Luck is more important to success

“If you’ve been successful, you didn’t get that on your own,” President Obama declared years ago at a campaign rally. “If you’re successful, somebody along the line gave you some help.” In America, the belief that hard work and a touch of grit is all one needs to succeed. Talent and drive can take you a long way, but it’s often not enough. Luck is as important.

• Most Americans underestimate the role of luck in economic success.
• The current American tendency is to overlook the role of luck as a cultural bias and Americans are less likely than Europeans to favor high taxes on the rich and generous benefits for the poor.
• Conservatives have a narrative about success, which prioritizes hard work and skill. Liberals have an alternative narrative about success, which prioritizes structural constraints and privilege. Neither one is entirely right, but it does seem that liberals are closer to the truth.
• People who amass great fortunes are almost always talented and hardworking. But it is also true that countless others have those same qualities yet never earn much. 
• Chance plays a much larger role in important life outcomes than most people imagine.
• The rich underestimate the importance of luck in success and why that hurts everyone, even the wealthy.
• In this world dominated by winner-take-all markets, chance opportunities and trivial initial advantages often translate into much larger ones and enormous income differences over time. 
• Luck is as important as hard work in becoming successful.
• Fortune favors the fortunate. And not acknowledging that can have unlucky consequences.
• People who succeed on a grand scale tend to believe they did it all by themselves. They think that whatever dollars came their way are theirs to keep. If the government tries to tax it, they regard it as theft. 
• Believing that all the good fortune that came your way was earned in the traditional sense is a very difficult claim to sustain once you look at how the competitions unfold and the role chance events play in all our lives.
• Ethically speaking, we have no control over the most important determinants of our lives. Even if you think you succeeded purely on the basis of talent and effort, where do you think you got your talent? Where do you think that inclination to work hard comes from? These are things determined by genes and upbringing and it's quite ludicrous to claim moral credit for them.
• Privilege has a way of blinding the privileged. People born into good fortune can’t appreciate how much of their success stems from the care and attention and resources they received at every stage of their development.
• You're probably not going to succeed if you don't get really good at work and effort. You shouldn't expect and wait with hope that lightning strikes. Tell people to try to deserve whatever it is that they want. That doesn't mean you'll get it, but you're certainly not going to get it if you don't deserve it.
• We really need to make the investments where the environment is conducive for talented and hard-working chances of succeeding. In America it was always true that if you work hard and are good, you may not be a spectacular success, but you'd most likely prosper to a reasonable degree.
• Rich people could pay more taxes and scarcely feel it, but nobody thinks about it that way.

Markets are not perfectly meritocratic. They're more meritocratic now than ever before in the past. Privilege always matters. Most of the people who emerge as big winners today do tend to be talented and hard-working, so there's at least a semblance of meritocracy. What's also true is that being hard-working and talented are by no means sufficient to get you into the winner's circle. Luck matters a great deal.

Luck is far more important to success in this life than we imagine.
 Things we're not entitled to claim moral credit for are the driving forces 
behind success ... Robert H. Frank

Read the source article

Extreme wealth is indefensible

What is difficult to understand about those who make millions of dollars a year is why they ever need that kind of money for? Who could ever use that much? What are they even spending it on? Why do they actually want it?

• These people live like monarchs. They live in almost ludicrous luxurious excess.They make no effort to curb their consumption. 
• When they want something, like a piece of designer clothing or a fancy dinner, they simply buy it. An expensive meal does not require an occasion. If the family wants to go out to a pricey restaurant, they just do it.
• They don’t have to do household chores. Everything is taken care of by the housekeeper, gardener, housemaid, driver etc. It is difficult to fathom living like this.
• Yet most of their income still just gets tossed into their savings account. This is truly extraordinary. 
• Whether increased taxes on the wealthy will have useful consequences is arguable. What is unimaginable is that increased taxation would deprive these people in any serious way.
• These people donating to charities may not exceed 1% of their annual income. It’s almost as if they care far more about feeling like they are charitable than actually being charitable.
• They rarely encounter criticism for the moral aspects of this kind of life. In wealthy circles, everyone has a strong interest in allowing each other to feel like they are good people. So if one person mentions about their donating to charities, the friend is unlikely to criticize. Rarely do elites tell other elites that it is wrong to be an elite, for obvious reasons. 
• And the most contact this person has with the working class probably comes during chance encounters with the pool man, who is unlikely to voice any judgment he may secretly hold about their decadent bourgeois habits.
• Even $400,000 annually is far too much to live on. It is very difficult to even grasp the amount of money possessed by the 20 people who own more than half the country’s wealth. If it takes a lot of effort to fritter away $400,000 each year, imagine how the billionaires struggle to think of things to buy. That’s why their spending becomes outright ludicrous. Once you go past the first million, there’s not really much more pleasure you can buy, so you have to resort to nonsense.
• The tax policy implications are debatable. But it’s uncontroversial to conclude that the possession of enormous wealth, especially in a time of great suffering, is just indefensible in every way. Even $400,000 a year provides enough to live in extreme luxury. Anything over that is just obscene. 
• Risk-taking investors deserve higher returns, but actual returns do not necessarily reflect merit. The determining quality of  billionaires is to be lucky -- the other qualities being necessary but not sufficient. And luck is not meritocratic.

Inequality does not cause poverty. Capitalism has resulted in much more economic inequality in China, but much less poverty. Studies have shown that lower taxes for the wealthy don't necessarily result in increased economic growth. Extreme wealth contributing to inequality were seen as irrelevant and a prerequisite for the growth that would also help the poorest, as the wealth created trickled down to the benefit of everyone. But rather than creating jobs and lifting others out of poverty super-rich minorities cause social unrest and depress demand for goods and services, limiting growth and innovation as a result. Extreme wealth causes extreme inequality that impedes poverty alleviation, slows economic growth, compounds gender inequality, drives inequality in health and education outcomes, undermines economic mobility over generations, fuels crime, undermines social cohesion, and harms democracy.

Read the source article

That man is rich, whose pleasures are the cheapest ... Henry David Thoreau
Honesty is incompatible with amassing a large fortune ... Mahatma Gandhi 

At least 50% of the world’s billionaire wealth is non-meritocratic owing to either inheritance or a high presumption of cronyism. Another 15% is not meritocratic owing to presumption of monopoly. All of it is non-meritocratic owing to globalization. By contrast, crime and technology are found to be negligible sources of extreme wealth. The argument that "These eight billionaires, through the salaries and stock paid to their employees and the stock owned by millions of shareholders, have made millions of people rich and improved the lives of billions of people through the use of their products. They have not made anybody poor." is fine but governments must tax them at higher tax rates and spend the proceeds for accelerating eradication of poverty. These billionaires have a greater obligation for contributing for this cause.