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Comment by bedhead | Hacker News Reader

You are right about the feedback loops that make it hard to escape poverty. The most uncomfortable one to talk about is basic social network effects. Two people meet at some prestigious college and get married - are we shocked they have children who are predisposed for success? Besides from having god-given IQ, they are likely some combination of ambitious, punctual, respectful of authority, long-term oriented, hard-working, etc. But would one of those parents have ever been interested in marrying and having kids with some high school dropout, someone from a vastly different social place and lacking those values? It's pretty rare. Society organizes itself around this stuff and it's extremely powerful. The two high school dropouts end up hooking up and having kids and it's often times (though obviously not always) the opposite cycle. And yeah there are plenty of societal biases that are real, but I really don't think anything will ever be as powerful as this self-organizing dynamic of how people marry and have kids. It's cold and depressing and uncomfortable but it's reality.

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If they have those admirable middle class traits were they born that way? Or is cultural and social inheritance as influential as genetic inheritance?

I used to live in an upper middle class area, and a worrying number of the people were very polished thieves. They spent an unholy amount of time fighting over inheritances with other family members and over property boundaries with neighbours. When they worked - inevitably as land owners, landlords, upmarket real estate agents, investment advisors, lawyers, company directors, horse breeders, and so on - they'd always pad their bills and expenses, inflate their prices, and cheat on their taxes.

Were they "successful" - in the sense of being very comfortably off? Of course they were.

Did they try to marry their own? Naturally - out of snobbery and opportunism if for no other reason.

Were they admirable human beings or truly productive members of society? Not noticeably. Between the drink and drug problems, the predictable infidelities and ensuing dramas, and the polished and educated facade hiding feral greed and entitlement, they looked good from the outside - not so much from the inside.

If you don't own shares/stocks to any significant extent your labour goes to supporting these people. They make a lot of money from "investments" and pretend this is a glorious, noble, and risky social service. In fact they're simply skimming money from the top of the economy into their own pockets - effectively wasting it when it could be put to work doing something innovative for future generations.

You have a weird concept of "thievery". If someone's prices are too high, don't hire them. If somebody doesn't pay enough, don't work for them.

If you think they are skimming money, then there has to be a way to offer the same services cheaper (without the skimming). So instead of complaining, do it. What's your excuse?

It's not about prices. He's referring to "crooks with suits and big smiles". We all met at least a few. They aren't your local drug dealers or some shady pawn shop owners. They are usually in pretty good jobs. Lawyers that only care about getting more money from the client rather then really helping them, dentists who do rush jobs so they could make more money, realtors,who flock properties and "forget" to mention important aspects that could have an impact on the decision. Business owners who take everyone they deal with for a ride and so on. And yes, they do live in nice houses and nice neighborhoods and can often be mistaken for decent people.

So what percentage of rich people do you figure are such "crooks with suits and big smiles"?

Of course crooks exist. Most people are not crooks, though. And especially the professionals you mention may have problems to persist. Like the shoddy dentist will be busy with lawsuits presumably.

I still prefer those "private crooks" to people feeding on government money (not meaning people on social security, but people in useless jobs paid for with taxpayer money).

So what percentage of corporate CEOs do you figure are "psychopaths"?

Of course psychopaths exists. Most people are not psychopaths, though. And especially the CEOs you mention may have problems to persist.

I still prefer those "CEO psychopaths" to people feeding on government money (people in useless jobs paid for with taxpayer money).

https://www.washingtonpost.com/news/on-small-business/wp/201...

I fail to see the relevance of your analogy? CEOs may or may not be psychopaths, but afaik it is not illegal to be a psychopath? Nor does it imply such a person will do evil things?

I personally think that the "successful pyschopaths" meme is also way overblown, but I don't really know. I think being a psychopath is actually a deficiency, not a super power. Also in business I think people who help other people tend to be more successful overall than the stereotypical ruthlessly selfish people.

Edit: I think you added the link later on, that cites 21% of CEOs to be psychopaths? I would wait for replication on that one. It reminds me of another thing I read where reading about economics allegedly turned people into psychopaths (which is of course bullshit - just because you learned about rational decisions, as perhaps most CEOs do at some point, doesn't mean you are a psychopath). I suspect the questionnaire or the study they used to determine the "21%" number may in fact be motivated by politics.

>If you think they are skimming money, then there has to be a way to offer the same services cheaper (without the skimming). So instead of complaining, do it. What's your excuse?

What if they are skimming money precisely because they made it difficult to offer the same services cheaper?

How would "they" make it difficult to offer the same services cheaper?

The only institution that can do that is government via regulations (like who can practice law or become a dentist). I agree that there are some (many?) fishy regulations like that. But that is on the government, that is, socialism. Only free markets can guarantee fair prices.

Focusing on the individuals is WRONG. Stop doing it! People are people, and - as far as capitalist societies go - money is success, and "skimming" is unfortunately the dominant and easiest strategy to get it. Blaming the individuals here gets us nowhere. You could swap low and high society at an individual level and likely be even worse off because there is at least some chance that those who are currently rich did so by producing large social value. But it is not the fault of skimmers that they skim. These people born in a society with different incentives would produce social value instead of taking it from others.

Attacking "Billionaires" is easy to do, but its the wrong target. A "wealth tax" will probably make a pretty good bandaid, but for a real solution here, we need to think harder about fixing the root cause - that skimming strategies are dominant in the first place. In other worse, say we pass a high tax. Great. Except it doesn't change the best action for people(rich or poor): make money by skimming. So now instead of having an unequal society of skimmers, we end up with a more equal society of skimmers.

Way too much capital right now is devoted to skimming: marketing/advertising, legal/accounting, real estate, and finance have ballooned. The largest tech companies in the world are ad companies. Lawyers and accountants spent significant time on tax avoidance. Real estate is run on speculation and bubbles. Finance is now more about about the short term rather than long term value investing. It didn't used to be the case, but in the modern world, the margins on these departments make them better ways to spend our time and resources to get money. I wish I had a mental model of things good enough to suggest what the right fix would be, but as a random guess, I'd rather see taxes on the industries above than a tax on billionaires.

Edit: in retrospect this rant went overboard. Wealth tax/higher taxes on extreme wealth are probably still needed as part of the plan. Easy to get carried away with rants lol!

Is this a critique of the concept of investing in general?

> Or is cultural and social inheritance as influential as genetic inheritance

No, it isn't. For intelligence, in adulthood, it clearly isn't. For harder to measure skills, current estimates are at around half and half, but the error is mostly in the environment category. So much general-population variance is genetic (and that's only amplified at the highest skill levels - you need great 'cultural and social influence', but also great genes, lol)

> Did they try to marry their own? Naturally - out of snobbery and opportunism if for no other reason.

fun fact, the trait that shows the most assortative mating is intelligence. curious!

> I used to live in an upper middle class area, and a worrying number of the people were very polished thieves.

and I know a worrying number of lower class thieves. '20% of rich people are grifters' doesn't impune rich people as a whole, any more than Tony the crack money launderer impunes poors.

>It's pretty rare.

I think it was in The Meritocracy Trap that spoke to how this is a relatively recent phenomenon that is exacerbates wealth inequality. Previously it appears to have intermarriage between social classes

Thank you for this well-thought (and written) comment. Human nature - ignored at own peril.

Reminds me https://en.wikipedia.org/wiki/Mary_Maxwell_Gates

Heritability studies suggest this is much more strongly mediated by genetic factors (such as IQ and time preference) than social factors.

I'm not sure this holds up to scrutiny. My limited understanding of epigenetics means that social factors and genetic factors are not so easily separated, we'd need significantly more generations of data to show that.

We know it holds up to scrutiny, because the epigenetics excuse, constructed without the information supply needed to support it, doesn't hold up to scrutiny.

Non-heritable effects (including epigenetic) are estimated to contribute to less than 30% of population intelligence variance.

If you were familiar with the data, you wouldn't make statements like that, because heritability is a population statistic, not a constant. It varies significantly between populations, to the point where you can't make claims about it without controlling for the population you're studying.

For instance, we could say that the heritability of intelligence among the children of suburban Chicago families in a particular income bracket is 70%, but not that the heritability of intelligence in general is 70%.

If you were familiar with the data, you wouldn't make statements like that, because heritability of intelligence is largely the same across all population studied so far, and universally high. There are exceptions, e.g. Scarr-Rowe effect is most likely real, but it only seems to work on very low end of SES range, which is virtually unseen in today's America, even at the lowest end of what counts as poverty.

Via what mechanism are we testing? Did we send some kids through a good upbringing and some to a bad one in a randomized controlled way, or did we just take a survey and assume intelligence was passed down through genealogy instead of upbringing?

> Via what mechanism are we testing? Did we send some kids through a good upbringing and some to a bad one in a randomized controlled way, or did we just take a survey and assume intelligence was passed down through genealogy instead of upbringing?

The most informative studies in this area are usually of twins-separated-at-birth, but the datasets aren't very large.

Through foster children, and measuring whether their IQs are ultimately more correlated with their foster family or genetic family.

Scarr's original twin study was done in Philadelphia. Seems strange to discount the Scarr-Rowe effect as not existing in the US at all when it was originally found there in the first place.

Scarr’s original study was done over 50 years ago on kids who grew up in pre-Civil Rights America. That level of deprivation is, as I’ve said, virtually unseen in today’s America. Recent studies usually fail to replicate it on more recent experimental data.

Sure; but this trend doesn’t rely on upbringing alone.

The children of two collage graduates have collage graduate genes and a collage graduate upbringing. It’s no surprise they’re (we’re) overrepresented in collages.

Collage(sic) graduate genes?

Genes are determined before college. And education doesn't change genes.

The children's genes are a collage of the parent's.

Just a cursory search on Google for the 'heritability of lifetime income' leads me to this from a study in Finland:

> For example, Björklund and Jäntti (2012) estimated using Swedish data that shared environmental and genetic factors explain 40–60% of inequality in a number of productive traits, including cognitive and non-cognitive skills, schooling and long-run earnings.

https://www.researchgate.net/publication/333090512_Heritabil...

Assuming that this paper holds up, then at around half of lifetime earnings would be attributable to environment.

Also, speaking purely of heritability factors is a little reductive. Two parents that lack a particular phenotype that, say, is fit for wage growth in our contemporary economy, may have offspring that does. Similarly those fit to succeed in the economy today, may not be in the future if the stressors change.

People aren’t dumb because they got the stupid gene (barring deformity that does real brain damage). They’re dumb because they were taught to be.

The are large social circles that being smart is a bad trait. There are social circles where there is little opportunity to learn as well. There’s little differentiation between baby brains and epigenetic traits aren’t set in stone by parentage, though upbringing will have a strong effect throughout life.

You don’t inherit intelligence, you get taught to throw it away or not based largely on environmental factors, including how your parents raise you.

> You don’t inherit intelligence, you get taught to throw it away or not based largely on environmental factors, including how your parents raise you.

You're glossing over the role of other personality traits in success. And yes, environmental factors are hugely important to those as well, but often in complex ways.

For example, food insecurity during childhood has an enormous impact on an individual's ability to delay gratification. While there is certainly quite a bit that parenting can do to make that even worse, there isn't a lot that can be done to make it better.

Thank god, now we can sit back and relax. No need to change anything.

While this is a cynical response, it's kind of true. Many progressive causes are doomed, because almost everything is shockingly heritable. If you try to "break cycles" that actually emerge from acyclic causal networks, at best you will accomplish nothing and at worst you will introduce additional inefficiencies and suffering (more likely).

The one thing you can do that won't be harmful is basically funding genetic selection research, e.g. lowering the cost of IVF embryo selection. This is relatively morally palatable (esp. compared to e.g. eugenics) but will actually have the desired effects.

In your explanation I see the feedback loop that makes it easier for you and your children to stay out of poverty if you're already successful.

I don't see a feedback loop that makes it hard to escape poverty. Why did the high school dropouts drop out in the first place, and why does that make their kid more likely to drop out? Ideally their kid should still have access to public school education, with all the tools needed to go on to become successful themselves.

To be clear I'm not saying there is no poverty feedback loop, just that even taking what you've said about fundamental human preferences at face value it is not inevitable that it stay this way. We can improve our systems to make it easier for people to escape poverty. But this doesn't really have anything to do with billionaires. Many of the issues in these systems are not even for lack of funding, but inefficiently spent funding or other poorly designed incentives or bureaucratic rules that make things more difficult for poor people.

> Ideally their kid should still have access to public school education, with all the tools needed to go on to become successful themselves.

Ideally, but in reality public education is not an equalizer like that. Wealthy parents give their students advantages that school can't provide in our society: e.g. upper class culture and habits, resources for extra education, connections, etc.

Even the institutional bits aren't equal: local property tax based funding mechanisms mean richer people live in better-resourced school districts than poorer people, with better educational opportunities.

When children have a rough family/home life growing up, that can create some big obstacles to overcome later in life. If their parents don't see a value in education, then the children tend to inherit that outlook took, thus continuing the cycle. Of course, some will work there way out of it, but I'd imagine that number is small compared to those who get stuck in it.

> I don't see a feedback loop that makes it hard to escape poverty

Really?

You’re 16 years old, you’ve a high IQ and a passion for programming.

Your parents are alcoholics. You don’t have nice clothes. You don’t have perfect manners because it’s just not the world you live in.

How do you get to the university admissions interview in the next town? How will you compete against the mannerly, well turned out student with no record of truancy. All you have is a high IQ and a passion. Will that cut it?

> incentives

Actors are sometimes irrational, you can’t rely on incentives.

Bill Gates has openly admitted how much his environment helped. Being genetically gifted as he is is only part of the equation. He also grew up in an affluent enough area to have early to computers as well as the time and supportive environment to pursue it. I wonder if people who claim environment doesnt matter have spent any appreciable time in poor neighborhoods.

The absolute best will usually find their way out. I think a society should optimize for beyond those who are just in the vanishing tail of the curve

> Bill Gates has openly admitted how much his environment helped. Being genetically gifted as he is is only part of the equation. He also grew up in an affluent enough area to have early to computers as well as the time and supportive environment to pursue it.

Not to mention the role his familial connections had in his landing that sweetheart deal with IBM.

For the unaware, his mom was an acquaintance of the IBM CEO by virtue of both serving on the board of United Way, and Microsoft came up in conversation between them. A few weeks later IBM contracted Microsoft to write the operating system for the first IBM "personal computer".

He also promised to deliver the operating system within an insane deadline. He did so by by purchasing 86-DOS [0] (also known as QDOS) for $50k ($148,931.42 today) and porting it over to IBM PCs.

He got business connections with IBM, he is a skilled negotiator, he got an expensive education paid by his parents, founded his own business with his parent's money (do you have a $150k allowance?) and knew intelligent but "poor" people who were even more skilled than him who he then could hire to actually do the important work.

In short, he was born a billionaire.

[0] https://en.wikipedia.org/wiki/86-DOS

These days, you can start a successful internet business in your basement with just a computer. Nobody has to see you, your clothes, or your bad manners. You don't need a university education, though you can get one for free online as needed.

No, starting a business takes capital. You can build a Django website from your basement for free, but to turn it into a profitable business takes cash.

Freelance programming doesn't require any more capital than owning a computer. Anyone can start by contributing to open source projects.

That's not "starting a business," that's just finding work.

It's a business in every way (be sure to register it with the government as a business). You can turn it into leverage by finding gigs for your programming friends, handling the negotiation, billing, and payment and thereby collecting a percentage. In fact, you can become quite wealthy doing this.

It does? A $5/mo droplet can serve a good amount of traffic. And there are lots of free ways to get some initial users, they just take time. I know because I’ve done exactly that.

This kind of can’t-do attitude really saddens me. I see it all the time in these discussions about wealth inequality.

I think you may have a few competitive advantages that a 16 year old may lack, like a quiet place to work, an internet connection, a network of people, etc. etc. You’ve got such an advantage that it’s utterly pointless to draw comparisons.

The idea that someone somewhere can probably maybe might be able to make this work does not make the case that people have opportunity.

We were talking about needing startup capital to get the business off the ground, so this is kind of moving the goalposts.

But if you have a library nearby, that can take care of a lot of the concerns you’re talking about. Before the pandemic, I frequently worked out of one. Your hypothetical 16 year old likely has a suitable spot at their school.

You really don’t need an existing network to get a business started. You can find initial users on Internet forums, or reach out to people on LinkedIn.

If that’s true, why is it so rare? Why is this secret undiscovered?

What is “it” referring to? Bootstrapping a small business?

There are quite a lot of successful small saas startups that took no funding. Are you familiar with microconf? The business of software conference?

It might seem rare if you don’t know anybody doing it, the knowledge isn’t evenly distributed. Doesn’t mean it is rare.

It's not rare at all.

I know. I've set up websites before; I am aware that it doesn't take that much money to get it running.

But what about advertising? Branding? Anything that a $5 droplet can do, someone else's product can probably do too -- you don't have the tech advantage. Do you stand out with UX? By doing the legwork yourself? All of these take manpower, and that means capital.

It's not the website that costs money to make; it's making that website profitable.

Yeah, if you don’t have any resources, you do everything yourself. Paid advertising can be useful for scaling, but you don’t need it for getting the first few users, and usually you’re shooting for being good enough to get word of mouth spread.

How the hell are you supposed to learn to code when you’re working 50 hours per week just to make rent and eat? How can you afford to deploy? And how can you market your product if you don’t know how to talk to your audience?

Sure, you will be able to point to many people who have managed to do it. But many, many others have tried and failed - through no fault of their own.

> you’re working 50 hours per week just to make rent and eat

The parent I replied to says you're 16. You're not working 50 hours etc.

I mean, sure. I grew up poor and without much in the way of access to education, and the internet was really a saving grace for me, in terms of self-education, income, and simply finding community.

At the same time, do you think the average income of a given internet business--let alone the segment that are run by solo entrepreneurs in their basement with just a computer and a $5 droplet--compares positively to the salary of the average CS graduate? Because we're talking about inequality, not asking "can poor people possibly make money online?"

The fact that the internet has made things better does not mean the problem is solved.

On average, the internet probably made thing worse to the average employee. Everything became much more competitive and automated.

I happen to know several people who did just that (grew up barely above what would qualify for welfare, did not go to college) and became millionaires.

Even if you fail (and you probably will) what you learn from it will position you much better when trying again. It often takes multiple failures before making it work. (Even Gates/Allen had business failures before starting Microsoft.)

> does not mean the problem is solved.

Most people don't recognize opportunity because it comes disguised as hard work :-)

aka https://en.wikipedia.org/wiki/Front_running

> Ideally their kid should still have access to public school education, with all the tools needed to go on to become successful themselves.

> just that even taking what you've said about fundamental human preferences at face value it is not inevitable that it stay this way

You're not wrong, but funding education is _expensive_, and education is only part of the puzzle, access is another large part of it, and so are the social norms you develop. My family and I grew up in "poverty-lite", and while I did manage to get into a great college, the adjustment was quite difficult. In high school I would show up to regional science fairs, and would often come in 2nd or 3rd place, and would lose to kids who used their high school's teacher's Masters thesis as a science project (for reference, in my school nobody even had a Masters degree.) Socially, I grew up very different from them. Where I grew up, you kept your head down and got in line. Disputes were aired out publicly, and often descended to fistfights if you were under 21. Textbooks were expensive, and my school often couldn't afford enough for everyone. I was constantly begging the librarian to borrow math books, but I never could because we didn't even have enough copies for the students in the actual class, let alone me, an interested kid.

For my college peers money was never an issue. I used my good grades to become a TA as soon as I could, and I worked as many hours as I could so I could pay rent and make expenses while my friends seemed to have endless amounts of time to go to social hangouts and parties, which certainly blocked the connections I could make.

Over the years I've made a handful of friends in tech who grew up in a similar income bracket as mine, and they remain comforting to me because even now, I have a hard time relating to the average Silicon Valley tech worker whose life started in upper-middle class gated suburbs.

Yep. And good luck figuring out how to impress girls that spent every summer of their childhood in Paris and Switzerland.

The incorrect assumption is that you need to impress those girls at all.

I think the implication is that "rich" girls won't show interest in you.

Tell them about the eiffel tower

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