling was relatively expensive.
Similarly for milennials graduating around ~2008 like me. I had the good fortune to graduate right into the chasm of the financial collapse, so was happy with my little $28k/yr job. But with Boston not as crazy hot as it is now, and a roommate, rent was only $600/mo, with no need for a car. That meant I had plenty left over to put a bit in a low-cost index fund (VOO) every month, and damn, with the S&P 500 going from 800 then to 4,000 now... you can't help but end up with a good chunk of change in the bank!
Graduates now are coming into a hot market, so on the one hand they probably can't expect such appreciation on their investments, but on the other you can get crazy high salaries right off the bat! I seriously think it's far easier to become a millionaire now than any other time in history.
You got lucky but most people who graduate during a financial crisis pay for it their whole life. It is harder to get your first job so you get a not so good one and you can easily get stuck in a suboptimal situation for years.
In the dot-bomb era, a lot of people ended up with job offers rescinded or were laid off from their new jobs and ended up at least underemployed for 3 or 4 years. I consider myself very lucky to have navigated that period with a relatively low salary but no meaningful time unemployed.
That’s likely true. It seems the people who graduated a year or two later were similar in many ways except that the job market was a lot better. And indeed many people with the option chose to get a little extra education like a masters degree rather than graduating for this reason.
Why did you invest in a index fund? Who made you aware of index funds?
My point is when you know about what to do with your money it’s an obvious one which has payed off for you. Did you learn about index funds from family, friends or on your own?
As a grad from a similar time I never even heard or knew what a index fund was at that time. I was always good with money never spending what I didn’t have and a small amount of savings but had very little knowledge on finances in general. My parents never taught me, they where not poor but not well off, similar friends never talked about money.
It’s only later in life through curiosity and reading financial posts on the internet am I discovering how to better use my money. If someone would of sat me down in the early 2000s to educate me as a young adult I’d probably be well on my way to a million now. As a young adult fresh out of school/college unless you come from a family that is financially savvy it’s hard to know what to do with money.
This is probably why wealthy families create wealthy families.
If nothing else, inflation makes it easier to become a millionaire over time. A millionaire in the early 1900s would be equivalent to someone with $30 million today.
Having $1 million in retirement savings only lets you spend $40-50k per year during retirement. That's a pretty solid amount of money for not having to do any work, but doesn't lend itself to luxurious lifestyle that people think about when you say 'millionaire'.
Single earner households were more common, mortgage interest rates were above 10% for years, material goods were more expensive. There was no YouTube for learning home or auto repair. Cars weren't very reliable. Not all roses.
Good luck repairing a car now. They are way more reliable, and way more tolerant to owner neglect, but give me an old BMW 2002 or VW bug and I can repair pretty much everything in those machines with my Haynes manuals. Safety on the other hand is orders of magnitude better today.
Well yes, obviously. I was simply expanding on the parents comments that it was difficult to learn to repair your car (or potentially a washing machine). I don't think that's necessarily accurate. Yes, YouTube didn't exist, but it was still possible to get information to rebuild a carburetor and Pep Boys has been around since the 30s. Newer cars are just objectively much more complicated, and when it comes to something like replacing a head gasket, sure it's doable, but yeah I'm going to get somebody else to do that. On the other hand, if it was something like an old flathead, I could feel confident doing that on my own.
My parents were born in the 40s, but they’re roughly in the generation you’re talking about. They’re still poor. My mom didn’t work much. My dad didn’t make much. Neither were financially savvy.
However, every last one of their 5 siblings is indeed a millionaire after leading relatively modest middle-middle class lifestyles. Maybe one of them you could call upper-middle, but even they traded thriftiness in most areas for the appearance of wealth in others.
I see a mix across that generation as well. It seems some of those that struggle kept the mentality that helped their parents flourish: an expectation that you find a stable job and work it for 40 years. They weren’t exactly in the mindset to constantly hustle and constantly learn new skills. When globalization started to pull the rug out from under them in the 1980s many had difficulty remaining relevant in the economy.
People of this era spent a lot too! In the 70s and 80s not only was there a bicycle boom, but a sailboat boom too!
The working class had money and they spent it.
I don't think we'll ever see that level of luxury consumption by the working class ever again. We've all seen the graphs of how wealth decoupled away from the working class after Regan and how poor a share of wealth millennials have compared to their parents.
60s and 70s were the golden era of light aircraft as well. Lots of working class people flew airplanes as a hobby. (A significant multiple vs today anyway.)
Regulatory changes were a big part of that. IIRC, manufacturers were ruled to be liable for accidents, and they all pretty much stopped making planes. So now planes are rare, very-old Cessnas cost what several cars do instead of what a single car does, and development is so stagnant that leaded avgas is still a thing.
My mother was the head teller at a bank, with 40+ years of experience. When I graduated from college and got one of my first jobs, I mentioned my salary. She (who had been retired for several years at that time) told me she'd never made more than $25,000 per year.
Many people spend every dollar they make (and often then some.) That's how.
Becoming a millionaire in a couple decades is more about living below your means, and consistently saving and investing. "Just" putting money in the bank would not make you a millionaire. You still need growth.
Condos are still cheap. People need to chill out with the whole detached housing thing, it's not economical in the long run (centuries) and we're rapidly approaching the point where it stops making sense near the coasts of the US. A point many countries have already reached.
Citation needed with respect to expensive cities. And you don't even need to get very far away from many of those cities--like an hour from Boston, for example--until land isn't really a limiting factor.
At least near DC yeah condos are pretty cheap. I haven't checked Boston but it means housing supply is something that can be increased to meet demand so provided the local regulators are at least partly competent they shouldn't be too expensive.
In Boston metro I doubt you could find a decent condo in a decent area for much less than $500K. Which you can get a house on some land for an hour outside the city in some communities.
They could have spent and wasted a lot of money, but if at least some of that money went into real estate that they still own, then they’re probably millionaires.
Investing in funds wasn't preached by every other YouTuber (there wasn't even a YouTube equivalent, obviously). Investment advice was something financial advisors were doing and they have a pretty bad track record.
My parents / grandparents had good salaries, got rich with houses, got incredibly early golden pensions, wasted some money with investment funds and market crises (2000, 2008).
> I sometimes seriously wonder if you born around the 1960s, how didn't you become a millionaire?
> wages were higher
Depends, of course, but for engineering jobs wages are way higher today.
I wasn't around in the 60s but my father was making less than $10K (as a professional with a PhD). That's about $80K today according to https://www.usinflationcalculator.com/
I can easily make twice that anywhere (without a PhD) and 3x-5x that if I shop around for best paying jobs.
No need to go back to the 60s though. In the 90s, $30K-$40K was a very nice starting salary for a software engineer. That's 52K-70K today. But entry level jobs today are paying far over 100K. I just hired a new grad last year for ~150K.
So salaries are certainly much, much higher today.
I'm always shocked every time that I read numbers like these. I'm from the EU. I don't know a single company that could afford to pay a single entry level job €100K or more. Realistic numbers for entry level positions are in the neighborhood of €20K. How can a company from EU hire anybody from the US?
They can’t. I’m shocked when I receive job solicitation from EU based companies. I got one from a Spanish company last year where the non-inflation adjusted salary was worse than my first year salary in a non-expensive locale 20 years ago.
I’d have chalked it up to just spam except the inquiry included recent conference talks & job history that wasn’t linked in simple ways.
Could have been a bot but one that did really interesting connection analysis but not basic salary survey linkage.
My only explanation for this is that you can buy a lot less with a dollar than a euro.
Just out of curiosity, inside what range of money was the offer? Around 20K, 30K, maybe more?
This isn’t the norm though. Are you in a tech-center? BLS numbers show the average median mid-career salary for software is $110k. Starting salary is slightly below $70k based on university data that aligns with government data for median salaries.
When I see these comments I wonder how much it’s skewed by the SV peer group on HN
> This isn’t the norm though. Are you in a tech-center?
I'm in silicon valley, so, yes.
But one doesn't have to be here to get hired here. The recent grad I mentioned wasn't anywhere near California when hired. It does need a willingness to move (although moves are on hold for now, of course).
Agreed, but maybe I missed your intent. My point is not whether it’s possible, but rather if it makes sense as a generalized statement. Given how much SV wages diverge from the national average, I don’t think the latter claim can be applied.
I remember precisely when engineers started getting paid for the first time. 1999. Warning. It’s lifetime expectation of earnings, not instantaneous earnings, and when changes devalue your skills, you’ll be in denial.
My parents ended up retiring with over $1m but growing up I remember constantly feeling like my father was terrible with money (to this day there are 8 cars parked at his house) and he worked a very middle-class middle-management job for his entire life. I'm worried the million they have(/had?) wont stretch for the rest of their remaining lifespan...
You are right.
But they were not millionaires when $1M was “real money.”
Inflation has a lot to do with that. The garbage house in Sunnyvale I bought for $128k in 1979 dollars is worth $2.2M today, but I assure you, it’s still a garbage house, a crash pad for a pair of 60-hour-a-week careerists. To me, real value was curing my wife’s cancer, my phone, the Moderna vaccine, high bypass turbofan engines, connections I’ve made on Twitter, Sci-Hub, zlib, etc.
> The book The Millionaire Next Door provided data to support "Seek wealth, not money or status". […] I like the Tweet thread, but prefer the Millionaire Next Door cause it's backed up by actual data.
Fooled by Randomness by Nassim Taleb, most/more famous for Black Swan, pokes holes in the methodology used in TMND, specifically survivorship bias.
Another observation from FbR:
> I will set aside the point that I see no special heroism in accumulating money, particularly if, in addition, the person is foolish enough to not even try to derive any tangible benefit from the wealth (aside from the pleasure of regularly counting the beans).
Personally, I find living well below my means leads to a great deal of happiness. I never have to stress about money. Never have to worry about losing my job (as long as it isn't a long term loss). I can make future career decisions based on quality of life a not raw salary.
It's an opportunity cost like anything else, but I would argue having more wealth than you need is a tangible benefit all its own.
I don't think Taleb was advocating living above one's means, but that aestheticism is not necessarily a high moral accomplishment. You can't take your wealth across the River Styx, and Charon only demands a single coin, so what's the point of amassing it?
Taleb should know that the benefit is having f*k you money. I suppose that once said money is obtained, there may be no greater advantage in accumulating more.
>High status professional are expected to drive nice cars and live in a big house. It's harder to be a millionaire if you're spending a lot of money.
houses and cars are assets. god why do people believe this crud masquerading as science
>I like the Tweet thread, but prefer the Millionaire Next Door cause it's backed up by actual data. It also seems like the Tweet thread is focused on advice that'll get you a net worth in the top 0.1%. The central premise of the Millionaire Next Door is a lot of people have "regular jobs" and get rich (depending on your definition of rich). See the janitor that amassed an $8 million dollar fortune: https://www.cnbc.com/2016/08/29/janitor-secretly-amassed-an-...
The only reason why the janitor story is newsworthy is because of how exceedingly rare it is, not because this is something that can be reproduced. no one publishes stories about lawyers, execs, doctors, coders, bankers, etc. donating millions. You have to donate tens of millions for Harvard to care.
Technically. What matters is that the house you live in and the car you drive are not investments. Choosing expensive ones is a bad decision if you want to accumulate wealth.
At best it's an opportunity cost - you are tying up money which could become an investment. Practically it's much worse - a car is practically guaranteed to lose most its value within a few years. A house might gain value but if you want to actually realize the gains you are left without a place to live, so these gains are imaginary money.
right, but they are assets nonetheless, which is why police repossess them for asset forfeitures, and some cars even gain value by becoming collectible
> some cars even gain value by becoming collectible
I've run some figures. Almost none pay back their storage, maintenance, and tax costs, let alone the opportunity cost of tying up the money.
I remember on an episode of "Antiques Roadshow" where some guy had a couple Leica's his father bought in the 1960s. They were mint, with all manuals, receipts, etc. The amount they were worth was pretty large, and the guy was ecstatic that he'd hit the jackpot.
The trouble was, if his father had put the same money into the S&P500, a completely boring investment, it'd be worth more today than those cameras.
Not sure if mint means the cameras were never used or just well maintained?
But if the father was able to take a lifetime of great photos in addition to the cameras increasing in value - I think I go with the camera 100/100 times.
Sure, but I think the point here is that given the option to maximize investment in a depreciating asset (buy fancy car) or minimize that investment (buy an inexpensive car) and invest the difference elsewhere, it's better to do the latter.
personally I do not count my primary residence or my daily truck assets even though they’re paid off.
the reason being if I lose them I can’t maintain my current quality of life. so the rising valuation of housing is a net negative, just more tax revenue for the state, doesn’t do me any favor
This isn't really true anymore. I just sold a 2 year old car with 25k miles on it for just 10% less than I originally paid. Prior to that I sold a 1 year old car with 18k miles on it for 1% less than I paid. You can also lease new cars for a very low fixed rate which includes all maintenance, insurance, etc. There is a value in having a safe, new, reliable car.
The chip shortage has put a dent in new car supply, driving prices up and having ripple effects on the used car market. It's an unusual time and shouldn't be thought of as the new normal.
Anecdotally my used car gained 25% in value over the last six months. But if I sold it and still want something to drive, I'm on the hook to buy a replacement that is also priced higher than normal.
The last time I looked at used vehicle prices, they didn't seem like great deals. Also, I think with modern cars, the reality is that you can get the latest and greatest and, after 10+ years, they're still pretty darned reliable. The trick, especially in snow country, is to get rid of them before rust-related issues, among other things, become a problem. I have a 10 year old vehicle and will probably think about replacing over the next few years.
Things also seem to have slowed down for year to year changes. My 2016 VW GTI is literally the same as the 2021 that is still being sold, for example. A lot of models seem maxed out feature wise. I think we might be at peak car lol
I don't know, we've been buying my wife the same make and model for some time. The latest upgrade can talk to my phone, is more powerful and about 25% more efficient. The increased efficiency alone will save us 50% of the capital cost over the period we own it.
I expect its replacement will be either a PHEV or full EV, a huge change.
Do you have any resources or particular qualms with Thomas Stanley's research techniques? To me, it seemed like he was drawing conclusions based on data. Interested in why you think it was "crud masquerading as science".
I would guess that the majority of people do not own their house outright. Just because you have a mortgage on a one million dollar house, doesn't mean you have one million dollars worth of wealth in your house.
Yes this is one of the main points of the book. What people think is wealth is usually just a lot of debt. Wealthy people use debt to make money. Poor people use debt to buy things, to paraphrase another article that was on HN a few weeks ago.
You are of course not wholly wrong. However, people paying on the latter half of a 30 year mortgage are almost certainly paying much less for housing than they would be paying to lease, due to inflation. And of course these payments are increasingly equity-weighted.
I think it’s going to be futile to argue with you (partially because you’re correct in the technical sense) but I’ll give it one shot.
Imagine you have 20 million. Should you buy a million dollar house outright, or get a mortgage? Look at the prime rate today and compare it with expected market returns over the life of a mortgage.
This is without even considering the ground reality of renting a place (which is the common alternative), where rents are liable to rise perpetually, and without considering a plethora of other factors which contribute to calling a mortgage an asset.
Of course, if you can get by without needing to pay for shelter at all, you should do that.
The whole point of accounting is to force black and white distinctions, especially in ambiguous situations. But in fact there is no ambiguity about this. Owing someone money doesn't earn you money. Owning an asset that you may have acquired with a loan is what earns you money.
I totally agree. I'm making the narrow point that a mortgage is a debt, and classified as a liability. A house is an asset. The benefit of purchasing real estate with leverage vs cash doesn't change how they sit on a balance sheet.
Personally I argue to everyone they should put down as little as possible for the reasons you're stating.
Only if the interest rate is fixed, right? Is it common for mortgage interest rates in the USA to be fixed at a set percentage for the life of the loan?
And this is one of the relatively few situations that work out in favor of the consumer. With most mortgages, you can refinance to a lower interest rate--perhaps with some associated costs--if rates go down. But if rates go up, you're locked in with a fixed rate mortgage.
> It's harder to be a millionaire if you're spending a lot of money.
"When most people say they want to be a millionaire, what they really mean is "I want to spend a million dollars," which is literally the opposite of being a millionaire."
I'd heard about Millionaire Next Door for years and mistakenly wrote it off as one of those scammy "buy my program" books about visualization.
Then it was gifted to me, and boy, was I wrong! Couldn't put it down. It's packed full of interesting tidbits and data. While I'd highly recommend reading the book yourself, I also wrote some notes on it here [0].
I'd love to see these same studies, but updated to 2021.
I've got good news for you! There was another book written 2 years ago called Everyday Millionaires by Chris Hogan that conducted a new study of millionaires. I think MND studied 100 millionaires, while EM studied 10000.
There are various competing concepts that most of us conflate erroneously most of the time:
* having much money in the bank
* having much property/wealth on the balance sheet
* earning much
* having an important role()
being able to afford all/most wants
* living lavishly
* being happy
(*) Angela Merkel might be one of the most powerful world leaders but earns 'only' around 20k a year. Greta Thunberg moves mountains and earns little/nothing for it.
Prominent politicians like George Bush, Obama, Hillary and Pelosi made almost all of their fortunes from "speaking fees", book sales, insider trading on stocks, etc.
If they were paid market rates, it would attract less of this corruption.
Anecdotally, at least in western Europe governments and companies seem a lot more careful of looking like they're disregarding the environment than they were 5 years ago (green washing is a thing but if organisations are doing it, at last they think perle care about it now). I don't think it's all down to her, but she played a part.
Supported Indian middlemen strike masquerading as a farmer's protests which among other things had the following demands from the Govt
- Ability to burn stubble without consequences, one of the primary causes for Smog in Delhi and North India every year contrary to people' perceptions that pollution and industries are primary source
- Subsidized diesel and fuel
- No restrictions on using groundwater in a water rich region which is facing a serious issues with the water table due to highly intensive agriculture mostly cultivating crops requiring a lot of water
- Continuing Govt subsidies on the above mentioned water intensive crops despite there being a significant overproduction and not allowing Govt subsidies to go towards more reasonable crops
- Not allowing farmers to sell their produce directly to the consumer or retailers (and receiving money directly in their accounts). Instead going through highly corrupt and legacy 'arthiyas' (middlemen) who add nothing but another layer of bureacracy for no value
Yes, i am not kidding. The 'environmentalist' Greta Thurnberg supported these protests because according to her and the media, breaking the lobby of powerful interests is akin to corporate takeover of poor farmers. This is without knowing anything about the subject and never involving herself in active debates about the topic
> High status professional are expected to drive nice cars and live in a big house. It's harder to be a millionaire if you're spending a lot of money.
> The authors were surprised to find that a lot of the Americans with a net worth over a million did not fit any of the "millionaire stereotypes" at all. They drive an old pickup truck and drink Bud Light.
So do you think people want the money, or do they want a big house and a fast car?
That's your prerogative, and there's nothing wrong with that. Others may prefer the freedom and stability afforded by a large amount of wealth-generating assets.
As someone with a 12 year old Nissan, and buys the cheapest beer beer I'm sympathetic. But what's the point of being a millionaire if you aren't spending? You can just do that on a regular low stress job.
To add to the argument about security, the average stock market return after inflation is around 7%. With investable assets of $1 million, that means you're being paid $70k/year, just for already being wealthy. I imagine that no matter how low stress a job can be, it can be even lower stress knowing that no matter what happens, even if you never work again, you would have sufficient income to live.
(This glosses over the variability of the market, but that just adjusts the amount of wealth needed relative to the yearly expenditures in order to continue indefinitely, and the principle still holds.)
Yeah that 7% is likely an illusion. If we kept up 7% a year forever just about every professional could retire at 50. But its unlikely to continue, we've had a 50 year bull market that is long overdue to end.
Thank you for finding a simple way to describe why that book bothered me so much. The author offers no room for rational dissent. You are either with him, or you're a fool.
In his value system, the additional security offered by millions is worth sacrificing every other potential want or desire in life for. I find that ridiculous, addition non-bullet proof security is just ONE of many things which must be evaluated for its relative worth based on ones own value system.
I say non bullet proof because I feel the author completely disregards the possibility of war or the country collapsing making the "security net" the money could otherwise buy be nullified entirely.
He also implicitly disregards mortality. The opportunity cost of every year spent with a focus on accumulation is one you can never get back. I guess in this case I'm thinking a lot about travel or living abroad at a reasonably young age where the impact is absolutely materially different from retirement in one's twilight years in Thailand.
Having a seven figure liquid wealth affords you the freedom to step away from a toxic job, relationship or other situation. Things that induce a high level of stress for most middle class families like a $5-10k repair bill become mere inconveniences. College costs for the kids are manageable, health crises can be navigated usually.
Earning a massive salary and spending every last dime is a far more stressful way to lead one's life and likely much less enjoyable save for some short lived hedonic rushes when purchasing that newest toy.
Its good insight but also recognize that all of these distinctions are arbitrary.
The only usefulness in these observations is knowing that you can keep raising the rent and there will still be people willing to pay it. Too bad about the favela at the end of your driveway though, but the millionaire janitor’s children will still be able to make rent.
But being a millionaire in today's world is not being rich or wealthy. Millionaire Next Door was published *25 years ago*.
To be relevant today it should be titled "Multi-Millionaire* Next Door (* Net worth > 5M)".
I'm sure for a lot of people 1M sounds like a lot, but when a majority of your wealth is tied up in your house - a much much larger % of a 1M dollars today than even 15 years ago - it's not working for you.
(Though, I concede that today, you have the option of refinancing and putting that capital to work, as interest rates are low).
This also has something, if not, a lot to do with millionaire farmers, mostly funded by incredible and often corrupt subsidies from the government. So before subsidies and pork, they would have made a more modest wage, but the game can be abused pretty easily. If its not designed to be abused because what benefits big agriculture also benefits medium sized "family" farms. Family farms may actually be a series of a dozen or more farms where the owning family does no actual farming on their own, but still live a rural lifestyle (pickups, bud light).
Secondly, its also skewed by government workers on fat pensions who can become millionaires pretty easily due to these collectively bargained benefits but also inflated salaries, especially overtime which is often abused in government jobs.
Lastly, a lot of this is self-reporting. Some people like to put on a modest front for their own reasons. The author got to see their pickup truck and muddy workboots, but not their Florida vacation home or Wisconsin lake house. Or the Corvette under a cover in the 2nd garage.
So some of the advice is hard to handle and not applicable to most. You can sort of FIRE your way into wealth and live like a miserable miser or hope you were born into a socio-economic culture where buying a lot of farmland is possible or getting a public sector union job is possible.
Discussions like these seem to miss the critical difference between individually and socially rational incentives and behaviors. Surely, given you at least live in a place that is sufficiently secure and stable with liberal markets and access to capital, anyone can get rich by following in the footsteps of the investor class. It is definitely not the case that everyone can get rich this way. If all 8 billion people on the planet did nothing but shuffle around paper ownership claims, there would be nothing to actually own. For an economy to produce anything at all, the vast majority of participants need to be on the ground making stuff, with only a tiny vanishing few shuffling paper at the top to decide who gets to own the inputs and outputs.
Maybe we'll actually reach some future where all production and maintenance labor is fully automated and most participants in an economy won't be human and we can just ethically enslave them for the benefit of human owners, but we're nowhere near that point.
I'm living right now in a hotbed of construction, a rapid growth metro, and I'm in the middle of it. Three lots I can see from my bedroom window are being leveled and turned into townhouses. That work is being done by people. They certainly have machine work multipliers. Nobody is carrying lumber and stone by hand from quarries to job site. Nobody is leveling the earth with shovels and trowels. But the bobcats and trucks are still operated by humans. Pipe is laid by humans. Walls are erected by humans. If all those people tried to do my job instead and became coders, or worse, tried to become investors, I and all the investors would be left with nowhere to live because no one would be building houses. We'd have no water or electricity if no one was laying the pipes and lines.
At some point, we should realize this and attempt to have an economy that recognizes most people in the economy have to be doing basic labor for there to be an economy at all, and figure out a way to accomplish this without these people needing to live paycheck to paycheck with the looming threat of a medical emergency able to wipe them out permanently. We can't just tell them to all change their focus from doing work to building wealth, because if they actually all do that, there will no longer be any wealth.
The author is mostly right, in this meta the best thing you can do is leverage as much as you can and pray that it doesn't burst at the wrong time. But that takes luck.
Incentives drive behavior. If you perverse the incentives, the economy will follow.
Why is our productivity growth at all time lows? Because our best are figuring out how to get people to click ads. Our best are trying to work out exactly which financial product will go up the most safely.
When the increase of the money supply outpaces the increase in productivity, everyone mistakes leverage for genius.
> Maybe we'll actually reach some future where all production and maintenance labor is fully automated and most participants in an economy won't be human and we can just ethically enslave them for the benefit of human owners, but we're nowhere near that point.
It’s equally likely that in such a future most people will be on some version of UBI that allows them to get by, but wealth, in whatever form it takes, will still be limited to a relatively small subset of people. There’s no reason to believe that the robots/AGI/whatever means of production will naturally be owned collectively rather than privately. I hope the future turns out better, but there seems to be something in human nature that makes inequity tend to stick around.
If de-globalization continues at its current pace, we'll probably find that a lot more labor is required in the future.
A lot of what we imagine to be automated work is actually just work outsourced to countries with cheaper labor and a container port. In the event that global supply chains becomes unreliable, a wave of on-shoring will follow.
> There’s no reason to believe that the robots/AGI/whatever means of production will naturally be owned collectively rather than privately.
I think that depends on the tech and what it can do. If we get a general purpose construction robot that can also make copies of itself — be that a 3D printer with some manual assembly required once the parts come out, or a genetically engineered programmable moss, or bioprinted fairy drones with microchips for brains — anything like that has close to no marginal cost to give to everyone rather than just to the rich.
If we never get von Neumann tech? Then sure, I agree with you.
I feel like you didn't read or listen to the content. Naval is not suggesting you have to be an investor to get rich.
But you do have to do something that gives you leverage, like starting a company. You're not going to get rich renting your time to an employer (unless you get lucky with stock options, or investing your income, but that's back to the point about leverage.)
>You're not going to get rich renting your time to an employer
poor goldman sachs execs. how ripepd off they are to only be making millions/year when they could fire thier boss and start a subway franchise. poor a-list actors only making $20/million per film. Most small businesses,startups fail. Odds are a doctor making 7-figures will become more rich compared to an entrepreneur who dropped out of college.
A-list actors are pretty much defined by being the extremely narrow elite of the profession (entry into which elite requires work and talent and lots of luck) whose income is determined by their value licensing their personal brand to attach to things.
> Odds are a doctor making 7-figures will become more rich compared to an entrepreneur who dropped out of college.
Sure, but most doctors don’t make 7 figures. Anesthesiologists (the highest paid medical occupation code in BLS data) have a national mean salary of $271K.
Most people with a very high salary end up with an expensive lifestyle to match it. If they lose their job, they’ll need to find another one before long. In this sense, they are not that different from someone making 1/10th the salary.
The main difference between being rich and being wealthy is owning and controlling your time.
I hear this argument a lot. Why would lifestyles become more expensive if you become an exec but not a successful entrepreneur? Successful entrepreneurs like fancy, nice things too.
That’s true, but the entrepreneur owns some piece of an income-generating asset. If the exec stops working, their income immediately goes to zero, and if they didn’t save or get some equity, their wealth could be near zero too. The entrepreneur can stop working, but still be left with both income and a valuable asset (their piece of the business).
The exec can invest his excess income into income-generating assets as well, with no problem. In addition, he can use his constant cash flow as collateral to take out a loan to invest in same income generating asset. And the variance for the exec is much lower than for the entrepreneur (failure rate much much higher for startup founders).
I feel like those places are the exceptions rather than the baseline. Working as a software developer in Europe, I make around 18k Euros after taxes per year.
While I will eventually make a bit more, it would take me 74 years to make a million even if I were to save 75% of my wages, assuming that inflation is of no concern (or that modest investments that match it are in place).
Not everyone is well paid, hence a side hustle and any means of passive income make sense - especially if it scales without issues (such as software, videos, music etc.).
Again, the original point isn’t that it’s impossible to get rich by selling your time but that you’ll most likely need some leverage (i.e. in the form of owning a business)
Becoming a doctor in the US is the most sure fire way to become wealthy across a whole occupation class. Less so today, as they are being squeezed, but they had a goldmine from 1980 to 2010s.
If you’re not becoming wealthy with these kinds of average incomes, you’re doing something wrong:
> Or an engineer at FAANG+M? There's literally millions of us
“Software and Web Developers, Programmers, and Testers”, total, in the US are under 2 million, and FAANG+M are a small fraction of that. FAANG+M is around 1 million total employees, but most of that is Amazon, non-software.
The idea that there are millions of FAANGN+M software engineers is simply nowhere close to true.
Do you like upper middle class better? No, they're not flying private jets but unless they're right out of school with a lot of debt they're probably pretty comfortable.
Top executives and superstars can make lots of money. There are also very few of them and there's a winner-take-all mechanic. I wouldn't choose that as a path to wealth unless I have some unfair advantage. It's not a path available to your average person.
> Odds are a doctor making 7-figures will become more rich compared to an entrepreneur who dropped out of college.
The only doctors that make that much are either superstars with a brand of their own, or entrepreneurs with their own practice.
Doctors these days don't make that much money, but it varies a lot depending on location and specialization. I'd rather be a programmer or a lawyer from a money perspective.
I think the point of the original comment is that everyone can't follow that path, at least right now. Someone has to pick the oranges and work in the warehouse.
So pretending that everyone in those jobs is making bad choices is wrong, because someone has to do those jobs.
Someone has to do the job. But if people were smarter, or had better opportunities and made better decisions, nobody would want it, so it would pay more, and then it wouldn't suck so bad.
Garbage man actually pays quite well for an uneducated job because nobody wants to do it.
I think you've pointed out the fourth kind of luck, as described in the article. The people building the houses, driving the Bobcats, have a skill they've developed over time through their effort, that now affords them employment.
If you know how to do something, and someone needs that, they're going to call you up and ask you if you'd like to do that thing for some amount of time for some amount of money. So that ability is a form of wealth.
I don't think he's talking about everyone in the world becoming passive investors; kind of the opposite actually.
That literally is not what the author wrote though. He said that “if you’re the best at something and you’re connected with someone that needs that skill” then you’ll get some wealth potentially. That’s not the same as learning a trade that is easily accessible and attainable by anyone interested.
What the author basically says in the article is “be part of the owner class generating wealth or you are a parasite”. Talk about playing the very same status games he claims to eschew.
Have you read the article? It’s discussing wealth. Learning a trade is literally not what it’s about. It’s taking about how you should try to find ways for wealth generation to be a passive enterprise, but with an extremely toxic perspective.
> figure out a way to accomplish this without these people needing to live paycheck to paycheck with the looming threat of a medical emergency able to wipe them out permanently.
This is basically how you make people do very sucky jobs, such as construction. Almost no one does it because they like it - they do it because they see no better options. Countries with very rich societies (e.g. some Arab countries) don't have enough people who have no other choice and hence have to bring in plenty of migrants as otherwise the construction wouldn't happen.
> Anyone can come here, be poor, and then work really hard and make money, and get wealthy.
While I agree with some of the article, I feel like this statement simply isn't true anymore. Probably for software/hardware engineers, but there's a shrinking middle class in America who can't afford a house despite working multiple jobs and doing everything right. My grandfather worked at Safeway and could support my mom and save up to buy a house. Seems like this would be impossible now. I don't know what the crux of the problem is, but something is definitely wrong with our system.
"Getting rich" shouldn't be our metric, as it's arguably an unreachable goal. Rather, we should aim for something definitely possible: Make our successive generation better off than what we had (in the context of each family unit). If that means giving them a better education (or giving them an education at all), or passing down some wealth in the form of inheritance or wisdom, or making sure they have stable upbringing that you didn't have then so be it. That is good enough in the grand scheme of things, and I would argue is the most moral view we can take on this game if we take a multi-generational approach to it.
Exactly - the goal literally cannot be “make everyone rich” especially if you define rich as “top X% income/wealth”. The benchmark has to be elsewhere.
Why should labor sacrifice a comfortable existence when the elite could sacrifice their exotic united foods, quarterly first class trips to the Seychelles, and bi weekly shiatsu
Lack of supply, increasing demand. A system of government regulations designed to increase scarcity, while shuffling resulting gains to property owners.
HN users are good at picking something they don't agree and agure against it. It's fine. But how about discuss what you believe is intereting and useful?
+1 to these three. I also like the observation about the only things that are "permissionless and limitless leverage" being media and code. If you position yourself along on of those (or both) and are patient, you have the chance to become extremely wealthy, especially once you've mastered the other 3 points you mentioned.
Exactly! I used to travel a lot for work and talk to Uber drivers all over the country.
The immigrant ones had stories like "I own 3 of these cars, so 2 guys drive for me, and my daughter is in nursing school" or my favorite "I just got hired in Columbia University as a janitor so I can get my MBA there for free". While the Americans were just kinda resigned to driving the Uber.
Immigrants are self selecting - we are people who chose to make moves, get off our asses to make something of ourselves .so of course the idea of accreting valuable skills and assets is going to resonate with us.
I love immigrant stories! U know what we have in common as immigrants. We just love to work and make money, to see that our hands actually produce money that goes into our bank statement just brings joy. It is almost not about the money itself but the honor that we get knowing that people appreciate our service.
You probably can't imagine the kind of initiative it takes to leave where you are to start fresh somewhere else. THAT's the self-selection I am talking about.
My parents’ and their siblings and all of their extended family left their country to go to US and UK. But they all had homes and networks and a place to go back home if things went sideways. The collective wealth of their network is sufficient to provide its own safety net.
Contrast that to someone in the home country who might not have that network, and who landed a decent government job that affords enough to feed and shelter and educate family.
This person will not have the “initiative” to throw away a relatively sure future because they do not have the ability to count on friends/family to support them in case they fail.
There's a certain self selection in that people who are motivated and brave enough to move counties for a new life are the only ones you see. Back home there are also people who are resigned to their position (or getting money from the ones who have moved). Moving to a developed country from a developing one as someone unskilled takes a lot of effort and determination and luck (for skilled people to a certain extent too), so there's a survivorship bias here.
My family did not. US has chain immigration so all the family members come over (and did in my family). We still visit the second and third cousins in the home country.
But the point is there can be support from outside the government.
I’ve noticed immigrants to New Zealand are often highly motivated, work hard, and are well on their way to success.
i suspect that this is because there is a strong selection bias: it takes some serious effort and skill to be allowed to immigrate here (plus some luck maybe!).
Whether native or immigrant, rags to riches stories are almost always: a) incomplete (they leave out substantial advantages or good fortune); b) reek of survivorship bias (i.e. ignore the fact that for every success story there are dozens if not hundreds of them with poorer outcomes).
Yeah. I know HN doesn't like the social sciences, but people have actually studied social mobility and found how limited it is in the US and similar countries.
"You want wealth because it buys you freedom—so you don’t have to wear a tie like a collar around your neck; so you don’t have to wake up at 7:00 a.m. to rush to work and sit in commute traffic; so you don’t have to waste your life grinding productive hours away into a soulless job that doesn’t fulfill you."
Am I the only one here who doesn't have any kind of "wealth" as defined by the author, yet doesn't suffer from any of the above? We don't wear ties, I don't have a commute, and I really enjoy my job. Is investing any of my time(as in - sacrificing time that would be otherwise spent with my family or just on relaxing) in "wealth" still the right choice?
Honestly, it's a metaphor. It makes sense to try and understand the intended lesson. The fact that you don't actually wear a tie at work is kinda besides the point.
I LOVE my work. But I also LOVE the idea that I can stop working if I wanted to, at least for a while, because of savings.
“Industry, thrift and self-control are not sought because they create wealth, but because they create character.”
- Calvin Coolidge
I think our generation is forgetting some fundamentals: money at the expense of anything else. The problem with this approach, is not only that it destroys character in the individual, but that it also scales externalities to the rest of society.
Part of this narrative is sold by startup culture and technocrats preaching to "change the world", while in reality the majority is just chasing quick money. From FAANGs to VCs, they control the media that convince young people to do the same: Robinhood, GameStop, cryptocurrencies are just reflections of this epidemic.
This article is as ignorant as it gets as it refers to a misquoted saying "money is the root of all evil". The real quote is "the LOVE of money is the root of all evil" (aka. GREED)
"The vaunted American dream, the idea that life will get better, that progress is inevitable if we obey the rules and work hard, that material prosperity is assured, has been replaced by a hard and bitter truth. The American dream, we now know, is a lie. We will all be sacrificed. The virus of corporate abuse – the perverted belief that only corporate profit matters – has spread to outsource our jobs, cut the budgets of our schools, close our libraries, and plague our communities with foreclosures and unemployment." - Chris Hedges
The full verse: “For the love of money is a root of all kinds of evils. It is through this craving that some have wandered away from the faith and pierced themselves with many pangs.” -1 Timothy 6:10 (ESV)
> I think our generation is forgetting some fundamentals: money at the expense of anything else.
This makes it sound like it is a collection of individual failings that lead to market and growth remaining as the only normativities today.
It is the other way around; since religion and nation are left for dead after modernism, there is no glue layer that brings values together. People are not likely to be virtuous in isolation because in absence of coordinating factors, game theoretic advantage is on the one who cheats, at least in the short run. If there is no ambient sense of fair play, character doesn't pay the bills.
New generations are increasingly feeling being cheated out of a life preceding generations had had. There is only one button available to them and that is "more work, more growth, more hype".
The problem with the article's premise is in its framing; why does one feel that they need to be rich to feel secure to begin with? What anxiety locks us up on focusing on that goal? What buttons we could viably add back to the game?
You do a great job summarizing the problems that arise from greed, but I wonder if you recognize that there are countervailing benefits.
A lot of progress and innovation has been made by greedy individuals. I think much of this progress would be lost had they adopted more wholesome values, because greed is a superior motivator.
Greed is a superior motivator because it has no bounds. When someone is obsessed with accumulating wealth, it tends to be a never-ending pursuit. No matter how much wealth they accumulate, they're left wanting more. This is in stark contrast to more wholesome values, which tend to be more easily satiated.
I think another way to frame this is: the problem is not greed itself. Rather, the problem is that our current system of harnessing greed fails at controlling negative externalities. Without these negative externalities, greed would be a positive force.
>Greed is a superior motivator because it has no bounds. When someone is obsessed with accumulating wealth, it tends to be a never-ending pursuit. No matter how much wealth they accumulate, they're left wanting more. This is in stark contrast to more wholesome values, which tend to be more easily satiated.
I'm not sure why you are stating this like it is a universal fact. Plenty of people reach a level of wealth in which their desire for more is satiated and many people have a need to do good that is never fully satisfied. It all depends on the person.
Agreed. I'm speaking in generalities to make the point that, on average, greed is a superior motivating force. At least from personal experience, I've found far more people foregoing personal health and relationships for the sake of wealth accumulation than societal contribution. Even among those that eventually satiate their desire for wealth, it's mostly because their values have shifted (not because their ultimate value remains wealth accumulation and now they have enough).
You just matched one viewpoint with an opposing one. At least the OP's opinion has some empirical evidence in the form of Gates, Jobs, Rockefeller, Vanderbilt, and so on. All greedy robber barons of their time that made profound impacts on industry and society while treating their employees like grist for the mill.
Self determination theory is the opposite. And has a lot of empirical evidence.
Also check the overjustification effect to see how extrinsic motivation destroys any motivation.
Imo intrinsic > extrinsic
Any time any day.
Want examples? Look at passionate people. Look at academia. They’re not a handful if people but tons of them that did good work that helped innovation.
Gates stopped and started spending his money. If the wealthiest person in the world eventually gives up that suggests greed is bound, it’s simply high enough in many people that they never realize that goal.
Further the institution of retirement suggests greed isn’t an unlimited motivator for most people.
I doubt it, considering he's now the largest private farmland owner in the United States. He's got a LOT of capital and it's growing every second. Now he'll be splitting it with his wife though and I expect we'll hear more stories about his philandering. The guy's a demon. He just uses a PR company now to make himself look humanitarian. He even tried to teach Epstein to do the same to rehabilitate his image. https://www.theguardian.com/commentisfree/2021/apr/05/bill-g...https://www.nytimes.com/2019/10/12/business/jeffrey-epstein-...
For a decade he did, though not in the past 5 years. However, it’s kind of funny at those levels of wealth if you buy a 30 million dollar painting for example it’s likely worth more in a decade.
It’s not exactly difficult to spend a billion dollars, yet to spend several Billion dollars per year without retaining any value is basically just charity, politics, or bad investments.
> ...our current system of harnessing greed fails at controlling negative externalities. Without these negative externalities, greed would be a positive force.
I believe it isn't a "current system" attribute, but a chronic feature of human power dynamics in scarcity-bound systems. We've always had these negative externalities, but the reach and rapidity available to those at various apexes within our power structures has dramatically expanded in recent generations.
Greed could be perceived a positive force in the past because its negative externalities were limited to relatively local scope and durations, and its essential beneficial features could be extracted and applied in modified forms outside of those scopes. But it still sucked mightily for those within its blast radius.
I really wish there was structured, systematic study of human power structures in relation to the various common personality types engaged at different focal points of those structures I could investigate, as I feel quite naive and ignorant of them.
That's an interesting observation about bounded externalities and wider positive effects.
I hope someone studies the dynamics and effects of power through the lens you described.
It might show up in biological systems as well, as so many of these depend on resource competition and signalling in an ever changing, open evolution environment.
> That's an interesting observation about bounded externalities and wider positive effects.
To a first-order approximation my mental model I'm trying to look for extant literature upon: model the signalling as a message-passing system whose agents exhibit observational reflexivity while they pass the payload. Agents are simultaneously bounded by their individual observational capacity's volume (how much granularity, how fast, how broadly of topics, how far-ranging of inter-relationships they can comprehend).
If the hypothesis withstands systematic back-testing scrutiny against historical data, then the next step is to assess its predictive modeling power. Degrees of validation would help me resolve some confounding observations of my own that different organizing principles of various systems ("capitalism", "socialism", "communism", "anarcho-", "merchantilism", etc.) in different contexts (economic, biologic, social, etc.) appear to repeat certain patterns. As if the levers of control change an interface like a protein surface on a cell/bacterium/virus/DNA-strand/RNA-strand changes, but there is a certain "core API" functionality that is found over and over, like a "portable DSL" that is re-evolved in many contexts due to emergent properties of power structures in resource-constrained settings.
I wish I had Dyson Swarm-scale computronium and stor-tronium to help us process and synthesize all of history's known works to find out who else has gone down this rabbit hole, though. There is hardly any original thought when college-dorm-style chatting ideas like this, mostly new ideas only show up in engineering new capabilities and pursuing scientific discovery of new principles; our ancestors were smart cookies. The Vatican has vast stores of works yet to comprehend, for just one data source out of many (every nation's archives, every private archive, etc.).
Curse our limited lifespans, and simultaneously marvel at our verse's breathtaking beauty, right?
It doesn't make any sense to talk about "losing" progress. Either you're progressing or you're not. What you're potentially losing here is "speed of progress" which may or may not turn out to be beneficial to this planet's inhabitants over the long run.
I think it's questionable whether top-down interventions could ever control the negative externalities associated with greed.
The upside of character is it is a bottom-up limitation on creating negative externalities, placed on those who are best placed and informed to avoid creating them.
Admittedly, this only goes so far. Another issue is that people are so often greedy for status. Being zero-sum, it is inherently a negative externality when one achieves a status increase.
There are definitely counter-examples. Linux wasn't started because Torvalds thought it would get him rich quick. Rowling didn't write the first Harry Potter thinking it would eventually earn billions. Plenty of famous artists, inventors, and scientists died poor, only receiving posthumous recognition. Key vaccine researchers were resigned to struggling in less-profitable sectors of biotech until 2020 happened.[0][1]
People in a great many fields put in huge amounts of effort for very little financial reward (and even virtually guaranteed hardship), and sometimes that results in huge benefits for the world.
"When someone is obsessed with accumulating wealth, it tends to be a never-ending pursuit. "
Wealth creation is not value creation.
Just because you put money in your account, does not mean you 'grew the pie' - in fact - you can generate a lot of wealth individually, while shrinking the overall pie.
For example, some kinds of resource extraction do more environmental damage than the profits generated.
'Good Capitalism' creates a ton of value for society, and then captures some of those surpluses.
'Negative Capitalism' just grabs surpluses by whatever means: leverage, legalities, etc..
The problem is we generally don't have a language for distinguishing between the two.
As of today, I believe everything related to blockchain is 'bad capitalism' - in that, the externalities and effort are not worth the benefits (though that could change).
My mother was complaining yesterday about the volume of ads on Facebook - while I think ads are ok, when people are locked in and deluged, its starts to corrode the net value of a situation.
'The Web' and 'Google' probably create a lot of value.
'Facebook' and 'Blockchain' ... more dubious.
Because of the ridiculous amount of money available to be made in net-zero games, even respectable VC's have to pay attention.
It definitely bothers me that there is no language of distinction in the SV.
Finally, yes, greed is a quixotic motivator, and sometimes it actually does help.
> The problem is we generally don't have a language for distinguishing between the two.
There is a language for this sort of stuff, it's part of economics, they just don't teach people much of it by default in our public school system. I think some of the terms you're looking for are productivity, rent-seeking, etc.
More and more I think economics should be a bigger component of K-12 education even if it means pushing out some things to college like chemistry or calculus (or really, even CS). Basically all the wealthy first world countries are social democracies, with a large role for government spending/regulation in addition to the private sector. Getting more people to see the economy through an economic lens (as a complex series of cause-effect relationships and not a more simple story like "who are the bad people", which politics often devolves to) might help us as a country better connect the actions we need to take to the outcomes we desire.
Unfortunately, we don't have a language for this even in the domain of economics.
The difference between zero-sum wealth capture, and 'growing the pie' is a point of discussion, yes, but it's rarely discussed and we don't do any real discrimination on it.
Where is the economists lists of businesses that create the most surplus value?
Imagine if we did valuation by consumer surplus, instead of stock value.
None of that is part of the discussion.
We generally don't even tax differently between those who extract and those who generate surpluses.
Of course, it's a very difficult thing to measure.
I'll try to explain the terms I think apply here - I'm not an economist but I find the subject very interesting and so read about it a fair amount.
I think what you call "value creation" (growing the total size of the pie) is what economists would call "productivity", and it doesn't include zero-sum wealth capture. The idea that productivity is ultimately what makes a country prosperous and not money or gold I believe dates back to Adam Smith's "An Inquiry into the Nature and Causes of the Wealth of Nations".
If you look at the shortest intro to modern macroeconomics that I know of [1], productivity is still basically the first thing mentioned.
The opposite of growing the pie is rent-seeking [2] - trying to get a bigger piece for yourself without growing it. Businesses that face a lot of competition have trouble just unilaterally taking a big piece of the pie, so the focus on this is businesses that are monopoly-like (or at least have a lot of market power). I think some of the courtroom arguments in the ongoing Apple vs Epic trial are essentially about value creation vs rent-seeking.
But these two factors tie in to many aspects of public policy - when making projections about the effect of corporate tax rate changes on growth, economists are probably estimating what percent of profits are due to monopoly rent. The reason for doing infrastructure investment is long-run productivity growth. Some countries have implemented a land-value tax because it falls on rent instead of value-creation.
The more I learn about economics, the more I feel that our (economic) problems don't really stem from a lack of effort on the part of economists to understand things - I think the obvious things have usually been considered already (although many things are hard to measure). More often the problem seems to stem from sound economic advice just getting ignored by our political processes.
Productivity, classically i.e. 'stuff per labour input' - would be a good measure.
But productivity is ultimately measured in profits. If Nike is able to capture massive surpluses by changing their logo and making it more hip, it's deemed more 'productive' effectively, even though it really isn't in the classical sense. I guess you could argue their 'cool logo' does improve people's lives but that's different than the difference between a 'good shoe' and a crap, 1960's one.
And for services, which make up much of the economy? It's hard to measure.
And yes, rent-seeking is the other side, but probably 'the best' companies are 'rent-seekers' in some way, using their value chain power or entrenchment to generate profits. But how much is due to their innovation vs. power is really hard to tell.
Like the AppStore debacle ... what if Apple subsidized the iPhone distribution to recoup profits in their AppStore monopoly? What if if the judge rules they have to open up their AppStore to competition, thereby meaning they have to jack up iPhone prices? Would consumers win in the end? Hard to tell. (Of course, Apple makes a lot of money on iPhones, I'm just stretching reality to provide an example)
One way to do it would be to measure aggregate consumer surplus, but we don't or can't do that.
That dream was scrapped for parts by Reagan et al. It’s ridiculous to blame the millennials- the first generation (ever?) in the US to be worse off than their predecessors economically.
But our "parents" are still largely in control? Wouldn't passing economic reforms probably be easier without a bunch of deluded boomers and gen Xers in Congress?
> But our "parents" are still largely in control? Wouldn't passing economic reforms probably be easier without a bunch of deluded boomers and gen Xers in Congress?
No. It would be easier without people deeply invested in the status quo system directing the political system from outside, but which marketing-focussed-label applies to the birth year of representatives in Congress has pretty much no bearing on that, even if age-cohorts correlate with differences in views in the electorate.
We don’t have a sortition system where you might expect people in Congress to be otherwise typical of their age group, after all.
If you want the values of Millenials more represented, you want more Millenials voting and devoting time and money to activism; more Millenials in Congress isn’t itself a recipe for change. Finding 535 Millenials that the establishment could rely on to represent their interests wouldn't be challenging.
Gen Xers have been getting the shaft from the boomers longer than you’ve been alive. And we’ll get stomped on by the millennials as they leap to power once the boomers start dying off.
As hard as it is to believe, the gov. is on our side. They are the last resort against greed. Maybe consider working for them to change the rules from the inside.
Nit: In a democracy, you are the government. We all are. There is no 'them'. They are us.
I know, I know. What I just typed was naive pedantic droll.
But if you really do believe it, then it does become true, kinda. It takes work, a lot of work, very hard work. But votes and service to the community really really do matter.
The YC bubble might be addicted to greed, but I don't think the youngest generations desire money more than anything else. Most don't even have the opportunity to desire money.
> He counts Soviet WWII dead as casualties of communism
I have a copy of the book. I haven't found that in it, although it's a large book and I may have missed it. Can you provide a page number? I'd appreciate it.
Which counts invading Nazis and babies that might have been born. It’s widely panned by historians and even several of the authors admitted they made bits up.
Regardless, capitalism’s death toll far exceeds 100 million, it achieves that much in a few years. The carnage is truly difficult to imagine, especially in the comfort such carnage buys for the imperialist countries.
Capitalism requires constant expansion to function, largely by super-exploiting its periphery. Poor countries are kept poor in order to exploit cheap resources and labour, which enrich a few in the rich countries. Some crumbs are thrown to the workers of rich countries in order to prevent them from rebelling.
Millions die every year due to poverty, through lack of clean water, lack of food, disease, etc. Wars are also used to prevent the poor countries from rebelling, which kills people too. In many cases the two go together, like the starving of Yemen. The attacks against Iraq or Libya or Syria are also good examples. It only takes a few years to get to 100 million if you add all of that up.
It doesn’t look very good historically either. The slave trade was essential to the initial accumulation of capital. In settler colonies like the US or Australia or South Africa or Israel indigenous people have been displaced and killed. WW1 started over competition for colonies in the global south. Later on the invasions of Korea or Vietnam, etc.
> In December 1978, eighteen of the local farmers, led by Yen Jingchang, met in the largest house in the village. They agreed to break the law at the time by signing a secret agreement to divide the land, a local People's Commune, into family plots. Each plot was to be worked by an individual family who would turn over some of what they grew to the government and the collective whilst at the same time agreeing that they could keep the surplus for themselves. The villagers also agreed that should one of them be caught and sentenced to death that the other villagers would raise their children until they were eighteen years old. At the time, the villagers were worried that another famine might strike the village after a particularly bad harvest and more people might die of hunger.
> After this secret capitalist reform, Xiaogang village produced a harvest that was larger than the previous five years combined. Per capita income in the village increase from 22 yuan to 400 yuan with grain output increasing to 90,000 kg in 1979. This attracted significant attention from surrounding villages and before long the government in Beijing had found out. The villagers were fortunate in that at the time China had just changed leadership after Mao Zedong had died. The new leadership under Deng Xiaoping was looking for ways to reform China's economy and the discovery of Xiaogang's innovation was held up as a model to other villages across the country. This led to the abandonment of collectivised farming across China and a large increase in agricultural production. The secret signing of the contract in Xiaogang is widely regarded as the beginning of the period of rapid economic growth and industrialisation that mainland China has experienced in the thirty years since.
It's well past time to face the facts: Capitalism raises standards of living. Socialism impoverishes.
> Poor countries are kept poor in order to exploit cheap resources and labour, which enrich a few in the rich countries.
Complete nonsense. Poor countries with liberal economies grow fastest and see the most dramatic drops in absolute poverty. No one benefits more from free trade than poor countries.
> Millions die every year due to poverty, through lack of clean water, lack of food, disease, etc.
And they die at a higher rate under socialism than capitalism.
> In many cases the two go together, like the starving of Yemen. The attacks against Iraq or Libya or Syria are also good examples. It only takes a few years to get to 100 million if you add all of that up.
What does this have to do with capitalism? Capitalism means
You need to provide a reliable source for your fantastical claim that "capitalism’s death toll far exceeds 100 million". You're trying to deflect because you don't have one.
It puts the present death toll of capitalism at around 9 million a year, so a mere decade or so to surpass 100. This without counting the significant historical death toll too.
> Compared to those that were less free, countries with higher economic freedom ratings during 1980–2005 had lower rates of both extreme and moderate poverty in 2005. More importantly, countries with higher levels of economic freedom in 1980 and larger increases in economic freedom during the 1980s and 1990s achieved larger poverty rate reductions than economies that were less free. These relationships were true even after adjustment for geographic and locational factors and foreign assistance as a share of income. The positive relations between the level and change in economic freedom and reductions in poverty were both statistically significant and robust across alternative specifications.
> Some fear that growth propelled by economic freedom will leave the poor behind. This was not the case during 1980–2005. During this quarter of a century, the developing countries that moved the most toward economic freedom achieved both strong economic growth and substantial reductions in poverty. This indicates that an institutional and policy environment consistent with economic freedom is an important ingredient for progress against poverty.
> We study the relationship between economic freedom and poverty rates in 151 countries over a twenty-year period. Using the World Bank's poverty headcounts of those living on less than $1.90 per day, $3.20 per day, and $5.50 per day, we find evidence that economic freedom, measured by the Heritage Foundation's Index of Economic Freedom, is associated with lower poverty rates. We also test the effect of various components of the Index of Economic Freedom. We find that a government's integrity and a country's trade freedom are associated with lower poverty rates. We check the robustness of our results using alternative freedom indices.
This book has been proven a fraud by historians around the world time and time again, including by many leading historians in the United States. It’s fraudulence, and the support and proliferation of it by US state officials and US academies is sheer embarrassment. The fact that anyone still has the nerve to so much as imply that this is a worthwhile source of information should serve as a stain on the prevailing liberalism of our times.
Are you claiming that the famines in the USSR and the gulags, for example, didn't happen? How about Pol Pot's massacres?
I'm curious as to your explanation for why communist countries built walls to keep people in, and the US builds walls to keep people out? Can you point out famines and gulags in the US?
I toured East Berlin in 1969. I went through the wall. East Berlin looked like a drab prison camp compared to West Berlin. You can believe whatever you like, but I've seen it with my own eyes.
I think the Berliners were a little too eager to tear down that wall, though I totally understand why. Should have left more of it up to inform later revisionists.
They were poor because they spent a large fraction of their GDP on the Wall.
I've heard the claim before that the Wall was built to keep Westerners out. But, as I said, I've visited the Wall in 1969. It was very clearly designed to keep people in, not out. The defenses pointed East. It was a layered defense, with the weakest parts easternmost and the deadliest parts adjacent to the Wall itself. Exactly what would be built to defend from attack from the East. You'll see the same setup in fortifications from castles (layers pointing outwards) to prisons (layers pointing inwards).
For another example, West Berlin helped out people who wanted to invade East Berlin by building platforms so one could look over the Wall (as myself and lots of tourists did). Nobody hopped over, though, to invade the East. But many got shot trying to go the other way, there's a museum there documenting it.
BTW, it was the East that blockaded West Berlin, attempting to starve the city into submission, not the other way around.
The wall was mainly built to prevent brain drain. The richer West was bribing people to move there, after they were raised and trained with the resources of the poorer East. It was a last resort taken out of desperation over the West’s constant economic and covert military attacks and arguably still a mistake. For example, the USSR disagreed with the wall and recommended against building it.
A similar kind of brain drain is happening all over Eastern Europe, to disastrous consequences. Especially with COVID it’s a massive problem that most trained medics have emigrated.
The West didn't need to bribe people, it just had to not take people's rights and things.
> For example, the USSR disagreed with the wall and recommended against building it.
It's a laughable idea that the GDR did decide such things without Moscow. Closing and fortifying the German-German border effectively happened on Stalins orders, the Berlin Wall was built with Moscows permission.
The why do the Soviet archives contain detailed accounts of Stalin himself (and several other leaders) discussing the matter and sending a recommendation against the wall? Why do the same archives tell us about the proposal of a unified neutral Germany after the war?
While not agreeing with them, I was interested in your arguments in the parent comments.
This one is wrong to the point of making you seem delusional.
> The GDR was poor because it was small,
It was about double the size of Switzerland, four times the size of Norway or Denmark, 30 times the size of Luxembourg. Do you see where I am going here?
> didn’t start out with much industry,
Berlin and Prussia have a rich industrial history.
> had a hostile enclave forced on half its capital,
Calling West-Berlin the hostile enclave is insulting to hundreds of people getting shot trying to flee towards it. You should be ashamed for this sentence.
> paid reparations,
... enforced on it by their communist puppet-master.
> competed with the US-funded western part
The effects of the Marshall plan are overestimated. It competed with its dysfunctional system against a functioning one.
> and was under constant attack from it.
I am confused. Are you talking about the care-packages sent to Eastern Germany by western family members?
I understand it is difficult to question much of what one has learned growing up about the past. It took me a lot of talking to older Eastern Europeans and reading history and political theory to begin questioning the default narrative.
The GDR was small and with little industry compared to its Western counterpart, not in absolute terms. When we’re talking about people moving between the two that is what is relevant.
It’s not the people of West Berlin that were hostile, but its state and US occupiers. The insistence of the US on a split Germany with half of the capital as an enclave was the first such hostile action, especially when the USSR was proposing a united neutral Germany. Leaving Nazis in positions of power in the west was the second.
Now you are insulting the people of the former GDR by implying they were puppets of the Soviets. Did you know the USSR were against the wall, but the GDR built it after all? In terms of reparations, it’s normal for an invader to pay reparations to their victim, if nothing else to rebuild. What is unusual is that the rest of Germany didn’t pay reparations to Eastern Europe.
In addition to the Marshal plan (which was significant in West Germany), imperialism continued. As the most obvious example, West German banks continued to export capital at extortionate rates to extract profits from poorer countries.
There were numerous covert attacks against the GDR, what do you think the Stasi were fighting? Western agents were found all over Eastern Europe spreading lies, arming fascists, assassinating people, etc.
I recommend you speak to some people that experienced the GDR. Their opinions are instructive.
Not all of us Eastern Europeans agree on everything. Having talked to hundreds older than myself on the topic however, I found overall they disagreed with you.
Well, of course, there was the ruling class, the party members. They are quite fond of the good old times when they ruled based on connections, politics and favors.
They hate with a passion the current times when people are able do better themselves and achieve their dreams on their own however they wish and wherever they wish, in freedom.
I’ve only talked to a handful of former party members.
What I did find is that those whose families were poor had most praise for socialist and condemnation for the return to poverty after 89. Freedom from poverty, hunger, homelessness, ignorance are important.
Former gentry, small business owners and fascists did hate socialism, indeed. The freedom to exploit others was what they wanted.
Secret police then - I bet they are in no hurry to admit their role in the commie shit show but there sure was an awful lot of them. You couldn't say one joke without an informant reporting it to the powers that be. Every group of friends had at least one and every family too.
And I wouldn't be so sure about the fascists hating socialists - weren't they even allies at some point? They seemed quite chummy to me. And they certainly had the same obsession with killing the ones they perceived as "guilty" for the whatever "societal injustices" their sick minds imagined.
"The poor" seemed quite happy to take off into the exploitative West to make some money after '89 though. ;-)
> The GDR was small and with little industry compared to its Western counterpart, not in absolute terms. When we’re talking about people moving between the two that is what is relevant.
I repeat my point: Switzerland is tiny compared to Germany, yet it is richer. Russia is big compared to Germany, yet it is way poorer. China is enormous compared to Germany, yet it took ages to overtake German productivity and is still somewhat within range.
> The insistence of the US on a split Germany with half of the capital as an enclave was the first such hostile action, especially when the USSR was proposing a united neutral Germany.
Historically just wrong. There were different plans during and after WW2. Britain had the idea to do a North-South division. The UDSSR wanted to split Germany permanently and as small as possible. Read what Stalin said in Teheran in 1943. It was not the US, who proposed to divide Germany.
All of them invaded Germany, but the US did so comitting less war crimes (e.g. against women) themselves than the UDSSR and with less intend to destroy everything or move it to America. That's of course also, because their people were less affected. We all know, who they acted in the Pacific. But it was also, because they had learned from WW1 and tried to bring stability to Europe. The UDSSR brought a totally different kind of "stability".
> In terms of reparations, it’s normal for an invader to pay reparations to their victim, if nothing else to rebuild. What is unusual is that the rest of Germany didn’t pay reparations to Eastern Europe.
If you ignore giving up 25% of its landmass with entire cities like Königsberg/Kaliningrad, which is now impoverished because of the system you are defending, then sure. I also don't know whether Poland and other Eastern European countries would have called the UDSSR a victim, after they had been invaded by them.
> The insistence of the US on a split Germany with half of the capital as an enclave was the first such hostile action, especially when the USSR was proposing a united neutral Germany.
Germans have to be forever thankful for the US keeping tabs on Berlin. It is part of the reason why Germany could reuinte eventually. You probably know about the Berlin Airlift. The UDSSR has proven its open inhumanity not only against enemies but also its own people and people they controlled time and time again.
> There were numerous covert attacks against the GDR, what do you think the Stasi were fighting?
It's own people. The documents are still there, you can look at them. It was a horrendous system. I cannot imagine why you defend it. I can admit that the West is not perfect. We can find ways to improve it, without defending a system that is so clearly worse.
Genocide of Native Americans, man-made famines in India, imperialism and colonialism in general, the >100 coups executed by the US in the 20th century...
Simple question: do you attribute all preventable or violent deaths under capitalism to the ideology of capitalism? If yes you probably have over billions of deaths since the ~1600s.
Simple answer: I would count violent purges and death camps, mass executions, deliberate impositions of famine, deaths due to mass confiscation of property, gulag deaths, etc. Those are active killings of people.
That is insulting to all the billions of people trampled under the boot of capitalism throughout history. Capitalism is synonymous with imperialism. From its beginnings with colonial companies it is an ideology of violence and destruction of the many for the benefit of the few.
Yes, I'm glad you live at the top of the pyramid in a comfortable American existence (a lifestyle which if everybody on the planet led we'd already be extinct), but don't forget the billions who aren't reaping those benefits.
Did you time travel from the 1800's? The standard of living of nearly everyone on the planet is light-years ahead of "trampled". Food, water, energy are thriving and growing. Life expectancies are stabilizing and the majority of everyone on earth is living better. We owe it all to capitalism and the free market.
Quoting old ideologies is getting wearying. From screeds about 'labor' (its becoming extinct; what about Marxism then?) to imperialism (the majority of countries in the world are democracies) to blaming the rich for success.
I disagree. The standard of living increases are attributable to one thing only: the progress of science and technology. Nothing else.
We have achieved better living standards over the years despite capitalism, not because of it.
Meanwhile inequality grows, democracies are backsliding across the globe, and inexhaustible "growth capitalism" has us facing a climate crisis which it continues to refuse to tackle. Inequality of wealth and income means necessities such as housing are ever more expensive, pushing ever more people into virtual "debt bondage" towards the landed class. Inequality of wealth also means inequality of opportunities, as the rich are afforded endless cheap credit and the poor cannot afford homes and cannot afford to start businesses.
But all that's okay, because we get 1001 new models of phones every year and TVs are cheaper than ever.
This is my opinion of course.
> Quoting old ideologies
The myth that Marxism is "old and irrelevant" is what's getting wearing :) On the contrary, it's frightening how relevant it still is, and how much Marxist criticism and analysis applies to 21st century capitalism.
Read his major points (and not just what other people tell you his major points are) and you'll be surprised.
> labour becoming extinct
I don't get it.
> most countries in the world are beautiful democracies
There's only really one country in the world, as far as I'm aware, that truly deserves the label "democracy", and that's Switzerland, with high levels of political participation, a free press, well-functioning institutions, etc. Maybe the autonomous municipalities in Chiapas too :)
All the rest are the bare minimum to keep the people from rebelling.
> imperialism
Imperialism is a major feature of global capitalism. Quick example: the market logic (a weasel-word for violent coercion by powerful countries) dictates that Ethiopia faces famines at the same time that it exports massive amounts of food.
Labor is becoming extinct because, automation. Everybody sees the 'working class' dropping down from technical work to office work to road work or point-of-sale (flipping burgers). It employment sure, but now point-of-sale is being automated away. What then? America has 30M in fast-food. They can't all be retrained as Engineers, and even if they could we don't need 30M more Engineers.
What happens to Marxism when the workers can't own the means of production, because there aren't any workers in the plant? That's already true in many, many operations. Automation has been explosive in the last 20 years. Production is off-shore when Chinese hand-work is cheaper then retooling for automation. When a factory 'comes back' from overseas, its because volume has increased to the point its effective to automate. No jobs come back (ok 2 or 3 automation Engineers but not 100 workers).
Today America's largest buyer of automation equipment is ... China. They're 20 years behind us but catching up fast. Imagine another Billion workers put out of a job.
The writing is on the wall. Workers are going to be irrelevant, and not that far in the future. Going on about what the workers are owed is going to be moot. Fast becoming so.
What works then? Not capitalism, I admit, because owning a factory that produces goods quits returning profit when there's few that have the money to buy the goods. The whole system is circling the drain.
But no just keep on about Marxism or workers rights or whatever, irrespective of how that group is dwindling and will soon be gone and the world is no longer an 1800's industrial society.
Oh and that mark about "No True Democracies" is an old, old, tired trope called "No True Scotsman". There's no point in addressing that at all.
1. There are about 3,000,000,000 people in employment in the world, with 200 million (about 6% of the former) able to work but unemployed.
It's ridiculous — and frankly reeking of inane SV bubble/echo chamber — that you make the absurd claim that "labour is a thing of the past". Plus dismissing concern about exploitation as being "workers rights or whatever".
2. Socialism is (broadly speaking) about social ownership of capital / means of production. Corporations being worker-owned is only one way of implementing a fairer and more efficient ownership model. In a future hypothetical world with replicators, post-scarcity and post-labour, if it ever comes, socialism will only become more of a necessity. Everybody will have to own a stake in the replicators, the mechanism of private and absolute control over capital will be absurd.
Labor is commonly understood to be those that use physical presence e.g. on an assembly line, moving a tool, carrying, sorting etc. Not professionals. Professionals are still employed but growing slower?
I don't dismiss workers' rights; but when there are fewer and fewer workers needed in society, workers' rights become less and less the focus.
Automation means most non-professionals will stop being employed. Except in make-work personal services. No road-building gangs; no fields of farm workers; no rows of checkout clerks or bank tellers. All going away. One person in 100 is needed to keep the electronics factory going. Workers will have no place. Even in China; most of your 3B will be out of a job. Not in the far future, but probably in your lifetime.
Folks love to point out every shit job somebody is resorting to as 'employed' and put the god of employment above any other measure. Putting pumping gas on a par with owning your own business, counting them both equally as 'employment'. The old Protestant work ethic writ large - the point of human existence is to be employed, at all cost.
Back in the '50s we read stories of the day robots would take the burden of labor from our shoulders so we could live better lives. Now that it's happening we read of nothing but panic and desperate moves to toward 'full employment'.
If Socialism will find a way to keep the high-tech machinery of society going with technical folks in charge and making the decisions, well I'll be flabbergasted. Because putting former shoe-makers in charge of a silicon plant seems doomed. Just look at existing experiments in Socialism to see the disasters - Venezuela springs to mind.
It'll be something like Capitalism or Socialism but adapted to the new reality, that keeps the machinery running. Not old 1800's papers about a bygone age.
Who would say that a society and economic system which rewards selfishness and greed would breed people who are selfish and greedy...
Actually the remarkable thing is that even despite the massive promotion of consumerism and the cult of money, the majority of people do not want to be rich or famous, they just want a nice comfortable life, where they don't work too much and don't have to worry 24/7 about making it till the end of the month with unpaid bills stacking up. They want to work reasonable hours and get a reasonable salary. They just don't want to be exploited, they don't want to rent a shitty apartment for their whole lives, they don't want to postpone starting a family because they cannot bear the expense.
Greed is not new, but the mechanics of society are completely different now than 100 years ago.
For common people only 2 generations ago, the only way to 'make money' was to do actual work, something that probably created some kind of net value. Surpluses were shared differently, but work was done.
The opportunities to hustle and grab value while creating little for society is available to the common person today.
The economics have changed quite dramatically and that does factor into the equation.
There were plenty of markets runs, crashes and scams even in XVII century. Regular people (meaning "anyone with some excess capital") hoped to get rich off them, just as they do now.
I think maybe the point of the comment is that there were countervailing forces in society at one point, e.g. the dictates of certain religions. That aspect of society is substantially weakened in our time (ethical codes of living are broadly considered antiquated and ridiculous in modern societies), so the focus on greed or greed-adjacent motivations are less restrained. Whether that is a Good Thing (tm) is up for debate, but it seems like a reasonable statement to me.
I knew when I saw "at scale" in call-for-proposals issued by federal granting agencies that it was soon to lose all meaning, and I think this is about the point at which it's done that.
>> I think our generation is forgetting some fundamentals: money at the expense of anything else.
This is a very broad statement and does not apply equally to everyone. It fits well for someone belonging from a well off family/society vs someone struggling to survive.
I don't think the critique here is against those struggling to survive, and I don't think you're doing those folks any favors by cutting off conversations about the overfixation on money in American society.
“ Wealth is money in the bank that is reinvested into other assets and businesses.”
So is it money in the bank then or is is it money reinvested? Or all of the above? He doesn’t really clarify.
Am I the only one that found holes in his thinking?
Example: the more houses we build the cheaper it will be...fact: there is more houses today than at any other time in American history. House prices are only increasing...buying up a scarce resource like land doesn’t help us create more of it, what helps us create more is investing in the resource.
I’m not trying to put Naval down since I do admire him and some of what he says, I just can’t put him on this guru pedestal others are...
I think true wealth is being able to control your time however you’d like. Everything else after that is about power.
No luck? The author admits themselves that they needed an able body and a good education, for example. Privilege and luck is simply assumed and ignored. Just another example of survivor bias looking backward and saying "I made it with no luck at all!"
Its not a real introspection despite the spilled ink.
> Wealth is the thing you want. Wealth is assets that earn while you sleep; it’s the factory of robots cranking out things. Wealth is the computer program running at night that’s serving other customers.
In reality you still need people to earn money. Wealth really is the control over the limited means of production which allow you to gain out of the work of others.
There are also positive sides to it though: Having other people earn money for you is a pretty high incentive for bringing into the world new means of production
There's is for sure some good advice, but most of this is just useless word play, which does not give you any directions, but gives you a false sense of "life and society understanding". If you don't know that reading and work makes you wealthy, you're a probably a fool. It's important to tell people they can unite and work towards common good of humankind, but you should not title it "How to Get Rich".
> But for the fourth kind of luck, there isn’t a common cliché out there that matches the unique character of your action
“Right spot, right time”
I think there’s a lot of flaws in the reasoning and characterizing anyone who isn’t prioritizing wealth creation (or even the concept of a tax) as a parasite is extremely miopic. For one, if you don’t have any customers, good luck creating your wealth. The data repeatedly shows that a stronger safety net (which requires taxes) encourages more risk taking and better allocation of wealth creation. Characterizing those that aren’t able to have that freedom as parasites… you have to be really full of yourself to make a claim like that.
There's some interesting philosophical concepts here, but nothing really hacker newsworthy. This is just someone carrying on that we should be like him without telling us how.
Does anyone else note the irony here that he says he is only interested in acquiring wealth, not in status, yet this whole article is really just advertising for his status?
not necessarily. before his appearance on the JRE podcast I didn't know him at all (i know i live under a rock), yet i've found his ideas compelling.
Although Joe doesn't invite nobodies for the most part, so i might be wrong to some extent.
you just explained it. joe rogan does not have nobodies. think of how many ppl write to him asking to be on his podcast. think of all the mail his producers get.
I'd really like to read the continuation of this thought experiment. Which skills, if any industry knowledge is part of it, what the first steps would be, how to balance financial security and entrepreneurship ect.
"I like to think that if I lost all my money and if you drop me on a random street in any English-speaking country, within 5, 10 years I’d be wealthy again. Because it’s a skill set that I’ve developed and I think anyone can develop."
I'm very curious how the author imagines the beginning of that process works. Where does your first security deposit come from? How do you pass any sort of credit check? Your first paycheck won't come for a couple weeks, so how do you buy groceries?
I'd guess being a sales person from day one. Find someone to click together a website for. Worst case in exchange for food and shelter which the other side might have in abundance if providing that is their profession.
I made a website for the italian restaurant downstairs once and basically had access to unlimited pizza. Sadly it was really bad pizza :((
How about you are dropped onto one of those streets, with your skillset, but: You're a person of color. Perhaps with no formal education to get someone to even consider your skills. Maybe you're past your prime age-wise too. And look it. Perhaps you develop an untreated health issue after being dropped on those streets.
It isn't at all true that hunter-gatherers had only status and not wealth.
The Native American tribes of eastern North America used wampum, small, regular beads made from a few specific shells, as a store of value and medium of exchange.
Yes, they couldn't own that much more than they could carry. Some of these peoples did farm, some didn't, but all of them relied on hunting or fishing, and most had to move around at least a couple times a year.
But a wealthy Iroquois could wear enough wealth to buy many times what he could carry in meat, tools, furs, and anything else which other people could make available.
Shell money isn't limited to the Native Americans, either, it's been found in paleolithic grave goods and was quite widespread anywhere Europeans encountered hunter-gatherers.
There's also the potlatch tradition of several PNW tribes, in which wealth was demonstrated by giving it away at celebrations, in the form of food, art, clothing, etc.
Yeah I was considering continuing down that road, and saying that, if anything, status derives more from wealth in hunter-gatherer cultures than it does in sedentary cultures.
Status hierarchies in nomadic foraging societies tend to be flatter, and more fluid, and based on what the 'big man' can do for his posse: leading them in war parties, having a lot of wampum or copper to give away for life occasions like bride price, throwing big feasts and so on.
The eldest son of a chief has a head start in life, but far less security than being the heir of titled nobility in a primogeniture culture entails.
>But the reality is everyone can be rich. We can see that by seeing, that in the First World, everyone is basically richer than almost anyone who was alive 200 years ago.
>200 years ago nobody had antibiotics. Nobody had cars. Nobody had electricity. Nobody had the iPhone. All of these things are inventions that have made us wealthier as a species.
>Today, I would rather be a poor person in a First World country, than be a rich person in Louis the XIV’s France. I’d rather be a poor person today than aristocrat back then. That’s because of wealth creation.
Ppl keep making this argument,and even though it is not wrong, rhetorically it is unpersuasive. People see the huge hospital bill, having to negotiate with insurers, tuition going up, bills unpaid, unrest and anger online and in poltics, etc. They feel like things are getting worse on a relative basis even if the iphone is more 10000x more advanced than a supercomputer 60 years ago.
You cannot make such an assumption because the subjective 'you' cannot experience both at once or compare and contrast the two. Both have advantages and disadvantages: Being a king means more status but also possibly dying of an infection and only having 0g wireless. Higher social status means generally an improved well-being.
> Today, I would rather be a poor person in a First World country, than be a rich person in Louis the XIV’s France. I’d rather be a poor person today than aristocrat back then.
A rich person also had access to near-unlimited amounts of human labour. Cleaning your house, cooking your meals, tailoring your clothes, nursing your children.
There is a limit to how much that has been replaced by technology.
An equivalent question is: Would you give up being a rich person in 2021, to become a poor person in 2200?
> An equivalent question is: Would you give up being a rich person in 2021, to become a poor person in 2200?
That's only an equivalent question if it is being asked in 2200.
From a 2021 vantage point, there are too many unknowns, as many of the plausible scenarios for 2200 could be summed up as variants of a Grim Meathook Future, even without considering extreme scenarios like nuclear winter, asteroid strikes, high mortality pandemics, grey goo, Curious Yellow, alien invasions, robot uprisings, and so on.
Sticking just to business-as-usual extrapolation, life could get very unpleasant for the poor within the next 80 years (or shortly thereafter:
2200 could be pretty decent but if things go to hell in 2202, you've still lost the gamble).
I'm now imagining rich grey goo saying it'd rather be poor grey goo, than a rich human in 2021.
Even if we have 200 years of consistent economic growth and technological process, I doubt you would see rich people giving up their wealth to teleport themselves there.
I think you may be underestimating the extent to which the rich attribute their success to merit (ie. they will assume that they won't stay poor), and the allure of relatively modest improvements in lifespan and healthspan (say, an extra 10 years of lifespan, and 20 of healthspan).
Also being able to procreate and reliably raise children (also with physical help from servants) is probably a bigger wealth enhancer, especially over generations.
In our modern world, being poor means you are going to either not procreate, or suffer while doing so. An iPhone does not cure that.
>Ending up in an orange jumpsuit in prison or having a reputation ruined is the same as getting wiped to zero—so never do those things.
Only if you lose everything too or get a really long sentence. I think Michael Milken is an obv. counterexample to this, having kept his wealth and reputation. Jordan Belfort got a lucrative book, movie and consulting gig from his behavior. many others.
> Humans don’t have that. I can cooperate with you guys. One of you is a Serbian. The other one is a Persian by origin. And I’m Indian by origin. We have very little blood in common, basically none. But we still cooperate.
I'm not a geneticist and I'm having trouble conjuring the right search terms to find a source, but I seem to recall reading not too long ago that all humans are more related to each other on average than members of most other species, because we very "recently" (still millions of years) went through a near-extinction event, making our gene pool less diverse than most other species because everybody alive today comes from the few people that survived that event. So altruism in most animals is actually more impressive than altruism in humans.
That’s true, but it’s just as dumb to say that success is all or mostly luck.
If one person struggles for years, trying and failing again and again before finding success, and another person spends all that time watching tv and playing video games, is the difference in outcome only due to luck?
There's most definitely luck involved, but a huge part of it is being prepared to capitalize on those lucky opportunities. Are you ready when the bell rings?
It always rings. The vast majority of people never volunteer, never want to be visible, never want to put in the work. The odds are in your favor that the bell will ring for you, just by reading this forum you probably read other interesting things. Most people just watch TV, it's crazy but it's true.
Depends on your definition of luck.
Some people define luck has having the skill to take advantage of opportunities you come across. Of course, the skill thresholds to take care of opportunities varies significantly case by case.
Having the luck to be born into a place where you can acquire the skills to take advantage of or build opportunities is one thing, I don't think the skill itself is lucky.
Especially because the author has said in other instances that he got lucky to get accepted to Stuyvesant high school in NYC, which is basically the premiere public school, and that opened up huge pathways for him to later get into an ivy league, and to get into tech investing. Where would he be in life if the coinflip in the Stuy admission office went the other way and he ended up going to a more normal public school and some other 14 year old got accepted in his stead?
Also, he hasn't talked much about his family - except that they were "immigrants and nobodies". But his mom did emigrate from India to NYC with two children, which isn't exactly common. I suspect, perhaps, his family is a little better connected, or a little better off financially, than he has let on. But it would be impossible to get the truth at this point unless it came from an outside source because Naval is going big on narrative building his own life.
> he got lucky to get accepted to Stuyvesant high school in NYC ... Where would he be in life if the coinflip in the Stuy admission office went the other way and he ended up going to a more normal public school
I'm pretty sure "got lucky" here is kind of a humble brag, like "I'm so lucky to be smart". Stuyvesant admissions are straightforwardly and deterministically based on a test, with spots going to the highest scores. There's no admissions officers considering extracurriculars, or interview or anything like that.
The luck could come into play by getting questions on the test that he was prepared to answer. For example, in 2014 I worked at a FAANG, and was applying to another FAANG. I had a co-worker who was the same level as me who also applied to the same company, and bombed the interview. However, I knew from extreme first-hand experience that this coworker was a better engineer than I was by far. But it just so happened that I got lucky with the questions I got, where they all fell into my wheelhouse, and he got unlucky. I got the job - he didn't. I consider that luck on my part.
In retrospect, maybe he did get lucky and I got unlucky, since his stock has outperformed my stock by 3x over that time range.
"Seek wealth, not money or status". What? To get wealth you need money to buy it. To get to the point B you have to pass the point A. That's why people are seeking money.
Secondly, it's claimed that those who say "We don’t want money" are playing another game - seeking high social status. That's another perverted logic. Seeking high social status is the most reliable way to have a lot of money without doing anything useful. That's why corruption is everywhere – people go to power to be rich, not because they want or able to solve societal problems. People who really don't seek richness don't seek high social status either.
The concepts are also linked together. Having lots of money automatically means having high status unless you actively reject it. If you think you don't have status but have lots of money then you merely need to go to places that only people with lots of money can get to and see how you get treated.
Making money is like a clicker game, such as Cookie Clicker. If you are earning a wage at a job, you're still in the boring part of the game where you click to get cookies. Wealthy people are playing the metagame, buying the grandmas and factories and space vortexes that automatically generate cookies. And that's when the game gets fun.
I think our concept of "greed" is a bit misplaced. Greed is not about having more money just to have it. If you or I had as much money as Bill Gates or Donald Trump, we wouldn't know what to do with the huge amount left over after all our needs and desires are met. It's about being able to buy the next thing that automatically clicks for cookies, so that they can continue making cookies (money) faster. Increasing the rate of cookie generation means they're winning at the game. It's their hobby, it's their passion.
Or rather, it says people who are advantaged (ie lucky) considerably underestimate the contribution of this advantage to their success, and overestimate their own contribution.
On the article itself, the stated idea of status is truly naive if not delusional, and allows them to put anyone who disagrees with their idea into the box of "status game players, to be ignored".
I'm not going to read the entire article, it reads like advice to people who don't need it (upper middle class people). I'm sure it must be comforting to the author, and upper middle class and rich people, but in reality there is no clear path from "poor" to "rich", or else everyone would be taking it.
What I will say is they seem to understand that our economic system is irrational, and to take advantage of it seems rational. But an irrational system is also unfair, and I would rather people not praise this unfairness as "good". The author seems to be paying lip service to the idea of "ethics" while teaching people to abuse the system. And they dare to talk about "virtue signaling".
I can guarantee you one thing, if you don’t try and complain about how only privileged people can do it, you DEFINITELY won’t get rich or be successful or whatever your metric is.
If you try, you might fail, and you might fail because of things outside your control, and it won’t be your fault.
No one is saying only privileged people can be successful. Just that observation has shown that the odds are stacked against them. I would call that unjust, and thus would be accused of playing the status game.
I agree. The act of trying itself opens you up to new possibilities which are just locked if one just complaints and do nothing about it. That's why trying is necessary.
But that doesn't mean one should deny the fact that some things are entirely dependent on pure luck. In my opinion, the luck part starts even before you're actually born (your place/country of birth, family etc.). So, one should acknowledge the fact that luck too played an important role in their current wealth along with their own hard work.
But what meaning does luck have if you consider every positive thing in life luck? You were lucky you were born with the ability to see. You were you didn't die of childhood disease.
If it was 100% luck, China and India would have most of the good things in the world since the have more lotto tickets (people) than the rest of the world.
I didn't say it was 100% luck. I said, trying itself is opening up to new opportunities and possibilities. After all luck is just a game of possibilities and chances.
There isn't a universal definition of luck and there won't ever be. The border between what is luck and what isn't changes every person to person. Your country, family wealth (which then pays for your education) play an important role in one's life and their wealth. A "rich" person on some poor island most probably won't be considered rich in any Western country.
Now it matters what you do with that what you have. Scoring high or low in academics is up to me which would contribute to my wealth in future. I'm not saying that academics is the only metric here, but people having high score are generally more "wealthy" than those that don't according to my observation. So all of it matters on what you do with the given time and opportunities.
I'm already relatively successful by my lights, but I won't pretend that luck of birth and circumstances didn't play a big part. Yes I took advantage of the chances that were presented to me, but I can recognise that someone who didn't start off with my advantages would have to work much harder top get where I am. The world isn't fair, that's a fact and there's no point pretending it isn't just to make yourself feel better.
Seems to me either you haven't experienced yourself the distinction between wealth creating and status seeking. Or you put it all into the box "they delude themselves they create wealth, to be ignored".
You are right, I don't have rich friends who create wealth. But if I to choose one as a friend or mentor to make the world a better place, I'll side with the person not trying to game an entire society to get richer, regardless of the other's stated intention to "create wealth for everyone".
That said, I don't doubt that they do create wealth, I just think any benefits to society are incidental, and that the logical rigor of their ex post facto justification is lacking.
Why do you insist they must be rich? I had in mind for example engineers who create wealth by solving problems and don't desire to climb corporate ladder.
a subversive if subtle inversion also underlies the argument, that status is subservient to wealth. instead, status is the game, and wealth is a conspicuous component of that. everything we consider ‘sociopolitical’ is about trading various proxies of status, including wealth, to try to ‘level up’ on the status meter.
his obfuscation is plainly designed to enhance the statused (like him) against the rising threat of the unstatused by confusing the potential up-and-comers.
also, luck is inherently cognitively dissonant. as such, it insists on rationalization, and rationalizations grounded this way inherently lack explanatory power beyond the individual and/or circumstance (since they’re projective rather than observationally exhaustive).
100%. A lot of survivorship bias in his diatribe. I feel most people I n this thread won’t like what you’re saying though, because it goes against the very belief drilled into Silicon Valley ideology.
yah, it’s an unpopular position, but that’s fine. i’ve seen prior unpopular positions get repeated, which means they’re doing their job of bringing diversity of perspective to the discussion.
and besides, irrational certainty (over unbiased reality) is often needed to be a successful (or even an unsuccessful) entrepreneur, so the bias is not surprising.
Yeah not surprising, but I’d like to see Entrepreneurs at least acknowledge luck.
Irrational certainty I feel is dangerous. Unbiased reality on the other hand is actually where I personally see the opportunities are since most don’t frame reality correctly and it’s impossible to know it all.
The article is insane. Pure ideological reductive bs.
To say anyone who points out social injustice plays a silly mean game of status is the most cynical thing I've read in a while. As if capitalists weren't driven by status.
And describing taxes as stealing is simply juvenile and fucking stupid and unhelpful.
Taxes are something we've decided is in the collective interest, but they are still the government reaching into your pocket. Especially with ever increasing overreach, mainly to fund blowing up kids overseas, I can understand this opinion.
I don't pay taxes in the US. I pay them in Austria, where the system mostly works (in comparison).
If taxes are misused, the misuse is the problem, not the concept of taxes itself. Government may be reaching into our pockets, but we also reach into the government's pocket when we need to (again, Austrian speaking here. My wife received around 2700 Euros per month during Mutterschutz, which surprised both of us, since she hadn't been working for some time due to it being our third child, just as an example).
I’d say taxes are halfway stealing and halfway actually doing good things for society.
Paying income taxes into the national debt and finding the military industrial complex is not that appetizing. That is just allowing for geopolitical shenanigans and bombing poor people the world over. Also funding the state governments (hello CA/NU) that think that they are small countries is ridiculous.
Paying property taxes to fund EMS/schools/roads is an entirely different thing that I fully support.
But yeah, right now as a whole we are paying way too much tax IMO and could get away with paying like half if we got rid of the military and bloated government. Then you could have the first 100k that you make you actually get to keep.
As a general principal would you call robin hood a thief? Taxes are theft since they're collected by threat of force, but they pay for things we all need (mostly), so necessary theft. I doubt an organised society that works for everyone could work purely on donations.
Theft is an abstract concept, and paying taxes simply doesn't reflect the meaning of that word.
Paying taxes is a result of the legislation we've indirectly put into action by voting our people into office. Robin Hood acted out of his own agenda, albeit an allegedly noble one. I'd call the latter theft, without judging it on an ethical level. Taxes aren't that.
The missing detail is that 99% of people have no access to these wealth creation mechanisms. Having money into the stock market is already a >1% privilege and not nearly enough to generate wealth (unless you already have it).
You said 90%. The 90th percentile income in the US is $125,105 / year for an individual[1]. The kinds of things he's talking about include "open an investment account and invest money", say in an index fund. Are you telling me that every single person making under $125k in the US has no access to open an account at Vanguard and buy index funds? I know from personal experience that that is not true.
As I said above, investing in an index fund will certainly help you retire earlier or more comfortably, but will hardly build wealth in the way Sahil talks about in the post.
This says something useful in among the stock nonsense - which is that wealth is not about what you own or how much you can spend, it's about personal freedom.
The interesting corollary is that in a capitalist economy hardly anyone is free. You "win" freedom by buying it. And that's what wealth is really for.
This is why "We're all rich now compared to people two centuries ago" is nonsense. We're not, because the odds are good that we're more or less similarly unfree, especially if we're at the bottom of the heap and working the proverbial two or three jobs. Owning an iPhone doesn't change the fact that our time is almost wholly owned by others.
It's also why it's impossible for a majority of people to be free. Someone has to do the actual work that keeps the lights on and food in the shops. Most people won't do that work voluntarily, so there has to be social leverage - implemented with loss of freedom - to force them into it.
And it has to happen. Passive investing is worthless when there's nothing concrete to invest in. Corporate entrepreneurship is useless if there is no activity to manage, control, and profit from.
The exceptions to this are genuinely creative activity. Invention, innovation (to a smaller extent), and cultural creativity are all individually powerful and can be disproportionately valuable, socially and economically.
Coincidentally, they also attract more than their fair share of parasitic activity which seeks to capture their value for the benefit of others.
But more - some people need to have these differentials in personal power. They lean towards narcissism, and it's important for them to feel more powerful than others.
They will never, ever allow an economic system which doesn't constrain the freedom of those they consider inferior. It doesn't matter if it's run by machines or AI or any other magic technology. It's fundamental to their psychology to keep others in a one-down position, and they experience any threat to this as an unbearable narcissistic wounding.
Inequality is not primarily an economic problem. It's a psychological issue - a public mental health issue, where the point of inequality is to allow unhappy rather damaged people to feel better about themselves.
This is orthogonal to issues of building, researching, inventing, and generally getting shit done collectively. Without narcissistic friction all of those would proceed more quickly and smoothly, with astoundingly positive consequences.
The stuff about capitalism being intrinsic and status games being zero sum suggests a rather myopic view of society. Of course many economic exchanges are positive-sum. But it does not follow that this drive is universal; it just looks that way to people whose social circle consists of others engaged in the same virtuous circle. Nor does it follow that others don't get it or are playing zero-sum status games; there are different groups with different motivations.
I missed the part where he says that wealth is limited. Doesn't he says that wealth creation is a positive-sum game (I.e. 1+1=3 thanks to automation and leverage), as opposed to status which limited and its pursuit is a zero-sum game? Wouldn't that mean that wealth is unlimited?
> Most of the wealth in civilization, in fact all of it, has been created.
After re-reading your comment, I realize I think I misterpreted this sentence. He's not saying the total future value has already been created, he's saying the past value was worked for
Eventually wealth relies on some physical resource somewhere down the line, so it's also not true imo. Wealth is remote from limits but not limitless I would say.
> we can mine an exhaustless supply of minerals for instance
Humanity is headed towards shortages of many critical metals, such a copper, within this century, with consequences on price and availability already felt and predicted to be a major geo-political issue within a few decades
It is true that becoming rich requires luck. So does completing college, landing a plumbing apprenticeship, or learning how to race a horse.
I see life like I see poker. You need to learn enough about the rules to know when the odds are in your favor, then make your bets to take full advantage of the odds. In life, raising your skills in specific and deliberate areas will improve your odds. Then, you have to have enough agency to make the bets.
Is that a guarantee that you'll achieve wealth? Certainly not. But you can learn how to improve your odds, and then take actions to put yourself in that improved position, and then be persistent and attentive to your progress. Analyze, adjust, optimize.
Persistence is the thing, and by persistent, I mean over decades. If you're a solid poker player, you can make money over time. You may or may not ever have the right luck at the right time to win a major tournament, but you can still make a living at the vocation you choose. It's the same in building wealth. Have a deliberate plan that his high probability, but be open to identify windfall opportunities, and make a bet if you see the odds are worthwhile.
There were a few deliberate choices I made to grow wealth. Each also took some amount of luck to transpire:
- Choice: I put myself through college. My parents couldn't help, I had to pay for it myself.
Luck: There were state and federal loan and grant programs to help with the cost, or I'd never have finished.
- Choice: I decided to major in computer science instead of music.
Luck: My dad's advice was that I'd be able to afford a more comfortable life in computer science. He'd chosen music.
- Choice: I made the choice to move to Silicon Valley from the Midwest. That's where technology seemed to happen first.
Luck: The only way I could do that was by living rent free for 3 months with a friend in Santa Clara that I happened to know.
- Choice: I intentionally asked by boss for more responsibility.
Luck: The company was in a growing market and needed engineering leadership. Promotions and raises followed.
- Choice: I developed a business plan to open a new sales/services office in a foreign country.
Luck: I had spent a lot of time traveling to that country on business and made friends with the people who established the business based on my plan and hired me. It was a lucrative choice.
- I chose a lifestyle that left extra $ in the bank each paycheck, and then invested that money.
Luck: My partner happened to have conservative approach to money management, and I listened to her.
Each step was about improving my odds. Once I determined what to do, I had to find a way to make it happen, even if it took other people's assistance in some way. Finding that assistance at hand was the lucky part. I just had to have the agency accept it and act.
So he invested in Clearview AI and wish.com.
Thanks for that ... not.
"Wealth is assets that earn while you sleep; it’s the factory of robots cranking out things."
Yeah, robots for sure.
This article seems to be mostly very mediocre social commentary. Reminds me of an angsty high schooler (who’s somehow rich and defending their position) describing their view of society
I am going to venture a guess that both you and the parent you are replying to belong to exactly the same economic strata as your parents. You haven't had to build yourself up.
For someone who has built their life from 0 dollars broke ass immigrant to being in the 1%, Naval's narrative resonates as exactly the right advice.
It is neither his ideology nor his advice that I'm taking exception to.
What strikes me as the issue is that he identifies literally anyone who may level any criticism at him as acting in bad faith: purely participating in a game of status and an inferior one at that.
Not only is it really unlikely that literally everyone who might have a different set of priorities than him is a crass social climber, but his need to describe them as such is immature, even if it were the case.
>What strikes me as the issue is that he identifies literally anyone who may level any criticism at him as acting in bad faith: purely participating in a game of status and an inferior one at that.
Where did you get that? I read this part of the article as describing a mental model the author believes in.
Thinking about it, the model matches up to my experience of the world.
A thinker needs to be able to express their best thinking. If this is what he believes and can argue for, that's an intellectual service. We can use our own intellect to agree or not.
I feel like a lot of the immigrants I meet from India are landowners there and not exactly the lower class. They all talk about having people to clean their houses and do their laundry.
Not rich per American standards, but definitely people that have an option if their gambles don’t work out.
> Ravikant was born in New Delhi, India in 1974. He moved to New York with his mother and his brother, Kamal, when he was 9. He graduated from Stuyvesant High School in 1991.[6]
He didn’t grow up poor in India. He went to Stuyvesant in NYC - one of the most prestigious high schools in the world.
In another article:
> His father was a pharmacist in India, but his pharmacist credentials were not acceptable to practice pharmacy in the United States. Both of Ravikants parents did clerical work in New York City after their move to New York City. Shortly after moving to New York City, Ravikant's parents split up, leaving his mother responsible for raising him and his brother for the majority of their childhoods.
They weren’t poor. Never were poor. I don’t know if maybe a pharmacist in India is a worthless job that is comparable to a subsistence farmer but in the US, it pays pretty well.
We all have different versions of poor but I think subsistence farmer when I hear poor - not the version I’ve heard from many people in India where if you clean your own house, you must be poor.
Yeah, he's correct you'll never make it to the top 0.01% working a job, but the jabs at socialists and the "makers vs. takers" are some Level 1 right-wing talking points. There certainly are makers and takers in our society, and the biggest takers are not the single parents getting $200 a month in food stamps, it's the capitalists whose businesses depend on cheating their workers out of wages, polluting the environment, and/or getting sweetheart government deals.
Everyone can be rich, because it's a positive sum game. You having a computer doesn't take it from someone else. Every person on the planet can have one.
It's not a fixed pie. We are growing the pie. Most people in "developed" countries are rich from a historical perspective. We have shelter, running water, cheap and plentiful food (so much that we waste over 30%), electricity, microwaves, refrigerators, pocket computers and so on. There's no reason this can't come to the entire world and continue to improve for all.
but if you define rich as "having more than your fellow human beings", then you cannot ever have everyone be rich. But that definition is not what most people would use.
I'd maybe define a rich person as "someone who is capable of working but does not need to labor ever again in order to have a comfortable amount of food, water, shelter, and medical care."
Everyone probably cannot be rich like this unless we invent some sort of frighteningly advanced automation to take care of our basic needs.
> unless [the exact scenario Naval is talking about]
Good example of "all or nothing thinking" here. "Toiling every day on the backs of humans for our every need" OR "Frighteningly advanced automation" — reality is higher fidelity than that.
We're already SO far towards the latter scenario (washing our clothes magically with the press of a button), painting it as a dichotomy only serves to highlight how out of touch with reality the immutable scarcity worldview is.
Allocation of land is indeed a fixed pie. Say being rich is everyone having an 1-acre SFH lot with a view of the ocean. No matter what sort of monetary system we place, there is hard limit to the number of lots that could exist. Some people will have to live further inland.
No amount of toasters will change the fact that some people will have to live inland.
“ At the same time, deep down many people believe they can’t make it; so they don’t want any wealth creation to happen. They virtue signal by attacking the whole enterprise, saying, “Well, making money is evil. You shouldn’t do it.”
But they’re actually playing the other game, which is the status game. They’re trying to be high status in the eyes of others by saying, “Well, I don’t need money. We don’t want money.””
Just saying "disagree with me? Then you are just playing a status game" isn't a criticism, it's just making stuff up.
The world is full of evidence that one of,if not the biggest factor on people's wealth is the wealth of their parents. It's incredibly hard to escape povity.
> But the reality is everyone can be rich. We can see that by seeing, that in the First World, everyone is basically richer than almost anyone who was alive 200 years ago.
> We can see that by seeing, that in the First World, everyone is basically richer than almost anyone who was alive 200 years ago.
And we can also see that those riches in large part rest on the poverty of people who happen to be outside the first world, even for basic necessities like food and clothes.
Externalising the poverty doesn't make it not exist.
It may not "need" to be[0], but the externalisation of poverty is precisely how the particular quality of life that the lower classes in most developed countries enjoy is maintained - from the workers that make their fast fashion to the ones that assemble (or mine raw materials for) electronics that they cannot afford themselves.
0. At some point in the not-so-far-off future we will get around to automating all of these things, but until then people have become too deeply entitled to commodities produced by other people that are paid poverty wages.
That’s the whole point of the article. Wealth-rich and money-rich are not the same thing.
I have access to pretty good healthcare (both privately And publicly). I have access to museums, and the internet, and I have a fire brigade and ambulances if I have some sort of accident. All of these things are wealth that we’ve built as a society and only tangentially related to how much money I personally have.
Exactly. You also have access, presumably, to a warm home in the winter, aren't suffering from pests and predatory animals, you can learn or be entertained in a million of ways. The fact that people can't perceive all of that as an incredible blessing says more about them than anything else.
Exactly. So many people think being "rich" is having the mansion, Ferrari, and the yacht. Those are just highly-priced, luxurious products that people buy to status-flaunt most of the time (I know so many here in Florida). We live in the greatest time humanity has ever seen in terms of abundance, and survivability.
Not in the physical world but maybe in the digital world where material scarcity is a fixable imposition and attention can be artificially constructed.
This reads like a parody. He’s trying to raise the status of tech entrepreneurs, painting it as the only truly virtuous endeavors, while literally saying he’s not into playing status games.
But there are plenty of other gems in here too. Some come off like silly ignorance, others as callous or at least very tone def.
You have a ton of parasites in you, who are living off of you.
Umm, no I don’t. If you’re talking about micro fauna, that’s not parasites. Otherwise, Dude, you need to get that checked.
It’s not about taking something from somebody else. It’s from creating abundance.
But “disruption” inherently leads to winners and losers. There is a transfer from one group to another. Sure the end state may have more abundance than before but unless you address the disruption to those that lost out, you’ll have people, perhaps many, who feel left out, impoverished and distrust or despise the system. You can label them as “status” seeking haters of wealth creation, it’s a nice simple narrative, but divisive and counter productive to actually making the system work for more people and generate more wealth.
Today, I would rather be a poor person in a First World country, than be a rich person in Louis the XIV’s France.
You have no understanding of the plight of the poor and homeless in America. French countryside estate with a dedicated staff to provide for all your needs, or the homeless guy standing on the corner with the “hungry” sign? Of course the latter is often afflicted with mental illness and substance abuse, but those factors are in no small part driven by our society’s abundance distribution choices. Or is the “hungry” sign just an attempt to seek higher status? I think it’s just food.
We would all be living in massive abundance.
What makes you so sure the abundance would be so evenly or widely distributed? The abundance we have now is becoming less and less evenly distributed, so jumping to this conclusion just hand waves past some big hurdles in getting there.
It gets hijacked by improper pricing of externalities. It gets hijacked by improper yields, where you have corruption, or you have monopolies.
Then perhaps the journalists that criticize tech entrepreneurs are actually functioning as a break against this hi jacking? “Status” and “wealth” games not so clearly delineated huh?
Capitalism is not even something we discovered. It is in us in every exchange that we have.
You can literally say this about any human behavior. Again, this just hand waves and papers over difficult and complex choices. It just assumes his world view is inherent and virtuous.
We are the only animals in the animal kingdom that cooperate across genetic boundaries.
False. And easy enough for anyone to search on this topic and see so.
Everybody can be successful. It is merely a question of education and desire.
Wow. If there was any doubt before, it’s now obvious we’re in a complete fantasy at this point. There’s no bias, no prejudice, no advantages that one group has over another. Wait, well except education. Clearly we need to fix that because education isn’t as easily accessible to all, right? But that’s no big deal.
I’m not talking about monopolies. I’m not talking about crony capitalism. I’m not talking about mispriced externalities like the environment.
Yep, never mind. You’re not talking about the real world.
> The purpose of wealth is freedom; it’s nothing more than that. It’s not to buy fur coats, or to drive Ferraris, or to sail yachts, or to jet around the world in a Gulf Stream. That stuff gets really boring and stupid, really fast. It’s about being your own sovereign individual.
This makes sense.
> Today, I would rather be a poor person in a First World country, than be a rich person in Louis the XIV’s France. I’d rather be a poor person today than aristocrat back then. That’s because of wealth creation.
I'm not sure we can have it both ways.
If the purpose of wealth is to be sovereign and have the freedom and time to pursue my own interests, whatever they are, then it's better to be a wealthy person at any time in history than to be a poor person at any other time in history.
A poor person today is going to spend 8-12 hours per day, 5-7 days per week, working and commuting, depending on how many jobs they have, just to pay for necessities. An aristocrat in any time period is going to have far more time to do any of the things that fulfill him. Air conditioning, health care, and Netflix don't make up the difference.
"Money is the McMansion in Sarasota that starts falling apart after ten years. Power (or status) is the old stone building that stands for centuries"
It's the same thing he's saying here, but like the guy Frank Underwood was talking to, Naval doesn't recognize that financial wealth is only more secure and fungible than social status if you can manage to move said financial wealth around before stuff hits the fan. So many examples to cite, ranging from Venezuela, to Zimbawe to Cyprus.
And mind...stuff inevitably always hits the fan, when stuff hits the fan you want to have loyalists who'd defend you against your enemies.
The whole reason why all investigation relating to Trump will end in a nothing burger. He has 75m people who follow him and the political cost of doing anything to him is simply too high.
Also same reason why Musk can't be touched even though he violates the law every day, he has a huge cult following and the political cost of doing anything to him is again simply too high.
Ideally you make money by lying low, then diversify (unless you are a hedge fund manager, in that case you are already diversified), then use money to build a following.
I say ideally because you need smart people around to make money and smart people tend to be repulsed by people who are hyperfocused on building a cult following and a great social status (exhibit A : the turnover rate at Tesla)
Realistically speaking, rent seeking is the only way present young and future generations are able to participate in economic "growth" effectively. The human population grows, but the chance to participate in the industries and locations with the highest ROI on human capital does not. In fact, wage stagnation and inflation have stunted ROI on human capital in many non-growth industries in developed countries already.
In fact, in my country where given the current trajectory of public policy I will see a huge net loss in pension benefits despite paying into the system more than any previoius generation in real terms already, without rent seeking through investing, I would literally end up poor as fuck and a slave to the state and would never have a chance to stop working short of just dying.
Rent seeking is how the current system works, get over it.
I don't think one should exclude a viable option for profit, just because of some poor actors.
I think rent can be a beautiful way to earn profit and to connect with people.
If you are earning with rent it doesn't necessarily mean that you're evil and that you're abusing your "customers" with unreasonable demands or unexpected surprises.
Rent seeking is how FAAANG companies make money. Secure the supply chain, low cost and cheap labor, fight right to repair, fight what does it mean to own a streaming movie and then charge exorbitant prices for services.
They exploit people on both sides of their business: consumers and laborers
I find it interesting how many individuals appear to both love and hate FAAANG companies. They love the products but seemingly hate the fact that the companies exist.
Would it not be equally fair to claim that both consumers and laborers also "exploit" FAAANG companies to their own benefit? Take Amazon as a single example - if not for the Amazon fulfilment centers, where else would these workers find employment? And if the claim is that it's such a terrible work environment, why not work somewhere else? Fact is, they are employed there of their own volition so clearly there must be some advantage over potential alternatives. Comparing Amazon to a hypothetical "perfect" employer is a straw man, a more fair comparison is to existing alternatives (including unemployment).
Would it not be fair to also suggest that Amazon has, directly and indirectly, contributed to raising more people out of poverty than any other company in history? They have opened the global supply chain to everyday consumers on a massive scale. Because of this, one can now buy a 65" flat screen television for $500 USD - a price point within reach of many low income households and no longer considered a luxury purchase. And the factories where these are made are paying much higher wages in much better working conditions than existed previously. And they are continuously improving.
Or consider AWS - this alone has enabled countless startups to succeed with virtually no upfront infrastructure costs. If AWS disappeared tomorrow, how many HN readers' jobs would be in serious trouble. How many newly minted millionaires owe their success, in some small part, to the services that AWS provides?
The point is, this is a give and take situation. Sure FAAANG companies make money. Because we give it to them, voluntarily, because we have decided that the benefits they bring to us are worth more than the cash we exchange for it.
If one has an issue with how any of these companies conduct themselves, the obvious response is to take your business elsewhere. If enough people agree, the business will adjust or a competitor will take its place.
I don't personally care much for companies making it impossible to repair their products, but I'm also of the opinion that I can vote with my feet and with my money to help change that.
>Fact is, they are employed there of their own volition so clearly there must be some advantage over potential alternatives.
There was a good article on HN a few weeks back that interviewed people in Amazon’s warehouses as the union debate heated up in the US. What struck me was that many were there because they didn’t have other options. Some were previously working very middle class jobs which no longer existed because they were outsourced and now were making much, much less because there were no good alternatives. People choosing the lesser of two evils doesn’t make for a compelling argument for the virtues of them acting out of their own volition. And that globalization that brought about that point may very well have lifted others elsewhere out of poverty but it seems to conflict with the article’s claim about non-zero sum wealth generation.
>In the brick and mortar stores that wouldn't have closed if Amazon wasn't there.
This seems unlikely, online shopping is far too convenient and provides far too much value for brick and mortar stores to compete. However, that's not to say that these stores necessarily went out of business. A savvy proprietor would see the writing on the wall and move their operations online.
>Because Amazon destroyed these somewhere elses.
Why Amazon? Would it also not be fair to say that consumers destroyed the somewhere elses by shopping online instead of on main street?
>This decision is wrong though. Humans are pretty bad at taking externalities into account.
That's the thing about freedom - when people are free to make their own decisions, one must accept that they may occasionally make (to some observers) irrational or counterproductive decisions. That does not mean that removing said freedoms is an acceptable solution.
>You can't when existing players use their established position as a way to prevent new players from entering the market.
This statement holds. Anti-competitive behaviour is counterproductive and should be discouraged because it has a negative impact on the free market.
Are you speaking on behalf of the entire HN community? I didn't realize we all spoke with one voice.
If anything, the HN groupthink is counterproductive. I find that the true value of the HN community is the diversity of the voices and opinions here, not what "all of HN" thinks, which is not always correct (and often not).
But as you can see from the responses to the GP comment, many nonzero people on HN think and believe the contrary.
So, the comment attempts to impose on the reader the perception that any contrary belief to what the commentary implies is a "normal HN opinion" is something that should not be held with credibility.
It's counterproductive to say that some non-zero group of people on HN believe something when a possibly equal or greater non-zero group believe something to the contrary. It makes me wonder if the point of the comment is to suppress contrary positions.
Depends on what you mean by "value," I guess, but it seems to me that being an effective participant in market economy is impossible without bringing some kind of value to the table (if only indirectly or as a side effect).
I don’t think so. Somebody once had to build the houses that they were collecting rent on. Time passes and what used to be value added becomes a simple matter of capital invested or inherited.
There are different levels of rent seeking. For example I don't think there's anything wrong with loaning money for people who will use it to start a productive business.
There's a lot wrong with corruption, where laws and politicians are bought with money. There's a lot of wrong with regulatory capture, where market regulation is distorted in a way that makes competition against the status quo next to impossible.
“Rent seeking” has a specific technical meaning, which is not the same as “collecting rent”. Most SaaS companies are by no means rent seeking, and in fact it’s hard for me to come up with an example of one that does it.
Sorta. But their real m/o ("value add") is they aggressively purchase the "fruit" (best seats) which pushes out regular market-price buyers. Then hold. Then sell at 5x to 120x list price. Its a game, similar to equities but perishable. Their only real service is standing in line in front of you to corner and add pressure.
fuck being rich. I just want to be able to afford a small house to live with my family. If I saved 100% of my salary for a decade I still would't be able to afford half of it.
"I just want to be able to afford a small house to live with my family. If I saved 100% of my salary for a decade I still would't be able to afford half of it."
In what country and what area?
There are places which will pay you to move in, and living there is free.
They might not be places you want to live, especially not with a family, but they exist
Then there are places that are super cheap by developed-nation standards.. like Eastern/Central Europe, parts of South/Central America, Asia, Africa... pretty much anywhere.
Even in the US, if you live far enough from a metropolitan area or in some less desirable locations you can find really cheap homes, or cheap land on which you can plop down a trailer or a kit-home, or build your own out of cheap alternative materials.
Again, you might not want to live in such places for a variety of reasons.. but they're affordable.
This is near to his point. Salary is trading ‘wealth’ for ‘money’. You could literally build that house to achieve ‘wealth’ faster than you can earn it by saving money from salary.
This essay helped me understand how I made this mistake over well more than that decade you fear. The 80-90% saved from two decades of engineering salary did absolutely nothing to get me closer to debt-free housing security. Money is amazing when you see it for the first time, but it ends up being worthless. Investments too - risk of unmitigated loss for an individual investor is structurally greater than the potential for post-tax gain.
So he’s saying to build wealth, not money, and definitely avoid status games. (But we’re here posting, so, failing that last one spectacularly.)
Wait, so you're saying to build a house rather than buy it because it's cheaper? I think the overwhelming amount of costs of a house is the actual land it's on. You can't build land.
I'd need a minimum 700,000 to buy a lot or a condemned teardown home on a lot here in Vancouver, BC. Actually that's not Vancouver, that would be an hour away in Maple Ridge or Langley. I'm ok with building (or subcontracting the building of) my own home - but I still can't afford the lot to even start the process.
Yeah the dream of remote. I sometimes think of getting a remote job and leaving for a cheap area but things like family and friends really tie me down here. It would really suck to see my parents only once or twice a year knowing that there's maybe 20 years or so left with them.
Depends on location and probably not true in most of the world by area. There's lots of land in the world you can have for cheap. Or even free, e.g. Russia is happy to hand out 1ha in the far east to any citizen with only one string attached - go and do something with it within 5 years, then it's yours. Somehow, not many takers.
Have you thought about a career change? You mentioned below you are a professor, a nobel endeavor but obviously not a very lucrative one (financially). Perhaps there is another career you can also love which pays you more and open doors of freedom.
You can (rightfully) blame external sources, but doing so isn't going to make any difference in your experience of life. If your desire is to own a house, there are actions you can do to get there. Is it fair? No, but neither is life.
That is the main point. Why is life not fair and why do we not try to do things to make it fairer? We all try to unbalance the system by trying to get more money or more power, instead of trying to work together and make it fair for everyone.
Because we are humans, and the factors that drive humans who are capable of making widespread change that would make things fair steer them towards wealth and power instead. That's just reality.
You can help yourself and also help others. I can say with certainty that debating these points on HN isn't going to have any impact on the fairness of life. Committing to action is an admirable thing, idle words bemoaning the unfairness of life doesn't help anyone.
I guess I do, but in academia (and in Europe). Is it different in the U.S.? How many years worth of a professor salary do you need to buy a house in a major city?
Universities in expensive cities tend to have housing-specific perks because otherwise recruiting/retention would be very difficult. One school we considered allows faculty to forego $30k/yr in salary in exchange for a beautiful home they can live in as long as they teach there. The school will customize the home to the professor’s liking, perform all maintenance (down to the lightbulbs), and pay all property taxes.
> Can't find salary info for UW (the big university).
In most states the salaries of state employees (at least over a certain amount) are available. Since UW is a public school you should be able to find them here: http://fiscal.wa.gov/salaries.aspx
Filtering by UW employees I can see at least one professor making $627k in 2019, and I imagine there are lower tier professors making a fraction of that (some associate professors making < $100k).
Sorry, but somebody is still producing that wealth through their labor. It’s just not your labor. Wealth in the sense that the author is using the word is when you collect the fruits of other people’s hard work.
No matter how you set up your economy, only a small number of people can live like that, so no, by definition this is not a strategy that everyone can use. Otherwise, who would be doing all the actual work?
The key is that machines (bulldozers, airplanes, websites etc.) multiply work to produce more wealth per unit of labor based on a productivity multiplier. Labor is a free market that can fail due to wages being insufficient or can be distorted by a minimum wage that may reduce demand for work to the point of significant unemployment. Need to model the whole system in detail to reach any conclusions. Single sentence observations are nearly always wrong in some respect.
As a corollary, I imagine that if I was a member of the class that owns things but does not work, I would not sleep well at night. After all, those who own wealth need those who work. The ones who work know how to make things, grow food, set a broken bone, build bridges, change diapers, do all the things that need to be done, but those who own things can’t do any any of that stuff on their own. In a way they’re like helpless children. They need us, for everything.
But do we need them? No. This article is literally saying that the property owning class can perform their function in society while they’re asleep. Well, if that’s true then they’re not contributing anything of value.
If I were one of those who own wealth, I would worry greatly that one day the people who work would figure this out. That’s the sword of Damocles that hangs over the heads of the wealthy.
This is a fallacious argument that ignores how progress occurs. Owners do not merely own, they create the process that produces the wealth. Without them we would still be in the stone age.
>Sorry, but somebody is still producing that wealth through their labor.
No, not necessarily.
E.g. You write a novel. It's selling every day online. Whose labor are you collecting?
If you say the customers' labor at their jobs - Yes, if you trace any chain of transactions far enough you can eventually find someone who did some labor. This is kind of meaningless though. It's true even if there's only one working human on the planet.
Basically, you're restating the labor theory of value which is generally not considered credible by economists.
How much of the economy would you estimate works on the "write a novel, sell it passively on a website you created/host/etc. yourself" model? Is this common in your mind or a very narrow example to make a point online?
The book was written by finance professors who examined the characteristics of actual millionaires. They found a lot of people who appeared to be millionaires did not actually have a net worth over a million dollars.
High status professional are expected to drive nice cars and live in a big house. It's harder to be a millionaire if you're spending a lot of money.
The authors were surprised to find that a lot of the Americans with a net worth over a million did not fit any of the "millionaire stereotypes" at all. They drive an old pickup truck and drink Bud Light.
I like the Tweet thread, but prefer the Millionaire Next Door cause it's backed up by actual data. It also seems like the Tweet thread is focused on advice that'll get you a net worth in the top 0.1%. The central premise of the Millionaire Next Door is a lot of people have "regular jobs" and get rich (depending on your definition of rich). See the janitor that amassed an $8 million dollar fortune: https://www.cnbc.com/2016/08/29/janitor-secretly-amassed-an-...