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How the .0001% Made Its Money

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Re: How the .0001% Made Its Money

#51

Post by vidarh »

adventured wrote: post #39
dustinrodrigues wrote: post #31

Earlier quoted context omitted.

It's not that he inherited his wealth, it's that he grew up in a privileged environment that gave him opportunities most other people didn't have.

Are you suggesting his privilege wrote his software for him? Much less had the vision to start a software company in the 1970s - which his parents thought was a bad idea. They did not like the idea of him dropping out, he did it anyway. Paul Allen didn't come from any kind of privilege. So is the theory that he should be robbed of his amazing success and effort also, by association with Gates' association with his fa…

Many people wrote software in the 1970s and started software companies in the 1970s.

He is not suggesting his privilege wrote Gates software for him, but that privilege gave Gates a substantial advantage over the large number of other people writing software and starting software companies at the same time.

His privilege is unlikely to have been a sufficient condition to explain his success, but it is also entirely unrealistic to assume that his privileged background did not provide him with a number of benefits, down to even basic stuff like growing up in an environment where success and ambition is expected and normal.

Re: How the .0001% Made Its Money

#52

Post by Samuel_Michon »

programminggeek wrote: post #32

> The economic story of the past decades is supposed to be the death of the American Dream. Income inequality has risen, the wealth of the middle class stagnated, and stories of the poor working their way to prosperity became just stories. I think the article doesn't really do a good job to change that view. The inequality has risen and the wealth of the middle class has stagnated. This is absolutely true. Things lik…

> The top 0.0001% gained their wealth not by inheriting it

How did you come to that conclusion? I looked for that in the figures, but I couldn’t find what percentage came into money from an inheritance. Perhaps it’s placed in the 12% ‘Diversified/Other’ category, but the impression I got from the article was that they tallied how the money was earned in the first place, not where the ones holding the purse got it from.

I believe your interpretation of the article in this aspect is incorrect. For instance, 4 of the top 10 spots are taken up by members of the Walton family. Those people inherited their wealth from Bud and Sam Walton, the founders of Wal*Mart.

http://en.wikipedia.org/wiki/Walton_family

Re: How the .0001% Made Its Money

#53

Post by ryandrake »

adventured wrote: post #39
dustinrodrigues wrote: post #31

Earlier quoted context omitted.

It's not that he inherited his wealth, it's that he grew up in a privileged environment that gave him opportunities most other people didn't have.

Are you suggesting his privilege wrote his software for him? Much less had the vision to start a software company in the 1970s - which his parents thought was a bad idea. They did not like the idea of him dropping out, he did it anyway. Paul Allen didn't come from any kind of privilege. So is the theory that he should be robbed of his amazing success and effort also, by association with Gates' association with his fa…

The privilege of having a well-to-do family gives you the ability to take more risks, knowing that if they fail you have a cushion to fall on.

I worked with someone who failed businesses over and over, each time going back to live off his family's wealth for a bit until trying the next businesses, until finally one of them hit and made tons of money. If you ask him, he'll tell you he didn't inherit a cent, and was a self-made millionaire. Technically accurate, but doesn't tell the full story.

Re: How the .0001% Made Its Money

#54

Post by Yhippa »

> the rising share of the Forbes 400 List accounted for by technology and finance supports theories that explain America’s rising income inequality by how technology has favored the accumulation of wealth and made certain sectors more scaleable. Tech moguls like Mark Zuckerberg and Sergey Brin account for a rising share of new fortunes.

Reading that reminded me of this: http://www.theonion.com/articles/economists-advise-nations-p...

Re: How the .0001% Made Its Money

#55

Post by humanrebar »

sigil wrote: post #41

It's also hard to stay on top, and it gets harder the closer you are: the turnover of individuals in these extreme upper brackets is high [0]. The composition of the very top income groups changed dramatically over time. Less than half (39% or 42% depending on the measure) of those in the top 1% in 1996 were still in the top 1% in 2005. Less than one-fourth of the individuals in the top 1/100th percent in 1996 remain…

Year-to-year income of the top 1% is probably a poor measure of "staying on top".

I would like to see those numbers controlled for wealth. Some of those people whose incomes move in and out of the top 1% are just in boom-or-bust jobs or own boom-or-bust businesses or investments. Others are big earners who recently retired to extremely comfortable fixed incomes.

Neither category really fits what I would think of as someone losing his or her "on top" status.

On the other hand, moving from a high-income high cost-of-living area (SF or NYC) to a lower-income, low cost-of-living area (Boulder, KC, or Charlotte) will technically move you out of the 1% while improving your standard of living.

Re: How the .0001% Made Its Money

#56

Post by scotty79 »

cylinder wrote: post #44
scotty79 wrote: post #34

Surest way is real estate. Just buy real estate and rent it. Repeat over 3 or 4 generations. Congratulations. You created a rich family. All other ways involve luck.

What you're saying is "The surest way to get rich is to be rich." Real estate is just a way to invest money you already have. It doesn't generate wealth unless you have access to capital and can put deals together to develop properties and take a chunk. But that might as well put you in the "Finance" category.

You can build real estate gradually, starting with one, two, three apartments paid for with your job and rent your tenants pay. At some point, pretty early you could stop working but if you don't you can buy additional apartments faster. During first generation, I think, you could buy around 10 if you have a good job. Your children will be able buy faster, their grandchildren even faster.

Re: How the .0001% Made Its Money

#57

Post by nostromo »

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…

Your comment has sparked a debate that always plays out the same way.

Let's just jump to the punchline and argue if the universe is deterministic or not.

Re: How the .0001% Made Its Money

#58

Post by nilkn »

adventured wrote: post #39
dustinrodrigues wrote: post #31

Earlier quoted context omitted.

It's not that he inherited his wealth, it's that he grew up in a privileged environment that gave him opportunities most other people didn't have.

Are you suggesting his privilege wrote his software for him? Much less had the vision to start a software company in the 1970s - which his parents thought was a bad idea. They did not like the idea of him dropping out, he did it anyway. Paul Allen didn't come from any kind of privilege. So is the theory that he should be robbed of his amazing success and effort also, by association with Gates' association with his fa…

Where I live, the wife of an oil & gas billionaire recently started up a donut shop. As for the location of her shop, she casually chose a quaint little shopping center in the heart of the most expensive and historically rich neighborhood in the entire surrounding metropolitan area and possibly the whole state. While having a shop in this area would be a dream for most, for her it was a given.

It's been a nice little success. It might be the most successful independently owned donut shop in the area.

But we all know that her donut shop, despite the significant amount of cash necessary to purchase the building and jumpstart the business, is just a hobby for her, the same way sewing quilts is a hobby to my mom. My mom doesn't fret about the few hundred bucks she may put into her quilts, even if she doesn't make a dime off of them. And the billionaire's wife won't fret if the hundreds of thousands of dollars necessary to even test the business all go to waste because nobody buys their donuts. They will barely notice the money has been spent. If my mom wanted to just start up a donut shop here for fun, well, that would be absolutely impossible--it wouldn't even be an option.

Why do I bring any of this up? Because context matters. Bill Gates is self-made, yes, but you have to interpret "self-made" in context. His little jumpstart, which appears minor in the shadow of Microsoft, constituted more success than most people in America will ever enjoy over the course of their lifetimes.

Re: How the .0001% Made Its Money

#59

Post by hackula1 »

werner34 wrote: post #19
Shivetya wrote: post #9

the good take-a-way is that more people created than inherited

Exactly my opinion. And even though I normally lean towards free market related views when it comes to regulation and government, I think a high inheritance tax would be justified in western countries. With it universities & infrastructure could be funded and possibly enable more people to get a university degree. My underlying reasoning: Every new generation is a giant possiblity for mankind. Now who do we want to c…

I would be a libertarian if we went to 100% inheritance tax and put every cent to education. Let the true competition begin.

Re: How the .0001% Made Its Money

#60

Post by TheZenPsycho »

adventured wrote: post #43
recuter wrote: post #37

Earlier quoted context omitted.

Buffet made his initial nut by raising a sort of "Friends & Family" round for a mini-hedge-fund type thing. You can read about his wealthy Aunts and extended family in Snowball. He was doing this on the side while working at his daddys Buffett-Falk & Co as an investment salesman. He did well and after stalking Graham was able to get a gig in NYC for a few years before returning to running "mini-hedge-fund" type partn…

Connections aren't results. Getting an introduction won't help you one iota if you can't deliver. The only thing that ultimately matters in investing is results. Buffett is the absolute worst example you could use to claim privilege results. Unless your theory is that his father's friends made all those investment decisions for him. Just about the hardest thing to do in business would be to generate a $300 billion co…

There are four grid squares here, and you're ignoring two, and insisting that they are not important to consider.

here are the variables: father is a congressman (yes/no) took good advantage of opportunities (yes/no)

to combine them we have: yes/yes, yes/no, no/yes, no/no.

so you are saying that it didn't matter that his father was a congressman because he took advantage of his opportunities. But imagine a warren buffet who didn't have a well positioned family, and didn't have the opportunities he had- Still a wiley person- our no/yes. Where is he on the forbes 400?

Warren Buffet is not exactly a rags to riches story. It's more of a riches to unimaginable riches story.

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