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How the .0001% Made Its Money

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Re: How the .0001% Made Its Money

#91

Post by balsam »

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.

Alright, pg, I had enough. I looked at the list of Russia's billionaires. At least 5 of them had humble backgrounds. (http://en.wikipedia.org/wiki/Mikhail_Gutseriev) 1 has a Muslim father. Some have Jewish sounding last names. Some of them had no early data.

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

EDIT: Will check my hypothesis that Communist politburo members had an even more varied background, to support some extreme conclusions.

Re: How the .0001% Made Its Money

#92

Post by anovikov »

You somehow forget that less than 20% of Americans live, or are born into poverty. With 20% of Forbes list having poverty background, this kind of, means that if you are poor in childhood, you have higher chances to get to Forbes list than if you are middle (well, really middle) class. Hard to explain.

Maybe because poor have nothing to lose so they are more prone to risky things that stand at the root of their business? Or reverse, they have medicaid so can afford more risk being less dependent on employers paying for their health insurance?

Re: How the .0001% Made Its Money

#93

Post by comrade_ogilvy »

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…

If it only applies to 1 in a million, it is not even demonstrably useful information about the upper class itself.

From a matter of plain definitions, Bill Gates started in the upper class from the moment of his birth. His circumstance did not require him to work a single day, in order to live comfortably for his entire life; ergo, he is upper class.

It may be true he rose from "upper class" to "very upper class" based on 99.9% his own achievement, but it is a non-argument regarding the ossification of the aristocracy in general. Guessing about the other 99% of the aristocracy based on the particulars of the most extreme 1% of the aristocracy is not logical.

Re: How the .0001% Made Its Money

#94

Post by comrade_ogilvy »

vidarh wrote: post #65
klochner wrote: post #25

Earlier quoted context omitted.

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 lad…

The problem is that on one hand the try to talk about "America's upper class", on the other hand they restrict themselves to looking at members of the Forbes 400. In other words: They're seemingly trying to make the story sound more relevant than it is, by framing it as if they have something to say about "America's upper class", when the data they look at consists only of a tiny subset of extreme outliers.

Bingo.

Bill Gate entered the upper class based on birth. His own efforts brought him yet higher. But Bill Gates proves exactly nothing about how hard working people move into the upper class, because he never ever did so himself.

Re: How the .0001% Made Its Money

#95

Post by humanrebar »

walid wrote: post #86
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 last sentence is the most important point of the article and probably should have been a separate article on its own: > America’s .0001% is becoming more meritocratic, but the means of a middle class background remain a necessary launching board. So in other words the most important aspect is to be from the middle class to be successful otherwise your chances are much less. Makes sense on many levels such as chan…

> being poor impacts IQ simply because it becomes the mind's obsession of finding means to survive.

While that's poetic, I'm very skeptical that you could even prove that empirically.

It's much more likely (because it is empirically demonstrable) that IQ is more strongly impacted by genetics (IQ of the parents), prenatal care (especially with respect to smoking and binge drinking), and childhood (mal)nutrition. I'm not sure how you would even test "obsession with survival" controlling for those things, all of which are much more common in poverty-stricken households.

I'm not saying that worrying about the next meal isn't terrible, but I am saying that we need to make sure we're not getting our causes and effects mixed up here. We can't just emulate "middle class" advantages for poor kids and expect the playing field to be level.

In other words, it's not as simple as saying being middle class is necessary to be successful, because to some degree, having minimally successful parents is necessary to be middle class in the first place. And why are parents successful? Probably things like good impulse control, general responsibility, mental health, and innate intelligence. Many of those things have certain genetic components.

So how do we make sure every kid has a fair shake at being rich? I'm not sure there's a good answer to that since it seems like so many of your cards are dealt in who your parents are. If you're really worried about it, I suggest you support substance-abuse recovery programs and food banks. Keeping kids healthy, well-fed, and free of birth defects are things we should be doing anyway.

Re: How the .0001% Made Its Money

#96

Post by stormbrew »

rafcavallaro wrote: post #78
stormbrew wrote: post #76

Earlier quoted context omitted.

This strikes me as likely to be just a delayed propagation of the increase in upward mobility seen in the post-war years. It seems entirely reasonable for that to take a couple of generations of people building on their parent's wealth accumulation to propagate upwards to the very top. How many of those people's success could you trace back to the GI bill? Gates' father attended university because of it, for example.

Gates's maternal grandfather, a multimillionaire bank president, left him a million dollar trust fund; his mother was on the a United Way board with an IBM exec which is how he got the contract for DOS. The GI Bill had little or nothing to do with Gates's success.

Well, Gates' mother and father may not have gotten together at all were it not for his father making something of himself with the help of the GI bill, so it's definitely somewhat involved. It's not clear from internet searching if William Gates I was wealthy or just had a pretentious approach to naming his kids, so it could be that he'd have gone to university anyway.

That said I wasn't trying to point to it as the sole contributing factor for Bill Gates, just one of many that may play a part in the overall trend and noting that one of the most obvious has it in his family's history.

Re: How the .0001% Made Its Money

#97

Post by recuter »

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…

I wouldn't dream of robbing Buffet of his success - I'm describing the lengthy period of his life that occurred prior to his irrational obsession of buying a small textile company by the name of Berkshire. :)

Re: How the .0001% Made Its Money

#98

Post by amitutk »

walid wrote: post #89
Samuel_Michon wrote: post #52

Earlier quoted context omitted.

> 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 fro…

Do some math. According to Wikipedia the population of the USA is 316,856,000. The 0.0001% of the population is 31685 after removing partial human beings caused by mathematical division. If the Forbes 400 list is used as a sample space for the rest of the 0.0001% then the numbers seem plausible. Note that I'm just playing "mathematician" and I haven't analyzed the 400 people in the list or did anything deeply scienti…

0.0001% of 316,856,000 is 317 (after rounding partial human beings caused by mathematical division), close enough to 400.

Re: How the .0001% Made Its Money

#100

Post by stormbrew »

adventured wrote: post #30
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…

This is a gross misunderstanding of the concept of privilege. The idea is not that Gates or Buffet's work had nothing to do with their success but that their work got them farther, per unit (if you could define such a thing), than would someone with less access to privileged parts of society.

Someone who's parents can't send them to college will obviously have to work harder than someone for whom a college education is assured. Someone who lives in a connected family will have to work less hard to be connected themselves.

In particular, this:

> 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.

Seems anything but given to me. And you don't really make a compelling argument for it. That said, Bill Gates clearly had access to both technology and connections beyond average means, so I'm not sure what it has to do with anything.

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