
It's Gotten Too Hard to Strike It Rich in America - pseudolus
https://www.bloomberg.com/opinion/articles/2019-08-14/it-s-gotten-too-hard-to-strike-it-rich-in-america
======
codingslave
I would argue that wealth in the last thirty years was driven by two primary
methods:

1.) Automating basic and well known tasks using computers.

2.) Outsourcing not easily automatable tasks to foreign counties and importing
cheap labor. Manufacturing, software engineering etc.

Things like getting wealthy in real estate and investments were off shoots of
the above.

I would argue that the two above have reached their capacity to be of benefit
to average Americans. Further development of the two will continue to destroy
the middle class and the cultural fabric of America. People are increasingly
aware of this, hence the tense political climate in this country

~~~
bduerst
The difference is that the wealth from cost-cutting (automation/outsourcing)
isn't shared with the middle class, but instead goes to the capital holders.

If you look at the rise of the middle class in America it was from new service
businesses flourishing, where skilled laborers could gain wealth. As the
wealth gap grows, debt encumbers more young families, and the middle class
shrinks, there is less disposable income to spend on services.

~~~
malandrew
> The difference is that the wealth from cost-cutting (automation/outsourcing)
> isn't shared with the middle class

As an engineer with equity in the company I work for, I benefit and I'm middle
class.

I think there is also a misconception about how much the capital holders
actually gain. A lot of automation is deflationary in the sense that it
reduces the cost of production, which in turn allows a reduction in the price
a product is sold at to capture market share. This allows the firm that is
automating to capture a large piece of that market, but at the cost of making
that market a lot smaller unless demand is pretty much unbounded.

You have to both automate and grow the market for what you've automated to
truly make it big.

~~~
AstralStorm
And hope the market has no natural bound or is at risk of getting obsolete.

Even where automation is not involved, you can get choked by lack of qualified
manpower. This is already happening in the USA, stopping the brain drain from
elsewhere. (Especially with the immigration policies.)

Outsourcing is essentially growing external competition by your own hand.

------
Sargos
Ray Dalio talks about this phenomenon in his free book Big Debt Crises. He
shows data that debt bubbles are cyclical and exhibit the same characteristics
each time. The debt bubble that played out from 1927-1940 also exhibited
increasing wealth inequality which led to massive social and political
volatility. In relation to that cycle we are around 1936.

Income inequality and political crisis will likely be very high in the coming
years (even as it's already high as you can probably tell by recent events)
and we might see some pretty stark changes in our economy and policies.
Perhaps more social programs to lessen the damage of the gap such as free
healthcare or universal basic income. The recurring bubbles do hurt but
eventually they give way to the next cycle of debt inflation and exuberance.

~~~
on_and_off
As somebody having moved from a country with a good health care system (ie
even if you are poor, going to the doctor is not a big issue), the us health
care system is definitely one of the most shocking aspects of this country.

It is extremely weird how the USA feel like a mix of first and third world
countries.

~~~
codingslave
The thing is, the USA has subsidized everyone elses health care systems. All
major health care innovations were invented here. So when your drug prices are
cheap, its because your country has access to free USA drug innovation. What
created modern health care (free market privatized drug companies and
equipment manufacturers), also causes health care to be a broken system.
Theres two sides to this coin

~~~
chipotle_coyote
Since people were asking for citations, here's a couple, but they seem to
contradict your assertion:

"US Pharmaceutical Innovation in an International Context," the American
Journal of Public Health. "We explored whether the United States is
responsible for the development of a disproportionate share of the New
Molecular Entities (NMEs) produced worldwide. [...] The United States was
responsible for the development of 43.7% of the NMEs. The United Kingdom,
Switzerland, and a few other countries innovated proportionally more than
their contribution to GDP or prescription drug spending, whereas Japan, South
Korea, and a few other countries innovated less. Conclusion: Higher
prescription drug spending in the United States does not disproportionately
privilege domestic innovation, and many countries with drug price regulation
were significant contributors to pharmaceutical innovation."

[https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2866602/](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2866602/)

"Global Drug Discovery: Europe is Ahead," Health Affairs Vol. 28 Supplement 1.
"It is widely believed that the United States has eclipsed Europe in
pharmaceutical research productivity. Some leading analysts claim that
although fewer drugs have been discovered worldwide over the past decade, most
are therapeutically important. Yet a comprehensive data set of all new
chemical entities approved between 1982 and 2003 shows that the United States
never overtook Europe in research productivity, and that Europe in fact is
pulling ahead of U.S. productivity. Other large studies show that most new
drugs add few if any clinical benefits over previously discovered drugs."

[https://www.healthaffairs.org/doi/full/10.1377/hlthaff.28.5....](https://www.healthaffairs.org/doi/full/10.1377/hlthaff.28.5.w969)

The argument that the US "subsidizes" the rest of the world's health care is
something that US pharmaceutical companies would very much like us to believe,
but the evidence for it appears to be pretty shaky.

~~~
istjohn
It seems to me the question is whether the US market fuels investment in
research in other countries.

~~~
AstralStorm
How do you propose to measure this?

If it's by revenue to the much maligned Big Pharma, then I think not. R&D is a
big cost, but not nearly as big in percentage as shown by the pharma
companies, so were they all to contract due to sudden existence failure of the
USA, they'd still make big profits if they kept the costs the same. The
smaller companies would evaporate.

I'm basing this on comparing Teva USA vs Teva Global R&D spending data. That
is 10% everywhere, 15% in the US (dropping faster) and falling regardless of
the USA or not, which is pumping in more money into this company every day.

I picked Teva because they're representative and one of global market leaders.

[https://www.statista.com/statistics/272544/expenditure-on-
re...](https://www.statista.com/statistics/272544/expenditure-on-research-and-
development-by-teva-since-2006/)

Solid: [https://articles2.marketrealist.com/2018/01/whats-teva-
pharm...](https://articles2.marketrealist.com/2018/01/whats-teva-
pharmaceuticals-research-development-strategy/)

(Yes, you can also read their quarterlies for USA branch and other ones. I
checked a few.)

Decent write-up, if a bit old:
[https://www.healthaffairs.org/do/10.1377/hblog20170307.05903...](https://www.healthaffairs.org/do/10.1377/hblog20170307.059036/full/)

------
mjevans
The housing bubble part of this as yet another way that the economy is
failing... well for everyone that isn't wealthy is probably a far larger and
more nuanced part of the problem than the article realizes.

It was at least true when I was a kid that the 'American Dream' included
owning your own home and trying to build up wealth that way. However, as an
American 'teen' I found getting a job in the suburbs pretty much impossible: I
didn't have a car and I had no reliable / safe way to get outside of the small
local malls which already had hundreds of other students competing for work.

It might have also been that most of the less complex, safe to hand off to any
random teen/adult, jobs had already been outsourced or made obsolete.

-

Today housing prices in the middle of nowhere, where there aren't jobs, are
somewhat reasonable... Trying to get a place that is your own near jobs? There
seem to be far too few places relative to the number of jobs; thus competition
fails to reward places that are planned and built well and favors sellers that
use every loophole and cut every corner they're not legally required to
fulfill.

------
perspective1
Another short, controversial news article with plenty of possibly good points
but no actual data. For instance, home ownership is down? Okay, tell me how
much and in what areas. Is it mostly densely populated areas that are running
out of space? Or is it everywhere? Are there other explanations (like older
first-age of childbirth?

------
bduerst
[https://outline.com/jeXm4x](https://outline.com/jeXm4x)

------
DoreenMichele
Research I did while homeless:

 _The research I have done also suggests that humans have only found about 5
percent of the gold on the planet and that gold is in high demand as a
material used in our fancy modern electronics. This demand is likely to go up,
not down.

Because the environment is a hot topic and sensitive issue, from what I
gather, this is a job not likely to be taken over by automation any time soon.
It appears that they are cracking down on automated processes for dredging
streams for gold because it has too much negative impact on the environment.
So, this is likely to remain an opportunity for small time operators for many
years to come._ [1]

The spot price for gold is currently higher than it was when I did the
research. It's around $1500/oz.[2] It was "above $1200" per ounce when I did
the research.

 _Get rich quick_ schemes have always been dicey at best. What we imagine
ought to be easy now because we have computers, such as house flipping, was
tough back in the day. It's still tough, just for different reasons, like
market saturation and fierce competition.

That isn't intended to dismiss the idea that we have systemic issues. I'm well
aware that we have systemic issues. I'm just saying that if you think getting
rich used to be easy, I doubt I would agree with you.

As always, you need to find the non-obvious opportunities that are being
overlooked by other people and then work hard. Occasionally, people just get
lucky.

Luck is always a factor. But there is no sure thing formula for wealth
creation. There never has been.

[1]
[https://sandiegohomelesssurvivalguide.blogspot.com/2016/11/h...](https://sandiegohomelesssurvivalguide.blogspot.com/2016/11/half-
baked-idea-panning-for-gold.html)

[2] [https://goldprice.org/gold-price-charts/1-day-gold-price-
per...](https://goldprice.org/gold-price-charts/1-day-gold-price-per-ounce-in-
us-dollars)

------
xkcd-sucks
Maybe the USA was historically "fertile" because the original inhabitants were
exterminated, leaving behind a wealth of material resources available for the
taking.

One could contend that the notion of "frontier" was the land until the 20th
century, it was "the rest of the world" in the 20th century, and now there is
none because the system is in temporary equilibrium without any huge wars or
natural disasters.

~~~
tlb
The Internet has been the frontier for the last 25 years. That's where most
new fortunes were made: providing services or access to it.

Perhaps the Internet is now full, or perhaps there's lots more territory.

Other frontiers include biotech and space. Both seem like we've only explored
1% of the potential.

~~~
jdnenej
With the internet some uni student could build something and become rich. To
just get started on space or medical stuff takes more money than most whole
corporations have.

~~~
tlb
Here are 61 companies that got started on biomedical stuff, most with just
$150k, in the last few years:
[https://www.ycombinator.com/companies/?vertical=Biomedical](https://www.ycombinator.com/companies/?vertical=Biomedical)
and
[https://www.ycombinator.com/companies/?vertical=Biotech](https://www.ycombinator.com/companies/?vertical=Biotech)

Not all will succeed, but some will. You can absolutely start with nothing but
some knowledge and ambition.

------
atemerev
Well, it is always hard to strike rich using something that was already
exploited for decades. People who got rich trading real estate used to do it
back when it was risky. Now people are becoming rich by doing other risky
things, e.g. cryptocurrencies. Of course, there are many ways to fail, but
there were never a risk-free way of becoming rich on one's own.

------
mitchellst
I stopped reading at the date ranges. It’s comparing the decade 1983-93 (start
at recovery from long recession, measure across famous economic boom with only
short 1990 downturn) versus 2003-2013. (Oldish data anyway and measures across
the famously deep 2008 recession which had an unusually slow recovery.) and
you want to make a point about economic mobility and inequality in 2019 with
this? We may have problems with economic mobility but this is a very bad
version of that argument.

------
lacampbell
Where is it easier to strike it rich?

~~~
phil248
China.

"Although the U.S. will remain a world leader in the number of millionaires,
reaching as many as 20.5 million over the next five years, Credit Suisse
forecasts that China will mint new seven-figure fortunes at more than three
times the rate over the same period."

[https://www.bloomberg.com/news/articles/2018-10-18/u-s-to-
re...](https://www.bloomberg.com/news/articles/2018-10-18/u-s-to-remain-hub-
of-world-s-richest-even-as-china-closes-gap)

~~~
PHGamer
well only if your chinese. chinese tend to not work well with non chinese.

~~~
neom
I'd encourage you to read this book, it certainly made me think differently
about China: Dealing with China: An Insider Unmasks the New Economic
Superpower by Henry M. Paulson

[https://www.amazon.com/Dealing-China-Insider-Economic-
Superp...](https://www.amazon.com/Dealing-China-Insider-Economic-Superpower-
ebook/dp/B00CO7FMDC)

~~~
mikeyouse
I'd rather take economic and business advice from the hobo outside my bus stop
screaming at pigeons than take advice from Hank Paulson.

~~~
neom
It's not a self help book it's a story

------
RickJWagner
Exactly the opposite of what can be found elsewhere.

"Number of U.S. Millionaires Grows in 2018, for 10th Straight Year"

[https://www.barrons.com/articles/number-of-u-s-
millionaires-...](https://www.barrons.com/articles/number-of-u-s-millionaires-
grows-in-2018-for-10th-straight-year-01552506244)

