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Comment by dang | Hacker News Reader

I think you might be overestimating how much money pg's family had; I'm pretty sure they were squarely middle-class (e.g. the next sentence reads "The gold standard then was the Apple II, but a TRS-80 was good enough," and that took "years of nagging"). Strictly from a class point of view his background would have been risk-averse. But your point about the intellectual environment seems solid.

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I think people have different definitions of "upper class". Maybe "Upper-middle class" would have been a better term, since pretty much everyone in the U.S. calls themselves some flavor of middle class. But my point is is that most people are not doing nearly as well financially as a mathematician/manager working at Westinghouse modeling nuclear reactors[1][2]. For example, 70% of americans have less than $1,000 of savings[3].

[1] http://www.paulgraham.com/work.html

[2] http://www.paulgraham.com/credentials.html

[3] https://www.fool.com/retirement/2019/12/18/the-percentage-of...

I agree. The question is whether they were above or below the financial threshold where kids know they'll be fine no matter what they do, and so are freer to take risks and pursue their interests. That's a popular argument to make about entrepreneurship being a class privilege, for example showing up in many comments in this thread. I don't know where that line is, but my impression is that people making this argument usually draw it somewhat higher than Westinghouse engineers and middle-managers (except maybe when they want the line to turn out somewhere relative to a particular person they're arguing about).

My sense is still that pg's intellectual background was more significant than this factor, but that's based on my own experience. Even though my upbringing was at the poorer end of the middle class (raised by a single mother who was a nurse), I didn't grow up risk-averse—and I also got the computer (a better one than a TRS-80, and totally not appreciating what my mom must have sacrificed to buy it). What I lacked was intellectual relationships or mentorship of any kind.

What do you think about the idea that it's a generational mindset? What motivates me more than anything else is the fear that I'll never own property, and I'll have to live with roommates or a have a very long commute for the rest of my life. It's hard for me to get over this because it looks like that's just mathematical reality. There's not many careers that provide a decent lifestyle anymore so I don't have the opportunity to fail. I want to be wrong though

My guess is no better than yours, but FWIW I doubt that it's generational. I think people tend to overestimate that factor, plus the current generation also has some advantages over earlier ones, not only disadvantages. I think the causality arrow more likely goes in the other direction: i.e. not that you have this fear because of the generation you were born in, but rather that the fear is influencing you to see things in these terms. I hope that doesn't sound overly psychologizing! It's actually good news if so, because you can't change when you were born, but it's possible to work with fear.

I think it's more a spectrum than a line. In any case, I don't understand why someone would draw such a line above "upper middle class mathematician/researcher/manager job at fortune 500 company", because they would be proven wrong trivially by looking at statistics of entrepreneurs historically. I would also distinguish "entrepreneurship" from what PG did, which was basically switch from interest to interest without an eye on how to monetize his education.

I think what you are calling intellectual background is a part of what is normally called class. Usually these sorts of things are correlated together, although as you point out, it's a trend, not a rule. PG also comments on this himself [1]:

> Closely related to poverty is lack of social mobility. I've seen this myself: you don't have to grow up rich or even upper middle class to get rich as a startup founder, but few successful founders grew up desperately poor.

[1] http://paulgraham.com/ineq.html

I see two important thresholds, and I agree with you that they are routinely conflated.

Above the first threshold, when you completely run out of money, your family sets you on your feet. Might move into the basement, might get some grudging bailout money, but you get made whole. Below it, you're homeless.

Above the second threshold, your dad or one of his golf buddies spots you $50k on good terms to launch your first business.

Looks like pg was comfortably above the first threshold, and well below the second.

That third link points to a survey by a bank that had 69% of respondents saying they had less than $1000 "in a savings account" in 2019. That's not the same thing as "in savings". "In savings" would include things like bonds, CDs, high-yield checking accounts, 401(k)s, IRAS, etc, etc, etc. Even if we exclude random equities in a brokerage account.

The proliferation of high-yield checking accounts in particular has significantly reduced the use of savings accounts for a lot of people who have quite a lot of "savings".

I keep seeing people cite scary-looking numbers like this (the other good example being the "half of Americans don't have $400 in cash on hand", which is ... not quite true; see https://www.politifact.com/factchecks/2019/apr/19/kamala-har... ), but each time I dig into the actual data it turns out the actual question asked was not what people seem to think it was and the answers don't mean what they seem to mean, in the context of the actual question.

Maybe the specific article I pointed to was not using the correct metric, but the fact still remains that most Americans are living paycheck to paycheck.

I really don't see how the article you linked disagrees with this basic conclusion. See the graph: https://static.politifact.com/politifact/photos/Kamala_scree...

People would need to go into debt in order to pay it (only 19% said they could pay for it by "selling something", which might be selling equities, but probably includes pawning personal possessions). IRAs or 401ks are not liquid. And neither is home equity, for that matter. So I would say that half of Americans not having the savings to pay a $500 expense is accurate, even though calling it a "complete upheaval" was not.

Even if you include non-liquid assets, the average person isn't doing so great. For example age 35-44, median net worth is $91,300, and the bottom quintile is net worth negative. I think it's easy to imagine how someone growing up in such a household would have a different experience than someone in the top quintile, who will have a net worth of >$300,000.

> But the fact still remains that most Americans are living paycheck to paycheck.

I am willing to believe that a large fraction are, but it is not 70% by any means and given all the bad numbers I have seen floating around I can't even tell what that number is. I would be shocked if it were below 10% and equally shocked if it were over 40%. If you have a good source of data, I would love to see it

> See the graph:

Just to be clear, that chart is the "other ways" chart. And people can select more than one item. The numbers being shown add up to way over 100%, if you look at the chart you linked, even though it excludes some options (options (a) and (c) from the actual question, which correspond to "I just pay it, what's the issue") that between them were selected by some fraction of people between 29.5% and 59%, depending on how many people selected both of those optons. Hard to tell what's really going on given this survey setup.

So as a simple example someone can check both "With the money currently in my checking/savings account or with cash" and "By borrowing from a friend or family member". Would you categorize them as being able to pay the $400 or not?

> only 19% said they could pay for it by "selling something"

Only 19% said they would sell something as an option to pay it.

I don't know about you, but if I had an unexpected cash flow issue I would probably be far more likely to borrow from friends/family as a tide-over than to "sell something". Depends on amounts, obviously....

> IRAs or 401ks are not liquid

I agree. My main point with those was that "savings" can mean many different things, and people are really bad about differentiating what they mean by it.

The only thing we can conclude from the bank survey is that somewhere around 30% of those surveyed _did_ have > $1k in a savings account. Which says nothing about how they'd pay an unexpected $400 expense, by the way...

> So I would say that half of Americans not having the savings to pay a $500 expense is accurate

I don't see how you can conclude that from the presented survey data. It was about a $400 expense (minor nit), and it's very hard to determine what people _can_ do vs what they _will_ do, and the latter is what the survey asked. And, again, allowed selecting all the things they might end up doing.

In the extreme, I know people who _could_ buy a house for cash but what they _do_ is take out a mortgage, for various reasons, including liquidity considerations, opportunity cost, etc.

> For example age 35-44, median net worth is $91,300

True.

> and the bottom quintile is net worth negative

Also true.

> I think it's easy to imagine how someone growing up in such a household would have a different experience than someone in the top quintile

Here we have an implication that may or may not hold. I know a number of people in their mid-to-late 30s and with negative net worth. All of them are doctors. Their kids are not obviously worse off than the kids of software engineers the same age (who generally have quite positive net worth).

That is to say, net worth numbers do not correlate straightforwardly with standards of living. Nor do income numbers necessarily.

There are things that seem like they should, like disposable income, but even there it's hard to tell apart someone who just has less income to work with and someone who prioritizes nicer house vs disposable income differently.

None of which takes away from the large number of people who really _are_ living paycheck to paycheck, or the children whose parents really _do_ struggle to make ends meet. And there really _are_ a lot of people who both have large student loans and have no idea how they will pay them off. And there are people with large incomes who still manage to live paycheck to paycheck, for various reasons, and obviously plenty of people with low incomes who live paycheck to paycheck. But as I keep repeating, all the data I've managed to find on this has been nearly useless because it equates things that are not equivalent (e.g. negative net worth with a low standard of living, or low income in your early 20s while lumping together students and non-students, etc, etc). This allows people to just read their preexisting biases into the data and come to widely divergent conclusions based on the same exact numbers.

Again, I would welcome any pointers to better data here.

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