No, he's rich because (1) he had first mover advantage (credit to him) (2) he has a good sense of how to run a business (3) he exploits a large number of people to his own benefit.
Isn't there also an effect like the second billion dollar being easier to get than the first? I mean all your points are good but the fact that the system allows you to leverage your wealth to increase it is probably the most important factor to get to $250B.
Absolutely, the more money you have the more risk you can take. That's fractions-of-a-martingale level money so you can probably chalk up a win before you lose it all. Musk uses the same playbook. Losing is for small fry.
Proverb from my granny to contemplate: the devil always craps on the larger heap.
Right, and the risk aspect is only a second order effect. The main effect applies even when you restrict yourself to low-risk investments: it's simply that the more you have, the more you can invest so the more you make on average. But yeah, higher risk tolerance means you can also aim for higher returns.
His parents invested about $500,000 in today's money in their 50s. At that age, 10% of Americans have a financial net worth (excluding home equity) of over $2 million. People in America invest that kind of money in small businesses all the time. That’s on the low end of what it costs to open a Dunkin Donuts, and half of what it costs to open a McDonalds. The kids of the Indian guy who owns the Dunkin’ Donuts down the street aren’t exactly scions of wealth.
And Bezos's biological dad was a unicyclist, his mom got pregnant with him at 16 and later dropped out of college, and his stepdad was a Cuban refugee who got an education and became an engineer for Exxon. Going from zero to billionaire in two generations actually says something remarkable about our system.
Think about it another way. If the government doled out $500k to fund business ideas, do you think that investment would be available to kids of refugees? Of course not. There would be gatekeeping behind credentials and connections, and it would be open to a lot less than 10% of the population.
> The kids of the Indian guy who owns the Dunkin’ Donuts down the street aren’t exactly scions of wealth.
I don't buy that this is a common scenario. How many of those actually own a franchise and how many of them are drowning in debt trying to pay off the loan?
I’m sorry but the idea that anyone near middle class would make the decision to drop their entire retirement savings on a single high-volatility business in a new product sector like e-commerce is insane.
The average retirement savings at that age is around $500,000 according to Edward Jones. That’s average, not median, which means that a ton of people have a lot less money saved up than that by that age.
The Bezos family had $500k adjusted for inflation in money they could risk and lose 100% on. That money was also in an account the presumably was liquid enough to spend (I.e., I can’t spend my 401k money before retirement age without enduring a massive penalty and tax burden).
I must reiterate that no parent would liquidate their entire 401k for a business investment. Middle class people are not starting McDonald’s franchises. At best they are starting a Subway or a Dunkin with borrowed money, and usually the families that do that are putting the whole extended family in on that investment.
Finally, I will address the way in which you our bootlicking our hyper-capitalist system: you praise the virtues of a system that allows people like Jeff Bezos to make it big while downplaying the wild inequalities in that system caused by under-taxation of people like him.
10% of Americans, over 20 million people, have no health insurance. Why is that okay?
> Going from zero to billionaire in two generations actually says something remarkable about our system.
It does? I mean, sure, it's better than having only the already rich stay rich, but let's not kid ourselves that this is a life outcome that everybody, or even 10% or 1% of the US can shoot for. The vast majority of people stay closer to zero. Who gives a shit that a few people get to win the right-time-right-place lottery?
Every society has elites. If you invoke the government to keep people from being financial elites, then those government positions will become highly coveted and those will be the elites. And in countries where there aren’t many financial elites because the whole country is poor (like India until recently) those government jobs are highly coveted and insanely difficult to break onto.
So it matters a lot where a society’s elites come from. In most societies, entering the elite requires family pedigree, credentials, and connections. If your society is such that simply becoming upper middle class gives your kids a sufficient platform to become a billionaire, that has a huge effect on who makes up the elites. Having elites whose parents were refugees or restaurant owners is hugely different from most countries.
> Going from zero to billionaire in two generations actually says something remarkable about our system.
This data point doesn't distinguish between a system that fairly rewards abilities, and one that works like a lottery. My guess is that the US is in between: it unfairly rewards abilities, and chance plays a large role.
Taking Jeff Bezos as example: 1) he certainly has remarkable abilities but maybe not 1,000,000 times more than the median American, yet he has about 1,000,000 times the wealth; 2) it's plausible that the US population of 350M includes several people with abilities similar to Bezos yet no notable wealth due to various circumstances. Both points suggest an unfair system.
Why are you assuming that “fairness” requires a linear distribution between ability and wealth? A winner-take-all system may be undesirable in many respects, but it’s not necessarily unfair.
Yeah there's no reason it should be a linear function, but it's a moot point anyway until we define what it would mean to have "X times more abilities".
My point is that having tycoons with 1,000,000 times the wealth of the median person is not a fair distribution, no matter which reasonable function you choose.
If you think superficially of "fair" like in a game, then yes a winner-take-all system can be fair. But when talking about socioeconomics, I think fairness goes a bit deeper. For example I would say a society with a lottery that picks one winner and tortures all others is not fair to those who lose (even though it's game-fair).
This reply has very strong "the average human does not eat 10 spiders a day; the average was thrown off by Spiders Georg who eats 10000 spiders a day" energy.
Amazon does not have an exceedingly high profit margin, and my understanding is that a lot of it comes from stuff like AWS, not Amazon deliveries - correct me if I'm wrong here. So I'm not sure that "three amazon deliveries a day" - if this is even common - is why that man is personally rich. Even if it were a big source of revenue, that would go into Amazon's coffers, not necessarily his directly.
Another way to look at this: Even if Amazon is wildly successful, does that mean Jeff Bezos specifically should become filthy rich as a result, instead of all its employees and investors? How should the gains from successful entrepreneurship be distributed?
> why that man is personally rich. Even if it were a big source of revenue, that would go into Amazon's coffers, not necessarily his directly.
Jeff Bezos owns 9% of Amazon. So 9% of the expected value of the money going "into Amazon's coffers" indefinitely into the future is counted as part of his current "wealth." It's not money under his mattress.
Is your argument that people shouldn't be allowed to own 9% of a company that they started?
People should not be allowed to accumulate capital beyond $X, yes. What natural law means they should? Society created the conditions for that person to be so successful; in fact, the person only had the minor part in that success. Once you reach $X, you get a certificate saying you won at life and society is really grateful, and society gets the rest of the rewards while they dedicate their life to philanthropy or torturing kittens or whatever it is they do as a hobby.
> People should not be allowed to accumulate capital beyond $X, yes.
The term "capital" is an abstraction that's not helpful here. The big "wealth" numbers are all about equity ownership in highly valued companies. Bezos owns 9% of Amazon stock. That's why he's "rich." What should happen to that stock? What happens to his voting control over Amazon?
> The term "capital" is an abstraction that's not helpful here
It was not so abstract when Musk came up with 44 billion to buy Twitter... The details are complicated but in the end it's still wealth.
> Bezos owns 9% of Amazon stock. That's why he's "rich." What should happen to that stock? What happens to his voting control over Amazon?
Presumably he would sell the stock to pay the wealth tax (or whatever mechanism is there to limit wealth)?
As for the voting control: when you're down to 9% this ship has sailed hasn't it? Anyway I don't think society has a moral obligation to allow individuals personal control of a trillion dollar company because they founded it (and if society disagrees with me, super-voting shares can be used as Alphabet does).
The problem is people that rich don't own anything. It's all shell corporations and LLCs and money borrowed against those shares (so no need to pay any taxes). But they clearly have access to yacht money. We're not going to write an airtight law in the comments section. We can just ignore paper wealth and ownership stakes for the purposes of wealth redistribution.
The question boils down to a feeling that when the revolution comes, that no one person needs more than, say, $100 million for themselves, or not. Trying to distract the conversation into defining "for themselves" will only prolong your time before the firing squad, comrad.
> Another way to look at this: Even if Amazon is wildly successful, does that mean Jeff Bezos specifically should become filthy rich as a result, instead of all its employees and investors? How should the gains from successful entrepreneurship be distributed?
The answer depends on how should the losses from unsuccessful entrepreneurship be distributed?
Can you be more specific? Suppose I put $1M into developing a business.
For whatever reason, construction hits a snag or revenues are not enough to cover expenses, how would it become “society’s” problem? Do I get made whole by the government giving me $1M, and the government takes posession of the property?
If so, I foresee a lot more opportunities for corruption.
> For whatever reason, construction hits a snag or revenues are not enough to cover expenses, how would it become “society’s” problem?
You declare bankruptcy. Your vendors who extended credit get hosed. Your employees go on unemployment benefits. Each of these costs money, and each of these reduces taxable income.
The aforementioned suggestions are a great way to kill any incentive to take risks and start a new business with one’s savings, further tilting the playing field to SP500 dominance.
This is like asking why are people buying so much stuff from a company that was founded as compiler/language tool seller. How much compiler do they need.
The above would be Microsoft for context. For some reason your comment assumes that what a company was "founded as" should dictate what they do decades later.