Owning capital is a skill

[Hygro]

Good thing we have video games to train us. Still, if we want to socialize wealth we better be a society of people trained in managing that wealth. Right now there's a few people who train for managing wealth (whether its the literal managing of machines and systems or the meta managing of assets) and they are rewarded with the wealth, which they don't share.

A bunch of us bemoan how unfair that is. But if the wealth was spread around, it would either end up back in the hands of those who can juggle servicing many different pieces, or a bunch would rust and rot away. Last time we spread the capital around we had a couple world wars to motivate people into caring to learn to man the machines. School ain't enough.

 

[Zkribbler]

The number one factor which predicts whether a person will be financially successful is not intelligence, or work ethic, or education. It the parents' income level.

That is, the US is no longer a meritocracy; it's a plutocracy. Welcome to the Middle Ages, and we are all serfs.

 

[Perfection]

This is why progressive estate taxes are a good idea. It allows wealth creators to be taxed at the much more moderate capital gains tax than income tax but when they die (and thus we lose their acumen) we aren't stuck gambling the whole of the wealth gains on the heirs (who may or may not have acquired the saviness of the deceased).

 

[timtofly]

The number one factor which predicts whether a person will be financially successful is not intelligence, or work ethic, or education. It the parents' income level.

That is, the US is no longer a meritocracy; it's a plutocracy. Welcome to the Middle Ages, and we are all serfs.

Here I thought it was the lottery.

What would you call one who discriminates the poor? I think that you are equating success with laziness.

A huge part of being financially successful is the willingness to give it away, even if to your own family, if they plan on being successful. If they do not, then I am sure there are other people who can manage the job. I agree that it takes skill and determination to use capital correctly.

 

[Narz]

I'd say it's more knowing what to own & what to rent that's the skill. Durden was right in that "the things you own end up owning you", you realize the truth of this when you move house many times.

I like to think if I was rich I could still pull off owning a small amount of precious things and renting the rest. Why people who don't need a car for work or childcare duties would buy one strikes me as odd, just pay for Ubers everywhere.

 

[onejayhawk]

The number one factor which predicts whether a person will be financially successful is not intelligence, or work ethic, or education. It the parents' income level.

That is, the US is no longer a meritocracy; it's a plutocracy. Welcome to the Middle Ages, and we are all serfs.

This is bunk.

It's true that parents are the best predictor, but that does not make it a good one. Many factors are involved. The conclusion that meritocracy is dead does not follow. Most fortunes are first generation. Simply saving 15% of one's income for 30+ is enough to retire a multi-millionaire.

J

 

[Kyriakos]

All property is theft (as a rich aristocrat once said)

 

[Flying Pig]

Simply saving 15% of one's income for 30+ is enough to retire a multi-millionaire.

Even being charitable and taking 'multi' as 'two', that would need an average income of $78,430 over those thirty years. That's not far under twice the US median - and remember that every year you spend earning $35,000 would need a year earning $120,000 to make that average.

 

[El_Machinae]

OJH is incorrect about the vanishing of the meritocracy. "Most fortunes being first generation" is a bit of a cherry-picking. It's true that there's rotation among the uber rich, and that is a sign of meritocracy for sure, but it's not the only metric. The problem with losing a meritocracy is that we end up in situations where the busboy is smarter than the manager, and has no hope of becoming a manager. It's reverse affirmative action. If the dumber rich have a greater chance of becoming doctors than the intelligent poor - the same with the architects and lawyers - who's treating our illnesses, becoming our judges, and designing our bridges?

But, that said, his figure on being a millionaire probably including compounding returns on savings. It's a weird world we've entered; people don't using savings to gain essential capital: they borrow for college, they borrow to get their car, etc. It's been a slow transition over a couple generations, but the difference between using savings to start the journey of your kids vs. needing to borrow to start their journey is a huge, huge difference in future savings.

The Boomers won't understand. The macroeconomics were different back then.

 

[dusters]

I can relate to something, especially "a small loan of million dollars" which is a real thing.

My dad is rich, maybe very rich according to Latvian standards. But he is a builder, I'm a geek and a math/physics person. He has little idea about that stuff. But he knows that I started to repair Pc's when I was like 6-7 (more like destroy them to be honest), he knows that I came 2nd at a programming contest when I was 11.

If I followed what he thought was best for me - IT career path, I would have gotten a decent loan of a lot of money. Maybe not a million, but a lot. Instead I decided to become an English teacher and recieved nothing.

 

[Lexicus]

The Boomers won't understand. The macroeconomics were different back then.

I suppose this must be an oblique way of saying that the rich are taking more of the pot than they used to?

 

[El_Machinae]

Well, the wealth flowed upwards. But the macroeconomics for the Boomers were really different too. They had the cash infusion from the Social Security tax. Their assets appreciated as interest rates fell. The initial investment required to 'breakout' of the poverty trap was lower.

The leftists made a lot of mistakes in that time period, so I can see why Conservatives are hesitant. But the economy really was different.

 

[BvBPL]

Hygro, we need to train students in this skill.

 

[onejayhawk]

Even being charitable and taking 'multi' as 'two', that would need an average income of $78,430 over those thirty years. That's not far under twice the US median - and remember that every year you spend earning $35,000 would need a year earning $120,000 to make that average.

15% of median income at 8% (S&P 500 average for the last century) over 30 years yields very close to $1 Million. That's your base. Beyond that, behavior matters.

Incomes are not stable. They grow over the person's employment life, typically faster than inflation. Numbers get hairy. For example, people that save are better employees. The discipline that promotes saving is valuable in the workplace. In turn this leads to faster job advancement. To some degree it becomes self fulfilling. To generalize, someone that saves 15% for retirement from youth typically retires a multi-millionaire.

J

 

[Lexicus]

Hygro, we need to train students in this skill.

I took a class called Democratic Capitalism that was all about exactly this. The professor was lecturing part-time; he also ran a consulting firm (forget the name at the moment) that helps companies transition to employee ownership, or implement other forms of profit-sharing and governance-decentralizing. The trick is to inculcate what they call "ownership culture" which is a set of norms and practices that help workers to understand how to run businesses.

 

[BvBPL]

Huh. At my school, we called it Home Ec.

 

[Lohrenswald]

fudging people over could be called a skill

 

[Lexicus]

Huh. At my school, we called it Home Ec.

You learned about employee ownership and workplace democracy in Home Ec?

 

[Farm Boy]

Huh. At my school, we called it Home Ec.

We teach to professionalism, now. Don't we? Of course we do. We want our children to have a competitive chance at a useful future. The alternative they're being presented with is being useless.

 

[Hygro]

****ing people over could be called a skill

Your computer is capital. Your kitchen broom is capital.