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Gates to students: Don’t try to be a billionaire, it’s overrated

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Re: Gates to students: Don’t try to be a billionaire, it’s overrated

#121
post #85

Earlier quoted context omitted.

If you make a billion dollars in a free market economy, you have also created a billion dollars in value for others.

No. If you make $1B in a free market economy, you have also provided (at least) $1B in value to others. You need not have created it: you might simply have arranged for them to have it rather than other people. An obvious example would be an extraordinarily effective thief, but one needn't be so blatant. For instance, the main effect of a successful investment advisor's work may be to transfer money from people who h…

The reason I mentioned "free market" was to not consider gaining money through theft, fraud, extortion, blackmail, etc.

In a free market economy, one creates value and then exchanges that value for money. This means that in order for one person to get wealthy, it is not necessary for them to drain wealth from others. Equal value is exchanged.

In other words, one gets wealthy by making the pie bigger, not taking other peoples' pie.

Re: Gates to students: Don’t try to be a billionaire, it’s overrated

#122
post #62

Earlier quoted context omitted.

Eh. Anyone who piled up a hunk of savings and invested it in the 2000s saw it get decimated or hemimated and took a hit against happiness. Taking more vacation or a fun lower paying job might well have been higher utility. But yeah, having a savings cushion while unemployment is rampant is satisfying.

A fluffy savings cushion sounds luxurious. I want a ladder to climb out of debt and 45k a year doesn't do much towards that.

I paid off $35k worth of student loan debt within 3 years of graduating. While I was in debt, earning more to pay it off was a great motivator. Now that I'm debt free and have my basic living costs covered without worry, more money just does not motivate me anymore.

The most depressing comment I read on HN was one guy telling a story about a sales manager he knew that encouraged his sales people to go into debt so they would be more motivated to earn more and therefore, make more sales.

Re: Gates to students: Don’t try to be a billionaire, it’s overrated

#123
post #58

Earlier quoted context omitted.

I don't quite believe that. Look at periods of history where high taxes on wealth have led to a drastic decrease in entrepreneurship activity. I think the dream of becoming wealthy is what does drive people initially, however, (not through experience but from what I've learned from others) once wealthy the pursuit of earning more money does not become the motivation - although I did work for someone who had sold a pr…

Any chance you could elaborate on the periods of history that you are talking about?

Off the top of my head, I believe before Margaret Thatcher took office in Britain, taxes reached 99% at the top level which stagnated the economy. There are other periods I have read about but can't remember the specifics at the moment.

Re: Gates to students: Don’t try to be a billionaire, it’s overrated

#124
post #92
post #54

Earlier quoted context omitted.

> I find it increasingly bizarre, day by day, that people are so fixated on money and not value, or meaningfulness. ...or happiness. I recently read "Stumbling on Happiness" which had an interesting discussion on the fact that there are several studies that show that pay raises up to around $45k per year result in an increase in happiness. But after that, an increases in salary brings only a marginal increase in happ…

Yes. I do research on the economics of happiness, and I do lectures/seminars on it occasionally. In these sessions, I often can't get general agreement that earning money is just a means to the end of being happy. Some students will maintain that earning money is the ultimate goal. Which is frankly weird and a little scary. I think the point of the $45k/year figure, though, is that you get no extra happiness from spe…

Are your lectures online? I would be interested in watching a couple on the topic.

Re: Gates to students: Don’t try to be a billionaire, it’s overrated

#125
post #85

Earlier quoted context omitted.

No. If you make $1B in a free market economy, you have also provided (at least) $1B in value to others. You need not have created it: you might simply have arranged for them to have it rather than other people. An obvious example would be an extraordinarily effective thief, but one needn't be so blatant. For instance, the main effect of a successful investment advisor's work may be to transfer money from people who h…

The reason I mentioned "free market" was to not consider gaining money through theft, fraud, extortion, blackmail, etc. In a free market economy, one creates value and then exchanges that value for money. This means that in order for one person to get wealthy, it is not necessary for them to drain wealth from others. Equal value is exchanged. In other words, one gets wealthy by making the pie bigger, not taking other…

At least one of us is very confused.

In a free market, of course one can get wealthy by growing the pie. But one can also get wealthy without growing the pie, even when illegal or blatantly unethical actions are not involved.

For instance, consider a country with a perfectly free market, in which many of the people enjoy betting on horse races. These bets use a tote system, which means in effect that the odds are set automatically according to how betters are betting (and the owner takes a small cut from every bet, makes a steady profit, and gets rich). There are some professional betting advisors, who watch lots of races and monitor the appearance and performance of the horses. Some of them are very good at evaluating how likely a given horse is to win in a given race. They charge large fees.

Clients of a very good betting advisor will win more of their bets; they will, on average, lose less money at the races. They may even gain on average, if the other people betting haven't been well advised. If you bet without such good advice (or equivalent horse-assessing skills of your own) then you will, on average, lose more at the races than if the well-advised people weren't betting. The immediate effect of the betting advisors' work, on average, is simply to transfer money from people who aren't their clients to people who are. (And to themselves.)

These betting advisors certainly provide value to their clients. They may, if they're good enough and have many clients who bet a lot, be very handsomely paid and deserve every bit, in the sense that their clients gain more from the advice than they pay for it. But they have added no value at all to the world; they have not grown the pie.

If the advisors' advice is very good, they charge very large fees, and extremely cheap credit is not readily available, then someone wealthy can engage a betting advisor and reap a profit at the races that exceeds the advisor's fees, while someone less wealthy can't afford to pay an advisor. This may become an appealing investment activity for the wealthy. Effectively, what the advisors are then doing is to increase the price (for the majority) of betting on the horses, while diverting some of the profits to themselves and their clients. If the effective price increase is too large, no one unadvised will bet any more, the horse-racing business will collapse, and lots of people will be in trouble. (The people who actually organize the races and the betting will probably lower their prices to maximize their profits in the new situation, which will postpone that disaster.) But as long as that doesn't happen, everyone's still reasonably content. Compared with not having the betting advisors: (1) the people who organize the races will take less profit, (2) the betting advisors and their clients will take more profit, (3) ordinary betters will lose more, and (4) the actual results of the horse races will be entirely unaltered. Again, the advisors have not grown the pie; they and their clients gain at the expense of the unadvised betters and the people who organize the races and betting (the latter being the only ones who are actually adding any value in this scenario, by providing an activity that people enjoy more than they pay for it).

So, in this hypothetical scenario, betting advisors get wealthy neither by making the pie bigger nor by taking other people's pie, but by arranging for their clients to get more pie while other people get less.

(You might feel inclined to draw an analogy with, say, hedge funds in the real world. But the situations are not precisely equivalent, and I am not claiming that they are.)

Re: Gates to students: Don’t try to be a billionaire, it’s overrated

#126
post #102
post #96

Earlier quoted context omitted.

How does the total value of privately traded companies compare to publically traded companies, and how many privately traded companies can the Rothschilds plausibly own without it being public knowledge?

Is it possible to find the total market cap of all privately traded companies? Considering that a private company's wealth isn't public knowledge the only thing we can do is estimate using a tool like bizstats.com.

Macro economics can give you a pretty accurate estimate of the "market cap" of privately traded companies: just work your way down from the Gross National Product by segmenting it into public and privately earned. (You could also look at total tax revenue and calculate from there)

Re: Gates to students: Don’t try to be a billionaire, it’s overrated

#127
post #124
post #92

Earlier quoted context omitted.

Yes. I do research on the economics of happiness, and I do lectures/seminars on it occasionally. In these sessions, I often can't get general agreement that earning money is just a means to the end of being happy. Some students will maintain that earning money is the ultimate goal. Which is frankly weird and a little scary. I think the point of the $45k/year figure, though, is that you get no extra happiness from spe…

Are your lectures online? I would be interested in watching a couple on the topic.

Afraid not. However:

* There's a whirlwind introduction in my TEDx talk (http://mappin.es/TEDx), and I've published a survey paper on the topic (http://personal.lse.ac.uk/mackerro/happiness35000ft.pdf).

* I'd highly recommend the transcripts of 3 lectures by Richard Layard from 2003 (http://www2.lse.ac.uk/publicEvents/events/2003/20030106t1439...). They're what got me interested in the area.

Re: Gates to students: Don’t try to be a billionaire, it’s overrated

#128
post #75

Earlier quoted context omitted.

Wow I can't find anything at all supporting anywhere near that. The total net worth of all the worlds billionaires is only $4.5 trillion according to forbes.

Forbes only knows about public wealth. The Rothschilds in the mid 19th century owned half the wealth of the world, and the contemporary argument is that they have not lost money since then, rather it has grown steadily, and is hidden off the books in countless family controlled foundations as well as secret reserves stashed away before there was the type of public accounting we have today. Heads of state and CEOs hav…

Families grow exponentially. It's possible that over the years it was spread out to the dozens of great great great grandchildren who are probably so far from the core family, that they don't act as a unified group any more.

Re: Gates to students: Don’t try to be a billionaire, it’s overrated

#129

Earlier quoted context omitted.

Forbes only knows about public wealth. The Rothschilds in the mid 19th century owned half the wealth of the world, and the contemporary argument is that they have not lost money since then, rather it has grown steadily, and is hidden off the books in countless family controlled foundations as well as secret reserves stashed away before there was the type of public accounting we have today. Heads of state and CEOs hav…

Families grow exponentially. It's possible that over the years it was spread out to the dozens of great great great grandchildren who are probably so far from the core family, that they don't act as a unified group any more.

The Rothschilds had a tradition of the majority of the family fortune going to the first born male, and the others only received, as they say in the Godfather, "a living".

Re: Gates to students: Don’t try to be a billionaire, it’s overrated

#130
My considered opinion is that the main reason Bill Gates is spending so much money, is to improve the world just enough to generate more users of Windows, over decades, in developing countries, thereby adding to Microsoft's bottom line, in the very long term, and in doing so, making more money for himself. Think about it: You have to raise living standards for people in untapped markets before they can buy your product, a thing which they now effectively consider an unattainable luxury.
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