Atlas Shrugged

Atlas Shrugged

There are a number of common sayings when it comes to the wealthy.

The Rich Get Richer

The Rich Get Richer is sometimes followed by the phrase “and the Poor Get Prison.” I am sure you are familiar with:

It Takes Money to Make Money

I am sure there are others but somehow these are the ones that have been burned into our minds as seemingly accepted fact for the world we live in. However, there is the old joke:

Q: What is the easiest way to become a millionaire?

A: Start with a billion dollars.

There are many stories of lottery winners who proven themselves extremely efficient reverting back to their personal mean over an incredibly short period of time. There are also the stories you sometimes hear of sports heroes or other celebrities facing bankruptcies after earning incredible amounts of money during the highlight of their careers. Past this single life time feat we have the sayings across many cultures that wealth does not survive multiple generations.

  1. English: Shirtsleeves to shirtsleeves in three generations
  2. Britain: Clogs to clogs in three generations
  3. Chinese: 富不过三代 (fu bu guo san dai) — Wealth does not pass three generations
  4. Italian: Dalle stalle alle stelle alle stalle — From stables to stars to stables
  5. Spanish: Quien no lo tiene, lo hace; y quien lo tiene, lo deshace — He who doesn’t have it, makes it and he who has it, wastes it
  6. Japanese: 三`代目が家を潰す’ — The third generation ruins the house

So which is it? The rich always get richer or the rich eventually lose their fortune? Perhaps it is not as simple as that but it is something to think about no matter which side of the wealth fence you are currently resting on. Also, when looking from the less wealthy side of the fence it is important to remember the people on the wealthy side most likely started on the poor side. Wealth, to some degree, has become a badge of dishonor that ironically most people dream of. It has bcome totally acceptable for the many to pump countless dollars into a lottery system hoping to give it to one. Yet, it is somehow unacceptable when someone builds a business from nothing and in the process becoming wealthy. They are instead chastised for not giving it to the many in the form of taxation or other forced distribution.

The President made this somewhat controversial comment some time ago:

There are a lot of wealthy, successful Americans who agree with me — because they want to give something back. They know they didn’t — look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there.

The problem for me is that it seems to presuppose a couple of things:

  1. That wealthy people somehow stop other people from becoming wealthy. That there is somehow a limit to how many wealthy people there can be.
  2. That wealthy, successful Americans somehow were always that way from birth.
  3. That getting help is bad, or otherwise needs to be flattened out where everyone is rewarded equally.
  4. That wealthy people cannot find a way to give back.

Giving back is what wealthy people do. Chuck Feeney (The Billionaire Who Wasn’t: How Chuck Feeney Secretly Made and Gave Away a Fortune) took tax savings to extremes just so he could die broke by leaving countless anonymous landmarks across the world for future generations to build on. Bill Gates has used the The Giving Pledge to ensure a better use of funds than just finding a way back to shirtsleeves. Then, if all else fails, many, many, many people will be employed getting that third generation reluctantly back into their shirtsleeves.

Of course this does not count the vast majority of the would be rich that end up in the graveyard of business when they are not successful. Yes, there are a “whole bunch of hardworking people out there.” When that hardwork and savings goes into executing ideas and turning them into reality it is not uncommon to literally have everything at risk. Unlike the lottery ticket you purchase at the local 7-Eleven, that produce winnings without controversy, the entrepreneurial lottery needs to have an all in bet. Amazingly the result usually rests on an inordinate amount of luck in addition to the hardwork as well.

Steve Jobs put almost everything he gained from his first run at Apple into Pixar before there was even a hint of it being in the feature animation business never mind producing a block buster film. If you read “The Snowball: Warren Buffett and the Business of Life” you will get to know the moments in time where luck decided the future of his investment career. When Elon Musk was asked, “What is the secret to being a great entrepreneur?” His answer was, “A high tolerance for pain,” as he thought about the 2008 time frame when both SpaceX and Tesla were about to miss payroll on top of going through a personal divorce process. In the early 1990s my own family’s business was on the fast track to bankruptcy.

My examples focus on people that have built businesses and thus do not rely solely on ‘realized income.’ Not that you cannot get rich on realized income alone but the challenges are far different in nature and lie outside of the scope I am looking to dig into here.

Which lottery ticket you want to buy is a personal choice. Let’s keep it that way, including the choice to not enter the lottery at all.

(Originally posted on Medium)