[shadowtree]

2-4 are great examples of survivorship bias.

For every success story with those traits are thousands of failures.

If Bill Gates had been born and raised in Ruanda, you wouldn't know his name today. Same IQ, same hustler. But no parents with connections, no upbringing devoid of war and violence.

It's just like in sports. Usain Bolt is not the fastest man alive. He is the fastest professional runner. Within a sample set of 9bn people, there are likely ones with better genetics - but no access or chance to become a professional runner.

This is why the slogan "Billionaires should not exist" is not without merit. A net worth of 100mil still means generational wealth. But once you're in the billions, the gap to all the other employees in your company becomes just crazy - but none of the billions would have been possible without their labor.

Remember: a million seconds is 11.57 days. A billion seconds? 31.71 years.

[imgabe]

> If Bill Gates had been born and raised in Ruanda, you wouldn't know his name today. Same IQ, same hustler. But no parents with connections, no upbringing devoid of war and violence.

Flip that around. There are thousands, if not millions of other kids who grew up with wealthy, connected parents. Why aren't they all billionaires if that's all it takes?

[overthemoon]

They're still wealthy, though, that's the main point. It's not that wealthy parents = billions of dollars, it's that the path to billionaire status overwhelmingly starts with abnormally good starting conditions.

[imgabe]

Billionaire is a bad metric. These are outliers of outliers. Obviously everyone can't be a billionaire. That's like asking why everyone isn't an Olympic gold medalist. Of course the path to a billionaire is going to start with abnormal conditions. It's also going to be completely abnormal along the way, too. It's an abnormal outcome. Why would you expect anything different?

[viklove]

Because if you're not born rich your chances of dying rich are astronomically low. We pretend social mobility exists when in reality it does not, or at least it's extremely rare (even in the US, now more than ever).

[edanm]

I think the problem is the flipping from "Billionaire" to "rich". To get to the most insanely abnormal outcome imaginable, you need crazy good conditions and lots of luck. To get to the level of "rich", by most people's standards, you don't need anywhere near the same level (though of course, luck still plays a role depending on how you define luck - I mean in some sense, you're crazy lucky to even be alive given the odds against the particular sperm/egg matching that made you up.)

[ForHackernews]

> Obviously everyone can't be a billionaire.

The question is should anyone be a billionaire? Many of us think the answer is 'no'.

[imgabe]

Should anyone run a sub-4 minute mile? Should anyone be 7 feet tall? Should anyone make the world's largest pizza? What other outliers are you going to put yourself in charge of regulating?

[overthemoon]

None of these (except the pizza?) are the result of policy, a billion dollars is. None of these polarize undemocratic power, a billion dollars does. None of them are innate in the sense that they cannot be separated from the person like extreme wealth. Height and athletic ability are neutral in a way that extreme wealth are not. Height and athletic ability are biological and meritorious in a way extreme wealth could never be. These aren't in the same category and cannot be reduced to a value neutral "outlier".

[n4r9]

No one suggested that being rich is all it takes, just that it increases the odds substantially.

[tathougies]

> This is why the slogan "Billionaires should not exist" is not without merit. A net worth of 100mil still means generational wealth. But once you're in the billions, the gap to all the other employees in your company becomes just crazy - but none of the billions would have been possible without their labor.

On the other hand, suppose you employ 30,000 people each with 10,000 in savings from working at your company. Without your initial labor to get everything set up and get the business going, none of their combined $300 million in assets would have been possible without your labor, so actually your net worth seems ever more justified.

[mijamo]

You don't know that though. They could have just worked somewhere else and earned as much. It's not like you're creating money out of thin air.

[ChrisLomont]

>It's not like you're creating money out of thin air.

No, but money (and value) is created out of ideas, of labor, and adding value to products.

When an IPO happens, for example, and a company owner holding 50% of the company is suddenly valued at $20B, that value did not come from taking $20B from other people. It's the value of the company. It is value simply created out of thin air, that didn't exist before.

If the next day, someone prices the stock 30% higher through market forces, the owners value shoots up 30% also. That 30% increase in a single day was not taken from anyone - it is made up out of thin air.

When a craftsman buys a piece of wood for $10, crafts it such that others value it at $1000, that craftsman just added $900 of value. It might have taken a week, or might have taken 15 minutes. It's not simply some labor value per hour times hours. The amount of value is created out of thin air, but it took some labor to allow that increase to happen. The labor amount and value added is somewhat related, but varies greatly across all endeavors.

And saying the employees could have just worked somewhere else is shuffling the truth - to have somewhere to work, someone has to start a company, which often takes significant money and risk to begin with, before thousands of workers can have a stable job. That money too was created previously through invention, innovation, labor, and previous investment.

[anigbrowl]

When an IPO happens, for example, and a company owner holding 50% of the company is suddenly valued at $20B, that value did not come from taking $20B from other people.

Unless you were the first to market in a completely new field, it's very possible that some of a firm's worth comes from gaining market share from existing players. That's the whole 'disruption' effect. This might be more economically efficient from one perspective, but that's not necessarily better - both because perfectly efficient systems lack slack, and because people are bad at valuing things.

So take Amazon back when it specialized in selling books. Good part - Amazon has pretty much any book you want, yay. Bad part - it kills brick-and-mortar bookstores. even today, while I'll go to Amazon for a specific book I want, I'll usually wait until I've looked around some other bookstores first. Not only do I like the chance discovery of books I might not otherwise have picked up in bookstores, I like bookstores themselves, especially used bookstores. And I don't like the fact that there are not as many bookstores as there used to be.

And saying the employees could have just worked somewhere else is shuffling the truth - to have somewhere to work, someone has to start a company, which often takes significant money and risk to begin with

So what? Make co-op financing better, figure out a tired grant system for allocating startup capital from a public pool. You're just underlining the article's hypothesis - rich people often get that way because they start out with or have access to more capital than others of equal or greater ability, rather than through any inherent virtue.

In a previous life where I worked at a boutique computer supplier, I got a client who was running a small stock market research/analysis business with only a few employees, and needed high power workstations. I'm not a big people person, and I was looking at his operation and thinking that I'd prefer it to what I was doing, and (from seeing his work product and helping him get going technically) that it was well within my capabilities. So I put in a bit of extra effort to get friendly with him and to figure out how he got his operation off the ground. Turned out his dad was an investment banker and had given him a million $ to set up (at a time when that was a much more significant investment than it is now). I also learned that his biggest obstacle was not his competitors but the chip he had on his shoulder about how his brother was the favorite son and had been given $10 million.

That was the day I realized that wealth isn't a meritocracy.

[ChrisLomont]

>Unless you were the first to market in a completely new field, it's very possible that some of a firm's worth comes from gaining market share from existing players.

It is possible, but you can simply check that the size of the US and world economy has grown tremendously, so that argument doesn't explain the growth.

>So what? Make co-op financing better,

There are plenty of ESOP companies. If they consistently did well enough, then the excess capital they generate could be used to start more employee owned companies.

That this doesn't happen perhaps points to an inefficiency in this process for company creation. Perhaps simply having workers is not enough to drive the economy. It shouldn't be a surprise that when an investor takes a risk to allocate capital to a fledgling company, that the investor would expect a return for resulting growth.

Creating companies without investment is possible, but likely less capable overall.

>That was the day I realized that wealth isn't a meritocracy.

Nothing is a meritocracy - everyone has luck and genetics. Income correlates both with IQ and hours worked, and I suspect most would consider the latter factor merit, and some consider the former merit too.

But wealth, correlating with many things one can control, is also not simply a random variable completely detached from merit.

[1] https://www.sciencedirect.com/science/article/abs/pii/S01602... [2] https://www.nber.org/digest/jul06/w11895.html

[viklove]

> It is possible, but you can simply check that the size of the US and world economy has grown tremendously, so that argument doesn't explain the growth.

Can it keep growing forever? If not, how much longer can it keep growing? Should we alter our economic system to account for the change in economic environment?

[tathougies]

Actually yes.. Production of goods does indeed create money out of thin air (and raw materials).

They could have earned just as much elsewhere. However since we are not in a situation of labor shortages yet, every income providing job is still important. If your employees worked elsewhere they may be as rich as they are with you, but the guy whose job they replaced would have to look for another job.

[gl00pp]

>...assets would have been possible without your labor, so actually your net worth seems ever more justified.

What? No, how is it justified?

Try again.

[robocat]

You are arguing against the article.

If Bill Gates didn't exist we could all easily be using Osbournes instead of PCs, or something equivalent would have occurred.

[guiraldelli]

> This is why the slogan "Billionaires should not exist" is not without merit.

> Remember: a million seconds is 11.57 days. A billion seconds? 31.71 years.

That was insightful and I am telling you: I am going to use your argument from now on---it was just beautifully simple and clear!

[umvi]

Is it still survivorship bias if it took 20 failed attempts before a successful one?

[marcus_holmes]

Kinda. The usual rate is apparently 5 failed attempts before a successful one.

Survivorship bias is looking at only the successes and not the failures. All those self-help books about "the 25 things all successful entrepreneurs do" without acknowledging that thousands of unsuccessful entrepreneurs also do the exact same 25 things.

It's standing up on stage and saying "I worked really hard to get here, I deserve this", without acknowledging that other people are working just as hard but didn't get the same result.

Survivorship bias is not acknowledging that there is luck involved in success. That "meritocratic" blindness that divides the world into "winners" and "losers" and blames people for not being successful.

[mighty_bander]

Yeah, of course. If the chances of some success are distributed geometrically, so that "winners" are randomly chosen at e.g. 0.001% per year, then somebody who wins the dice roll looks pretty smart to themselves and the rest of the world, having done something seemingly difficult. However across a population of a million individuals, 10 or so will achieve that success in the first year.

What is usually achievable through hard work, and worth achieving, is an honest life, a home of one's own, and for some, kids. These are things that bring contentment and happiness. Wealth and power beyond a reasonable measure only endangers these things.

[meiraleal]

> If Bill Gates had been born and raised in Ruanda, you wouldn't know his name today. Same IQ, same hustler. But no parents with connections, no upbringing devoid of war and violence.

same IQ, same hustler and you'd have a warlord or a revolutionary leader. There are genius everywhere, and they don't create only software.

[dorgo]

>2-4 are great examples of survivorship bias. >For every success story with those traits are thousands of failures.

I guess that is the reason why 2-4 start with "luck from...".

I read it like this: from the ones who do/are X only a few lucky succeed. But (almost) all who don't do/are X fail. To succeed you need both: luck + X.

[klaudius]

  "If Bill Gates had been born and raised in Ruanda, you wouldn't know his name today."

You are unfairly using an extreme example. It would be like saying that someone wouldn't be 6'5" if they had been born in extreme poverty with malnutrition. Yes, extremely bad environment can stunt your growth, but you can't use poverty and malnutrition to explain in general why some people are shorter or taller than others.

There are wealthy people outside of the USA and those who weren't born wealthy.

It's a mistake to claim that differences in wealth (or height or IQ) can be explained by environmental factors.

[refurb]

You’re looking at it way to black and white.

I would bet if Gates had been born in Rwanda, he would have stood a good chance of being successful there, better than average.

[asjw]

Not really.

When I was a teenager we hosted at our home kids running from Rwanda , my mom was working in an hospital that cured them, doing the best possible for kids (kids!) with arms or legs amputated or a big part of their skull chopped off with a machete.

You're assuming Gates had probably more chances when the chances weren't there to begin with.

[empath75]

Libertarians who talk about how the state just gets in the way of innovators like Gates forget how hard it is to start a business when the central government fails and people start hacking away at each other with machetes instead of programming computers.

[_fq4v]

Okay, but this is a strawman, because a basic tenet of libertarianism is that a government is necessary to forcefully (if necessary) prevent others from trampling on your individual rights. You are describing anarchy, not libertarianism.

[anigbrowl]

In theory yes, but in practice most libertarians involved in politics want to ruthlessly prune government down to courts for arbitration of contractual disputes, and police for enforcing property rights.

What you are describing is not anarchy, for that matter. Anarchy means absence of rulers, which is not the same thing as chaos and warlordism. Political anarchists are concerned with the establishment of systems that disallow concentrations of power or wealth that enable oppression.

Libertarianism is not exclusively capitstic. Philosophical anarchism can include autonomism, autarchism, and market anarchism, for example: https://www.libertarianism.org/columns/anarchism-libertarian...

It's doubly wrong to describe the situation in Rwanda as anarchism because the genocide that occurred there was not due to some lack of contractual or property relations, but planned, engineered, and carried out because of tribal animosity, partially pursuant to grievances stemming from a particularly brutal period of Belgian colonialism and subsequent civil war(s). That genocide was highly organized by social elites of one tribe over a period of about a year. To maintain otherwise is either product of ignorance or bad faith, so I hope you'll abandon this erroneous position. https://en.wikipedia.org/wiki/Rwandan_genocide

[_fq4v]

I haven't said anything about rwanda. I wad only adding nuance to your extremely blanket characterization of libertarianism which clearly calls for a government of some kind.

[anigbrowl]

If you read back up the thread, the whole context of people hacking each other with machetes arose from speculation on how well Bill Gates would have done had he been born in Rwanda. I default to assuming that people read the threads to which they are commenting, and that it's not necessary for everyone to restate all the context every time.

[empath75]

I have in fact read from libertarians that the government has no business doing such a thing and that's the rightful place of private militias and police to enforce.

[Terretta]

There are African-born self-made billionaires.

// Still on the backs of “labor”.