Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

How the .0001% Made Its Money

priceonomics.com

Post reply on HN
Print view View original

21–30 of 154 posts

Re: How the .0001% Made Its Money

#21

Post by Florin_Andrei »

pg wrote: post #17
Florin_Andrei wrote: post #16

> The popular view of America's upper class is that of an ossified aristocracy. But research from the National Bureau of Economic Research shakes up this view, at least among America's richest individuals. > The individuals of the Forbes 400 List are the wealthiest people in America - the top .0001% Am I the only one who sees the contradiction? On one hand, they say things are not that bad. But then they turn around…

They're talking about these people's origins, not their current wealth.

Let me emphasize it again - perhaps by sheer repetition, the main point will become obvious:

It's not something relevant to the general population, the middle class in general, or the concept of social mobility, IF IT ONLY APPLIES TO 1 PERSON IN 1 MILLION.

Re: How the .0001% Made Its Money

#22

Post by a3voices »

Sagat wrote: post #3

I wonder when we will have the first dollar trillionaire. (Rockefeller doesn't count) It's likely that some people will own entire planets in the future.

This reminded me of a Star Wars book where Han Solo won a planet in a game.

>Han Solo won the deed to Dathomir from Drackmarian Warlord Omogg in a game of sabacc in 8 ABY.

http://starwars.wikia.com/wiki/Dathomir

Re: How the .0001% Made Its Money

#23

Post by firstOrder »

The first paragraph says: > The popular view of America's upper class is that of an ossified aristocracy. But research from the National Bureau of Economic Research shakes up this view, at least among America's richest individuals.

Not much has shaken up this view. Half of the list inherited $400 million or more upon turning 18. Even the other half of the list are from among a small percentage of America's upper middle class.

#1 Bill Gates. Father a wealthy lawyer. His grandfather was a national bank president. He went to an elite private grammar school, which had teletypes and computer timesharing back in the 1960s. His mother was on the board of United Way with the CEO of IBM - a helpful thing for a son who became a billionaire by riding IBM's coattails. Despite all of this, he is still on the bootstrapped, self-made side of the F400 list. He is not one of the heirs.

Next is Warren Buffett. His father was a congressman. His grandfather owned a string of stores. And so on.

The rest of the top ten are the Waltons, who inherited Wal-Mart on birth, the Koch brothers, who inherited an oil company on birth, plus Larry Ellison and Michael Bloomberg. Ellison and Bloomberg are the only middle class people on the list.

I do think there are new trends happening at this level, but they don't point to what the blog post authors are pointing to.

Re: How the .0001% Made Its Money

#24

Post by yummyfajitas »

aspir wrote: post #14
CoachRufus87 wrote: post #6

Why doesn't 'VC' fall under 'Finance'?

It could be argued that VC involves the building of technology businesses, rather than simply investing in a hands off manner. It's a fine line, but the famous VCs that come to my mind (Doerr, Andreessen) help mentor and grow a company, and similar financiers (Buffett, Soros) are more industry analysts and money managers. It's a gross simplification, but it may be what they were thinking.

You could make the same argument about a lot of private equity - that tends to involve the restructuring/managing of various brick&mortar.

Re: How the .0001% Made Its Money

#25

Post by klochner »

Florin_Andrei wrote: post #21
pg wrote: post #17

Earlier quoted context omitted.

They're talking about these people's origins, not their current wealth.

Let me emphasize it again - perhaps by sheer repetition, the main point will become obvious: It's not something relevant to the general population, the middle class in general, or the concept of social mobility, IF IT ONLY APPLIES TO 1 PERSON IN 1 MILLION.

The article presents that caveat straightforwardly:

   The popular view of America's upper class is that of an
   ossified aristocracy. But research from the National
   Bureau of Economic Research shakes up this view, at
   least among America's richest individuals.
And elaborates:

    Over the last 30 years, income inequality has grown and
    intergenerational mobility has decreased. The rich are
    getting richer and drawing up the ladder to the upper
    class with them. 

    The story differs for the members of the Forbes 400 List.
So I'd say you're in violent agreement with the author.

Re: How the .0001% Made Its Money

#26

Post by pc86 »

> America’s .0001% is becoming more meritocratic, but the means of a middle class background remain a necessary launching board.

Doesn't this directly contradict the preceding statement that those "born into poverty stayed level at 20%?" Maybe I'm being too pedantic with my interpretation of "necessary" but 20% seems a sizable chunk.

Re: How the .0001% Made Its Money

#27

Post by morley »

firstOrder wrote: post #23

The first paragraph says: > The popular view of America's upper class is that of an ossified aristocracy. But research from the National Bureau of Economic Research shakes up this view, at least among America's richest individuals. Not much has shaken up this view. Half of the list inherited $400 million or more upon turning 18. Even the other half of the list are from among a small percentage of America's upper midd…

The article goes on to address your point.

From the article:

During the period the researchers investigated, the number of individuals on the Forbes 400 who were the first in their family to run a business rose from 40% to 69%. Sixty percent of individuals on the list grew up wealthy in 1982 while only 32% did in 2011.

Re: How the .0001% Made Its Money

#28

Post by pg »

Florin_Andrei wrote: post #21
pg wrote: post #17

Earlier quoted context omitted.

They're talking about these people's origins, not their current wealth.

Let me emphasize it again - perhaps by sheer repetition, the main point will become obvious: It's not something relevant to the general population, the middle class in general, or the concept of social mobility, IF IT ONLY APPLIES TO 1 PERSON IN 1 MILLION.

Please don't use uppercase for emphasis.

http://ycombinator.com/newsguidelines.html

(It's especially unnecessary when replying to someone who already understands the point you're making.)

Re: How the .0001% Made Its Money

#29

Post by seferphier »

NhanH wrote: post #12
gcb1 wrote: post #7

Earlier quoted context omitted.

like putting a fence on some land? like having rights to some nation natural resources (energy on the graph if not clear) all wealth is created out of thin air for the 1%. they just adapt every time the not 1% comes closer to their turf.

I might well be very wrong here, but the main difference is that the other type of wealth-creation process actually creates more wealth (more products for everyone). While finance seems more like wealth-accumulation without the creation process - I'm aware that redistribution of resource in an efficient way is supposedly the part finance does in the wealth creation process, I'm just unconvinced of how much does that…

I agree.

Finance created lots of value for the British Empire when they were colonizing countries - where they could raise money to buy navy ships and soldiers.

Finance does create value in the long run. However, it creates minimal value in the short run. Debt being traded in the short run is a zero sum game which does not create any value for the society. Considering that we allocate the best and the brightest people in finance, I would consider it creates negative value to society.

Re: How the .0001% Made Its Money

#30

Post by adventured »

firstOrder wrote: post #23

The first paragraph says: > The popular view of America's upper class is that of an ossified aristocracy. But research from the National Bureau of Economic Research shakes up this view, at least among America's richest individuals. Not much has shaken up this view. Half of the list inherited $400 million or more upon turning 18. Even the other half of the list are from among a small percentage of America's upper midd…

Bill Gates shouldn't be listed as someone who inherited his wealth: he did not inherit it.

The $100 billion he'll give away was of his own creation, spurred from effort of his own mind, from a company born of his own fingers and imagination.

We're having this conversation thanks to the Internet, probably via relatively inexpensive tools/gadgets. Which means we've all inherited an extraordinary privilege - courtesy of the immense efforts of countless others and countless invested wealth - that I would argue is drastically beyond anything Gates had the benefit of despite his family. What have you done with it? (rhetorical)

The privilege we're all enjoying right now - all of this easily accessible, relatively cheap, amazing technology - is beyond anything being born to a successful Seattle lawyer is worth. Why aren't we all millionaires N times over? If you understand that point, then you understand why Gates deserves credit for his wealth.

His mother didn't make the deal with IBM (in fact Ballmer was arguably most instrumental in the nuanced legal structure that gave Microsoft its position), and his mother didn't execute and build software for 30 years against tremendous odds and competition either. Is your theory that Bill Gates should be penalized for being born into a family and situation that was not of his own choosing? Such that you pretend his wealth wasn't of his own creation and is null and void, because his father was a lawyer (remind me again what making $100k a year as a lawyer in 1970 has to do with your son generating a $100 billion fortune in 2000, seems to me there are a lot of extraordinary steps required to get from one to the other no matter how good your first step is, whether you're Steve Jobs or Bill Gates).

There are 9 million millionaires in the US currently, and this country has been rich for a long time now. Why aren't we drowning in Bill Gates clones? The answer is obvious.

Any idea how many successful lawyer sons didn't generate $100 billion in wealth the last 40 years? All of them but one. Gates is one in a million even by that narrow-down.

I'd counter argue that Buffett would have been successful regardless of his father being a Congressman (it's absurd to think that a one term trip to DC is what made Buffett what he is). Indeed, using Buffett as an example is the absolute worst thing you could do: the market doesn't care if your daddy was a Congressman, it was his massive results that spoke volumes, got people to invest with him over time, and made him rich. Some of his shareholders held for decades. It was his understanding of how to make money, and his ability to sell that vision, that scored his first investments. Even doctors don't like to lose $100k to some idiot kid, no matter who their father is (his father wasn't that important, and his grandfather's stores weren't that wildly successful).

Or did you think people were buying Berkshire at $100 because his daddy was a a borderline irrelevant Congressman for one term?

Post reply on HN