

Are the smart getting richer? - cwan
http://dilbert.com/blog/entry/redistribution_of_wealth/

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roc
I have met many smart poor people. I have met many dumb rich people. I've
never met someone with business savvy who was poor (for long).

As near as I can tell, capitalism doesn't reward the smart at all. But it
rewards those with business savvy. Maybe some people call that intelligence. I
don't. It's more an ability to shrewdly calculate just how much you can take
advantage of other people and get away with.

~~~
gjm11
Suppose you meet someone who is poor. How do you tell whether they have
"business savvy", and how do you avoid your judgement of that being affected
by the fact that you know they're poor?

~~~
roc
It's all just anecdotal evidence. You can't just point at someone and I could
to tell you how savvy they are.

I just note the people I know who come out ahead or behind in their dealings,
just as I note when someone says something fairly profound, finds a rather
ingenious solution or writes a bit of clever code to guesstimate intelligence.

I wasn't representing it as anything other than a working theory from personal
data. But it's not like Adams started from a statistical argument either.

I figured my experiences and generalizations were a fair response to his.

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jsankey
This appears to completely ignore the fact that money gives you power,
privilege and opportunity - and that can be used to make more money. It's not
impossible to get rich from nothing, but you start with a huge disadvantage.

~~~
HeyLaughingBoy
I think if you studied it, you'd find that most people who start out with a
lot of money, end up with less, not more. The smart poor are hungrier and more
willing to take risks.

And that's what really hit home for me: when he made the comment that risk
counted more than hard work. I work for a company whose stock was severely
depressed last spring. I know our fundamentals are good, we're a leader in a
growing, relatively recession-resistant industry and that the stock would
probably bounce back in a year. So I considered buying a $10k block of it when
it dropped below half normal price, but chickened out when I realized that I
couldn't afford to lose $10k or so if I was wrong. What happened? Exactly what
I guessed: the stock is now back to to its high 60's-low 70's level and I
would have made an easy $10,000 had I made the investment a year ago.

Reminds me how bourgeois I've become :-( Losing my stomach for risk!!

~~~
barrkel
I can make exactly the opposite argument: the poor can't afford to take risks,
so the smart poor don't.

It's one thing to be poor and desperate enough to take risks to survive, but
when you have enough to survive reasonably comfortably, you need another
buffer before you can take risks that can really pay off.

Someone with 10K to spare - I mean really to spare - in your situation would
have made that money. If you were even tighter for money, I don't think you
would have been less risk averse - on the contrary, you'd be even tighter with
it.

~~~
HeyLaughingBoy
My ability to accept risk these days depends more on the downside than the
upside. This was radically different 10 years ago. At that time I would have
seen the opportunity to make an easy $10k and gone for it. If I lost the
money, well I could always make more. These days I have a hefty mortgage and a
family to support. Losing the 10k won't put us on the street, but it takes a
big bite out of our safety net. It wasn't worth the risk, especially with the
economy tanking.

In retrospect, my comment was poorly phrased since I had myself in mind as the
"smart poor." Upon reflection I can see that it wasn't the lack of money that
made me so willing to take risks without much of a buffer, it was the lack of
responsibilities.

~~~
ahlatimer
That tends to happen as you age. Values and priorities shift drastically as
you get older and, presumably, take on more responsibilities (children, wife,
etc.). This is played out pretty heavily in politics. Young people tend to be
more liberal and grow more conservative as time goes on with the possibility
of again moving back towards the liberal side of things at the end when
responsibilities start to dissipate (children grow up, social security kicks
in, etc.).

I think the key is to take risks when you have the ability to (i.e. when
you're young). It doesn't mean you can't grow rich later in life, but I have a
feeling that the longer you put off taking on the "big" responsibility, the
higher the probability you will be to succeed in a financial sense. If your
idea of "successful" is to have a spouse and offspring, by all means, pursue
that as early as possible. If it's to be financially well off, you'd be better
off pursuing that instead of a family.

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notjeffgoldblum
[quoted from some website]"It turns out that Mensa has an investment club.
Wow. That must be one heck of a way to make money, right? The smartest people
in the world making investment decisions.

Well, not so fast. During the 15-year period 1986 to 2001, the S&P 500 had
average annual returns of 15.3%, but the Mensa investment club's performance
averaged returns of just 2.5%. Let's see, that would be 84% worse than the
index.

How could this be? An amusing article by Eleanor Laise ("If We're So Smart,
Why Aren't We Rich?") details the smart-but-undisciplined investment approach
that reduced Mensa's returns to fiasco status. In brief, the investing
"strategy" of the club relied on trendy tech stocks, horrible timing, and
over-reliance on charting. The "strategy" was constantly changed. Some stock
picks were taken straight from Internet message boards. One member described
the approach as "buy low, sell lower.""[/quote]

also: <http://minvestmentclub.com/>

sexy web design is sexy

~~~
gaius
Malcolm Gladwell says, a gifted child is a gifted learner but a gifted adult
is a gifted doer and the two are quite different.

Mensa members are gifted children who never grew up.

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jpwagner
Two comments:

1\. "Smart" is not a scalar; "rich" is.

2\. True that hard work alone will not make you rich, but [extreme] hard work
coupled with _working-on-the-right-thing_ has a very high chance of making you
rich.

~~~
mmt
I don't believe "rich" is a scalar, either.

When I look for a firm definition, it appears to be, in effect, accumulated
wealth (however one might define it). However, especially in a taxation
context, I hear it associated with, if not equated to, income. (Granted, this
could merely be an artifact of a taxation system which relies heavily on
taxing income).

Let's put that aside and use the "something people want" definition of wealth.

One can certainly convert to a scalar value (money) a particular form of
wealth (asset) at a particular point in time (i.e. sell it). However, since
the reverse is not true, (e.g. just because, if I had it, I could sell the
Mona Lisa for $X does not mean there is a value of $Y for which I could buy it
if I didn't have it), it seems safe to say they are of a different type.

Although that doesn't mean that wealth itself is not a scalar, I contend that
any additional dimension, not bidirectionally convertible to a scalar does.
Risk (e.g. that people will want an item more or less) is such a dimension.
Inherent depreciation is another. Scarcity is, arguably, another.

Perhaps a more compelling situation is where a particular asset is worth more
when concentrated, such as fissionable material or arable land. The former has
what one could consider a sharp increase in value at "critical mass," whereas
the latter increases more steadily due to economy of scale.

Perhaps "smart" is the same kind of non-scalar, but I'll let someone else
exercise that conjecture.

~~~
jpwagner
I'd define "rich" as |wealth|

You may define it differently, but that's language isn't it.

~~~
prewett
Although "Rich Dad, Poor Dad" is a pretty terrible book, I liked his
definition of "rich": how long can you live your life without working. (Of
course, a more precise definition would need to factor in standard of living)

~~~
jpwagner
Actually that was his definition of wealth, quoted from Buckminster Fuller.

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rauljara
The formula for success is apparently: Intelligence + hard work + risk taking
+ luck

I want to focus on risk taking, because Mr. Adams mentioned that the degree to
which risk taking rewards you is a function of intelligence. It seems like in
the recent economic downturn capitalism did reward good risk taking in say,
the banking industry, but it also failed to punish bad risk taking, as many of
the same people who caused the crisis still received their bonuses, and
probably will well into the future.

The phrase the rich get richer tends to resonate because very often the rich
engage in behaviors which would result in serious consequences for the poor,
but for which the rich only seem to get rewarded.

~~~
pchristensen
There are two ways to take a risk:

1) Bet on something unlikely and get lucky

2) Have an advantage over others so that your chance of success is higher than
the average chance of success.

#2 is pg's approach to startups - starting a company is "risky", but starting
a company if you're determined, smart, and connected to a system that turns
entrepreneurs into companies isn't risky at all, with a ~50%+ success rate.

On a sinister note, insider trading falls into this category too - the market
isn't a random walk if you know information that will move it, and your
information gives you an advantage over the average investor.

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hyperbovine
What is smart? There is no proper definition of smart so it's a pointless
question. Many people seem to define "smart" as "good at making money" in
which case of course the smart are getting richer. If you consider musical
smarts, artistic smart, being a great teacher, carpenter, whatever.. very
often those don't make any money, and yet I have met people who do each of
those who are absolute geniuses.

~~~
ahlatimer
Part of being business savvy is working on the right thing. Most artists I
know, and some of them are damn fine artists, aren't really working on the
right thing because art isn't typically a good way to make a large some of
money. Sure, you may end up catching a break and ending up becoming super
famous, but that isn't the norm. If those incredibly intelligent people were
to direct their interest towards business, my guess is that they'd be more
than capable of making money.

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johnnybgoode
This sounds a lot like some of PG's essays, where he tries to break something
complex down into a few character traits. I wonder if the reactions here would
be different if PG had written this, too.

~~~
unalone
They would be. I don't think it's just that Paul is famous here and Scott
Adams isn't, though certainly there's always a pro-YC bias present. Part of it
is also that Paul's essays have a very clear style about them, and they've got
a confidence about what they're saying. So combine something convincing along
with a community inclined to like the something and you get overwhelming
support.

That's why I was astonished the first time I read MeFi's commentary on a
Graham essay. There, the community is much more critical, and it's more built
to support multiple viewpoints. There was some interesting criticism that I
found myself agreeing with a lot, and there were a few people that really
_hated_ both his essays and the YCombinator crowd. While I can't say I agree
with their vitriol in full, it reminded me that even a bright, argumentative
community has blind spots.

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ajscherer
He dismisses hard work because it exists at all income levels, yet
intelligence also exists at all income levels and he considers it the dominant
factor. He needs to demonstrate that intelligence is more correlated to
present wealth than work ethic is.

He also dismisses risk taking as only being useful in combination with
intelligence. Can he provide an example of an intelligent person who became
rich in the absence of risk taking, hard work, and luck?

Wealth being equivalent to intelligence must be a very flattering idea if you
are rich, but I have observed many smart and hard working people who do not
become rich.

------
jibiki
I had expected the opposite argument. Dilbert is pretty smart, but he sure
isn't rich. His boss, on the other hand...

~~~
varjag
His boss isn't rich either.

~~~
gwern
But his boss's boss, Dogbert, is.

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pradocchia
Am I the only one who finds some irony here?

I mean, the man made his fortunate satirizing the managerial class.

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DanielBMarkham
"Smart" is a word you can drive a truck through.

"Smart" like Sam Walton? You betcha. As it should be

"Smart" like a Nobel prize winner? Nope, and Nobel prize winners shouldn't all
be rich.

Smart can mean knowing things, discovering things, applying things, or a
combination of all of those attributes and more.

In this case, the word "smart" is very misleading.

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budu3
I clicked on the link expecting some revealing statistics showing that the
smart were getting richer.

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biohacker42
Wow. I know he's cartoonist and it is literally his job to over simply, but
still wow!

~~~
david927
I don't know why you were voted down: as a cartoonist, his over-
simplifications are funny, but as an essayist they just make you scratch your
head.

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madair
Social darwinism rears its ugly head in odd places.

 _Luck and intelligence can each work alone to produce fortunes. But after the
initial fortune is made, only intelligence helps grow it._

Wow.

~~~
hughprime
You can't just disagree with something by saying "Wow".

~~~
madair
I can disagree by deconstructing the ideas to relatives of Social Darwinism,
the friend of colonialists and the entitled alike.

~~~
hughprime
Umm, nope, that's pretty much exactly what you _can't_ do.

