
The privilege of risk - fs111
http://blog.edtechie.net/asides/the-privilege-of-risk/
======
Tomminn
I remember talking to a friend, who was stressed about the risk in her next
career move, and I said:

"Realistically, the worst case scenario is that you have to move back in with
your parents for a while, and I'm pretty sure they'd be stoked to have you
back."

And she just burst out laughing. Because it had never occurred to her that
that is _exactly_ the limit of how much it was possible for her to materially
suffer.

~~~
maccard
I feel like you're totally missing the point here. Not everyone can move back
in with their parents for a while, I certainly can't. Despite earning an above
average salary (nothing in comparison to bay area) in the UK, I still couldn't
afford to just drop my job, and take a year to try and earn some money, I'd
starve to death.

~~~
Tomminn
That _is_ my point. You, on the other hand, are someone who has to deal with
actual downside risk.

~~~
maccard
I re read your comment and it totally went over my head three or four times
last night.

------
colemannugent
_Risk becomes a vehicle by which privilege reinforces itself – only the
privileged can take risks and only risk is rewarded. Which is not to say we
should all be cautious and people or institutions should never venture to do
unusual things._

I agree with what the author is trying to say here, but disagree with the
second part of the first sentence. Everyone can take risks, and risk is not
the only factor that determines reward.

Anyone can take risks, but me investing half my net worth into a company is
fundamentally different than Elon Musk throwing half of his into a business
venture. While we both would essentially be betting the same 50%, taking 50%
from me might put me into financial hardship while Musk, though I'm sure he
would be very upset about it, would not struggle to make ends meet.

Say both of our 50% bets paid off and we made a 5x return on investment, that
would immediately put me into a higher tier of quality of life, while Musk is
still just another billionaire. In this example I, the comparatively less
privileged, have far more to gain than the more privileged Musk.

From a purely financial standpoint Musk seems to come out better in terms of
risk to reward ratio, but there is more than just money at play in our
internal risk evaluation strategies.

~~~
davesque
If your lower end is someone who would be placed into financial hardship by
losing 50% of their net worth and your higher end is Elon Musk, you use only
the two most extreme examples to make your point. There are plenty of lower-
tier rich (millionaires) who would stand to gain far more and lose far less
(relatively speaking) than the average person by taking risks.

Also, I'm not really sure just what point you're trying to make. Much of what
you say seems to corroborate the author's opinion.

~~~
sidlls
The lower end extreme on this scale isn't financial hardship for risking 50%
of net wealth, it's someone who has no net wealth and little income. In
America especially that person's risk profile typically includes "avoid
getting a cold" and "start a business" barely registers as a thing.

------
dvt
_Risk becomes a vehicle by which privilege reinforces itself – only the
privileged can take risks and only risk is rewarded._

This is patently untrue. My parents emigrated to the States in 1997 (from the
post-Communist Romania) with two briefcases, two kids, and $2,000 -- _hardly_
privileged. After their Visas expired, we technically had illegal immigrant
status (after a few thousand dollars in lawyer fees and many years, we paid a
fine and were eventually naturalized in 2008). We won the Visa lottery, yes,
but I know of immigrants that did not and _still_ found a way to citizenship.
My parents now own a $1M house in Southern California, one of my uncles (also
emigrated to the US in the 90s) owns his own business. He doesn't even have a
college degree. It wasn't easy getting here (we recently celebrated 20 years
of America): my college-educated parents had to work menial jobs like washing
Target toilets, cleaning houses, and flooring and construction.

The gain for myself and my sister, our cousins, and some day hopefully my kids
-- is immeasurable. The risk, even moreso. I know of Romanians that swam the
Danube (pre-1989) and were shot at and imprisoned. The risk of freedom was
worth it. Everyone can take risks. Investing $10,000 and 6 months of your life
in a startup is _not_ ruin-inducing. And perpetrating this kind of argument
is, imo, doing a disservice to people that are on the fence.

Obviously, I don't have the same kind of opportunities as a rich trust-fund
kid from Manhattan. But I'll be damned if I don't try. I recently quit my cozy
six-figure job in ad-tech to try and bring some of my ideas to fruition. Will
I fail? The odds are stacked against me -- I've failed before and failing
sucks. The purpose of life is not wallowing in self-pity, but rising above the
adversity. I leave you with this quite by Nassim Taleb[1]:

 _Risk takers can be socially unpredictable people. Freedom is always
associated with risk taking, whether it led to it or came from it. You take
risks, you feel part of history. And risk takers take risks because it is in
their nature to be wild animals._

[1] [https://medium.com/incerto/how-to-legally-own-another-
person...](https://medium.com/incerto/how-to-legally-own-another-
person-4145a1802bf6)

~~~
frgtpsswrdlame
>Obviously, I don't have the same kind of opportunities as a rich trust-fund
kid from Manhattan. But I'll be damned if I don't try. I recently quit my cozy
six-figure job in ad-tech to try and bring some of my ideas to fruition. Will
I fail? The odds are stacked against me -- I've failed before and failing
sucks. The purpose of life is not wallowing in self-pity, but rising above the
adversity. I leave you with this quite by Nassim Taleb[1]:

...

But your parents have $1M house, and you have a six figure job. Are you not
the definition of a rich trust-fund kid? (To be fair, I don't know your age) I
don't understand? To me it seems that you perfectly personify this section of
the article:

>The research that concludes that entrepreneurs don’t have a propensity for
risk, they just have wealthy parents backs this up. It is less of a risk to
start a company if you can be supported while doing so, and have fall back
options.

And this one:

>A senior manager once told me they loved risk, and I remember thinking, ‘but
you aren’t affected by it’. They’d go on to a well paid job elsewhere, and not
only would they be untouched by any failure of their risk but it would likely
boost their status. They become a person willing to take risk, which has
increased currency. This is not the case for someone who may be made
unemployed in their late 50s with little chance of re-employment as a result
of the change they sought to introduce.

~~~
dvt
> But your parents have $1M house, and you have a six figure job. Are you not
> the definition of a rich trust-fund kid? (To be fair, I don't know your age)

No. And here's why: I grew up dirt poor. I never was able to attend computer
club chess club, or what have you. My parents, when I was in high school, were
constantly working (often under the table and at odd hours). They could also
never afford to give me _any_ money for school. Attending college was also a
nightmare. We moved across the US after my dad lost his job on the East Coast
(I was 19, after my freshman year at GSU), so I had to start working as I
couldn't afford out-of-state tuition. I finally finished school when I was 27
(I'm 31 now). At UCLA, I had a full academic scholarship and graduated with an
almost-perfect GPA. I was able to pay for housing with the money I had saved
up from FAFSA while attending community college.

I _earned_ my salary and I resent anyone that would argue otherwise. I've
contributed to Google Go, have two technical books under my belt (one as
editor, the other as co-author), and dozens of open source projects. I've
started a handful of startups and have taken my fair share of risk.

Finally, my parents got their house in 2011 (at one of the lowest points after
the housing crash) and it was kind of a fluke. They never expected such a nice
house at such a low price point (around 700k at that time), but hey, God is
good. My post was mainly about my _parents_ and the risks _they_ took, but
I've had to suffer many of the consequences of those risks and I still
criticize my parents for some of their decisions. But c'est la vie, I'm making
do.

~~~
true_religion
My...700,000 for a house will you look at these _poor_ people?

I'm a child of immigrants as well but I won't pretend that my parents did
anything more than live up to the expectations bred into them during to their
social class. Class Privilege is a good thing, one that we should be so lucky
to give our children.

~~~
leereeves
Seems clear enough: dvt's parents were poor when dvt was a child but
eventually earned wealth. dvt certainly wasn't claiming their parents are poor
_now_ , so your snark about the house is based on a misunderstanding.

------
creatrixcordis
Of course privilege affords you a cushion for many things, not only taking
risks. That happens in any environment since "money" correlates to a safety
net which could translate into the ability to take time to work on what you
want. Some countries which have more supporting social systems also support
more risk taking, because if the risk taking doesn't work out, the social
system will support you to your next career change or re-education programs
will let you shift to another field you are interested in. It is much easier
in these countries to stop working in your current field and shift to another
field. Since education is payed by the state. In the US the divide between the
risk takers and the stable situation agents can't only be associated with
wealthy support network(family). Since peoples values and levels of what
comfort is can vary dramatically. So dvts example actually illustrates this
quite strongly. People from a third world country have put up with different
levels of poverty or non-access to comforts, so what they consider risks or
comforts are different than what people in first world countries consider
risks and comforts. The other thing is that people that live with more risks
and are brought up in risky environments are more comfortable with taking
risks. Success in an immigration story is dependent on many factors, hard work
and a lot of luck.

------
dwaltrip
This is the Matthew principle in action (a.k.a the power law or Pareto
distribution). In this particular example, powerful positive feedback loops
are at work.

This stuff is everywhere -- from tiny microscopic processes, to most skill-
based human endeavors, all the way up to many grand cosmological dynamics.

Now, humans are not lifeless particles, and our awareness gives us the ability
to tweak the systems in which we operate, to a certain degree. But we can't
entirely eliminate the existence of power law distributions and positive
feedback loops.

We instead must work to mitigate and dampen some of the less desirable
effects. We should be able to safely reduce the extremities of some of these
distributions, as well as shifting entire curves further along one axis,
bringing increased benefits to all.

Note: the above comment includes some new conceptual articulations &
evolutions for me. Thoughtful feedback/ responses are kindly appreciated.

------
chaostheory
> only the privileged can take risks and only risk is rewarded.

I strongly disagree with this. Anyone can take a risk. This is embodied best
by the people crossing the Southern US border where they risk their lives and
most if not all of their net worth before they even set foot on US soil. While
my experience wasn't nearly as hard, I can relate since I was an illegal alien
for years until college.

The difference between the privileged and everyone else is the cost of risk.
They can afford to take risks with bigger rewards and they can afford to take
risks more often. Consequently they are also more inclined to take risks.

~~~
AstralStorm
Also how many are successful at the risk.

It it's like gambling or investment, if you're poor you can probably invest
once, va banque. If you're rich, you can invest many times with smaller stakes
and more likely not bust.

------
ballenf
I've always puzzled at Jesus' parable of the talents:

> ‘Master, you delivered to me two talents; here, I have made two talents
> more.’ 23 His master said to him, ‘Well done, good and faithful servant. You
> have been faithful over a little; I will set you over much. Enter into the
> joy of your master.’ 24 He also who had received the one talent came
> forward, saying, ‘Master, I knew you to be a hard man, reaping where you did
> not sow, and gathering where you scattered no seed, 25 so I was afraid, and
> I went and hid your talent in the ground. Here, you have what is yours.’ 26
> But his master answered him, ‘You wicked and slothful servant! You knew that
> I reap where I have not sown and gather where I scattered no seed? 27 Then
> you ought to have invested my money with the bankers, and at my coming I
> should have received what was my own with interest.

[https://www.biblegateway.com/passage/?search=Matthew+25%3A14...](https://www.biblegateway.com/passage/?search=Matthew+25%3A14-30&version=ESV)

The condemnation of the final recipient of the investment is so incredibly
unexpected and seemingly out of character. Not only did Jesus reward risk-
taking but he condemned the absence thereof. I don't really know what to make
of the lesson, but it certainly presents a different angle than what I would
presume to be the "Christian" approach to life.

~~~
Terr_
The most charitable interpretation I can think of (as an agnostic) is that the
servant who took no risks with their investment is like a person who avoids
chances to do good because they are afraid to "lose" under the existing system
of Jewish religious rules.

An example of this is in the parable of the Good Samaritan, where ostensibly-
virtuous people ignore the victim, because to intervene would make them
ritually-unclean. Another case would be where Jesus seems unafraid to mingle
with beggars and prostitutes, to the confusion and consternation of other
religious figures at the time.

From a modern standpoint, we do not have many of those rules drilled into us,
so the "risk of having a net increase in sin" simply isn't on our radar. For
example, if someone is drowning we think nothing about which hand we use to
pull that person from the water.

~~~
slededit
Digging the hole and hiding 80 lbs of silver (what a talent was) would have
been more work than just depositing it with the bank. So his aversion to loss
caused him to expend more effort for a worse outcome.

------
drawkbox
The world is somewhat a free to play game where people start in various stages
of the game in terms of level, currency and powers.

The really high up players who enter at that level are playing a different
type of game because they are exponentially more powerful and have more
resources to take on bigger battles and losses aren't as impactful but
victories are. Risk is low and game on!

Other players start out gold farming and have to be careful and strategic but
they can get taken out by a random small event too costly for their level of
resources and their world has ended. Risk was too high but way smaller than
the risk for the high up player, game over.

Risk levels vary at all startups/companies really. The investor is taking a
risk but that is one of ten deals, but has wealth to fall back on and probably
owns the building. The executives are taking risks but have a golden
parachute. The early employees are taking a risk but also pretty compensated,
if they make it. The employees after are taking little risk but have the most
to lose on someone else's risk and the least to gain. The risk should be
rewarded as it can bring others wealth but the wealthy risk taker is a high up
player in the "free to play" game with less to lose overall in the
leaderboards.

------
hkmurakami
>deification of risk

This is the crux of the problem, and the sooner we can get away from this, the
better off we will be.

Risk is fine. Take it if it makes sense for you. But don't glorify it and
don't worship it.

~~~
dvt
Why not? Courage (the motivator of risk) has been a virtue since the dawn of
humanity.

~~~
fleitz
Fortune favours the bold.

------
summerdown2
I have the same feeling when I hear politicians here in the UK say that
they've had to make "tough decisions." Always the part being unsaid is "tough
on who?"

------
colemannugent
Site looks like it's down, here's the archive link:
[https://web.archive.org/web/20171011011443/http://blog.edtec...](https://web.archive.org/web/20171011011443/http://blog.edtechie.net/asides/the-
privilege-of-risk/)

------
relyio
>Risk becomes a vehicle by which privilege reinforces itself – only the
privileged can take risks and only risk is rewarded.

That is a pretty absurd leap to take. By its very own definition, there is no
guaranteed pay-off yielded by risk-taking. And by risk-taking, I mean an
individual going off the beaten, risk-minimal, path. In this economy, it is
starting a company or joining an early one. So yes, of course, that "risk" is
rewarded. But only _some of the time for some of the people_ and that alone
makes it insufficient to back the thesis that _" Risk becomes a vehicle by
which privilege reinforces itself"_.

If richer folks are able to go off that beaten path more easily or often, that
is only because there "risk-taking" is less risky (amortized) for them than
for anyone else. But again, that makes the reward neither guaranteed,
systematic or easier to obtain.

------
Tycho
We need people to take risks with their personal wealth. When the risk pays
off, there is generally a benefit for the rest of society. When the venture
fails, the rest of society is generally unaffected. When no-one takes risks,
progress stagnates.

------
fleitz
There's always going to be someone with a shit situation worse than yours.
Using the better situations of others to justify your lack of risk taking is
just lame. If you don't want to take risks, don't.

There's plenty of risk taking that didn't pay off.

------
bactrian
Privilege is wealth. The idea that there are a number of privileges is a lie
people who have wealth tell.

If you have money, you have privilege. If you don't, you don't. Everything
else is but a symptom.

------
yoyar
Fuck off with this priveledge bullshit.

