Friday, January 23, 2015

Worshipping the Rich's Luck

Chris Dillow at The Angry Bear: Those of us who are in the global 1% are apt to under-estimate our good fortune. There is, in fact, quite robust evidence from other contexts that we tend to under-rate luck and over-rate skill and causality...If we over-rate causality and under-rate luck, we will exaggerate the extent to which the wealthy deserve their fortune. As a result:

"We frequently see the respectful attentions of the world more strongly directed towards the rich and the great, than towards the wise and the virtuous. We see frequently the vices and follies of the powerful much less despised than the poverty and weakness of the innocent...The great mob of mankind are the admirers and worshippers, and, what may seem more extraordinary, most frequently the disinterested admirers and worshippers, of wealth and greatness." ~ (Adam Smith: Theory of Moral Sentiments)

If you read Dillow's blog, you incessantly see people claiming that the wealthy MUST be smarter and better at everything than the rest of us. Some people are blinded by the Horatio Alger "rags to riches" myth, thinking that at some point, they too will be wealthy — and that all it takes is some great idea on their part. But the world is full of great ideas, and mediocre ones too. And regardless, good luck always pays better than just good ideas.

In 1999 the executive chairman of Google (then the CEO of Novell) said in an interview for Forbes: "Lots of people who are smart and work hard and play by the rules don’t have a fraction of what I have." Eric Schmidt acknowledged that the scale of inequality generated by his new wealth “makes me uncomfortable.” The reason: "I realize I don’t have my wealth because I’m so brilliant. Luck has a lot to do with it."

USA Today wrote, "If we assume that wealth comes from working hard, taking great personal risk and coming up with great ideas, then the wealthy don't necessarily "owe" society for their success. But if the rich are simply lucky, or if they get wealthy on the back of America's publicly funded infrastructure, they owe more of a debt in the form of taxes or philanthropy."

Personally (as I've noted before in another post), I've come to the conclusion that rich people are only rich JUST BECAUSE they are lucky. Here are just a few of the ways someone can acquire great wealth — and why they would also require great luck as well...

  1. Their parents were rich (pure luck.)
  2. They won a lottery (astronomical luck.)
  3. They started out poor, but with hard work, they became rich (but also very lucky, because most people who work just as hard don't get rich.)
  4. They had a fantastic idea (but also very lucky, because not everyone can cash-in on a good idea, say, if someone else also has the same idea and beats them to the patent office --- or an unscrupulous business associate steals their idea and gets all the credit.)
  5. They were very talented, such as an artist, musician or athlete (but also very lucky, as not everyone is "discovered" or recognized during their lifetimes for their capabilities and/or can financially benefit from their God-given talent and/or hard-won skills.)
  6. They went to higher schools of learning, grew up in a conducive environment, and had the God-given intelligence to exceed in higher learning (also very lucky, because many don't have the same opportunities from birth.)
  7. They took an enormous risk or gambled on something (again, lucky for winning the bet -- although some people believe gambling is immoral --- and some people have even risked their lives --- and that's just plain crazy.)
  8. They worked hard (found a good job in a good labor market), wisely saved their money, lived frugally, and incrementally invested in something, such as stocks or real estate (again, lucky, especially after we saw what happened to the stock market and the housing market a few years ago.)
  9. Just luck itself --- They had a chance meeting, or they just happened to be in the right place at the right time when an opportunity presented itself (and yes, we'll also give them credit for being "prepared" when the opportunity came along.)
  10. They were born a genius -- the luck of the gene pool.
  11.  Related to #1 on the list --- connections --- it's who you know, not what you know (that's lucky.)
  12. They married into money (finding love is a stroke of luck, and luckier still if the other is wealthy.)
  13. They lied, cheated, robbed, stole, fleeced, defrauded and/or took a bribe and/or murdered someone else (it takes some luck to get away with breaking the law too.)

Is there anything on that list that poor people should admire and worship — especially if they did all the same things, but didn't become rich themselves?

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