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How People Get Rich Now

paulgraham.com

361–370 of 941 posts

Re: How People Get Rich Now

#361
post #280
post #32

I don't want to derail this too much with personal anecdotes, but I suspect you are much more likely to build wealth with the more established tech companies - and that wealth is "rich enough". Maybe I am just unlucky or unskilled, but I spent roughly 20 years working at startups or innovation labs. I was "close" to some big events where I could have made big $$ but made 0. Both at my own startup and being at early s…

> but I suspect you are much more likely to build wealth with the more established tech companies FANG: low variance + moderate reward vs ENTREPRENEUR: high variance + high reward The Kelly Criterion can probably be applied here on how much to "invest" in each opportunity. Ultimately it matters how often these opportunities come up.

When you use the phrase "reward", are you talking expected value? Or top of the distribution?

Because if it's expected value, I doubt "entrepreneur" is high reward compared to FANGs "moderate reward".

Re: How People Get Rich Now

#362
post #71

It's a classic PG article. Many true facts in there, lots of good analysis with just a few questionable claims thrown in here and there. At the end, there's a massive claim that isn't fully stated but implied. "Of course the Gini coefficient is increasing" translated means "income inequality is not a problem". Firstly, Gini coefficient is based on income, not wealth. That isn't stated clearly. Secondly, there's absol…

Paul Graham's articles always shoot immediately up to the top of HN, but I agree with you, they're generally cursory and pithy thoughts which don't convince my skeptical mind. I don't know, can someone explain why his work is so popular? Think of all the amazing writers across our civilization whose work is linkable, and we're worshipping these decent but not amazing blog posts?

It is funny to read pg's take on wealth tax, given that Piketty has produced massive scholarly literature suggesting the exact opposite of what pg writes.

If the pg's wealth tax blog was supposed to counter Piketty's work, it is comically pedestrian.

Re: How People Get Rich Now

#363
Is it possible that we just don’t know about people inheriting great wealth nowadays? Is there a world registry of wealth somewhere to track this stuff or does Forbes just search public information sources? Maybe the richest people are secretive.

Re: How People Get Rich Now

#364
post #138
post #71

It's a classic PG article. Many true facts in there, lots of good analysis with just a few questionable claims thrown in here and there. At the end, there's a massive claim that isn't fully stated but implied. "Of course the Gini coefficient is increasing" translated means "income inequality is not a problem". Firstly, Gini coefficient is based on income, not wealth. That isn't stated clearly. Secondly, there's absol…

There's also the unstated implication that "anyone can do it if they work hard for it" - basically saying it used to be you had to be born into a wealthy family to be one of the richest people in the world and now you can be the richest person in the world based on merit alone (thus rich people are inherently meritorious).

Somehow all of those explanations seem to gloss over the fact that you generally need to be born into a wealthy family in order to have the cushion to take the risks that allow you to collect billions. As an example, Paul Graham would have been far less likely to attend Cornell and Harvard if his father had a blue collar factory job instead of being a nuclear physicist. Almost none of the 'bootstrap billionaires' of the tech world come from less than an upper middle-class background, but like PG they are quite fond of suggesting that their success was entirely due to 'merit'.

Re: How People Get Rich Now

#365
post #71

It's a classic PG article. Many true facts in there, lots of good analysis with just a few questionable claims thrown in here and there. At the end, there's a massive claim that isn't fully stated but implied. "Of course the Gini coefficient is increasing" translated means "income inequality is not a problem". Firstly, Gini coefficient is based on income, not wealth. That isn't stated clearly. Secondly, there's absol…

Paul Graham's articles always shoot immediately up to the top of HN, but I agree with you, they're generally cursory and pithy thoughts which don't convince my skeptical mind. I don't know, can someone explain why his work is so popular? Think of all the amazing writers across our civilization whose work is linkable, and we're worshipping these decent but not amazing blog posts?

> I don't know, can someone explain why his work is so popular?

It's a prosperity gospel for nerds: you are the special chosen ones, therefore you deserve every blessing. Anyone who says otherwise is sinful and blind to the holy truth.

Re: How People Get Rich Now

#366

Earlier quoted context omitted.

OTOH, the top comment is a criticism. So, probably not all is lost :)

The front page giveth and the comments taketh away

This is a really funny and pithy description of both HN and reddit - and according to Google, you're the first person ever to say it.

Re: How People Get Rich Now

#367
post #71

It's a classic PG article. Many true facts in there, lots of good analysis with just a few questionable claims thrown in here and there. At the end, there's a massive claim that isn't fully stated but implied. "Of course the Gini coefficient is increasing" translated means "income inequality is not a problem". Firstly, Gini coefficient is based on income, not wealth. That isn't stated clearly. Secondly, there's absol…

Can I ask a related question? Why all the focus on income/wealth "inequality"? Shouldn't we be looking at the absolute baseline quality of life? Hasn't it been increasing dramatically despite increasing inequality? Due to technological advances, hasn't the baseline quality of healthcare, education, sanitation, nutrition, shelter, comfort, convenience, etc. significantly improved from the 60s or the 80s? If so, why be…

Three problems:

1. Humans are humans, and they pretty much always judge their success by comparing themselves to others. Or, rather, humans are primates. Take a look at the famous study of the monkey that got cucumber while the other monkey got tastier grapes.

2. Income inequality in and of itself can be a problem because the mega wealthy can essentially buy laws that benefit themselves. There have been many studies that show that politicians are much more responsive to the desires of the rich than the desires of the average person.

3. In any economy, limited resources always go to those on the top of the wealth graph, regardless of cost to produce. So while you may be able to say everyone's standard of living is better, that's cold comfort to someone who won't be able to buy a house in their lifetime because limited land supply goes to the richest.

Re: How People Get Rich Now

#368
post #183

Earlier quoted context omitted.

My two cents on why his writings are popular: - He uses anecdotal evidence which appears to be sound at first. Looking at the top 100 billionaires seems to give a good idea on how wealth is created and distributed, but really it is only a glimpse at a much bigger phenomenon (especially since the data only comes from two years). - His style of writing is very accessible and natural. He wrote an article on his style (…

Could you expand on the last sentence a bit more regarding effective altruism? Are the uncomfortable questions related to the utilitarian nature of how the movement racks and stacks the causes they choose to support or not?

I was more referring to the fact that EA promotes philanthropy instead of asking why we have inequalities in the first place. So it evades questions of redistribution or fairness in a similar fashion as PG.

I'm not quite sure how strong the analogy is though.

Re: How People Get Rich Now

#369

Earlier quoted context omitted.

Can I ask a related question? Why all the focus on income/wealth "inequality"? Shouldn't we be looking at the absolute baseline quality of life? Hasn't it been increasing dramatically despite increasing inequality? Due to technological advances, hasn't the baseline quality of healthcare, education, sanitation, nutrition, shelter, comfort, convenience, etc. significantly improved from the 60s or the 80s? If so, why be…

Social status is by comparison, that's why. I assume the vast majority of people would choose to be in the aristocracy somewhere in 1300 Europe, compared to middle class today. Even if objectively the middle class has better quality of life.

Why on earth would you assume that? Middle Ages aristocracy lived comparatively miserable lives - no daily hot shower, no climate control, nothing resembling health care, no running water or sanitation, no access to information, no international supply chain for food or products (eat only what your community can preserve for the winter). I would wager that any of those aristocrats would gladly amputate their limbs to live as an average person today.

Re: How People Get Rich Now

#370
I find this essay frustrating for a number of reasons, but the biggest one is that it feels like a rehash of his "Inequality and Risk" essay from 2005 - except this one is less direct and buries the lede until the end ("Of course the Gini coefficient is increasing").

Because here's the thing that's wrong with most of the thinking in this essay and in the last one: measuring the success of your economic system based on outliers tells us very little about whether that's a good economic system. For the majority of people in a given country, whether the wealth of the top .001% is inherited or built through some sort of ability to scale doesn't matter, it's still a bad system. If ten thousand people try to do something and only the one that succeeds gains anything from it, we are looking at a non-viable economic system for 99.99% of people.

And I see this all the time now, in all places. It's like when people say "Look, this guy makes huge amounts of money from Twitch/Youtube/Patreon (with the older standards being music/hollywood and pg's focus being startups). These are winner-take-all systems. That's why there's people without inherited wealth at the top of the charts - they won, and somewhere out there are tens of thousands of people that lost. This doesn't mean those people are destitute or homeless, mind you; people that "lose" in the software ecosystem go work for the winners, and things sort-of work out (its worth noting that things don't work out as well in other spaces). But consider - if I have a half a dozen people that start companies in the same space, and 5 of them drop for various reasons - bad marketing, bad design, bad customer support, whatever - does the guy who wins really deserve to be not just 10x, or 100x richer, but 1000000x richer? Is this a just system? Is it even an effective one? Are we really incapable of imagining an economic structure where people don't lose motivation to do great work without the possible reward of billions of dollars?

There's further complaints to be made - looking back only to the industrial revolution to consider 1982 the anomaly, when since the dawn of civilization inheritance has been the standard form of wealth transfer; the social impact of high inequality and how the massively wealthy have a tendency to warp society around them (this was at least examined to some degree in the other essay); and so on.

The future I see from pg's inequality essays is one of increased separation: one in which rather than having an accountant or travel agent in every town, these services are provided by a single company that serves to funnel that money from hundreds of thousands of local areas across the world to a single business, probably somewhere in SV - and a few hundred thousand middle class jobs disappear into the void. And as our technology increases in capability, it happens again, and again, until we're largely left with a few groups - the founders and funders that own everything; the few remaining high-skill jobs that make and manage the systems for huge winner-take-all tech companies; and the rest, which spend their lives doing work directed and optimized by computers until a point is reached where that work can be automated cost-effectively. I'm not sure that's a world I look forward to.

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