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Comment by chrispeel | Hacker News Reader

> I'm surprised the average Americans (the 90%) don't get that they are providing insurance to the 86% wealth of the top 10%, but get almost none of the gains.

Are you so sure that they don't get this? I guess that many do understand it and either would like a much more inequality-reducing tax structure, or envision themselves as (somehow!) becoming part of the top 10%.

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> or envision themselves as (somehow!) becoming part of the top 10%

I don't disagree with you but want to add some insight to this... My entire life I've been told the lie that if I "just work harder" I can be rich etc. Most of America thinks about themselves in this same way, and it's taken me years of traditional employment + risky startup opportunities to realize that no, success is not guaranteed if you "just work hard"... Honestly you just get nailed with the majority of work as an IC who's trying to crank it out vs. your peers who are off having "dev beers" at the trendy bar down the road.

The peers that I see that are "well off" often had huge monetary injections from their parents in either fully-paid education, first houses, vehicles, incestuous "investments" in their business, etc. Now, those same people that had everything handed to them on a silver platter are invested, some own rental properties, etc. to the point that they can choose not to work for long periods of time to just collect dividends/rent. Funny part - they still define themselves as people who have pulled themselves up by the bootstraps!

So yea - in the US we have a really unhealthy view/mentality around success and ignore the fact that the IT'S THE EXCEPTION for someone to truly "pull themselves up by the bootstraps" into any sort of significant wealth. Truth is most "rich" people had an incredible amount of external financial support and stability to get themselves there and maintain it.

Bring the downvotes, because you're darn tootin' I'm bitter about all of this.

The original formulation of the statement of “work hard and you’ll make it” was created in the context of 17th-19th c. Europe, where no matter how hard you worked, if you weren’t landed gentry, you simply could not make it. The idea was that any opportunity existed. The universalist position you described is a rosy reimagining of a history that never was.

This is super interesting to me and I would actually love to learn the origins of this... do you have any resources you may be able link? Books, articles etc.

Precisely, My ancestors left Denmark and Sweden. Hundreds of thousands left doing the later period of the 19th century. Mainly because how the land was distributed and taxed in such a way that you could never get ahead.

Nice anecdotes! Here’s some more. Everyone I know who’s “made it”, top 10% came from poor or lower-middle class beginnings.

Probably more a factor of where you came from, who you know, etc.

This seems incredibly dismissive of what I was trying to say with your whole "nice anecdotes!" bit.

Obviously it's situational.

what seems very weird to me (as a non US citizen), is that most working class people in the US seem convinced the 'american dream' is synonymous with being a millionare/billionare and introducing legalization to level the playing field of the latter will hurt their own changes at becoming part of the former.

It might also be the reason social democratic/socialistic parties never got a foothold in the US post world war 2.

Home ownership is a core part of the American dream, and in pricey places like the Bay Area, you pretty much have to be a millionaire to own a house.

Thanks to inflation "millionaire" doesn't mean as much as it used to. Billionaires are a completely separate class though.

Exactly. Even setting aside the house prices, if you have exactly a million dollars in your retirement account, you should plan on spending only about $40K-$50K per year from that account. That's hardly a luxurious retirement; yet "you're a millionaire!"

It's also interesting how the scale has slid up so much that many people now believe the "American Dream" is to become a millionaire/billionaire. When originally it was merely the idea that if you do the right thing your children will be better off than you were. It wasn't until the gold rush in the 1850s that the American Dream, for some, became this idea of get rich quick scheming.

I can't speak to everyone, but my parents are children of the 50s and their idea of the "American Dream" was the nice house in a safe neighborhood in the burbs.

Thankfully pretty much everybody still has the ability to buy into a safe neighborhood with a good school district in the Bay Area.

is that most working class people in the US seem convinced the 'american dream' is synonymous with being a millionare/billionare

That's true, but I have no idea where it came from. "The American Dream" was never about becoming a millionaire, it was the idea that you could start with nothing and have a nice, comfortable middle class existence in the US.

How many blue collar millionaires do you know? My two anecdotes are one guy who opened a machine shop with his dad in their very lower middle class garage and one guy who worked his way up to having a few taco bell franchises from the bottom rung. If you don't know those kinds of millionaires, your perception of the world might be tinted by being in a career path that is popular for a certain category of children of wealthy families.

The issue is not that these cases exist, but that they are sold as being the standard, which they're clearly not. To became wealthy coming from a poor background requires a lot of effort, sense of opportunity, and frankly, luck. But all this is sold as something at grasp to anyone in this country, which is clearly false.

Of course luck plays a role in everything. It's merely luck that I've never been run over by a bus, or any number of other problems. But can you help me understand how a lot of effort and a sense of opportunity is not available to the common person?

42% of children born to parents in the bottom fifth of the income distribution ("quintile") remain in the bottom, while 39% born to parents in the top fifth remain at the top.

Okay, more than half of the people at the bottom rise up out of it. And less than half of the people at the top stay at the top. What are you hoping for? Please be as specific as possible.

And what does this have to do with whether a lot of effort and a sense of opportunity is available to the common person?

Most every other developed nation has greater social mobility than the US [1]. Why can't the US reach Scandinavian levels of social mobility?

[1] https://markets.businessinsider.com/news/stocks/ranked-the-s...

A full explanation is too complicated for a single post. But here's two good starters.

https://wtfhappenedin1971.com/

https://www.ineteconomics.org/perspectives/blog/how-why-gove...

Now that we've addressed your off topic question. Could you please try to explain how hard work and a sense of opportunity is not available to the common person?

Advocates of big government love these metrics that have been put through the academic ringer, so-as to spit out whatever tortured output is expected. Why look at this kind of esoteric figure at all? Why not look at, you know, real numbers?

Spending as percentage of GDP: Denmark - 52% of GDP Norway - 55% of GDP Finland - 53% of GDP Sweden - 50% of GDP Iceland - 42% of GDP

Average - 50.5%

USA - 22% of GDP

What does all that extra spending get them?

Poverty rates: [0] Denmark - 13% Norway - Not reported Finland - Not reported Sweden - 15% Iceland - Not reported USA - 15%

Unemployment rates (2017): [0] Denmark - 5.7 Norway - 4.2 Finland - 8.5 Sweden - 6.7 Iceland - 2.8 USA - 4.4

Household Incomein US dollars (2018) [3] Denmark - $34,712 Norway - $39,555 Finland - $34,497 Sweden - $34,301 Iceland - Not reported USA - $50,292

Household Debt as % of disposable income (2015-2018): [1] Denmark - 281% Norway - 239% Finland - 145% Sweden - 189% Iceland - Not reported USA - 105%

Household Net worth as % of net income (2014): [2] Denmark - 553% Norway - 318% Finland - 359% Sweden - 526% Iceland - Not reported USA - 601%

[0]https://www.cia.gov/library/publications/the-world-factbook [1]https://data.oecd.org/hha/household-debt.htm [2]https://data.oecd.org/hha/household-net-worth.htm#indicator-... [3]https://data.oecd.org/hha/household-disposable-income.htm#in...

Interesting numbers. Where are the spending per GDP from? IMF numbers in Wikipedia put US spending at 35%.

Also should comparing the spending numbers take into account that healthcare, schools and universities are paid by government spending in the Nordics and not from household income?

Honest questions, I'm really interested in these differences between systems.

Ah, I forgot to add the citation on that line. The spending numbers come from the CIA World Factbook site, [0] above.

Your number likely includes State, Regional, and Local spending (which was presumably excluded for all nations in my numbers).

Even with the 33% figure, for the US to make up the ~15% difference would require ~3 Trillion in annual spending.

The existence of Social Healthcare programs in those countries is a huge chunk of the difference, I'm sure.

Okay, but are they worse off because they can't afford as much stuff? They don't seem to be in more poverty, they're healthier, more fit and highly educated.

I can spend an extra 20k as well or poorly as I like.

That 'extra 20K' of income is easy to sneeze at for the affluent, but it means that Americans have ~40% more disposable income. That's huge.

> They don't seem to be in more poverty

They're clearly not 'more in poverty'. The point is that they spend (the US equivalent) of Trillions of dollars per year for comparable outcomes.

>They're healthier, more fit and highly educated.

This is a matter of culture, not economics. The US already spends more per pupil than all of the 'top 5' nations, with worse outcomes. [0]

[0]https://data.oecd.org/eduresource/education-spending.htm

Suppose that higher incomes are also a matter of culture.

The US poverty rate is very misleading. It’s not the percent of people in poverty. It’s the percentage of people below a level of income at which not being impoverished is impossible.

Yeah, my impression is that the US has far more real poverty than Scandinavia, so I really wonder what the basis for these numbers is.

What data have led you to that understanding?

Being unable to afford food and a place to live, yet being well above the poverty line.

This link provides more detailed information: https://www.irp.wisc.edu/resources/how-is-poverty-measured/

“ The Census Bureau determines poverty status by using an official poverty measure (OPM) that compares pre-tax cash income against a threshold that is set at three times the cost of a minimum food diet in 1963 and adjusted for family size.”

Regarding my definition in the previous comment, I’m unable to find my original source. Sorry.

Or 58% born in the bottom fifth move up, and 61% born in the top fifth fall down.

It's the classic Trump small loan of a million dollars scenario. Sure not many are as lucky as Trump was. But even t hese examples of blue collar success have a bunch of luck in them.

Not everyone can start a machine shop with their dad, or own or even operate a taco restaurant. You need to be at the right place, the right moment, have the right amount of money and or the right equipment, interests and skills. And only then your sense of opportunity and effort will take you places.

For the common person it's a lottery just to be allowed to play the game.

For the common person it's a lottery just to be allowed to work at Taco Bell and do what the Taco Bell handbook tells you? And then, once you become a manager to save your pennies until you have a down payment on your own store?

Gimme a break man.

How many people do you think working the counter FT at Taco Smell can save enough money to afford their own franchise location?

> The cost of opening a new Taco Bell restaurant is between $1.2 million and $2.6 million. Taco Bell also charges a $45,000 franchise fee, an ongoing royalty fee equal to 5.5% of gross sales, and a marketing fee equal to 4.25% of gross sales.

https://www.businessinsider.com/what-it-costs-to-open-a-taco...

Give ME a break man. LOL.

I expect about 0% of people to go from the bottom level position at Taco Bell directly to owning one. But I'm sure you're smart enough to have known that. So why did you feel it would be useful to frame the scenario in such a disingenuous way?

I am 100% dialing it back in good-faith to explain why I just framed it as you put it.

1. I read tinco's comment to state (paraphrasing): "it is difficult to start a business, and for the common person it is a game of chance." Which, I absolutely agree with when I measure it against my life experiences/knowledge.

2. You replied with two questions, also paraphrasing: "It's a lottery to work at Taco Bell?", and, "And assuming you do work at Taco Bell, that you would become a manager who could save up to own their own store?"

---

Given that scope of the conversation, I assumed you were positing that someone could seriously start working at a Taco Bell, start saving their money, and then some day afford their own franchise location.

The first question of 2 is an absolute possibility, ie: it is not a lottery to work at Taco Bell and it would be silly to assume otherwise. That may have confused me leading into the second question, asked rhetorically, as something that you deemed possible. This is to say, "A person could absolutely work at Taco Bell, and they could also save to own their own some day."

The "Gimme a break man" in reply to someone saying something that I deem 100% rational (#1) with two rhetorical questions that seem to paint the situations that they posit as rational possibilities confuses the crap out of me.

Simply put: You submitted two arguments, seemingly painted as possible realities, in an adversarial way to something I saw as a rational and relevant statement. I fired back thinking you thought that was possible because there's not much context to figure otherwise.

If I confused your comment I apologize.

Quick Edit: When I posted this reply I saw another person, harimau777, answering similar to myself with another credible source (also with a much higher caliber quality of language - I'm goof sometimes). What I'm trying to say is I'm not the only one who took your statements this way.

I told the story of one person I knew who started working at Taco Bell in high school and then worked his way up to eventually owning a few of them.

The response to that was, "Well, just a lottery winner" with no argument whatsoever. How can you have taken that seriously?

I'm out man. I feel like this is getting super adversarial and into the fray for HN. Sincerely - sorry if I offended.

This was just the result of a quick Google search so perhaps the numbers aren't accurate, but this website suggests that you need a net worth of 1.5 million to open a Taco Bell franchise.

https://www.lendingtree.com/business/small/how-to-finance-a-...

I think that would be out of reach for many if not most Taco Bell managers. Presumably it would be even harder in parts of the United States with higher costs of living.

Well that's at least impressive. Was it a good investment for him to have spent his saved pennies on a Taco Bell franchise? If it hadn't worked out, could he do it again on another restaurant? I still feel he was lucky to have been able to save so much, you'd need to save like $400 every month for like 10 years, on a small salary. But you're right there was likely a very large amount of self determination at play.

> You need to be at the right place, the right moment, have the right amount of money and or the right equipment, interests and skills. And only then your sense of opportunity and effort will take you places.

If you flip that around, you get "Anyone, anywhere, any time, with any amount of money and any (or no) equipment, interests or skills should be able to be start and own a successful business." Does that really sound like a reasonable expectation?

The amount of opportunity available to a given person can vary greatly. For example, one person could have college paid for by parents, another could work to pay for college, and another could not have the opportunity to work to pay for college (e.g. perhaps they are taking care of younger siblings or sick family members).

Available effort could likewise vary. For example, someone with a disability might have much less effort available or their effort may be significantly less efficient. Someone who has to expend a great deal of effort on other matters (e.g. providing for basic needs, self protection, caring for others, etc.) may have less effort to expend towards things like career advancement or education.

The argument as I see it is that a person expending a roughly average amount of effort should be able to achieve a reasonable quality of life with the luck and opportunities that are available to them. (There will of course always be some variance in the effort required and the outcome received, but that's fine as long as it stays within a reasonable distance of this goal.)

The increasing anger over inequality seems to me to be because people are being asked to give above average effort (e.g. working multiple or demeaning jobs) in exchange for a low quality of life (e.g. difficulty affording healthcare, housing, retirement, raising a family, etc.).

I know a lot of Indian-Americans and Ukrainian-Americans for whom this is the norm.

Step one: arrive in the United States as a child.

Step two: a childhood of grinding poverty.

Step three: make tons of money in STEM.

It happens with extreme regularity. It is the rule, not the exception.

Ok - maybe I’m exaggerating a bit. I’m sure some of them don’t “make it.” Someone is staffing those food vans.

But it’s not unusual either.

I think you defined perfectly the defining problem of this generation in the US: nepotism. It is the root cause of so many structural problems that we see as unrelated. In particular the failure of the press to do their job and hold the powerful accountable. Not so easy when you went to the same school as them; got an internship thanks to them; were at a NYC roof party with them last week.

Positions once available to anyone who worked hard, are now reserved to the children of the already wealthy. The consequences are severe.

> nepotism

85% of American millionaires are self-made.

"The Millionaire Next Door" by Stanley

Is there any data on where wealth increase has come from for those people?

e.g. started own business, vs savings + stock market, vs investing in real estate.

I recommend getting the book, it's cheap and a good read. It also lays out a path for those that want to accumulate wealth themselves.

Yea - I'll second that even though you don't think I've read it.

"The Millionaire Next Door" was published in 1996 when the economy was booming, the dot-com bubble had yet to burst, and the employment market meant anyone slightly skilled could get a FT+benefits career.

In the 24 years since that book's publishing I absolutely argue that ladder has become more difficult to climb. But hey - what do I know? I'm just a lazy millennial who's now living through his second major recession, with the first one landing directly on when I was entering the work world FT. Thank goodness for my tech career because let. me. tell. you... my peers were struggling. Especially the ones who persisted in Cedar Rapids (blue collar Iowa town).

But sure - 85% of American millionaires are "self-made", whatever the heck that means. I don't doubt that's how they feel about themselves and self report!!!

The market has done even better in the last 10 years than in the 90's.

Besides, I heard the same lament in the 70s, 80s, 90's, 00's, and 10's.

> I don't doubt that's how they feel about themselves and self report!!!

Always better to guess than pick up the book and read it!

The market has done great since 2008! Wonderful time to have already had a lot of money on hand to invest, for sure. And man, I tell you, all of the houses I bought have gone way up in value, even faster than earnings! What do people even have to complain about?

If you had a regular plan where you invest every year, and don't sell, you would have ridden out the 2008 fiasco just fine.

Yes! But if you were still in school in 2008 and putting your money into food and paying off student loans, the market performance isn't necessarily the thing that impacts your future wealth.

The 2008 recession didn't last that long.

But paying off student loans probably did.

My point is that "the market did great" means investors did great; doesn't mean that everyone did great.

This thread is about investing.

This thread relates to investing, but more specifically it is debating whether or not the following fact

> The market has done even better in the last 10 years than in the 90's

is an adequate response to address the GGGGGP's claim that

> that ladder has become more difficult to climb. But hey - what do I know? I'm just a lazy millennial who's now living through his second major recession, with the first one landing directly on when I was entering the work world FT.

Nobody here is denying your claim about the market performance.

What does self made mean to you?

I read that book when I was in my early 20's. I followed all of its advice, which basically comes down to "live below your means, save, and invest." The truth is I was already following it anyway. My parents lived below their means, and my dad taught me about investing when I was a teenager.

Every generation has recessions to deal with. By the time I was in my mid 30's, I was, indeed, the millionaire next door, though just barely. This was despite the dot-com crash and the great recession...

"Self made" is an over-simplification of a complicated process... one which you impressively admit you've achieved. Which, 100% - that is amazing, and you should be proud of your accomplishments.

My definition of "self made" is not important, my point is that everyone's definition is going to be different.

Here's the thing - I have no idea who you are, what your history is, and I can't make a single comment on the validity of how you got from point A to point B... that is outside of the above compliment really.

What I will tell you is that my anecdotal experience is that no one is out there admitting, "OH YEAH, my parents totally dropped $120k on my education, bought all of my cars, paid my rent, and gave me a free-reign credit card into my 30's." and ironically... I've ran into a TON of those people who self-identify as "self made" which is why I don't take the term seriously and see it as 100% subjective.

TLDR: "self made" is subjective as all heck. I can't comment on your life man - I have no idea who you are. I stand by my original comment that things are getting more difficult in regards to building wealth from nothing. I got snarky against a comment that seemed to just posit a book from the 90's as the entire content of a reply as if that's valid to any conversation.

Thank you... but I never said if I thought I was actually self made!

What if I tell you that my parents did pay for my education? And they gave me a car when I was 16? Or they were fortunate enough to be able buy a computer when I was in elementary school, which definitely contributed to my interests today, many decades later? Am I still self made? Or did that give me too much of a "head start" so I'm not? Was it so long ago now that it doesn't matter?

TLDR: I agree, it's all subjective...

Ha - I mean... self made or not that's freakin' amazing. I envy that stability and hope to be there myself some day =)

I'd personally say, me too in so many ways... I had my struggles with an early death in the immediate family but it did provide the money to support me into my early start!

Here's the thing - struggle or not I absolutely have been around poverty and have actually done a bit in advocacy in the area. I don't say this for a gold star - just to qualify what I'm about to say.

Being poor is hard. Like really hard. It's expensive in sooo many ways and I freakin' wish more of us had empathy for those people that are struggling in that situation. I see WAY too many folks on HN that are comfortable in highly-paid positions like myself that don't acknowledge these things and even sound angry in regards to how people are "suppose to be"... lemme tell ya... as someone with struggles - man sometimes it's really really hard. Even with some of the insane privileges that I've been afforded.

All-in-all ... I wish more people admitted "man I had a lot of help" regardless if it's a computer in elementary school, or investments in education, etc. I know this has a negative "SJW" spin to it these days, but man... I have been privileged. holy crap I've been privileged. Doesn't diminish my accomplishments, but we need to come to terms that as a society everyone should have as equal of a playing field as possible..!

> My parents lived below their means, and my dad taught me about investing when I was a teenager.

I'm surprised nobody's come along yet to tell you that you're not self-made because you had parents and they taught you about investing.

Of all things, nepotism seems like an odd thing to single out. Do you have any numbers for this claim? It would be useful to hear e.g. what percentage of people secure positions through referrals/family members.

I suspect you'll get a different answer if you weigh by numbers.

But when you weigh by total wealth the Walton and Mars families skew the data in favor of nepotism. It also depends on your opinion of source of personal wealth of Ms Bezos or Ms Jobs (and anyone in similar position) - nepotism or self-made?

Why do you find it odd?

Many people make the claim that the fundamental problem of the US is wealth inequality, or no social safety net, or disdain for the poor. I believe these claims are much more common (and in my opinion could be considered more fundamental) than the claim that nepotism is the fundamental problem.

Well, symptoms of problems tend to be more evident than their root cause, so commonality of claims is not a particularly good reason to rule out nepotism being a problem.

Evidence would be nice to have though.

As for me, I've had enough anecdotes to think it's plausible. Just recently we hired a new CTO at my company, and he got the job simply because he was friends with our CEO and he needed a job. Turns out he's completely incompetent...

It's not about working hard, it's about working smart (i.e. choosing the right things to work on).

Also, part of working smart is owning meaningful equity in a business likely to generate meaningful returns. Startups are high risk, high reward, and if the GP doesn't care for how their luck has played out at startups, there are many other lower-risk opportunities to build equity: writing books, teaching, consulting, a bootstrapped SAAS app... and plenty more outside of the software engineering landscape.

> books

Most books don't pan out and if I don't turn myself into a marketing personality good luck. I say this as someone who's marketed books professionally as a web product across all major publishing platforms. I'm a nobody and prefer to focus on my engineering.

> teaching

Sure - because there's tons of money in teaching? Uhhh...?

> consulting

I've made a killing here and am likely going into my next 1099 tomorrow so yea. No arguments here. It DOES take a solid network though to do consulting so if you're not sociable you're likely screwed in this arena. I have two sales people who are my guardian angels hawking my services for top-dollar so I'm incredibly blessed in this department.

> bootstrapped SAAS app

Currently working out licensing with two corps on one of these myself as well. Finding the foot in the door for industry, then collecting user data on problems to solve, then pushing through solving them, and then gambling on the problem you solved is INCREDIBLY risky.

Plus - if you're the startup engineer things fall near-100% on your shoulders unless you're willing to play the outsourcing game. Which I have and my god that's a FT job itself even for the most menial of applications.

---

All-in-all I am actually the guy who pulled myself up by the bootstraps to probably 10x what my parents made in small town Iowa. So yea. But all of my original comment absolutely stands. It was hell on earth and I worked my entire 20's away hustling my BUTT off to get out of the trailer park and out to California.

I still absolutely posit that my story of "just pull yourself up by the bootstraps" is the exception and shouldn't be sold as "anyone can do this if they work hard enough!!!" Most people can't.

Your list makes it seem like those things are easy - and as someone who has experience in them (minus teaching)... it absolutely isn't. Those are all serious endeavors that take time, commitment, failure, getting back on the horse, and ultimately years of pursuit/work.

> owning meaningful equity in a business likely to generate meaningful returns

That's exactly what the stock market provides an opportunity to do.

American institutions should be controlling for this inherit classism, instead, the most prestigious continue to employ race-based selection criteria.

Middle-class America seems to have a particular disdain for the less well off.

This divide is the driving force behind Trump. It's the same divide we're seeing play out now over reopening the economy. Suburbanites with cushy WFH jobs, chastising the poor who have been laid off, as they have the audacity to want to put food on the table tonight.

> Middle-class America seems to have a particular disdain for the less well off.

Hell as someone who's struggled early-on... Poor America seems to have a particular disdain for the less well off too. I feel like I'm constantly surrounded by entitlement regardless of the person - and I'm no better as I am constantly trying to quash my own crap attitude with this... We were brought up this way across the board, to the point that I'm convinced childish entitlement is in our DNA as a country.

It's just a whole bunch of finger pointing while ignoring the elephant in the room... but hey people seem to get off on the hate so the folks in charge keep us divided and subdued to their interests.

Not disagreeing - just my own take being exposed to many diverse backgrounds rich/poor, rural/metro, etc etc. Everyone wants to point a finger because it's MUCH easier than acknowledging difficult societal problems/self-reflection.

> incestuous "investments" in their business.

This is open to anyone, but of course it's not guaranteed. You have to put yourself in a place where you're more likely to encounter these folks, and demonstrate value.

I think it is a pretty widely shared consensus in economics that "the American Dream" was the truest in the beginning of the 20th century, when European regimes were aristocracies and peasants were regularly starving to death. That was why waves of immigrants arrived from Europe to the US.

After WWII the situation basically got reversed: Europe experienced such a shock and disruption to the existing social order/redistribution of wealth etc., that it went really left-wing/"social democratic". In the meantime, the US saw a greater and greater concentration of wealth and the division between the rich and the poor got increasingly stark, and social mobility is much worse than that in, say, Northern Europe. The American Dream as people knew it is pretty much dead. This is also one huge reason behind the polarization in politics that we see nowadays.

Unfortunately, a lot of narratives in the US don't seem to realize/willingly ignore this situation and still seem to talk about the old idea of "bootstrapping" and American exceptionalism in this regard, which is really kinda one century out of date already.

"39% of Americans will spend a year in the top 5 % of the income distribution, 56 % will find themselves in the top 10%, and 73% percent will spend a year in the top 20 %."

from https://medium.com/incerto/inequality-and-skin-in-the-game-d...:

What are these numbers actually taken from? I'm betting the vast majority of this is counting the sale of a home or a one-time windfall (e.g. small inheritance, gambling winnings) as income for "a year", but I'm not going to buy the book just to see.

Russ Roberts has a fairly thorough treatment of composition effects impacting income statistics: https://medium.com/@russroberts/do-the-rich-capture-all-the-...

Thanks for the link.

These stats just backup what I've always heard - the top 10%, 1%, whatever, is not static. Neither is the bottom 10%. Many people usually start their careers at the bottom (i.e. college student working part time) and then eventually make it into the middle class and plenty make it further than that. Of course, some never make it out of poverty.

I've heard otherwise that this mobility (which nobody denies exists) is about the lowest it has ever been and growing more static. I'm sure some searches about social mobility stats would bring up lots of stuff.

If you do a google search on mobility, you'll find papers that say a whole lot of different things - some that say it's gotten worse, some that say it's gotten better.

The biggest problem is data. It's not that great.

If every American worker started buying $100 worth of stock per month, they could start chiseling at that 86% number. Not every worker has the financial means to do so, but many could if they practiced financial constraint (delaying consumption now, in exchange for greater consumption later). To the extent it is feasible, it would be wonderful to see Americans fight back against wealth inequality by buying the ownership. Imagine how much progress towards equality could be made. Each household makes a choice with how to spend their money.

Considering many American workers are in debt with high interest rate products (sub-prime car loans and credit cards), those would first have to pay the interest on their debt on top of the capital gains on the $100 when they sold it (provided they invest wisely). In other words, it makes no sense to invest when the return wont consistently match your debt interest payments.

Depends on the type of debt, which is individual to the consumer. Mortgage, auto, and student loan debt compose 88% of consumer debt. [0]

These types of debt typically have low interest rates. Market returns for the past decade have exceeded the interest rates. Paying the minimums, and investing the difference? The consumer would be ahead. 12-15% YoY stock returns compound faster than 4% mortgage debt.

[0]: https://www.experian.com/blogs/ask-experian/research/consume...

I don't think it's wise to project guaranteed 13-15% stock market returns, or suggest it's better than paying off debt. It may have been the case last few years of the cycle, but may well not be the case for the next 5 years.

You're arguing for taking out loans to invest in the stock market, which sounds irresponsible to me.

Actually, corporations do do things like borrow to pay dividends or buy back stock... because they get to deduct debt from their taxes. Individuals can take advantage of this with mortgages: your mortgage interest is deductible. [1]

Not all debt is equivalent: credit card debt and payday loans are examples of pretty punitive debt that really should be avoided. The return on investment from paying off debt is roughly equivalent from the interest on your debt; if it's lower than you can get by investing elsewhere, then it may make sense to invest elsewhere, especially when you factor in second-order effects like tax laws.

[1] For the record, I think the tax-advantaged nature of debt is absolutely inane and should be removed. But that is unlikely to be politically feasible.

Are you saying every person who buys a home with a mortgage, while still throwing 5% of salary in their 401(k) is irresponsible? Many, many people do this.

If you think you can count on YOY 12-15% returns on the stock market, you should be buying 10% OTM LEAPs instead of shares. You'll be the world's first trillionaire in a decade or so

You don't need a 12-15% stock market return for your investment returns to beat the growth of your interest debt. For most mortgages, it's a fixed rate. About 4%, some well-qualified borrowers have in low-to-mid 3%, for mortgages originated in the last 12-24 months. Long-term, will an index fund stock market investment exceed 3% returns? Historically speaking, it's a likely outcome.

Even if they all did that, they still end up buying after all the really wealthy get in, whether it's investment bankers, venture capital, hedge funds, or whatever else, normal income people just end up buying from the 1% and 0.1% who got in privileged and early. Add on top of all that, think about all the investments with minimums that are thousands of dollars and it's obvious that regular money will always be behind even if its investing maximally because less money always has fewer opportunities.

No, this is just atrociously wrong. It pains me to see because the post you're responding to about getting everyone to chip in a small amount to investments every month is one of my pet goals that I've helped many friends with.

Everything you've said is wrong. I don't know what you mean by "getting in after all the really wealthy get in"... VCs, IPOs? That's not even close to necessary. Investing in simple index fund ETFs is fine. And "all the investments with minimums in the thousands"? Well... don't buy those! Again, buy simple index fund ETFs. Most brokerages don't even charge a commission on that, so you can easily add small amounts each month.

People just don't seem to know that investing in the stock market is easily done, and so extremely worthwhile. Income inequality being what it is, the wealthy will probably own more of the stock market for a long time (or always), but that 84% could easily come way down if people just knew what to do!

But I feel like your comment is counter-productive fear mongering that will turn off people on the margin, thinking everything is stacked against them, the "good" investment opportunities aren't available, and so they just shouldn't even try.

>> less money always has fewer opportunities.

That's a fact of the US system.

> I don't know what you mean by "getting in after all the really wealthy get in"... VCs, IPOs? That's not even close to necessary.

That's a strawman. What's necessary, isn't the subject.

> And "all the investments with minimums in the thousands"? Well... don't buy those!

The wealthy have more opportunity, got it. Pointing to some other instrument, saying "it's also good" is not a correction.

> Everything you've said is wrong.

If you find yourself saying this, you're probably about to say something stupid. It's trite nonsense.

I'm not saying it's necessary, I'm just saying the previous poster can't seriously expect that the 84% (86%?) number will decrease much from everyone investing if that percentage's owners are able to always outperform - even if the top 10% (or even 1%) only have a 2% advantage because of better or earlier access it's just going to compound non-linearly compared to everyone else's returns over time. And it being non-linear means for that 80-something% number to go down the $100/month folks have to continually increase in population at a rate greater than the difference between their rate of return and the rate of return of the top 10% or top 1%.

That is zero sum thinking and misses the point entirely. You don't decide based upon more or less than others but the best option for you. Judging by percentages is like saying "Why jog or walk if you will never be a supermodel?" Invest because it is an end in itself.

The reason VCs and hedge funds get in early is because they can afford to fail a lot and have their successes outweigh their failures. It isn't because of some caste gatekeeping to monopolize the wealth while twirling their moustaches but because without that level of capital it is a very good way to lose your life savings. First rule in investing is never risk what you can't afford to lose.

It's not zero sum thinking. Clearly investing is likely better than not investing.

My point wasn't that people shouldn't invest, it's that previous poster suggested everyone investing would "chisel away" at the "86% number," and my general presumption is that so long as the return on wealth is nonlinear to the quantity of wealth, as enabled by the ability to access more expensive/specialized/higher-return investments, it's a lost cause as a simple comparison of function order and rate.

If those who are already richer are likely to have a higher rate of return from greater levels of access or unique opportunities and that rate of return compounds non-linearly, no matter how many regular people invest it's still basically comparing functions with nonlinear differences in rate of increase.

Ofcourse a small portion will always be ambitious, enterprising and expect to join the 10%. But we are all convinced (and I assumed this too) that the stock gains are good because it helps average Americans increase their 401k, but the stock ownership ratio is so skewed to affect the majority. If the stock market crashed, it wouldn't really afffect most American's net worth which is so interesting? I'm sure companies will shut down and there's be trickle down job losses but that can happen in stock boom times too (like now). A quick Google search showed where this number comes from https://www.nytimes.com/2018/02/08/business/economy/stocks-e...

It's more the latter I suspect. The fear that they can't become art of the elite if they reform the system currently keeping them from being the elite anyway doesn't register with a surprisingly large number of folk.

Possibly because they haven't read this book (https://en.wikipedia.org/wiki/The_Wealthy_Barber) or understood it.

The Richest Man In Babylon is going to apply for the next decade, but all the negativity about romantic investments is countered by the billions being made in romantic investments. It's the wet blanket approach, it only has ten percent to consistently soak up in the flood times. When you have to make money by creating something, it breaks down.

It can't handle Bitcoin, space rockets, jordan peterson, self driving cars, hyperloop, neuralink, starlink, ect. There's huge and reliable money to be made riding the flame. Or rather there was, it's all about to be flooded out and those of us who don't like being formless, liquid money & stock chasers will have to wait for the next desert to appear in fifteen years time.

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