I wonder if at a certain point, someone learns about compounding, and just sticks with it, building generational wealth. And poof, the wealth just keeps growing as long as the descendants don’t make errors.
We seem to love creating stories about why so-and-so is rich, but, I suspect the most common answer is “time, patience, and no major bad luck”.
You make it sound easy, but there are relatively few billionaires in the US descended from historically wealthy families [0]. First off, this kind of compounding has only really been possible since the industrial revolution (~200 years). Before that, wealth came primarily from land ownership, which was zero-sum. Second, "no major bad luck" has been pretty hard to come by in most of the world across multi-generational time-scales. The US has had a historically exceptional period for the last 80 years or so, but there is no reason that has to continue. Third, "as long as descendants don't make errors" can also be a significant hurdle. Many Asian countries have a saying: wealth does not last past three generations (not meant to be taken literally, but people say it for a reason).
Also, to start compounding, you have to have enough to compound. Most people instead start off significantly in debt (student debt, mortgage/rent, etc.). Then they try to save enough to be able to raise their children and retire before they become too infirm to work, at which point they start compounding in reverse. All the while, they are competing with everyone else trying to do the same thing for how much they are willing to pay for scarce resources and how little they are willing to receive for their employment. Having your compounding achieve escape velocity is the exception, not the rule, and it has to be that way.
I also suspect that’s the most common path to single-digit millionaire in the US. My parents were the first generation on either side to attend college and the steady economic progress across 5 generations is impossible to miss.
Teaching the next generation(s) about how to invest (in self and in markets), not spend time nor money to frivolous excess, and delaying gratification are other critical parts of sustainability of family wealth. I think those were as big a factor as any other in the 5 generations from my kids back to their great-great-grandparents.
I'm not sure if the next few generations will have the same opportunities as the last few that enjoyed America's dominate place in the world, who also took out incredible amounts of debt that the upcoming generations will have to pay back somehow.
The values you mention are timeless & should be taught to all.
Hopefully technology continues to be a thing that rises all boats & that more people can get said boat.
I fear the current tax laws, political contributions & financial regulations favor those with more wealth so much that when you factor in compounding, their wealth will continue to grow at extreme levels compared to those with less wealth. Retail needs to start pulling their money out of stocks until large companies reduce executive pay to reasonable levels. Otherwise we just blindly keep supporting this current chaos. I believe we also need to start taxing margin loans, instead of going down a wealth tax road.
> The values you mention are timeless & should be taught to all.
Agreed, with the related note that I think that facts/knowledge can be taught by strangers, but values must be taught by family or another tight community structure (church, respected elders, or similar). Schools can prattle on all they want about delayed gratification and it won’t move the needle in behavior.
There are schools that can serve in that manner, but it’s a tiny minority of them. No (or virtually no) public schools with 125+ students per grade will have that tight community structure.
A private school with 20 per class and 60 per grade has a fair shot at it. Maybe a small public district could as well, but I’ve never seen it happen there.
Sports teams with strong non-athletic aspects to their program are another possible source of values transmission.
I agree that it’s not the sign on the building that matters, but the content and consistency of what happens inside it.
It’s true in theory, but a couple of big things happen 1) for the vast majority outlays increase as fast if not faster than wealth, and 2) things like divorce/remarriage/second families happen creating massive dilution, 3) the experience of most HNW clients is more like 3-5% real after tax.
Yes I suspect the rich's strategy of owning nothing and controlling everything contributes as much to their wealth retention through the inevitable catastrophic events in life, as much as snowball interest accumulation does.
Middle class / poor people generally know how to build wealth through interest but make the fatal mistake of keeping their wealth largely tied up in on-paper assets in their name, this means they're ripe for the taking from every judge / wife / healthcare creditors / random guy with a lawsuit as soon as something in their life goes south. Of course once you get to a certain segment of underclass people who are basically unbanked you get back to horse-shoe theory and you'll never be getting their $50k gold chain they keep around their neck.
Even within compounding there's an interesting phenomenon.
Start with $100 and compound it at 10% per year for 30 years and you end up with about $1,700. Improve that return by just 1% to 11% and after the same 30 years you have about $2,300.
That small 1% edge produces roughly 35% more money in the end. Compounding is extremely powerful, and even marginally better money management leads to vastly better outcomes over time.
Over the last 100 years, the S&P 500 has grown with an average of 6% yearly adjusted for inflation (9.8% nominally).
That means an inflation adjusted doubling every 12 year.
It also means that if you manage to live on e.g 1% of the wealth annually, your wealth will double(inflation adjusted) every 15 year.
So yeah, as long as you don't get too many children (branching factor not more than 4) you 'just' need to get filthy rich, and none of your descendants ever need working.
The last 100 years has been the era of the American Empire, which is monetized through the network effects of the dollar and dollar-denominated-assets. We don't have ships full of Potosí silver, but we do have 10% yearly S&P returns in an economy growing 3%. Extrapolating another year of that is probably reasonable, extrapolating another 100 years of that is probably not.
Yeah, it's easier to analyse the past than predict the future. I agree that I made a statement about the luxury of wealth the last century.
I don't know if the S&P500 will grow at the same rate the next century, but I am willing to bet a beer that stocks in wide index founds will grow faster than both inflation and average salary for the next century.
I think the realistic number is is more like 2-4% if it’s not supplemented by working (and sometimes even working) I also think when you add in things like paying for private school/ college, divorces, taxes, carrying cost of real estate, etc. luxury travel/clothes/meals/vacations it’s a big number.
I’m not saying it’s not possible, but I suspect the vast majority of grandchildren of a wealthy couple have meaningfully less than the original couple did, as well as less than their parents did.
2-4% of the wealth you mean? That surely depends on the wealth... If you need 200k a year that's 2% of 10 million, but 1% of 20 million.
If you manage 1% then the real value doubles after 15 years. If you need 2% annually, the real value doubles after 18 years. The moral of the story is the same, with enough wealth you can live comfortably while your wealth grows.
The tough part is someone with 20 million "in the bank" will have a hard time constraining themselves to 200k/yr expenses. It seems like a lot but next to 20 million the temptation to spend a little, like 1m on a house, 100k on a car seems like nothing and a potentially reasonable purchase. But it drastically changes the trajectory of that balance.
And you wouldn't feel as good spending 1m on a house or 100k on a car with a 200k salary and zero in the bank.
and the further you get from the actual work that created the nest egg the greater the temptation - because no one treats found money like earned money.
> If you can convince the lowest white man he's better than the best colored man, he won't notice you're picking his pocket. Hell, give him somebody to look down on, and he'll empty his pockets for you.
"I'll tell you what's at the bottom of it. If you can convince the lowest white man he's better than the best colored man, he won't notice you're picking his pocket. Hell, give him somebody to look down on, and he'll empty his pockets for you."
Privilege breeds privilege. Once you have at least a little bit of it. You can generate a little bit more with it.
The bar that you get to grow up in a relatively safe place, with non toxic friends or parents is quite high already. I haven’t been lucky to have grown up in a safe place or in a good family, but I did manage to make good friends, and if I had not been lucky enough to have positive experiences with some real smart resourceful people, I probably wouldn’t had been alive today. Not to sound too dramatic.
Every time I visited the US it was mostly to visit people who were in a very privileged position. They either rented an expensive apartment in new york city in an ok neighborhood, or they owned a 3 story house in the suburbs. When we drove to walmart I could already see in the parking lots the stark differences between people who called this country home.
Next to us parked a family, 3 kids, a car that looked like it was falling apart next to my friend’s huge modern SUV. I wonder if any of them will ever br able to afford an SUV, I wonder how many of them will be able to go to college. The father and mother were yelling a lot at those poor kids. Everyone looked overweight(no offense), the father literally obese. And we went on with our day. I bought a bunch of random stuff I didn’t really need and ate a lobster sandwich. And I kind of forgot for a long time that family ever existed, except for the couple of times I randomly remember them. Hope they’re alright.
I don’t think it’s helpful to talk about it in terms of “privilege.” It’s not about being lucky enough to be born into privilege, but not being unlucky enough to be born into structural dysfunction.
If you compare income mobility between parents and adult children in the U.S. versus Denmark, it looks quite similar for the top 80%. https://archive.nytimes.com/www.nytimes.com/interactive/2012.... Someone raised in the second lowest income quantile in the U.S. has about the same chance of ending up in the top income quantile as someone in Denmark. It’s the bottom 20% where Americans are twice as likely to get stuck there in comparison to people in Denmark.
Activism was a big part of my life, even full time at times, from 1991-2005 and I spent a lot of time going into rooms inhabited by different groups building bridges not to mention tabling, going door to door, getting signatures for political candidates, you name it. So I've had a lot of experience to how people react to different messages when I deliver them and when other people deliver them and I've got strong and grounded opinions about discourses that are counterproductive and make me wish I could use a hook to shuffle people off the stage.
The word "privilege" and especially the phrase "white privilege" is at the top of that list.
There really are some privileged individuals who are entitled and could use some bringing down but if you're speaking to a group you really don't where people are coming and frequently when I talk to an individual I find my expectations about their history and point of view are completely wrong. In particular I know a lot of white people who have black problems including the meaningless-but-fatal confrontations with the police. For the most part [1] black people are more concerned about racism in America than white people, but know many black people who resent the idea that they are first-and-foremost descendants of slaves and victims of racism and it's such a strongly held feeling for some that if you give them a choice of a strident "anti-racist" and a flagrant racist they'll pick the latter.
People have been so hung up on this idea of intelligence being heritable or not heritable that it's almost forgotten that severe mental illness (schizophrenia, bipolar, major depression) is highly heritable -- and there are few things that can sidetrack your life like that.
How's your self-object breakthrough? Okay, I might be jealous that you found a foolproof(?) way to have it published :)
Ofc I'm still mostly bouncing between the top 2 boxes here... (Being aware of it maybe makes that less concerning?)
(Pleasantly) surprised-- but maybe shouldnt have been-- that Chandrasekhar opened with thermodynamics
Heads-up. Regarding the self-obj. Might try to set up a three-way to sync with aeb* when I can tria(ge/ngulate) the relevant emotions better (modulo whatever mental resources my own PRE-breakthroughs require)
This turned up the other day and explains the overarching framework of how my practice (symbolic, embodied) fits into other approaches to facing the world
and i think communicates the sense of urgency in terms of the current crises such as the crisis of object relations, crisis of energy and the environment, crisis of political legitimacy, etc.
Yeah I saw that post and was going to try to kick off the thread from that very stub.
I do feel the urgency, so a thorough read is warranted.
Thoughts after the first pass, though, "rationalism fails because humans learn that fast-think responses are better for dealing with chaos", what's your succinct summary of the "crisis of object relations"
Instead of relying on real science, magic has become the sole foundation of expertise for the technocratic elite and the professional managerial caste—culminating in the legendary powers of the High Mages of the Central Bank, the Priesthood of Think Tanks and the Sacred Policy Institutes.
There's this sock-puppet on HN who I might have otherwise written off as a conservative but the way he writes is stimulating so he seems to be just one of these technocratic elite according to the above (albeit I credit him for the "insight")
"object relations" is the ability to express love.
In higher ed we are already facing a crisis because people slowed down having kids 20 years ago. The hysterical right is talking about the crisis, the left cares about the welfare state which needs working-age people to fund it but it still fantasizes that billionaires can pay for it all without the recognition that billionaires need working-age people and an expanding economy to be billionaires.
Young men immediately around me are desperately struggling in various ways, which makes the problem intensely personal to me.
20-30 years from now though the hysterical right will seem prophetic, but for now the responsible right and the literate left share in the "individual uber alles" ideology that problematizes everything.
There's a take that revolutions only happen right after things get slightly better, like spring for the suicidal.
(Have been trying to link "individual uber alles" to the macro-nihilistic core of liberalism but nothing has been clicking, including https://news.ycombinator.com/item?id=46346958 [0])
At the risk of overgeneralizing, women tend to make a healthier (more functional=better moral-injury-compensated) tradeoff between value or values. For men, the "trades" come close to women's Goldilocks zone, but "trading" (finance) will always be the devil. A man will rather be seen in the company of high-class "Trading" than be married to "the Trades".
(Within the technocratic elite, VCs try to make a better tradeoff than Jane Street/RenTech etc, but the national ideology is such that followers of Warren Buffet can still accuse them of leaving value on the table. PG used to talk of "rapacious" finbros but he & Jessica doubling down on Altman is your "supply-side socialism")
[0]top comment: high risk high formal value politics ("war") beat high _informal_ risk high _informal_ value building, family, community ("love"). like how Taleb only gets love (sycophancy, but not really?) from low-bros of the global South-- too much testosterone to make a healthy tradeoff.
Development of selfobject images I've been chewing on it and think the best thing is the "emotional preparation" used in the Meisner techniques of acting. Images that really activate the real self are very personal and archaic and could be embarrassing. It would not work if I were to give you one as a guru [3], and if were to have you describe them as a guru you I would be inclined to judge them and you'd be inclined to be dishonest because you'd be afraid of being judged.
In the case of Meisner you go into the repetition exercise having done an emotional prep and your "guru" observes how it affects your behavior and can tell you "that was amazing, that really worked for you" or "that fell flat" and the one thing they'll tell you is that you have to imagine something rather than recall an experience. You aren't expected to talk about what you used, you're getting feedback about the effects.
The other thing I want to suggest is the Bandler/Grinder kind of content-free exercise where you are told to evoke an image but not expected to describe it, I think that's less effective than the Meisner training because it is presented as something you can do out of a book or in a large group and you don't have the closed loop that monitors behavior and physiology.
I've lived in about every demographic area of the USA and the only thing that would have gave them away to me as poor in your SUV/walmart story is that they were all fat. Being fat is the best marker of poverty in the USA. The rest just sounds like the lifestyle of Warren Buffett which isn't terribly unusual as the comfortably rich generally only worry about flashy cars if they're a motorhead and often get there in part by being thrifty.
Buffet is well known for "slumming it" at times. He drove a clapped out hail damaged ~decade old mass production model Cadillac like everyday through McDonalds. This is pretty inline with stuff I've seen from comfortably rich families.
>edit: oh fuck me its this goddamn bot poster who just lies to your face
The walmart experience is so wildly different depending on who they're catering to.
When I lived in poor areas, I've literally been shaken down by gigantic bouncers in the parking lot for "stealing" (but not) a bag of $5 cat litter. Why on earth this is even worth the liability of sending bouncers is beyond me. And everything even remotely valuable and easy to steal is behind locked showcases, but no one gives a fuck to get it out to help you buy it.
In rich areas, it's lobster sandwiches and no one even bothering you for your receipt on the way out, and maybe someone might even help you find something in the store. Nothing you want is behind glass, except maybe something unusually valuable by walmart standards and miniscule like an SD card.
“Gas Station Sushi: Fresh one day a week, but no one knows which one…”
I read the post as involving seeing the other family at Walmart, but the buying of things not needed and consumption of lobster as happening elsewhere.
I spent a couple of years in the States before returning to Europe. I really had no idea what happened to people - what they became - if they weren't fed and watered properly. I had always assumed that the way people were was just how people are. Scary how much we take for granted.
This is true when you look at raw numbers but you'll still get some pushback on this fact since the pace of USA's drop in median wealth has been so sudden. As in my home country of Australia now has ~2.5x the median wealth per capita compared to the USA. This never used to be the case at all. Australia still has a lower average wealth but this is just telling of the extreme inequality. The median and averages aren't meant to be this far apart.
Sort by median and compare to average wealth to see the issue the USA has right now. The USA's median wealth in 2007 was $173,151 in inflation adjusted teams for some reference, it dropped in 2008 and never really recovered. It's now well below many other Western nations.
Isn't this an artifact of using the median when the majority of families in both countries own a home, and housing prices in Australia are somehow even crazier than they are in the US?
When housing prices are high, anyone who can't afford a down payment is completely screwed, because they're paying the high rents which inhibits saving, but the high rents they're paying aren't turning into principal. So the savings of most of the people who can't afford a home end up being ~0 or negative (in debt). But this will be worse, i.e. more inequality, in the country with the higher housing costs.
It just doesn't show up in the median when the median is a homeowner and then the higher housing costs increase their number.
But the "extra" wealth is mostly on paper because you have the house but you also need somewhere to live. If you sold it to get the money you'd have to pay the crazy rents, so all the value really does is give you the capacity to borrow against it, which is only useful if you wanted to borrow more than a smaller amount of equity would have allowed you to, which most people wouldn't. And if they did they wouldn't have that "wealth" anymore because they'd have borrowed and spent it, and would then be paying interest on the debt.
It's inflation adjusted to 2022 though, not 2025 (hopefully at least that's still in ballpark though). There was a slight spike upwards for median wealth during the pandemic fwiw. This seems to have entirely corrected though.
I'm not sure why that 2022 number is so much higher than the previous years listed.
I guess the stimulus checks and stock market movements during the pandemic brought the median and average closer together for a year? Regardless it didn't hold, it's back below 2007's level again today by any measure.
Nomadland the book documents this for a lot of Americans surviving in the brink in the aftermath of the 2008 crash, turning to living in vans and RVs, a less glamorous version of van life, barely scraping by and eventually bad luck or circumstance of some kind of another just crushes individuals. Even in Silicon Valley just a few streets from Google HQ in Mountain View on Longhorn and other streets there are several blocks filled with RVs of folks I assume like the ones in Nomadland. https://maps.app.goo.gl/KQY2AWL2sNfGem44A
Inequality is proof of free markets. Free markets are proof of prosperity maximalism. Worry about raising the floor, not the distance of floor to ceiling (there is no ceiling - shoutout Lil Wayne).
There are a sizable number of levers that raise the ceiling by lowering the floor. For some reason, intentionally giving all the power to people near the ceiling makes pulling these levers very popular. Not sure what the reason could be. Maybe we'll figure it out one day.
Not only that, but it provides opportunity to create levers such as you describe in the first place, due to the concentration of power and influence. Funny how that part of Adam Smith isn't worshipped as much
As a libertarian I also dislike the "crabs in a bucket" mentality people have towards inequality because it is clearly motivated by jealousy, but the massive amount of inequality we see today seems to undermine some of the assumptions behind democracy.
I think the reason why the social contract of democracy evolves from natural law is that the basic assumption is that we all have about the same fighting power, and voting is representative of this. This assumption does not hold when some minorities have 1000x the economic power but 1x times the voting power: the majority of people will vote to redistribute wealth, while the rich will be motivated to destabilize the peace and take advantage of their disproportionate fighting power directly (killbots? [1]).
Additionally, special interest groups will lobby to protect their cash cows. An increasing amount of the economy flows through government expenditure (including tax incentives, nationalization, etc.), for example palantir, flock, openAI and others. We live in an increasingly planned economy. In the USA, we import pretty much everything and we only build for the military and real estate.
The state of inequality is also concerning considering the recent technological improvements that threaten to totally devalue all labor. There's this notion that the lives of the 1% don't matter as long as we raise the standard of living for the lower class as you suggest, but what is happening now is more like a doomsday situation where we are pulling the ladder up and consigning the working class to the chasm of liquid hot magma below [0]
Hot take but the more time I spend with poor people the less respect I have for them. I grew up in Eastern Europe where the economies were actively suppressed during communism, so the story "poor people just need more chances" hit home because that's exactly what I saw around me. But then I moved into a poor neighborhood of a rich country and... no matter how you organize the society, a certain percentage will always either be incapable of participating in it, or flat-out refuse to do so. You can give them all the chances they need, they will stubbornly keep making wrong decisions.
> Hot take but the more time I spend with poor people the less respect I have for them. I grew up in Eastern Europe where the economies were actively suppressed during communism, so the story "poor people just need more chances" hit home because that's exactly what I saw around me.
Well, what I saw around me in post-Soviet times was that as soon as people got any kind of wealth they would just spend it all on luxury cars, fur coats for their wife, expensive vacations and building a mansion-like dacha. Only the last asset on this list has any potential to appreciate.
> But then I moved into a poor neighborhood of a rich country and... no matter how you organize the society, a certain percentage will always either be incapable of participating in it, or flat-out refuse to do so. You can give them all the chances they need, they will stubbornly keep making wrong decisions.
Western left agrees with you, they just won't spell it out like you did. But their current policies are basically:
1. Just give money for free to the poor, both explicitly and implicitly (social housing, rent control, etc.).
2. All kinds of equality of outcomes policies, diversity quotas, etc.
Equality of opportunity got out of vogue because it didn't produce results the left was hoping for.
> Well, what I saw around me in post-Soviet times was that as soon as people got any kind of wealth they would just spend it all on luxury cars, fur coats for their wife, expensive vacations and building a mansion-like dacha. Only the last asset on this list has any potential to appreciate.
It seems likely that you're just seeing the highly visible purchases and assuming that that's all that they're buying. What's not so visible is the difference between always eating cheap, poor quality food and then being able to afford fresh vegetables etc.
> Equality of opportunity got out of vogue because it didn't produce results the left was hoping for.
That doesn't seem accurate outside of the U.S. - there's plenty of countries that are still attempting to redress the balance after rich white men skewed the odds so that only them and their families could get access to quality education/healthcare/financial services etc.
It always bugs me when people point out diversity quotas whilst ignoring the centuries of white-only quotas.
> It always bugs me when people point out diversity quotas whilst ignoring the centuries of white-only quotas.
The diversity discussion is always funny to me in the context of a country built by 99.9% white people. It's like... imagine arguing about the role of black americans in the history of Japan and why they deserve a piece of the pie.
That doesn't seem like a reasonable comparison and I'd dispute the "country built by 99.9% white people". Yes, lots of white people claimed to be "building" things and yet relied a lot on non-white slavery to achieve it. So, not only were the slaves' lives treated as mere possessions, but they also don't get any credit for the hard work they were forced to do.
It seems to me like a country built on theft of labour (as is the UK where I am).
I'm from Poland. Throughout most of its history, my country was being invaded - by the Germans, by the Austrians, by the Russians, by the Swedish. We had literally nothing to do with colonialism. When Napoleon sent Polish people to Haiti to fight off slave rebellion, Polish people joined the Haitian side.
My country lost its independence in 1795. It regained independence after WW1, but then Germans and Russians attacked us, starting WW2. After WW2 we became a puppet country of USSR, which lasted until 36 years ago.
The only nation that felt invaded by us were Lithuanians, long long time ago. We had nothing to do with colonialism, we did not import slaves from Africa. We never murdered local population. The past 300 years of my country's history was being invaded and then miraculously coming back to existence. Our capital city was completely destroyed by Hitler just to set an example.
> But you have the same amount of melatonin in your skin as the British, therefore you're guilty of everything that the British did
I hope you've replied to the wrong comment as I didn't write the bit that you "quoted" and accused of being "pure fucking racism".
However, I don't think your comment is at all in line with the guidelines on commenting on HackerNews so I shall not engage you in any further discussion if you cannot be civil.
Inequality has biological foundations. Plants and animals have inequalities of king vs death level. It is almost inevitable barring some rare occasions in history.
In the US stock wealth inflates inequality measurement. No way a billionaire can liquify millions of stocks in a stable current price. Most are multimillionaires. Although there is a lot of room for improvement based on the recent history of strong democratic national tradition.
Idk my family in the Phillipines can literally just build a shack near a city with jobs no permits or anything, then carry your kids 5 up on a moped without being hassled by cops. I took a family member to the ER and only charge was $5 worth of pesos for meds (granted if I hadn't paid they'd have got absolutely nothing, but at least it was cheap) , no other charges.
Building a shack with nothing but bamboo and no paperwork in US is illegal almost everywhere, transporting kids this way would get you pulled over, and you spend a fortune to get healthcare to the point of getting Phillipines tier healthcare.
Nominally we're richer, with the freedom to have cops bring violence to us if we're not and we try to keep our unpermitted urban shack. It feels like you have to earn a fortune in the USA to do the things poor countries almost take for granted.
We seem to love creating stories about why so-and-so is rich, but, I suspect the most common answer is “time, patience, and no major bad luck”.
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