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Are super-rich people just better at making money?

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Re: Are super-rich people just better at making money?

#431

Post by gabesullice »

naasking wrote: post #410
gabesullice wrote: post #97

This is a dishonest piece. It ignores that it's based on a zero-sum game and the world isn't zero sum. The quoted economists know that very well. I like that the coin flip game illustrates the concept of compounding interest, but it doesn't model wealth creation at all. Most new ventures aren't I-win-you-lose, they're we-win-or-I-lose. Wealthy people really can take bigger bets more frequently like the article sugges…

> This is a dishonest piece. [...] If you think this game through, you'll still end up with super wealthy outliers and bankruptcies, but the players in the game actually have some agency. You basically admitted that the zero sum property has little bearing on the outcomes we're scrutinizing here, and so the argument is ultimately the same. I'm not sure how the piece is dishonest simply because it dispenses with an ap…

Honestly, this was a good observation that forced me to think more deeply about why the distinction matters.

I disagree that it's irrelevant. If the game is zero sum, the winners must succeed at the expense of everyone else. The game mechanics themselves produce unfair outcomes since nobody has any agency in their own outcome. Therefore, as this piece argues, the rules should be changed.

On the other hand, my example provides an alternative explanation for wealth inequality in which risk taking and inequality are inextricably linked. In my game, nobody loses because someone else won.

Far fewer people would find these game mechanics unfair, even though the final distribution of wealth is the same. It is not obvious that the rules should be changed.

I could adjust my game mechanics to make them look even more like the real world (as I see it): Every time someone takes a risk and wins, the non-bet reward should go up by a penny (e.g. from $0.30 to $0.31). In that situation, one would expect all the players to encourage risk taking because they know it benefits everyone whether they're taking risks or not. They might even conclude that the risk takers should have a chance at being wealthier than them because of these effects.

Using the zero-sum game leads the reader to a conclusion based on a false premise and I feel that was intellectually dishonest.

Note: one can still argue that the rules should be changed because wealth inequality itself is a problem, but that's not what this article is doing. It's arguing it based on the fictional rules.

Re: Are super-rich people just better at making money?

#432

Post by gabesullice »

dang wrote: post #425
gabesullice wrote: post #97

This is a dishonest piece. It ignores that it's based on a zero-sum game and the world isn't zero sum. The quoted economists know that very well. I like that the coin flip game illustrates the concept of compounding interest, but it doesn't model wealth creation at all. Most new ventures aren't I-win-you-lose, they're we-win-or-I-lose. Wealthy people really can take bigger bets more frequently like the article sugges…

Please make your substantive points without name-calling or swipes (like "dishonest"). They don't add to the informational comment and they tend to irritate, distract, and ultimately evoke worse from others. This is in the site guidelines: https://news.ycombinator.com/newsguidelines.html .

You're right, that was poorly worded.

Re: Are super-rich people just better at making money?

#433

Post by snapplebobapple »

burlesona wrote: post #377

There are two core insights here that are actually pretty obvious: 1. 20% of 1200 is more than 20% of 800. Duh! But the practical insight is simply that people with more wealth can afford bigger bets and expect bigger payouts. 2. Many systems are sensitive to initial conditions. In this model, the first coin flip matter vastly more than all others and determines almost the entire outcome. As others have pointed out t…

Something to keep in mind is that Capital gains are not as privileged as they appear in most places because people making that claim are usually not comparing earning a dollar as a person vs earning a dollar in a corp and flowing it through to the individual, they are comparing earning a dollar as a person to earning a dividend or selling a business. There is still a net positive if you hold in the corp for a long time and avoid the personal dividend tax for years and there are some capital gains exemptions for selling corps but they are smaller than most claims on the subject espouse. If you want to harmonize you have to be cognizant of this and not switch to overtaxing earning through corps

Re: Are super-rich people just better at making money?

#434

Post by 543g43g43 »

nobodyandproud wrote: post #284
543g43g43 wrote: post #269

Earlier quoted context omitted.

Shame Hurun doesn't publish its source data, or a list of those people.

Which is an irrelevant objection, unless the list is inaccurate. Hurun reports are widely cited with few (if any) questions on its accuracy. In fact, it's an inaccurate objection proven by 1 minute of research: https://www.hurun.net/en-US/Rank/HsRankDetails?pagetype=glob...

>Hurun reports are widely cited with few (if any) questions on its accuracy.

I could make the same statements about Forbes and Knight Frank, so that doesn't help explain the 3x disparity between Hunan's figures and the rest.

>it's an inaccurate objection proven by 1 minute of research:

I too found that list of the globe's billionaires. As we are comparing the rates of billionaires in the US, UK, and France, that page doesn't help.

Re: Are super-rich people just better at making money?

#435

Post by Eisenstein »

mcculley wrote: post #413
Eisenstein wrote: post #409

Earlier quoted context omitted.

Me, personally? I don't know -- there are smarter people than I who can come up with lists. I was remarking about the idea itself.

These details seem to make the idea unworkable to me.

Until someone comes up with a proposal I guess we will never know.

Re: Are super-rich people just better at making money?

#436

Post by nobodyandproud »

543g43g43 wrote: post #434
nobodyandproud wrote: post #284

Earlier quoted context omitted.

Which is an irrelevant objection, unless the list is inaccurate. Hurun reports are widely cited with few (if any) questions on its accuracy. In fact, it's an inaccurate objection proven by 1 minute of research: https://www.hurun.net/en-US/Rank/HsRankDetails?pagetype=glob...

>Hurun reports are widely cited with few (if any) questions on its accuracy. I could make the same statements about Forbes and Knight Frank, so that doesn't help explain the 3x disparity between Hunan's figures and the rest. >it's an inaccurate objection proven by 1 minute of research: I too found that list of the globe's billionaires. As we are comparing the rates of billionaires in the US, UK, and France, that page…

> Shame Hurun doesn't publish its source data, or a list of those people

> I too found that list of the globe's billionaires. As we are comparing the rates of billionaires in the US, UK, and France, that page doesn't help.

The raw data is there to help you derive and check Hurun’s claim.

Perhaps you mean you want an easy way to sort and aggregate the information in order to dispute this.

However, the burden is on you to do this as you’re the one questioning the accuracy of the widely cited Hurun list.

At this point it’s hard to take your objection seriously; nor view it as anything more than cherry picking with an underlying agenda.

Re: Are super-rich people just better at making money?

#437

Post by cloutchaser »

AnimalMuppet wrote: post #422
cloutchaser wrote: post #280

Earlier quoted context omitted.

It also ignores another big factor if psychology, humans are a lot more afraid of losing what they have than gaining anything. So even in this stupid simulation, it just doesn’t work, as people get wealthier they actually risk less. This whole article is Marxist academic bullshit, eaten up by Marxist upper class tech 20 year olds in this thread.

> It also ignores another big factor if psychology, humans are a lot more afraid of losing what they have than gaining anything. Rightly, I think. The marginal utility of the next dollar is higher when you have fewer dollars. (I think of it as roughly a 1/x curve, but I have no solid data for this.) This means that, if I bet 50% of my available money on a 50/50 chance, I will lose more utility with a loss than I will…

This is just not how it works on the psychological level. Mathematically yes, but we are not machines.

Someone with a net worth of $1bn is not going to brazenly bet $500m because hey, who cares it’s only half my net worth. That’s ridiculous.

Just like this entire post and discussion. It’s a frustrated poor intellectuals self explanation for why they are unsuccessful.

It’s also the line of thinking that when taken to the extreme killed around 130m people in the 20th century.

Re: Are super-rich people just better at making money?

#438

Post by xg15 »

donatj wrote: post #195

The whole yard sale model suffers from the fallacy that there is a predefined amount of wealth. If that were true, we’d have exactly as much wealth as our cavemen brethren did, which is clearly not the case. Every time anyone creates something more valuable than the sum of its parts, value is added to the system. A bow is far more valuable than the wood used to build it. A hammer and nails far more valuable than the…

Yes, but value is not created out of thin air, you need capital to create value, i.e. you need to be wealthy.

So you could extend the yard-sale model and include a rule that after each round, each $ will turn into $1.5 with some probability.

Guess what? Now the rich players can't just risk higher stakes in the coinflip games, they will also have more opportunity to introduce more money into the game through value creation.

So that would make the outcome even more extreme than the standard yard-sale model, not less.

Re: Are super-rich people just better at making money?

#439

Post by kelseyfrog »

mcculley wrote: post #397
kelseyfrog wrote: post #319

Earlier quoted context omitted.

Do you suppose laws and the legal system provide the social infrastructure to support the corporate ownership of housing as property? If so, that - outside of political will - can be modified, deleted even. Without legal support, it will collapse.

I currently lease my apartment unit in a 24 story tower from a corporation. My friend leases a single family home in a suburb from a corporation. Should both of these use cases be eliminated?

Does it matter that you lease it specifically from a corporation? I'm just going to guess that you are more interested in where any how you live than what the ownership model is of the place your living. For example given two properties in all ways equal except ownership models, you would take the corporate-owned one? I find that a bit far fetched.

Even then, because we typically lack experience with a variety of ownership models, it will be difficult to dis-entangle the familiarity bias from our conceptualizations.

Re: Are super-rich people just better at making money?

#440

Post by xg15 »

burlesona wrote: post #377

There are two core insights here that are actually pretty obvious: 1. 20% of 1200 is more than 20% of 800. Duh! But the practical insight is simply that people with more wealth can afford bigger bets and expect bigger payouts. 2. Many systems are sensitive to initial conditions. In this model, the first coin flip matter vastly more than all others and determines almost the entire outcome. As others have pointed out t…

> A very simple distribution solution therefore is to stop privileging capital gains and tax all income equally. But of course this has been considered and hasn’t gained traction.

A reason why it hasn't gained traction though is that wealth doesn't just give you buying power but also political influence. So especially those who already have excessive wealth would be in a position to block such a measure.

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