Before the tea party, thank your lucky stars

[FinanceDude]

or Bernie Madoff can climb in and rob you blind....

Madoff is such a wuss........

 

[HFWR]

Madoff is such a wuss........

He will be in prison...

 

[Westernskies]

He will be in prison...

This Thread is USELESS without pics.........

 

[armor99]

The "self-made man" is more myth than accurate is the point of the article, when you consider that the determining factors in many cases for success are genetics and environment, two factors which are primarily the luck of the draw! I think most of us would rather be "good" at something than "lucky" but "good luck" frequently has a significant role in success.

Always here to learn something new. Just trying to understand your point of view. Some people are born with more intelligence than others or are born into families with higher incomes.

Obviously that is random or luck as you might put it. You believe that those born in one of those two circumstances are almost certain to succeed in life, or much more likely to succeed, because your personal actions in life, choices and the decisions that you make are not nearly as important as the advantanges of the situation you were born into.

Or perhaps you are saying that being born into one of those situtions will shape your thoughts and actions in such a way that you will have the ability to succeed. As in, most of your thoughts, opinions and actions are determined by how you were raised, and the environment you were raised in.

So following it a bit further, you might say that if you are born into a poverty stricken home, where violence and drug addiction might be the norm, then you are doomed from birth, and will probably never be able to elevate your station in life, because your genes or environment has permanently impared your ability to think rationally. And conversely if you were born into a very wealthy family with all of the learning advantages that brings with it, you are almost guaranteed a life of success because you were raised in such an environment.

Is that about right?

 

[Gone4Good]

He even misleads us about the Outliers book.

It's interesting to see how two people can read the same thing and come to completely different conclusions. Rather than highlighting the section that you did (presumably with a focus on just 4 of the 10 words) I'd highlight the larger portion that clearly supports Mr. Frank's point.

Now that he's gotten us talking about the viral life of ideas and the power of gut reactions, Malcolm Gladwell poses a more provocative question in Outliers: why do some people succeed, living remarkably productive and impactful lives, while so many more never reach their potential? Challenging our cherished belief of the "self-made man," he makes the democratic assertion that superstars don't arise out of nowhere, propelled by genius and talent: "they are invariably the beneficiaries of hidden advantages and extraordinary opportunities and cultural legacies that allow them to learn and work hard and make sense of the world in ways others cannot." Examining the lives of outliers from Mozart to Bill Gates, he builds a convincing case for how successful people rise on a tide of advantages, "some deserved, some not, some earned, some just plain lucky."

 

[HFWR]

I'm not sure that the two points-of-view are mututally exclusive...

 

[BunsGettingFirm]

The last time I checked, 3 years to go works in Manhattan in the financial services industry, and here he is arguing in favor of the point argued in the article. I quoted 3 Years to Go, and yet Dex manages to attribute my description of the Wall Street guy to the person who wrote the article.

My argument is that a nice start doesn't hurt, but what you do with it is up to you. Perhaps I didn't make that clearly enough. However, that nice start usually doesn't come without a price tag. Unless you managed to go through K-12 in private school, somebody other than your parents paid for your education. It also doesn't hurt to start out in a country with the rule of law. However, none of these things can be had without zero cost. That's why I asked the question of all the posters who claim that they made it all by themselves if they could have achieved the same had the been born and stuck in Rwanda. No one has answered. Instead, I got a bunch of platitudes about hard work.

As for MasterBlaster, snide sarcasm doesn't make coherent discussions. I'm all for smaller government. At one time I was a card carrying Libertarian, and I still lean that way though not in the extreme form exhibited by some posters on this forum, so I don't know why you think I was trying to convince you that big government is the answer to everything. Please don't knee jerk before you hit the reply button. Instead, propose what you think is the right sized set of services. Would you be happy to see no Social Security or Medicare? I know at 37, I'd benefit enormously by not having pay 20% of my salary for those two services I'm not currently enjoying.

 

[dex]

That's why I asked the question of all the posters who claim that they made it all by themselves if they could have achieved the same had the been born and stuck in Rwanda. No one has answered. Instead, I got a bunch of platitudes about hard work.

The answer to your question is yes. If a person had the qualities that enabled them to go from a 1 to 3* in the USA; then a"self made man" with the qualities needed to go from of 1 to 3* in Rwanda would have achieved the "same" .

* an arbitrary level used to show order of magnitude.

 

[BunsGettingFirm]

The answer to your question is yes. If a person had the qualities that enabled them to go from a 1 to 3* in the USA; then a"self made man" with the qualities needed to go from of 1 to 3* in Rwanda would have achieved the "same" .

* an arbitrary level used to show order of magnitude.

That is not the question I asked. I asked whether you could have achieved the same absolute level of wealth you have now had you started and stayed in Rwanda, not whether you could have achieved the same relative levels of wealth. I don't lob softballs. So please elaborate on why you could achieve your mid level management job with no education, bad childhood health care, and a genocide or two thrown in as a bonus.

 

[ChrisC]

Always here to learn something new. Just trying to understand your point of view. Some people are born with more intelligence than others or are born into families with higher incomes.

Obviously that is random or luck as you might put it. You believe that those born in one of those two circumstances are almost certain to succeed in life, or much more likely to succeed, because your personal actions in life, choices and the decisions that you make are not nearly as important as the advantanges of the situation you were born into.

Or perhaps you are saying that being born into one of those situtions will shape your thoughts and actions in such a way that you will have the ability to succeed. As in, most of your thoughts, opinions and actions are determined by how you were raised, and the environment you were raised in.

So following it a bit further, you might say that if you are born into a poverty stricken home, where violence and drug addiction might be the norm, then you are doomed from birth, and will probably never be able to elevate your station in life, because your genes or environment has permanently impared your ability to think rationally. And conversely if you were born into a very wealthy family with all of the learning advantages that brings with it, you are almost guaranteed a life of success because you were raised in such an environment.

Is that about right?

Yes, that's about right, as far as the odds go. Obviously, people do beat the odds -- I did and countless others have. You can emerge from poverty and succeed as long as there is "hope"; and being born in a privileged family is no guarantee for success in life -- some might even say that being born in a privileged family where everything is handed to you might even lessen your chances for success. But all things being equal, I think it's fair to say that being educationally privileged and rich is far better than being educationally impoverished and poor. Poverty, in case you haven't realized it, really sucks! And "catch-up" is a bitch!

I once heard the President of a major University in this country remark that the best predictor of admission and later success for students at this selective university was the zipcode from where the students lived. On average, as we're dealing with odds here, I think that sums up most of the benefits that people have when they come from privileged backgrounds, live in good neighborhoods, and have high incomes. I don't know of any reason to doubt the veracity of that statement from this University President; seems reasonable to me that people in the right zipcodes do better than those in the wrong zipcodes. I don't mean to suggest that our society is stratified to such an extent that upward mobility does not occur -- obviously, it does, but I hasten to point out that there is an "underclass" that is essentially trapped, where beating the odds is painfully difficult, unless you have the talents of a Benjamin Carson or Dwayne Wade or you get real lucky!

Some people have the deck stacked against them and might succeed based on genetics (talent) and will power, but the vast majority of those with the deck stacked against them will fail, despite good choices or good decisions they might make in life. Not everyone can will themselves to become world class surgeons or play in the NBA -- it does take a lot of talent and some would say a whole lotta luck, too.

 

[dex]

That is not the question I asked. I asked whether you could have achieved the same absolute level of wealth you have now had you started and stayed in Rwanda, not whether you could have achieved the same relative levels of wealth. I don't lob softballs. So please elaborate on why you could achieve your mid level management job with no education, bad childhood health care, and a genocide or two thrown in as a bonus.

Are you surprised no one answered that question?

What enlightenment (i.e. something that isn't basic knowlege - e.g. differences in GDP and social variances between the USA and Rwanda) or insight does it bring to the discussion?

 

[armor99]

Yes, that's about right, as far as the odds go. Obviously, people do beat the odds -- I did and countless others have. You can emerge from poverty and succeed as long as there is "hope"; and being born in a privileged family is no guarantee for success in life -- some might even say that being born in a privileged family where everything is handed to you might even lessen your chances for success. But all things being equal, I think it's fair to say that being educationally privileged and rich is far better than being educationally impoverished and poor. Poverty, in case you haven't realized it, really sucks! And "catch-up" is a bitch!

Ok... thanks for clarifying your position. Don't really know what to say here though. Life is not fair.... If it were easy then everyone would be rich.... a few others come to mind. Is the world fair, or "nice" to everyone?... no probably not.. I guess I just do not feel the need to try to rectify that situation artificially, nor do I feel guilty that I may have achieved something that someone else has not. We all have to make our way in the world the best we can... and some will do a better job than others...

 

[FIREd]

I don't know what luck means.

I have two brothers. One elected to drop out of high school. He's had low level jobs for much of his life (e.g., dishwasher). I can remember him telling me that he puts in only 25 hours/week because he doesn't like to work. My other brother graduated from high school and has been employed in typical blue collar jobs for 35-40 years. Historically, he puts in a solid 40 hours/week. I have a PhD. I've been putting in 60-80 hours/week, either at school or on the job, since high school (the last 35 years). I've taken 10 days of vacation in the last 18 years. I can only guess as to what my two brothers earn. One probably earns $10K/yr; the other perhaps $35K/yr. I earn a little over $185K/yr.

Yes, all three of us are very lucky that we live in the United States and not Rwanda. But that doesn't explain the difference in our incomes. Here are three brothers coming from the same gene pool, or so my mother claims. Presumably, we possess similar innate abilities and intelligence. We've been blessed with similar opportunities in life. We had many of the same teachers in public school.

I didn't win the lottery. 99% of the income difference between me and my brothers is due to the work, dedication, focus, and sacrifice each of us elected to put into our own lives and careers. It's as simple as that.

While an ethical argument can be made that the United States should redistribute its wealth to people in Rwanda, I don't see why the government should force me to redistribute much of my income to either of my brothers. If I choose to do so, fine, but I don't see this as the governments call.

My marginal tax rate is approaching 50%. I paid about $60K in taxes last year (all taxes). And then the government tells me that it needs more and that I'm not paying my fair share. On the other hand, my annual expenses are about $30K/yr. That's $15K for mortgage and property taxes, $5K for charity, and $10K for everything else (food, clothes, utilities, gas, home and auto repairs, insurance, recreation and entertainment, etc). Put simply, I pay more than twice in taxes than what I spend on myself. If I can live within my means, why can't the government?

I work for every penny I earn. And then I pay my taxes. Work doesn't pay, which is a main reason why I will soon take early retirement. If the government wants to create an anti-incentive for me to work, fine, I won't work. And when I retire, my taxes will drop from $60K/yr to well below $10K/yr. And when I'm relaxing on the beach, I'll start complaining that others aren't paying their fair share.

Back to work.

I completely agree with you, yet perhaps it's only because I am one of the "lucky" few...

I think that blaming other peoples' success on "luck" is just another way to avoid taking responsibilities for one's own (lack of) success.

At any rate, and as I mentioned in a previous post, if success is solely attributable to one's luck, then our progressive tax code already taxes "luck". The luckier one gets, the more money one makes, the more taxes one pays. Perhaps it's not enough for some.

Hard work is a personal choice. It's always tricky to justify taking from people who work hard and redistribute it to people who do not work as hard. In that context, raising taxes can be politically difficult. So you just have to twist it around. Luck is not a personal choice. You either are lucky or you are not. Luck is unfair, unequally distributed, and most of all it's undeserved. So, if success is simply the result of luck, that success must be shared with others because you did not deserve it in the first place. Therefore luck should be taxed heavily to restore a sense of fairness and equality. Now, that's a much easier sale...

 

[ChrisC]

No one is really saying that success is solely attributed to '"luck." Nor is failure solely attributable to bad luck. I think we would all probably agree that one is lucky to be living in the USA rather than Rwanda; for some, this is simply the luck of being born here -- you did absolutely nothing to get that enormous benefit or privilege; others may have made their own luck by scrambling to get here.

Yes, life is unfair, in many ways -- there's nothing that says everything has to be balanced or work in your favor; but when you draw the longer straw in life, I think you should thank your lucky stars -- it's not all about you making it happen, is my point!

 

[kumquat]

Well, luck certainly plays into it. After all, I started this thread: http://www.early-retirement.org/forums/f28/how-many-are-simply-lucky-20785.html

In retrospect, I think that while luck had a part, upbringing did a bit (or was that luck too).

I look at myself and my 4 siblings. We all were raised by LYBM parents (I was 20 before I realized our family had much more than our neighbours, you'd think we had less by the way we lived). We all had a few brains inherited from parents who (both) started university at age 16.

What happened to us?

• Oldest, got U degree, entered civil service, rose to the most senior level possible. Retired at 59 with DB pension, serious savings and a bit of financial knowledge.
• Next (me), got U degree, lucked out in a private sector job, stock options etc. Retired at 58.
• Next two, took over family farm, worked hard, expanded it and are probably FI with a NW of 1-2M. Still farming as that's what they want to do.
• Youngest became a (Canadian equivalent) of a CPA. Stumbled into a startup company, became CFO, stock options etc and is maybe the most secure financially. Can probably RE at 50, when s/he gets there.

All of us have a NW of 7 digits (if you include the PV of eldest's DB pension) and the first digit is > 1.

We inherited good genes. We got an education if wanted. All of us worked very hard at what we did. Were we lucky or did we earn it?

 

[Khan]

Well, luck certainly plays into it. After all, I started this thread: http://www.early-retirement.org/forums/f28/how-many-are-simply-lucky-20785.html

In retrospect, I think that while luck had a part, upbringing did a bit (or was that luck too).

I look at myself and my 4 siblings. We all were raised by LYBM parents (I was 20 before I realized our family had much more than our neighbours, you'd think we had less by the way we lived). We all had a few brains inherited from parents who (both) started university at age 16.

What happened to us?

• Oldest, got U degree, entered civil service, rose to the most senior level possible. Retired at 59 with DB pension, serious savings and a bit of financial knowledge.
• Next (me), got U degree, lucked out in a private sector job, stock options etc. Retired at 58.
• Next two, took over family farm, worked hard, expanded it and are probably FI with a NW of 1-2M. Still farming as that's what they want to do.
• Youngest became a (Canadian equivalent) of a CPA. Stumbled into a startup company, became CFO, stock options etc and is maybe the most secure financially. Can probably RE at 50, when s/he gets there.

All of us have a NW of 7 digits (if you include the PV of eldest's DB pension) and the first digit is > 1.

We inherited good genes. We got an education if wanted. All of us worked very hard at what we did. Were we lucky or did we earn it?

All of the above?

 

[NW-Bound]

I don't think any of us here would argue that we should abolish all taxes. Even the hardest and brightest workers among us would concede that the US is a much better environment for the individual to excel compared to Rwanda.

But just because some taxes do some good, it does not mean that increasing the taxes would bring even better results. I understand that the Scandinavian countries have higher taxes than ours. Are their economies better than ours? If the European economic policies are that good, why don't they have anything to compete with the likes of Microsoft, Intel, AMD or Google?

I came from a much different background than most of you, and am grateful that I may not get to where I am now if I were in a different country. One of these days, I may tell my story. There are plenty of opportunities in this country; the playing field is more leveled than any other country that I know of. Frankly, I do not see how higher taxes would make it better. If anything, I fear what ziggy posted earlier. We may just discourage people from working hard and promote mediocrity.


PS. The title of the thread is meant to provoke. Whether a tax protester's financial success (or perhaps even lack of it - let's not jump to conclusion here) comes from luck or not has nothing to do with his belief that the taxpayer's money is not usefully spent. Let's debate the two separately and not mingle the two issues.

 

[Gone4Good]

No one is really saying that success is solely attributed to '"luck."

But it's much harder to criticize if I can't argue against an absurdly extreme extrapolation of your point.

 

[Gone4Good]

I find the story about professional hockey players fascinating . . .

In his current best seller, “Outliers,” Malcolm Gladwell reports that a disproportionate number of pro hockey players owe their success to the accident of having been born in January, which made them the oldest, most experienced players in every youth league growing up. For that reason alone, they were more likely to make all-star teams, receive special coaching and eventually become professionals.

Nobody would ever dare say that you can make it as a professional athlete without working extraordinarily hard for it. But it's not out of the question that external factors contribute considerably in the extensive winnowing process that separate the handful of pro's from the legion of also rans.

And with respect to "hard work", millions of people work hard. Many of them working multiple jobs doing back breaking labor. But we can all see that working hard isn't sufficient to be financially successful, although you wouldn't know it from reading these boards.

 

[NW-Bound]

As an "enlightened" society, we need to ensure that working people earn enough to make a decent living. There should be laws to protect the workers and to prevent their exploitation. Surely, there must be other means to achieve that goal than to simply tax more out of the high wage earners.

And talk about luck, capital gains by stock ownership are arguably more attributable to luck than wage incomes are. Shouldn't the former be taxed at 75%?

And talk about earning one's wage, should people who have new ideas or make useful inventions earn more than the day laborers? If yes, then how much more?

Ayn Rand has the following to say on this subject, for what it's worth.

I should note here that the Khmer Rouge held the totally opposite idea. They praised pure menial labor and hated and killed any person whom they thought was educated. After the fall of Cambodia and the entire population was driven to the countryside to be "reeducated" by physical hard labor, near-sighted people had to throw away their glasses. Mere ownership of reading glasses would classify one as an elite citizen and that might bring horrible death.

I am not saying anyone here thinks like the Khmer Rouge of course, but just to bring up a contrast with Ayn Rand's idea.

What determines the material value of your work? Nothing but the productive effort of your mind—if you lived on a desert island. The less efficient the thinking of your brain, the less your physical labor would bring you—and you could spend your life on a single routine, collecting a precarious harvest or hunting with bow and arrows, unable to think any further. But when you live in a rational society, where men are free to trade, you receive an incalculable bonus: the material value of your work is determined not only by your effort, but by the effort of the best productive minds who exist in the world around you . . . .

Physical labor as such can extend no further than the range of the moment. The man who does no more than physical labor, consumes the material value-equivalent of his own contribution to the process of production, and leaves no further value, neither for himself nor others. But the man who produces an idea in any field of rational endeavor—the man who discovers new knowledge—is the permanent benefactor of humanity. Material products can’t be shared, they belong to some ultimate consumer; it is only the value of an idea that can be shared with unlimited numbers of men, making all sharers richer at no one’s sacrifice or loss, raising the productive capacity of whatever labor they perform . . .

In proportion to the mental energy he spent, the man who creates a new invention receives but a small percentage of his value in terms of material payment, no matter what fortune he makes, no matter what millions he earns. But the man who works as a janitor in the factory producing that invention, receives an enormous payment in proportion to the mental effort that his job requires of him. And the same is true of all men between, on all levels of ambition and ability. The man at the top of the intellectual pyramid contributes the most to all those below him, but gets nothing except his material payment, receiving no intellectual bonus from others to add to the value of his time. The man at the bottom who, left to himself, would starve in his hopeless ineptitude, contributes nothing to those above him, but receives the bonus of all of their brains. Such is the nature of the “competition” between the strong and the weak of the intellect. Such is the pattern of “exploitation” for which you have damned the strong.
​

 

[armor99]

In proportion to the mental energy he spent, the man who creates a new invention receives but a small percentage of his value in terms of material payment, no matter what fortune he makes, no matter what millions he earns. But the man who works as a janitor in the factory producing that invention, receives an enormous payment in proportion to the mental effort that his job requires of him. And the same is true of all men between, on all levels of ambition and ability. The man at the top of the intellectual pyramid contributes the most to all those below him, but gets nothing except his material payment, receiving no intellectual bonus from others to add to the value of his time. The man at the bottom who, left to himself, would starve in his hopeless ineptitude, contributes nothing to those above him, but receives the bonus of all of their brains. Such is the nature of the “competition” between the strong and the weak of the intellect. Such is the pattern of “exploitation” for which you have damned the strong.

That was great! Thanks for the posting. An interesting point. Who should really be grateful to whom for what has been contributed in a society. Then again I supose that is determined by your personal model of the ideal soceity. For me... I just want the govt to get out of my way. Let me work, create, fail or succeed, and persue my own happiness wherever it might lead me. My mistakes are my own, and my problems are my own. Not for the govt to figure out how to fix MY life, but allow me the most freedom to figure that out for myself.

The opposite point of view (which I think I am finally starting to comprehend now) is that by and large most people will never be intelligent enough to solve their own problems. Most people are mentally inferior, and only through allowing other "smarter" people to tell them what to do (the govt, celebrities, religious groups, etc) can they ever hope to survive in life. For people who think this way, giving away all of their rights to think and do for themselves, is a small price to pay for the "security" that this brings. Existing, but not really "living" is the goal here. Having a house, car, food, without having to really worry about how it will all be paid for, is acceptable in trade for all self determinism. As in "I will be your b#ch, as long as you promise to take care of me".

As in all things in this life the choices are yours.... choose wisely...

 

[Independent]

As an "enlightened" society, we need to ensure that working people earn enough to make a decent living. There should be laws to protect the workers and to prevent their exploitation. Surely, there must be other means to achieve that goal than to simply tax more out of the high wage earners.

And talk about luck, capital gains by stock ownership are arguably more attributable to luck than wage incomes are. Shouldn't the former be taxed at 75%?

And talk about earning one's wage, should people who have new ideas or make useful inventions earn more than the day laborers? If yes, then how much more?

It would be nice if there were some way to "ensure that working people earn enough to make a decent living". If you define "decent" in terms of US lifestyles, I don't know how to do this. Do you have any ideas?

Capital gains tax rates currently appear lower than tax rates on earned income. I'd like to see them be equal. Does this seem excessive to you?

The Constitution gives Congress the power to grant temporary monopolies to people with new ideas or inventions. They are then able to earn whatever the market will bear. This seems like a good approach to me. I think the 1988 copyright extension act (which provides a monopoly of the lifetime of the author plus 70 years) went too far.

The first two paragraphs of the Rand quote are generally accepted in the US -- hence the Constitutional provision for patents. The third paragraph seem way over the top. That might be a literary device on Rand's part just to fit the character, or she might have actually believed it. I don't.

 

[ziggy29]

Capital gains tax rates currently appear lower than tax rates on earned income. I'd like to see them be equal. Does this seem excessive to you?

Yes, it seems punitive to me if there is no inflation-indexing provision for long term gains. If there were a realistic way to index capital gains to inflation and there was no double taxation of dividends, I'd believe all this income should be taxed at the same rate.

But as it is, long-term cap gains are mauled badly by inflation and a dollar paid out in dividends is taxed twice, so I believe these forms of income should receive different treatment.

 

[armor99]

It would be nice if there were some way to "ensure that working people earn enough to make a decent living". If you define "decent" in terms of US lifestyles, I don't know how to do this. Do you have any ideas?

Yup... it's called socialism....

 

[ERD50]

It would be nice if there were some way to "ensure that working people earn enough to make a decent living". If you define "decent" in terms of US lifestyles, I don't know how to do this. Do you have any ideas?

Yes, I do. It is simple.

Let businesses (and people) succeed/fail on their own merits. The government may need to break monopolies (on either the labor or hiring side). Growing businesses will need to hire people. Those businesses will need to compete for workers by offering an attractive compensation package. Workers need to have/gain skills that are marketable to successful companies.

Problem solved.

Ok, now I hear the reply.... But, but, but, some people don't have the skills companies need... companies won't pay 'enough' (they have to, or they won't get workers - that is 'enough').

Any attempt to 'fix' that is just robbing Peter to pay Paul. If the company does not want to offer more than $X/hour, or has limited need for unskilled workers, and the government 'forces' them to, we pay for it one way or another. It's just a redistribution of resources - and that always has unintended consequences. No way to do it fairly.

The 'free market' may not always seem 'fair', but I still think it is the 'most fair' of all. And the rules are not random - so learn how to play the game.

And yes, I do think society (we), should help those who cannot help themselves. Had to say that before I get one of those 'you'd laugh at people starving in the street' comments.

-ERD50