Discussions like these seem to miss the critical difference between individually and socially rational incentives and behaviors. Surely, given you at least live in a place that is sufficiently secure and stable with liberal markets and access to capital, anyone can get rich by following in the footsteps of the investor class. It is definitely not the case that everyone can get rich this way. If all 8 billion people on the planet did nothing but shuffle around paper ownership claims, there would be nothing to actually own. For an economy to produce anything at all, the vast majority of participants need to be on the ground making stuff, with only a tiny vanishing few shuffling paper at the top to decide who gets to own the inputs and outputs.
Maybe we'll actually reach some future where all production and maintenance labor is fully automated and most participants in an economy won't be human and we can just ethically enslave them for the benefit of human owners, but we're nowhere near that point.
I'm living right now in a hotbed of construction, a rapid growth metro, and I'm in the middle of it. Three lots I can see from my bedroom window are being leveled and turned into townhouses. That work is being done by people. They certainly have machine work multipliers. Nobody is carrying lumber and stone by hand from quarries to job site. Nobody is leveling the earth with shovels and trowels. But the bobcats and trucks are still operated by humans. Pipe is laid by humans. Walls are erected by humans. If all those people tried to do my job instead and became coders, or worse, tried to become investors, I and all the investors would be left with nowhere to live because no one would be building houses. We'd have no water or electricity if no one was laying the pipes and lines.
At some point, we should realize this and attempt to have an economy that recognizes most people in the economy have to be doing basic labor for there to be an economy at all, and figure out a way to accomplish this without these people needing to live paycheck to paycheck with the looming threat of a medical emergency able to wipe them out permanently. We can't just tell them to all change their focus from doing work to building wealth, because if they actually all do that, there will no longer be any wealth.
The author is mostly right, in this meta the best thing you can do is leverage as much as you can and pray that it doesn't burst at the wrong time. But that takes luck.
Incentives drive behavior. If you perverse the incentives, the economy will follow.
Why is our productivity growth at all time lows? Because our best are figuring out how to get people to click ads. Our best are trying to work out exactly which financial product will go up the most safely.
When the increase of the money supply outpaces the increase in productivity, everyone mistakes leverage for genius.
> Maybe we'll actually reach some future where all production and maintenance labor is fully automated and most participants in an economy won't be human and we can just ethically enslave them for the benefit of human owners, but we're nowhere near that point.
It’s equally likely that in such a future most people will be on some version of UBI that allows them to get by, but wealth, in whatever form it takes, will still be limited to a relatively small subset of people. There’s no reason to believe that the robots/AGI/whatever means of production will naturally be owned collectively rather than privately. I hope the future turns out better, but there seems to be something in human nature that makes inequity tend to stick around.
If de-globalization continues at its current pace, we'll probably find that a lot more labor is required in the future.
A lot of what we imagine to be automated work is actually just work outsourced to countries with cheaper labor and a container port. In the event that global supply chains becomes unreliable, a wave of on-shoring will follow.
> There’s no reason to believe that the robots/AGI/whatever means of production will naturally be owned collectively rather than privately.
I think that depends on the tech and what it can do. If we get a general purpose construction robot that can also make copies of itself — be that a 3D printer with some manual assembly required once the parts come out, or a genetically engineered programmable moss, or bioprinted fairy drones with microchips for brains — anything like that has close to no marginal cost to give to everyone rather than just to the rich.
If we never get von Neumann tech? Then sure, I agree with you.
I feel like you didn't read or listen to the content. Naval is not suggesting you have to be an investor to get rich.
But you do have to do something that gives you leverage, like starting a company. You're not going to get rich renting your time to an employer (unless you get lucky with stock options, or investing your income, but that's back to the point about leverage.)
>You're not going to get rich renting your time to an employer
poor goldman sachs execs. how ripepd off they are to only be making millions/year when they could fire thier boss and start a subway franchise. poor a-list actors only making $20/million per film. Most small businesses,startups fail. Odds are a doctor making 7-figures will become more rich compared to an entrepreneur who dropped out of college.
A-list actors are pretty much defined by being the extremely narrow elite of the profession (entry into which elite requires work and talent and lots of luck) whose income is determined by their value licensing their personal brand to attach to things.
> Odds are a doctor making 7-figures will become more rich compared to an entrepreneur who dropped out of college.
Sure, but most doctors don’t make 7 figures. Anesthesiologists (the highest paid medical occupation code in BLS data) have a national mean salary of $271K.
Most people with a very high salary end up with an expensive lifestyle to match it. If they lose their job, they’ll need to find another one before long. In this sense, they are not that different from someone making 1/10th the salary.
The main difference between being rich and being wealthy is owning and controlling your time.
I hear this argument a lot. Why would lifestyles become more expensive if you become an exec but not a successful entrepreneur? Successful entrepreneurs like fancy, nice things too.
That’s true, but the entrepreneur owns some piece of an income-generating asset. If the exec stops working, their income immediately goes to zero, and if they didn’t save or get some equity, their wealth could be near zero too. The entrepreneur can stop working, but still be left with both income and a valuable asset (their piece of the business).
The exec can invest his excess income into income-generating assets as well, with no problem. In addition, he can use his constant cash flow as collateral to take out a loan to invest in same income generating asset. And the variance for the exec is much lower than for the entrepreneur (failure rate much much higher for startup founders).
I feel like those places are the exceptions rather than the baseline. Working as a software developer in Europe, I make around 18k Euros after taxes per year.
While I will eventually make a bit more, it would take me 74 years to make a million even if I were to save 75% of my wages, assuming that inflation is of no concern (or that modest investments that match it are in place).
Not everyone is well paid, hence a side hustle and any means of passive income make sense - especially if it scales without issues (such as software, videos, music etc.).
Again, the original point isn’t that it’s impossible to get rich by selling your time but that you’ll most likely need some leverage (i.e. in the form of owning a business)
Becoming a doctor in the US is the most sure fire way to become wealthy across a whole occupation class. Less so today, as they are being squeezed, but they had a goldmine from 1980 to 2010s.
If you’re not becoming wealthy with these kinds of average incomes, you’re doing something wrong:
> Or an engineer at FAANG+M? There's literally millions of us
“Software and Web Developers, Programmers, and Testers”, total, in the US are under 2 million, and FAANG+M are a small fraction of that. FAANG+M is around 1 million total employees, but most of that is Amazon, non-software.
The idea that there are millions of FAANGN+M software engineers is simply nowhere close to true.
Do you like upper middle class better? No, they're not flying private jets but unless they're right out of school with a lot of debt they're probably pretty comfortable.
Top executives and superstars can make lots of money. There are also very few of them and there's a winner-take-all mechanic. I wouldn't choose that as a path to wealth unless I have some unfair advantage. It's not a path available to your average person.
> Odds are a doctor making 7-figures will become more rich compared to an entrepreneur who dropped out of college.
The only doctors that make that much are either superstars with a brand of their own, or entrepreneurs with their own practice.
Doctors these days don't make that much money, but it varies a lot depending on location and specialization. I'd rather be a programmer or a lawyer from a money perspective.
I think the point of the original comment is that everyone can't follow that path, at least right now. Someone has to pick the oranges and work in the warehouse.
So pretending that everyone in those jobs is making bad choices is wrong, because someone has to do those jobs.
Someone has to do the job. But if people were smarter, or had better opportunities and made better decisions, nobody would want it, so it would pay more, and then it wouldn't suck so bad.
Garbage man actually pays quite well for an uneducated job because nobody wants to do it.
I think you've pointed out the fourth kind of luck, as described in the article. The people building the houses, driving the Bobcats, have a skill they've developed over time through their effort, that now affords them employment.
If you know how to do something, and someone needs that, they're going to call you up and ask you if you'd like to do that thing for some amount of time for some amount of money. So that ability is a form of wealth.
I don't think he's talking about everyone in the world becoming passive investors; kind of the opposite actually.
That literally is not what the author wrote though. He said that “if you’re the best at something and you’re connected with someone that needs that skill” then you’ll get some wealth potentially. That’s not the same as learning a trade that is easily accessible and attainable by anyone interested.
What the author basically says in the article is “be part of the owner class generating wealth or you are a parasite”. Talk about playing the very same status games he claims to eschew.
Have you read the article? It’s discussing wealth. Learning a trade is literally not what it’s about. It’s taking about how you should try to find ways for wealth generation to be a passive enterprise, but with an extremely toxic perspective.
> figure out a way to accomplish this without these people needing to live paycheck to paycheck with the looming threat of a medical emergency able to wipe them out permanently.
This is basically how you make people do very sucky jobs, such as construction. Almost no one does it because they like it - they do it because they see no better options. Countries with very rich societies (e.g. some Arab countries) don't have enough people who have no other choice and hence have to bring in plenty of migrants as otherwise the construction wouldn't happen.
Maybe we'll actually reach some future where all production and maintenance labor is fully automated and most participants in an economy won't be human and we can just ethically enslave them for the benefit of human owners, but we're nowhere near that point.
I'm living right now in a hotbed of construction, a rapid growth metro, and I'm in the middle of it. Three lots I can see from my bedroom window are being leveled and turned into townhouses. That work is being done by people. They certainly have machine work multipliers. Nobody is carrying lumber and stone by hand from quarries to job site. Nobody is leveling the earth with shovels and trowels. But the bobcats and trucks are still operated by humans. Pipe is laid by humans. Walls are erected by humans. If all those people tried to do my job instead and became coders, or worse, tried to become investors, I and all the investors would be left with nowhere to live because no one would be building houses. We'd have no water or electricity if no one was laying the pipes and lines.
At some point, we should realize this and attempt to have an economy that recognizes most people in the economy have to be doing basic labor for there to be an economy at all, and figure out a way to accomplish this without these people needing to live paycheck to paycheck with the looming threat of a medical emergency able to wipe them out permanently. We can't just tell them to all change their focus from doing work to building wealth, because if they actually all do that, there will no longer be any wealth.