I have learned the same thing about myself: I am (relatively) successful not because my grit allowed me to keep doing something which I disliked but were rewarded, but because the things I enjoy doing are things which are valued by our society.
I realized this after reading the following Warren Buffet quote[1]:
"I happen to have a talent for allocating capital. But my ability to use that talent is completely dependent on the society I was born into. If I’d been born into a tribe of hunters, this talent of mine would be pretty worthless. I can’t run very fast. I’m not particularly strong. I’d probably end up as some wild animal’s dinner.
But I was lucky enough to be born in a time and place where society values my talent, and gave me a good education to develop that talent, and set up the laws and the financial system to let me do what I love doing — and make a lot of money doing it. The least I can do is help pay for all that."
...and that's why he also said on Monday: "If you took someone and asked them, without them knowing whether they'd be born boy or girl, black or white, with or without any relevant talent, or to rich or poor parents, and asked them when and where they'd like to be born. They'd answer, 'The US, in modern times'. There is no place on Earth, and no time in history, that a person can make the most of their talents, as today in the US. As hard as it is to be in the bottom 10% here and now, it would have been much worse any time in the past."
I see how it could sound weird to the eyes of an American, but the only place where I think his statement would be incorrect is Western Europe. A part from that I'm confident that a majority of people around the world would very much like to either have been born in the US or give their children the opportunity to live there.
At least where I'm originally from, emigration to the US is seen as an an incredibly desirable outcome even more so than to europe. Though personally I'm glad I've ended up in canada! Funnily enough, my parents first choice was still the US and they only tried for Canada when they didn't get picked in the Us Visa lottery.
I don't think there is as much business opportunity in Western Europe due to taxes and regulations.
This is why the US has given birth to the majority of big businesses in the world in the last 20 years. A lot of startups that started elsewhere, moved to the US to continue their growth.
Europe might have some quality of life elements such as health care, vacation time, and regulations to protect citizens and workers... but being able to start a business in the US is what Warren Buffett refers to as opportunity.
The US might be the best place to start a world-conquering multinational like Google or Facebook, but it's not the best place to live for general social mobility or for starting a small business. Small business startups play a lesser role in our economy than other Western European countries. (https://www.theatlantic.com/business/archive/2012/10/think-w...)
This is provably false. It is incredibly hard to create a small business in western Europe. Capital borrowing is difficult, employee staffing is onerous, and local officials make sure that larger established companies compete more strongly in their areas.
That Atlantic article is both antiquated, and cherry picks data just after the 2008 crisis.
The social policy advantages in Nordic nations and Western Europe today vastly outweigh those in the US. Growing up in the US, I was lucky my parents had good jobs and pushed me to learn and grow. If I did not have their support (and healthcare) I would not have survived college or medical issues at that time, some of which are ongoing today. I'm extremely lucky to have an advanced education, be healthy, and be less than 10k in debt 5 years after graduating. That's entirely due to my parents funding my education and medical bills best they could through that period as well as the insanely good benefits from my current position.
If I was born into a Nordic nation I think I'd have been better off. I'd have had the same supportive parents but no burden from education and medical debts, or stress of finding a position with good benefits before turning 26. I might even be freelancing or building my own company right now without fear of paying for prescriptions out of pocket for me and my SO which would be significantly more costly than our rent.
The US is a great country for opportunity but it is not a place of equal opportunity.
But in his thought experiment what you're trying to avoid is being massively disadvantaged by where you were born.
If you're born in Scandinavia you'll have very good education and healthcare no matter what family you're born into. Maybe starting a business is harder, so what? You can move to the US later in life if that's your goal, you'll still be better off by having no student debt.
In the past this was a murkier trade-off as the cost of immigration vs the cost of student loans was much closer.
Nowadays, however, I'd say that it's possibly the better route to take from a debt standpoint, but there is still the reality that being able to move to the US (or most other countries) is not a guarantee normally.
I'm canadian, I sure as fuck wouldn't want to emigrate to the USA. Warren Buffet has huge biases and blind spots when it comes to sociological analysis. I strongly doubt the man understands what it's like to be making 7$ an hour working at Dennys somewhere in the bible belt because the public school system left you semi-illiterate, or living in any heavily criminalized urban area, or picking fruits in california because you had to escape cartels in mexico/central america. None of the people in my examples or developing their full potential, and there's a massive proportion of americans in this bottom social class.
*And canada could be doing way better. There are glaring social inequalities here too.
> huge biases and blind spots when it comes to sociological analysis.
...apparently so do you since your next sentence is full of such incredible hyperbole...
> 7$ an hour working at Dennys somewhere in the bible belt because the public school system left you semi-illiterate, or living in any heavily criminalized urban area, or picking fruits in california because you had to escape cartels in mexico/central america.
Pew suggests about 50% of America is the middle class, earning about $78k a year. I'm not sure what fraction is in manual labor jobs but if labor means working then the rate is about 62%.
From BLS data, about 12.7% of the population lives in poverty, workers/children/etc. This group is disproportionately minority (non white) and an example of the social failing of the richest nation in history.
That sounds like a very mid 20th century POV. Which I totally get for Buffett.
Most rankings of social mobility put the US outside the top 20. The highs are higher here, but the path to get there, especially from the bottom 10%, is more difficult than almost any country we consider a peer.
I would be interested in how the US mobility fared if the metric was not %, put purchasing parity. I imagine it is better to go from the bottom 10% to 20% in the US than bottom 10 to top 10 in many counties.
After all, an income of 15k (ppp) puts someone in the top 10% globally and 30k is the top 1%
I don't think that's accurate. Economic mobility in the US has been so high for so long, that it stands to reason that most families in the US have already achieved their potential.
What is probably a more telling indicator is the degree to which poor IMMIGRANTS are able to move up - an indicator that the US dominates.
I don't think that stands to reason at all. That sounds laughable, especially in the context of the heinous things American society did to purposefully black families from "achieving their potential". While immigrant families' ancestors were in their home countries accruing assets, educational opportunities, and (relatively more) equal access to what their country had to offer, black people here were held back from their white peers. Home equity, educational opportunities, freedom from police harassment, the ability to organize politically without facing literal terrorism.
Modern times, sure. The United States not so much. If you aren't sure about any other factor, you might want to be born in a society that provides most of its population with the tools they need.
The problem with the that quote is that "it's better now than before" is used my large political movements to justify cancelling the effort that got us here, and letting us backslide.
Will Durant has an interesting quote that has stuck with me, something along the lines of: Out of every 100 new ideas, 99 of them will be bad, and inferior to what was replaced.
My impression is that "It's better now than before" is used to protect the effort that got us here, not cancel it. It's used to protect us against the 99 bad ideas.
There’s a subtle issue with that quote: one of the predicates is “with or without any relevant talent”, but the answer of the modern US seems to assume talent that one can make the most of.
Why not pick a modern country with a better social safety net, lower inequality, and greater economic and class mobility?
...and almost everyone agrees with him. The problem is that any time a Bill is put forward to raise taxes on "the rich", it also happens to include the upper-middle class, not the rich.
Economic mobility is down in most wealthy nations, especially in the US. Not to mention the demonstrable differences in outcome people have based on familial wealth, race, location, etc.
I have often thought that boy, I would really have suffered had I been born in medieval or Roman times because I don't know what I would've done if I didn't work in IT.
I would describe the feeling as guilt, and it took me some time to just accept that things are the way they are.
There is this notion I see going around that in the past people survived by being brutish animals and smart people would have died quick. In fact, it's the opposite. We outcompeted other animals because we are NOT like them. Because we engineer. In a hunter gatherer society someone who builds traps, designs better huts or tents, etc could be extremely valuable.
Buffet's self-deprecation is admirable but lacks imagination.
The thing is just that I've been obsessed with computers my whole life and can't imagine myself being, for example, an aqueduct engineer or a blacksmith.
Where Buffet's quote struck a chord is that I'm thankful that society allows me to do what I love, but I should stay mindful that not all people have those opportunities.
I suppose a different way to look at it is that had I lived in a time before computers I wouldn't have known what I was missing out on, so there's that.
From what I gather, the actual monk-monks in your average abbey, the ones doing the routine of daily prayers and reading & writing in an established and bookish order, were largely children of aristocrats or otherwise well-off. There were very few of these relative to the total population. The rest of the folks living at an abbey lived some of the routine but were largely excluded from the life of study and learning, instead doing manual labor to keep the place running. They were usually classified as something less than full brothers/sisters. Most weren't literate and there was typically no serious program or intention to make them so.
Yes there were exceptions and various orders work differently, but talking about in general and during times when there were quite a few—though still not that many—full-on monastics sitting around writing commentaries on Augustine and such. Some orders took a work-and-prayer approach for everyone to keep their order afloat, but those generally seem not to have lasted long before morphing into collecting rents and relying on patrons. Turns out it's really hard to have a life of the mind & spirit without a bunch of other people working to support you—if you're doing the necessary work yourself, it's all you have time for, meanwhile a competing order nearby's adding a wing to their abbey with the money they're collecting from a share of a mill, rents on three commercial properties in town, and 30 acres of land worked by peasants, their wine cellar is full, and their abbot has significant influence in the court of the Duke. So. Maybe that seems like a better idea.
Why do you think he's a parasite? He seems to live a modest life, and work very hard to make the economy work more efficiently. He's giving almost all of his money to philanthropic causes, and seems to campaign for all the right causes. He maintains a pretty low profile for his level of success (he doesn't even support philanthropy through his own family foundation; he went with Gates, since he thought they'd do a better job).
I think he's had about $10 million in frivolous spending in his life (a plane, and a home in California).
I agree most people in the financial sector seem to be parasites, but Warren doesn't seem that way.
I think his claim to be a beneficial 'allocator of capital' is bogus. He tends to invest in established exploitative companies. His investments have been made on an almost exclusive basis of growing wealth, which in the end is a very sterile end to aim for.
> I'll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It's addictive. And there's fantastic brand loyalty.
— Buffett, quoted in Barbarians at the Gate: The Fall of RJR Nabisco
I agree he's led a modest life. I am somewhat dubious about his claims to be a philanthropist. I don't see exploiting the world (Buffett & Gates) necessarily redeemed by later posing as a philanthropist.
None of this is meant as a critique of capitalism. Just a critique of the kind of sterile, exploitative capitalism that Buffett practises, that he then tries to dress up as philanthropy. "It's ok if I give away all my money at the end" - well he can't take it with him can he? And at 89, he still hasn't given most of it away anyway.
Finally, here's a link to a much more detailed criticism of Buffett, if you're interested:
"America isn’t supposed to allow moats, much less reward them. Our economic system, we claim, is founded on free and fair competition."
That's called a straw man. No one has ever said America "doesn't allow moats" and that there is "free and fair competition".
The whole point of business is, within the law, to build a moat that makes it impossible for a late-starting competitor to compete with you. Patents are moats. Immense capital is a moat. Brands are moats. Regulations are moats.
When Disney pulls its movies from Netflix to start its own streaming service, it's using its moat to block a competitor.
I bet almost every dollar you spend in your life goes to companies that legally try to stop you from spending money with their competitors. From your phone to your bank to your car to your airline.
The Fed is currently propping up the price of assets through $3 Trillion of asset buying. This isn't a free economy.
That quote is probably right out of a business school textbook.
Any Apple customer will tell you they "benefit" from spending all their computer and phone money with Apple. Apple trying to build a moat around their ecosystem doesn't preclude mutual benefit.
The vast majority of businesses are what I describe. The large economic profits are mostly rents accumulated by a small fraction of businesses, in a Pareto distribution. I argue we’d do fine with less of the rentiers.
I think most Apple customers will tell you that Apple products are too expensive.
Most 'moats' are not beneficial to the consumer. What's beneficial to the consumer is competition, and companies innovating, not building moats, to stay ahead of their competitors.
> He tends to invest in established exploitative companies.
What about BNSF for instance?
> His investments have been made on an almost exclusive basis of growing wealth, which in the end is a very sterile end to aim for.
What is a more appropriate terminal goal for a hedge fund manager? Would you personally invest your parents' 401Ks, your alma mater's endowment, or your city/state's pensions in a fund whose goal is not "growing wealth"? Are you willing to contribute to each fund to make up the difference (or raise taxes)?
I read the linked article and it was terrible. It kept playing a sleight-of-Hans between him being an example of what monopolies empower (which he is), and he as somehow the cause of monopolization (which it doesn’t support at all, it just makes meaningful glances in that direction). Quite a lot of its arguments boil down to “he’s rich,” as though that were a sin in itself.
No one who went into that article without a pitchfork in hand is likely to emerge with one.
>I think his claim to be a beneficial 'allocator of capital' is bogus. He tends to invest in established exploitative companies. His investments have been made on an almost exclusive basis of growing wealth, which in the end is a very sterile end to aim for.
How do you separate this from a more general critique of capitalism? How should capital allocation work?
The majority of Warren's investments are in the secondary market. These transactions are effectively just transferring ownership and don't actually make cash infusions into the companies at all.
He makes some primary market investments and allocates capital between his fully owned subsidiaries. But I think many people naturally wonder the value to society of getting rich by buying and selling things in a secondary market. No products or services are produced and his gains(over the market return) come from a zero sum game between buyers and sellers.
> But I think many people naturally wonder the value to society of getting rich by buying and selling things in a secondary market.
Obviously, buying and selling stuff in a secondary market is enormously beneficial to the people doing the buying and selling (or else they wouldn't be doing it)... For instance, if I start a business, I want to be able to sell it to Warren Buffet. When that doesn't happen, I want to be able to buy a slice of the businesses that he has invested in under the assumption that he does a pretty good job (as I don't have time/ability/money) to do that myself. Beyond personal utility, the value to society comes in the form of more businesses, more products, more services when its easier to buy and sell abstract ownership in businesses.
What counterfactual would get rid of Berkshire but keep YC?
I think your question conflates the primary and secondary markets. If you start a company and sell all or part to Buffet, that would be a primary market, and money goes into the company which can be used to grow. Same for YC. On the other hand, if you buy stock from another private investor, the company sees no money
I am sympathetic to your viewpoint and will give it some more thought. That said, my immediate thought would be that a fluid and healthy secondary market is necessary for a primary market to exist at all. Also, a secondary market allows growth companies to channel revenue into investment instead of paying out dividends. Last and relatedly, the overall secondary market return makes it nonzero and this incentivizes investment in lieu of dividends.
This only means that, so far, he's only talking about giving most of his money away, not actually doing it. If he'd be doing it at any significant speed, we'd be seeing monthly/yearly drops in his net worth.
I realized this after reading the following Warren Buffet quote[1]:
"I happen to have a talent for allocating capital. But my ability to use that talent is completely dependent on the society I was born into. If I’d been born into a tribe of hunters, this talent of mine would be pretty worthless. I can’t run very fast. I’m not particularly strong. I’d probably end up as some wild animal’s dinner. But I was lucky enough to be born in a time and place where society values my talent, and gave me a good education to develop that talent, and set up the laws and the financial system to let me do what I love doing — and make a lot of money doing it. The least I can do is help pay for all that."
[1] https://en.wikiquote.org/wiki/Warren_Buffett