How the Rich Got Rich

For the rest, it depends on where you want to draw the line for "modest backgrounds". For example, which side does Bill Gates fall on? He's certainly more self-made than Christy Walton, in that he inherited only millions, not billions. But having a multi-million trust fund from your bank-founding grandfather, and a mother who's on several boards of directors, is still considerably above the median in terms of winning the birth lottery (http://philip.greenspun.com/bg/).

The reason societies have typically been pro-Property comes from religious superstition; consider that the concept of private land ownership emerged out of a perversion of ancestor veneration; " will rape your shit for breakfast in the afterlife if you don't honor his descendant's claim to this land". Eventually, these ancestors became legends or gods and those who claimed ancestry became the priests, and the rest (literally) is history. [Note: I'm not saying that all religion was born this way, but only that the desire to corrupt or abuse the religious impulse is as old as dirt.]

If you take a person's percentile-ranking on Property vs. Energy and compare the two, it determines what that person's politics will be-- not in a left/right sense, but in terms of how they view certain social justice questions. People who are Property-heavy (i.e. have a lot of connections and capital but low talent) tend to resist change and want to keep doors closed. People who have more Energy than Property want to shatter barriers and dynamite the doors keeping them out.

The reason it doesn't map easily to left/right politics is that both corporations and government can be corrupted to protect the entrenched (i.e. undeserving, Property-heavy people) so there are a lot of pro-Property types who are superficially liberal. Most HN-types and entrepreneurs, even the libertarians, tend to be pro-Energy. A source of our continuing frustration is that the world is still run (look at who actually makes major funding decisions, a few top incubators aside) by extremely connected people who have lots of Proprety and little Energy/talent.

There's another way to view this, which is more fundamental and equally correct. Property equals Past. Energy equals Future. Sadly, people tend to have more faith in an established (but rapidly becoming irrelevant) past than in an uncertain future.

However I do know that when this question is posed (in various forms), the answers seem to all be rooted in a combination of ideology and differing priorities, some of the arguments are circular, some are based on a set of assumptions, and in various combinations. For a sampling of things i've seen[1]:

* The capital disbursement problem is hard, and that it naturally evolves into this pattern, similar to hubs in a scale-free network. It may look inefficient, but really is the result of maximizing efficiency

* A truly free market would not have this problem, but government regulations create it by favoring some over others.

* Government isn't strict enough, allowing some bad players to accumulate enough money and power to get away with anything and becoming these power nodes.

* Modern economic theory is just not capable of describing reality, because much like early undergrad physics, the theory is simple and nice, but when getting to real issues, actual issues (akin to friction, thermodynamics etc) cause inefficiencies that are hard to fully account for.

* Individual greed and shortsightedness cause people with lots of capital to act in a manner counter to efficient capital investment.

* People with all the capital are morally superior and deserve their position, (various morals at play - from religious to it is earned via hard work)

* It doesn't actually matter, because the high end pulls the bottom up with it, e.g. those pools of capital create jobs directly and indirectly (the latter being such things as creating early demand for products allowing for production to be figured out, eventually lowering price, allowing more production research to lower price more).

I certainly hope people jump in here and expand on all of these, because almost certainly someone here knows more than me about all of them. I think it would be useful for all involved to state their base assumptions, because for some reason, discussions of this topic don't ever seem to examine those, and it would be neat to get to that level once in a while.

[1] Please note, I am not taking a side on any of these, just presenting various arguments as I understand them.

Not really. I hate this argument.

A person with $20 million who puts $500,000 into a new business is not taking that much risk. He's putting 2.5% of his net worth into it; if it tanks, he'll have other opportunities to do it again.

A person who puts 2000 of his ~3000 effective working hours per year into a job is taking on a lot more risk. He's putting about 67% of his working time in, and if that job tanks (company goes out of business, he gets fired) he can be seriously screwed.

Both deserve to be rewarded, for sure, but this mentality in which monetary investors deserve prima facie higher status than time investors is utterly fucking sickening. It reminds me that some people haven't got that we stopped having royalty more than 2 centuries ago.