Capitalism really just luck

Discussion in 'Finance' started by Pardy, May 10, 2014.

  1. Pardy

    Pardy Well-Known Member Past Donor

    Joined:
    Mar 11, 2013
    Messages:
    10,437
    Likes Received:
    166
    Trophy Points:
    63
    Two cases:

    • Person A works hard all of his life and dies a rich man.
    • Person B works hard all of his life and dies a poor man.
    What is the the difference between these two cases?

    Person A was lucky enough to have a rich parent who put him through school, or successful friends who gave him a job, or good looks, or maybe got lucky with a risky investment. Any way you slice it, he had an advantage that transcended hard work.

    Capitalism is a formal system of chance. Those who get lucky and succeed want to sustain it, and convince those who don't succeed that they just need to work harder and contribute more to it. They work harder and still get nowhere. They buy lottery tickets and play the stock market and just lose more money. The rich benefit from this effort.

    I'm not claiming that people can't get lucky in free markets outside of a capitalist structure. I'm saying that it seems as if the capitalist structure layered on to of free markets has rules that favor those who have already lucked out -- codified cronyism.

    This is just a theory. (I'm not claiming to believe it).
     
  2. smevins

    smevins New Member

    Joined:
    Jun 7, 2013
    Messages:
    6,539
    Likes Received:
    34
    Trophy Points:
    0
    Since he did not have rich parents, Bill Gates must have become rich off his good looks.
     
  3. tonythepony

    tonythepony New Member

    Joined:
    May 8, 2014
    Messages:
    6
    Likes Received:
    0
    Trophy Points:
    0
    It is a combination of luck and choices. One can be born with some luck, like having parents who can afford to put you through college or network to help you find a good internship, but plenty of people in those circumstances make choices that lead to failure. Conversely there are plenty of example of people of modest means who make choices related to hard work and personal sacrifice that succeed.

    To say there is no luck is wrong, as saying it is all luck.
     
  4. mutmekep

    mutmekep New Member

    Joined:
    Apr 25, 2012
    Messages:
    6,223
    Likes Received:
    46
    Trophy Points:
    0
    Where are those free markets?

    I don't understand what working hard is suppose to mean , intensity of work does not define wages.

    In areas where private capitalism is established for centuries its toxicity is blurred if you really want to get an insight of how things work look in areas where private capitalism recently replaced state one . This guy is a fine example .

    *For every Bill Gates are millions of programmers that work 9-5 for crap money, if those are the "chances" capitalism provides i suggest you start buying lottery tickets.
     
  5. Pardy

    Pardy Well-Known Member Past Donor

    Joined:
    Mar 11, 2013
    Messages:
    10,437
    Likes Received:
    166
    Trophy Points:
    63
    [​IMG]

    You're saying that it's luck and choices. They seem the same to me. Aren't life choices a gamble? One can buy a house that ends up being a money pit. One can go to college and never get a good job. It seems that if a person with modest means gets rich, it's almost always because they got lucky.

    Free markets are everywhere. Anyone can buy or sell with anyone else.

    The idea is that the harder you work (intensity), the more you earn -- that people are poor because they're not working hard enough. Everyone has acess to the American Dream if they just work hard enough... supposedly.

    Bill Gates was exceptionally lucky. He cinched a deal with IBM that gave him sole rights to their OS before PC's were popular. At least he's sharing the wealth.
     
  6. mutmekep

    mutmekep New Member

    Joined:
    Apr 25, 2012
    Messages:
    6,223
    Likes Received:
    46
    Trophy Points:
    0
    Free markets do not exist and it is not only about buying and selling. How about prices and state favoritism ? why you have to pay to get access to stuff that it supposed to be free like rain water or the sun in Spain.

    Allegedly 10 ave Marias erase your sins
     
  7. Pardy

    Pardy Well-Known Member Past Donor

    Joined:
    Mar 11, 2013
    Messages:
    10,437
    Likes Received:
    166
    Trophy Points:
    63
    That's capitalism, not free markets. People exchanged goods freely long before capitalism existed.

    As a social capitalist, I believe that free markets need regulation because large economies allow for easy predation.
     
  8. Ruiy

    Ruiy New Member

    Joined:
    May 6, 2014
    Messages:
    2
    Likes Received:
    0
    Trophy Points:
    0
    The heavens and the depths of capitalism : Bleh:
     
  9. Taxpayer

    Taxpayer Well-Known Member Past Donor

    Joined:
    Oct 31, 2009
    Messages:
    16,728
    Likes Received:
    207
    Trophy Points:
    63


    I disagree. The luck you describe isn't a function of capitalism, it's a function of your life. Capitalism is a great way to incentivize people because it allows people to accomplish great things. But it doesn't guarantee that they will.

    We share a lot of of things, that doesn't mean we share everything. A man is entitled to the things he owns: that includes the gifts he receives, the compensation he earns, and the luck finds. No system promises to make life fair, or should be believed if it did.

    The best it can do is not be unfair itself.



     
  10. shaker154

    shaker154 New Member

    Joined:
    Jun 24, 2009
    Messages:
    1,068
    Likes Received:
    13
    Trophy Points:
    0
  11. jdog

    jdog Banned

    Joined:
    Jul 20, 2014
    Messages:
    4,532
    Likes Received:
    716
    Trophy Points:
    113
    Free market, and capitalism are two different things.
    A free market economy is a perfect balance of supply and demand. Capitalism is a controlled market in which corporations use government and laws to create oligarchy.
     
  12. Taxpayer

    Taxpayer Well-Known Member Past Donor

    Joined:
    Oct 31, 2009
    Messages:
    16,728
    Likes Received:
    207
    Trophy Points:
    63


    Possibly. But it's usually more complicated than that. All we can know for sure is the difference between what was put into the economy on Person A's behalf and what was removed from it, was greater than for Person B.

    That's what it means to have more money, you hold more little green IOU's for wealth put into the economy.

    And whether that wealth went into the collective pot because of a man's labor, his luck, or his enterprise I could care less. I doubt you ask which produced whatever you choose to take from economy before you pay it's price.



     
  13. Lil Mike

    Lil Mike Well-Known Member

    Joined:
    Aug 4, 2011
    Messages:
    51,271
    Likes Received:
    22,661
    Trophy Points:
    113
    Yeah I'm not sure what luck even has to do with the economic system. It would be the same deal under a communist system, only you would have even less opportunity to get ahead unless you come from a "party" family. I think someone said that luck is when preparation meets opportunity. A mentality that thinks their outcome in life depends on "luck" is probably a superstitious twit who plays the lotto and would never make it under any system.
     
  14. Taxpayer

    Taxpayer Well-Known Member Past Donor

    Joined:
    Oct 31, 2009
    Messages:
    16,728
    Likes Received:
    207
    Trophy Points:
    63


    I once heard someone describe lotto as a tax on those who don't learn math.



     
  15. Judicator1

    Judicator1 New Member

    Joined:
    Sep 25, 2014
    Messages:
    45
    Likes Received:
    0
    Trophy Points:
    0
    The beauty of capitalism is that even with all of the luck that there, capitalism rewards success and punishes failure, which ensures the best products remain on the market and bad products are removed from the market. Maybe you were fortunate enough to have good parents who provide for you and send you to good schools. This is luck, but it is exactly the type of luck that should be rewarded because you are the kind of person who should be doing jobs that require high quality education.

    In capitalism, all else equal, hard work pays off. If you are born into an impoverished home, you will do better if you work than if you don't.
     
  16. Meta777

    Meta777 Moderator Staff Member

    Joined:
    Sep 15, 2011
    Messages:
    15,617
    Likes Received:
    1,730
    Trophy Points:
    113
    Can't we have a system that provides all those rewards for success and punishments for failure without all that luck needing to be involved?
    And note: its not so much the good luck bestowed up non-working people I'm concerned about,
    as it is the bad luck hoisted on the hard workers and those who aspire to work hard.

    -Meta
     
  17. Judicator1

    Judicator1 New Member

    Joined:
    Sep 25, 2014
    Messages:
    45
    Likes Received:
    0
    Trophy Points:
    0
    No, for several reasons. First, we have already removed as much luck as possible using private insurance markets. Second, a lot of the rewards for success aren't known in advance, so there is a huge luck component no matter what we do. And third, the benefits of removing more luck probably aren't worth the costs.

    As far as hard workers not making a lot of money (what you are worried about?), this isn't an issue of luck. The problem is that their skills simply aren't worth that much in a market economy, so most of them will make $8/hour for a long time. There isn't a lot of luck here.

    If you are talking about whether or not we should redistribute wealth, that is a somewhat separate question.
     
  18. Meta777

    Meta777 Moderator Staff Member

    Joined:
    Sep 15, 2011
    Messages:
    15,617
    Likes Received:
    1,730
    Trophy Points:
    113
    What exactly is stopping us from removing more?

    I'm not saying we should/can remove ALL the luck, just most of it/more of it.

    How can you tell? What are the benefits? What exactly are the costs?

    Maybe not all the time, but certainly a lot of the time it does have to do with luck.

    First is the acquisition of the skills themselves.
    Some people get lucky and have their educations provided for them, along with living necessities while they are being educated,
    some have to work hard and show promise before being granted the same, while others are unlucky and due to factors outside their control need to choose between an education and supporting themselves and or their family. (education as in primary, secondary, and or technical)
    Some get lucky and are accepted to internships, gaining valuable experience. Qualifications can factor into this too, but there can be 100s of qualified candidates who don't get picked due to simple funding, spacial, personnel, or other practical limits.

    Even after acquiring a valuable set of skills, one can be luck and get a job in a desired well-paying field,
    while another person with the exact same skill-set goes unemployed or underemployed due to a limited supply of jobs.

    How would redistributing wealth help?

    -Meta
     
  19. ronmatt

    ronmatt New Member

    Joined:
    Oct 22, 2009
    Messages:
    8,867
    Likes Received:
    158
    Trophy Points:
    0
    It's all about luck. Say a really poor and destitute person goes out and collects aluminum cans for a week, He manages to scrape together enough money to buy some food for his family. On the way to the market, he somehow looses the money. Bad luck.
    An hour later some guy with a wallet full of cash finds the money lost by the poor fella. He ads it to his stash. Good luck. Neither did anything good or bad, right or wrong. It was all lucks doing.
     
  20. ryobi

    ryobi Well-Known Member

    Joined:
    Sep 28, 2013
    Messages:
    3,247
    Likes Received:
    373
    Trophy Points:
    83
    Gender:
    Male
    Bill Gates was asked what was the most important factor in his success and he said 'luck, I had the right skills at the right time'
     
  21. Judicator1

    Judicator1 New Member

    Joined:
    Sep 25, 2014
    Messages:
    45
    Likes Received:
    0
    Trophy Points:
    0
    Insurance markets have removed as much as is profitable to do. Car insurance, for example, protects you to some extent in an accident, but you still have to pay the deductible and other repair depending on the level of coverage. If people wanted more coverage, they could just buy it. This is true for most consumer and business insurance.

    To reduce luck, you would have to have some kind of luck-reducing bureaucracy. I'm not sure what this would entail, but figuring out everything that happens in the economy and then compensating people for bad luck would be very expensive and could create perverse incentives (e.g. making bad investments that will usually turn out "unlucky"). I don't really know what the benefits are...people don't like risk?

    I think in this conversation we are getting two kinds of luck mixed up - there is "birth luck" (good genes, good environment, etc.) and luck relating to the outcomes of life choices or life events - "outcome luck". Having an $8/hour job might be the result of bad birth luck, but beyond that there is no additional luck - most people born into poor families will remain poor - i.e. there isn't much "outcome luck" here.

    Maybe you might get lucky and get an internship, but if you apply to 50 or 60 and are qualified for all of them, the luck element gets significantly smaller. I can also tell you from the interviewer side of things - we don't usually say "these people are basically the same, let's flip a coin." One of them will make a better impression, have a better resume, etc. This small edge in apparent skill goes a long way in interviews.

    Re: Wealth redistribution: This serves as a proxy for luck removal. Because the unluckiest people (in both senses of luck) are usually the poorest, they benefit more from redistribution and therefore redistribution benefits the unlucky.
     
  22. Meta777

    Meta777 Moderator Staff Member

    Joined:
    Sep 15, 2011
    Messages:
    15,617
    Likes Received:
    1,730
    Trophy Points:
    113
    When it comes to luck, I think we need to differentiate between those who choose to gamble and those who are forced to.

    If you ask me, a society that is less about luck becomes more meritocratic.
    Rewards and punishments align more closely with people's successes and shortcomings.
    And as such provides more of an incentive for hard work and overall performance from individuals to provide benefit to the rest of society.
    Supposedly, such an increased incentive/motivation to provide benefit to society, would lead to more overall prosperity.

    Not sure "outcome luck" is the best phrase to use for what you're describing... maybe, "semi-adjustable luck" or "impressionable luck"?
    Luck which, although one does not have complete control over, can be influenced by a person's choices/actions after birth...

    Obviously, there are things a person can do to improve their odds,
    but it is still a lucky person who excels in an area where few other qualified individuals excel,
    and an unlucky one who excels where many others also excel and compete for a small set of jobs.
    And obviously one can still at least seek education and experience to change/add to their skills, but that goes back to the luck involved in getting education.

    I see, yeah I guess that makes sense.

    -Meta
     
  23. Moriah

    Moriah Well-Known Member

    Joined:
    Nov 24, 2013
    Messages:
    7,646
    Likes Received:
    2,125
    Trophy Points:
    113
    Gender:
    Female
    :roflol:
     
  24. Moriah

    Moriah Well-Known Member

    Joined:
    Nov 24, 2013
    Messages:
    7,646
    Likes Received:
    2,125
    Trophy Points:
    113
    Gender:
    Female
    Parody, I do believe people can succeed by their own hard work. What about self-made millionaires? What about people who are born very poor and make it to middle class status? If someone works hard all their lives and still dies poor, it is usually because they:
    1) made bad marriage choices
    2) became addicted to alcohol, drugs or gambling.
    This is my opinion.
     
  25. Moriah

    Moriah Well-Known Member

    Joined:
    Nov 24, 2013
    Messages:
    7,646
    Likes Received:
    2,125
    Trophy Points:
    113
    Gender:
    Female
    Did he really lose the money or did he drink/drug it up?
     

Share This Page