Comment by rayiner | Hacker News Reader

Comment by rayiner | Hacker News Reader

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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.

[1] In terms of birth lottery, having top 10% parents is like being born smart enough to get a 1290 on the SAT or having a 120 IQ. Not exactly rarified aid! https://research.collegeboard.org/reports/sat-suite/understa...

> 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?

> they could risk and lose 100% on

How do we know that it wasn’t a financially irresponsible move that in this case happened to pay off?

> 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?

One guy went from zero to billionaire. Neat! How many thousands went from middle class to homeless over the same timeframe?

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).

Do you think "fair" is about procedures or outcomes?

Isn't it of course both? What do you think?

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