OT: “The Self-Made Myth”

[Anonymous]

[quote=davelj]The problem is not “luck”, per se, and you know this. The problem is massive income (and thus influence) inequality of which one source is “random fortune” (or “luck”).[/quote]

I’m the one who is responsible for emphasizing the term “luck” in the discussion (although I quoted it to suggest that it wasn’t quite the common use of the word.) Perhaps “circumstance” is a better word.

[quote]While I don’t advocate a Scandinavian-socialist model […][/quote]

Oh no, we are talking about Europe and socialism!

I didn’t start it, I swear!

Do you know IKEA is the largest tax-evasion scheme in the world? I love this story:

http://www.economist.com/node/6919139

[quote]it’s pretty clear to me (at least) that our system is rigged to perpetuate the ultra-wealthy[/quote]

Although I agree it would seem this way lately, there is some pretty basic evidence to the contrary:

Look at the list of the 20 or so richest people in the US and notice most of them are first-generation wealth. And most of the rest are second-generation.

[davelj]

[quote=pri_dk]

[quote=davelj]it’s pretty clear to me (at least) that our system is rigged to perpetuate the ultra-wealthy[/quote]

Although I agree it would seem this way lately, there is some pretty basic evidence to the contrary:

Look at the list of the 20 or so richest people in the US and notice most of them are first-generation wealth. And most of the rest are second-generation.[/quote]

Yes, but I virtually guarantee you that the families of “this top 20” or so will remain in that top 1% – if not near the very top of the pyramid – for many generations.

For example, none of the Rockefellers are in the top few-hundred richest folks in the U.S. anymore, but hundreds of them have net worths north of $10 million and thus remain among the ranks of the quite wealthy (in relative terms). (A friend of mine is a multi-generation removed heir to the Vanderbilt/Whitney fortune – he’s quite wealthy despite not having accomplished a great deal commercially, although he’s a very smart, personable guy.)

Whether you have $20 billion or $20 million you remain in rarefied air from a socioeconomic standpoint.

[scaredyclassic]

I cannot even pretend to know the answer but student loans can be bad.

Many law schools are now being sued for misrepresentations in employment data by way indebted jobless law grads.

Tuition has gone up steadily and heavily over the last few decades.

The kicker is the debt is nondishargeable in bankruptcy. Ouch. Can get ugly.

Tuition would never have gotten so astronomical without student debt flowing freely.

It’s all very scary. Large risky investments from which there is no fresh start ever in the event of failure.

[Allan from Fallbrook]

[quote=walterwhite]I cannot even pretend to know the answer but student loans can be bad.

Many law schools are now being sued for misrepresentations in employment data by way indebted jobless law grads.

Tuition has gone up steadily and heavily over the last few decades.

The kicker is the debt is nondishargeable in bankruptcy. Ouch. Can get ugly.

Tuition would never have gotten so astronomical without student debt flowing freely.

It’s all very scary. Large risky investments from which there is no fresh start ever in the event of failure.[/quote]

Scaredy: I know you’re an attorney, as are several friends of mine. I had a conversation with two of them over the weekend, one of whom had been a partner at Thelen, and was there when Thelen imploded.

The topic of Dewey & LeBoeuf came up and one of my friends made a comment that Dewey, in his mind, represented the tip of the iceberg in terms of Big Law firms soon to go under.

This led to a sidebar (sorry, couldn’t help myself) about the costs of top tier/elite law schools, like Boalt and Stanford and the Ivies and the fact that many law students are racking up insane debt with limited job prospects on the outside, post graduation.

Left unspoken in the discussion about college debt is that there is a subconscious expectation that a college degree will “pay off”, in terms of future employ and income. Problem is, those graduating with Liberal Arts or “soft” science degrees are finding that they racked up six-figure debt for zero prospects in the job market.

I’m all for subsidizing those kids that pri mentioned: Those who have the brains, drive, etc, but not the opportunity, but I think it has to be a business decision, meaning degrees in Mathematics and the hard Sciences, where there is a definite need and where America is starting to lag the competition.

I’m pretty sure we have more than enough lawyers (no disrespect, Scaredy).

[scaredyclassic]

None taken. Cutting lawyer production will make current degrees have greater value.

Student loans are the next housing bubble.

[Allan from Fallbrook]

[quote=walterwhite]None taken. Cutting lawyer production will make current degrees have greater value.

Student loans are the next housing bubble.[/quote]

Student Loan Debt Clock: http://www.finaid.org/loans/studentloandebtclock.phtml

USA Today article stating that total US student loan debt will exceed $1 TRILLION (yup, trillion) this year: http://www.usatoday.com/money/perfi/college/story/2011-10-19/student-loan-debt/50818676/1

From the article: Students are borrowing twice what they did a decade ago, and total outstanding debt has doubled in five years.

All this in the teeth of the worst job market in decades. Yeah, I’d agree that its a bubble.

[sdduuuude]

[quote=davelj]… it’s pretty clear to me (at least) that our system is rigged to perpetuate the ultra-wealthy and, as we saw during the financial crisis, to “protect” these folks from the actual downside risks associated with the risky assets from which much of this group’s wealth is derived (think of much of Big Finance).

If these folks are going to have a permanent put related to their wealth – as it appears they do – I think they should pay for it in the form of redistribution that reduces the level of inequality that we see today.

I’m not saying this is a perfect model (far from it, in fact) – to be clear – I’m just saying the model we have now is completely screwed where the middle class is concerned vis-a-vis the 1%.[/quote]

Well said. You have my attention here. Not sure how that fits in with all the talk about “luck”. Did the powers that be luck into the rigged system or did they make it that way? I’d say they made it that way.

To me, when the system is such that it is “rigged to perpetuate the ultra-wealthy” you can do two things.

You can 1) undo the rigging or 2) you can try to live with the current rigging and add bunch of other rigging to make the current rigging have less effect.

Either way, you are fighting the powers that be to implement the change that is needed.

The way I see it is this – a whole lot of money gets funneled through the government and through that government system, it is guided by very few hands. Those hands are the rigged system.

Let 350 million people each guide a small amount of the money and it will get distributed more evenly.

I think Ron Paul is represents path #1 – undo the rigging. I, personally, like that approach. Low likelihood of success but if it happens, then the rigged system falls apart and few decision-makers are replaced by many. The Revolutionary War also exemplifies path 1.

Path 2 is “politics as usual” that leads to regulations and redistribution schemes piled on top of regulations to undo regulations that were once put into place to deal with one problem but created another. Take a simple home loan, for example. It should be pretty simple. One dude loans another dude some money. If the second dude doesn’t pay him back, the first dude gets the house.

Well. Something went wrong and the small number of decision-makers decided that the taxpayers would bailing out the first dude. So, to protect the taxpayers there comes an army of acronymns to make this simple loan process a complete mess. Isn’t it better to just not bail out the first dude in the first place. Or, to at least avoid doing it again in the future ?

So, why don’t we just go back to the simple situation where one dude loans the other dude money and the taxpayers have nothing to do with it ?

Because we choose path 2, which puts puts band-aids and non-voluntary redistribution schemes into place to try and make up for the prior horrible decision, which tricks the public into thinking some progress has been made, when in-fact, the whole system that bails out the 1% is still there and, as you say, creates the wrong incentive.

Reducing the flow of money through the small number of government hands would be better than continuing to run that money through their hands and trying to control their hands.

[an]

[quote=pri_dk]So there is a line somewhere that needs to be drawn. But how do we determine where? I understand your point about STEM degrees, as I purposely setup a fairly uncontroversial example.

But why not liberal arts? Are they of no value at all? What about people that become lawyers? The rule of law is the most important aspect of our society. And who writes our history books?

I don’t have an answer, but I know it’s not so simple.

Do we limit our pool or lawyers, historians, and teachers to the children of the rich?[/quote]
Yes, there needs to be a line drawn. If we have unlimited funds, then sure, free education for all, regardless of degree. However, we don’t have unlimited funds and I put STEM degrees above all others, since those are the degrees that will keep us competitive with the rest of the world. Keep us innovating and keep us producing.

I never said there are no value for liberal arts degrees. I just don’t feel like their value is as great as the cost. People can become lawyers if they want, but I don’t think there’s a shortage of lawyers like there are for STEM degrees. Yes, rule of law is very important in our society, but at the same time, you have to question, are there too many laws? After all, if you ask any politician how many laws they’ve created and they’ll be proud to list them to you. However, when you ask them how many they’ve repealed and most probably say none. So, more and more laws are being added. You have to take a step back and ask, are all of these laws worth it.

No, we do not limit our pool of lawyers, historians, teachers to children of the rich. Currently, that’s not the case. It wasn’t the case in the past and I don’t see it being the case of the future. Those who don’t care about $ are welcome to become a historian or a Shakespearean literature major. However, I think that’s a luxury, not a necessity. Lawyer is a risky profession. You take up the loan debt in hope of hitting out of the park and be a partner at a law firm. High risk, high return. for STEM degrees on the other hand, it’s a lot less likely to hit it out of the park, unless you’re one of the lucky few who are in the right place at the right time and hit it big with the .com IPO.

I don’t know why you bring teachers into the equation. But just like my answers wrt to degrees, I think teachers of STEM subjects should be paid more than teachers of liberal arts subjects.

BTW, right now, if you’re poor and are ambitious and smart, there’s a very likely chance you’ll get a free ride. I know a few HS senior this year who are in this boat. I also know a few when I graduated HS many years ago. So, aids have been out there and continue to be out there for the cream of the crop.

[an]

Coming back to the original topic about luck, IMHO, luck is at least 50% of success, but the other 50% needs to be attributed to perseverance, hard work, and risk taking.

An example would be the many immigrant “boat people” who risked their lives to get to America. The luck part is that they didn’t get killed while trying to escape. But, it takes the hard work to save up the money to get on one of those boats. It takes perseverance in trying and trying again if the first time fail. It take risk taking, knowing that if you get caught, you’ll be put into concentration camps and possibly get killed. So, sure, luck is part of it, but sometimes, you have to be willing to put yourself into a situation that can take advantage of that luck.

[CA renter]

[quote=sdduuuude]Not with tax money, no.

I would rather they play the role of encouraging people to donate voluntarily and managing the distribution of those funds.

If no funds come in, then the society has chosen not to do this. If lots of funds come in, then society has chosen to support it.[/quote]

Here’s the problem with that:

When people have the money/power, they tend to want to keep it. Wealth and power are relative, so it’s doubtful that the wealthiest and most powerful are going to “donate” their money to people and causes that will diminish their socio-economic standing.

They might give small amounts, or might donate to causes that won’t “negatively” affect them, but are unlikely to do much to create opportunities for others to usurp the very power that they’ve spent their lives trying to attain.

[CA renter]

Thank you, davelj, for posting this link. It’s a topic that really needs to get more exposure.

[scaredyclassic]

even if luck is greater than effort, and it’s irrational to believe we are self-made, might there not be some real benefit to irrational beliefsystems?

i have a feeling that many of the things we irrationally believe in (including lucky charms, etc.) have some sort of beneficial psychological function.

[Anonymous]

[quote=davelj][quote=pri_dk]
[…]

Look at the list of the 20 or so richest people in the US and notice most of them are first-generation wealth. And most of the rest are second-generation.[/quote]

Yes, but I virtually guarantee you that the families of “this top 20” or so will remain in that top 1% – if not near the very top of the pyramid – for many generations.

For example, none of the Rockefellers are in the top few-hundred richest folks in the U.S. anymore, but hundreds of them have net worths north of $10 million […][/quote]

I think one of challenges in this subject is that we need to define the problem.

Is the problem that we have an entrenched class of elites who maintain power generation after generation? Many people like to present the situation that way. As the child of of very “working class” family I’d like to believe it myself. But when I look at the evidence I see a mixed picture:

So there are hundreds of descendents of Rockefeller that are worth tens of millions.

But there are thousands of people on Silicon Valley, Redmond, and even right here in San Diego that have gone from middle class to that kind of money in just a few decades. I’ll bet Qualcomm alone has created at least a dozen “Rockefeller heirs” as measured by wealth.

I don’t think “old money” is the problem, or at least not how we should measure the problem. The list of names at the top, and even the upper tiers, is constantly churning and there is plenty of evidence of upward mobility.

I actually don’t have an answer to my own question. But I’m pretty sure it’s an important question: What exactly is the problem? (and how do we determine whether it is getting better/worse?)

Are there multiple problems?

Clearly, there are symptoms of a problem. There is extreme partisan gridlock on our government. The media seems to be more disconnected and nonsensical – making us “dumber” instead of informing the public. Lots of other disturbing trends…

Sure there is unemployment, but this is about more than jobs – or is it?

Are the Walton heirs really causing much trouble?

We’ve always had rich and poor.

So what exactly are we trying to fix?

[dumbrenter]

The right to life, liberty and an equal share of luck is what differentiates us Americans from the rest of the riffraff that squats on this planet of ours.
– From the desk of the Secretary of the Luck re-distributing office.

[Coronita]

[quote=dumbrenter]The right to life, liberty and an equal share of luck is what differentiates us Americans from the rest of the riffraff that squats on this planet of ours.
– From the desk of the Secretary of the Luck re-distributing office.[/quote]

But everyone needs to put in their fair share of effort too.

See, I wouldn’t mind paying more into the general welfare of the public system resources for the greater good of others if…well frankly others who “are less fortunate” aren’t also so damn greedy too. not saying all are like this but…Here’s my morale delima..

See my neighbor I would say probably is ok, but nowhere near considered wealthy. He’s been in preforeclosure…..Let’s go through the timeline.

Bought in 2004. Overpaid… Ok, no problem. He did the loan-mod thing, probably got some sort of deal (more or less at taxpayer/shareholder expense). Ok, I’ll even let that slide. But then see this. Ever for the past few years, I see the mom come home with bags from Nordstrom. I see more toys, crap for their kids piled high in their garage so that they have to park their cars outside. See a bunch of new electronics/tvs/etc. So much that they can’t fit the cardboard boxes in the recycling bin, that they at one point asked if they could use mine….They currently have a NOD on them…And yet the man of the household shows up with a brand new Audi TT recently….

So, I’m scratching my head. I’m suppose to help support some of this excess? I’m really trying hard to understand how people like this, who could have lived a modest/comfortable life, could not only blow it (because shit does happen), but absolutely no remorse, no guilt, no feeling of responsibility for these actions. And they will do it again, until it’s taken away from them. Heck, they are in preforeclosure, and the “man” of the family has the balls to buy a new car..What, and their kids when they go to college is going to apply for a “need based” scholarship???

A lot (not all, but a lot) of americans I feel should not be given a long economic leash…Simply because they would strangle themselves on it….As we have seen….As we continue to see….

[Author]

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