Fourth Way, The
From Zanecorpwiki
In Traders, Guns, and Money, Satyajit Das says on page 133, "Other than sheer luck, there are really only two ways to make money: inside information and overwhelming force."[1] As Nasim Taleb says, we are "fooled by randomness."
I've seen enough business myself to know this is mostly true. As is my wont, however, my first reaction to the statement was to hone in on the little bit that I had a quibble with. Rather than "to make money", I'd say, "to make a lot of money." Mr. Das is speaking from the perspective of a derivative trader, and in that world "making money" means "making a lot of money."
The big money is a function of luck, power, and inequality. Maybe that's not even a controversial thing to say. It's not really a good thing that that's the way things are, but overall it's not really such a bad thing either. There are positive aspects; e.g., if the most talented people can't win big easily, then they stay hungry and produce more.
But overall maybe it just doesn't matter that much anymore. The idea of absolute wealth would say that the richest among us are excessively wealthy in a unpleasant sort of way, and there is a strongly implied future cost when resources are over-allocated to those who can make the best use of them. But to actually allocate correctly is very hard. It's hard because whatever makes you great and deserving of wealth doesn't necessarily mean you'll be good with wealth. TODO: move these ideas to the Absolute Wealth page.
But there is a fourth way: hard work will make you money. It won't make you a lot of money, but it will make you money. (Unless of course you're just unlucky.)
Part of the challenge of working hard is that when you start to get a little rich, you get close to all these people who were lucky, had overwhelming power, and/or inside information. They're no dumber or smarter than all the poor people you know, and they certainly don't work as hard, but they've "succeeded" whereas you continue to have to work.
How to get by:
- Find other people who work hard. Surround yourself with them. Keep in touch with as many as you can stand. You may not even need to seek "active support", but having these people as active nodes in your network means that instead of dealing with some random guy who happened to know a guy that got him his job, you'll be dealing with people you can understand. It means removing the opportunity for jealousy. There's also the possibility of healthy competition.
- Avoid people that don't. Even if they're well connected. Even if they have money to invest, stay away unless it's a sure thing. If some guys writing a check or just itching to toss you his Rolodex and say, "Give me a dozen names and I'll introduce you as sliced bread 2.0", then take that. But most of the time you need to work with, spend time on, and grow relationships. So don't spend time with people that you don't want to spend a lot of time with.
- Watch your assumptions. The allocation of "types" is pretty random across the entire spetrum. So don't assume that just because a guy happened to be born rich, he's a trust-fund douche bag. Proportionally there's just as many if not a smidge more great guys who are rich than are poor. So yes, in absolute numbers there are two orders of magnitude more great guys who are non-rich than rich, which can lead towards just rounding that little bit down to zero.[notes 1] But this is just prejudice. Really, if you meet 100 people from any socio-economic class, you'll meet a couple people you hope never to see again, a handful that rub you the wrong way, a great many who don't really do much for you, around a dozen you'll want to keep with, and a very few that you want and/or should forge a relationship with. If that number is 4 in the general population, maybe it's even 5 amongst the rich.[notes 2] The problem the rich have as a class, is there's a lot more people you just won't like. I don't mean this to impune the rich (although the statement necessary ends up doing that to some extent) but to a consequence of being rich. It means you don't have to work with others unless you want to. You probably never want for anything. You've probably had people you're entire life who are subservient to you. In other words, if you're born rich, unless you're very lucky and receive excellent parenting, it'll fuck you up. Specifically, it'll make you spoiled. Ergo, there's more assholes on the rich side. The majority or near enough would still fall into "meh" category, but your distribution does end up with fat tails.
References
- ↑ Via Planet Money Deep Read, 2010-09-07.
