Prception vs. Reality

Discussion in 'Politics, Religion, Social Issues' started by Desertrat, Sep 19, 2003.

  1. Desertrat macrumors newbie

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    #1
    A while back, some folks were adamant that the very wealthy got that way mostly by inheritance.

    Nope.

    http://story.news.yahoo.com/news?tmpl=story&u=/ap/20030918/ap_on_bi_ge/forbes_400_list_1 is the "Forbes 400".

    The great majority worked it up on their own.

    But let me add to the "inheritance" numbers: The Waltons of Wal-Mart; and James and Bill France, Jr. have indeed inherited, but they also have been active in management of the affairs of the family enterprises.

    Note that the Bass family of Fort Worth adds up to a goodly sum, but the Boss Dinosaur, 88 years of age, is still alive.

    I was surprised to see that Ross Perot is at 3.7 billion; he was at 4.0, +/- in 1992/1996. And Ted Turner must have been spending quite a bit, even with his losses in stock value...

    It's my belief that as you come on down in the rankings, the relative numbers between inheritance and earned wouldn't change; at least not much. No reason for it to...Last I heard, some 4,000 of the 17,000 MS employees were millionaires...

    :), 'Rat
     
  2. mactastic macrumors 68040

    mactastic

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    #2
    Well of course the top 400 people are self made. Even in the pool of super wealthy, these are the driven-to-succeed crowd. Lets see the list of everyone worth over say, $25 million net worth. Then lets talk.

    Additionally, many of the super-wealty are able to grow any investment. Some through their own hard work and efforts, others by hiring someone to do it for them. As has been said before, the first million is the hardest. So when that first million is handed to you, you aren't one of the people working some crappy job just to survive. Being on the edge of survival like that gives you perspective into how others live.

    A professor of mine once said something very wise to me. "No one ever got rich from working.";)
     
  3. mactastic macrumors 68040

    mactastic

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    #3
    Well what do you know... Seconds after I posted above, I ran across this CNN article talking about how well some of the wealtihest among us have done over the last few economically poor times for most of us.
    Must be rough to be in that family.
    My emphasis. Also, just as an aside:
    It sure wasn't from sales of G4s!:D
     
  4. Taft macrumors 65816

    Taft

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    #4
    Exactly.

    'Rat, you mention the Walmart clan as some of those who have inherited and worked for their money. But would they ever have been in a high level position at Walmart without their heritage?

    I'd bet there are many more like them on the list of the richest 400 in America. Additionally, below the 400 top Americans there are TONS of millionares of the smaller variety. We didn't see any data on those guys.

    Taft
     
  5. Desertrat thread starter macrumors newbie

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    #5
    'A professor of mine once said something very wise to me. "No one ever got rich from working."'

    The problem with that BS is, "Define work."

    Somebody once asked J. Paul Getty what he did on vacation. His response was that he did not know from what would he take a vacation. His entertainment was in making deals. The money, in and of itself, was merely "counters" in the game.

    No one ever got rich from merely being a hired hand. That first million commonly involves a willingness to take the risk of going broke. Imagination helps; witness the success of such simple things as hula hoops or pet rocks.

    You Californians in particular, given the rises in real-property values, ought each to know several people who bought land or built buildings 30 or 40 years ago, and after paying for it from their own incomes are now worth over a million...

    If a family effort at a small business creates some significant amount of wealth, and the family inherits the patriarch's share, are the heirs then merely "drones with inheritances"?

    And then there are the accidental millionaires. Remember Ferlinghetti? He had a little bookstore in San Francisco. He was a happy little anti-materialistic Beatnik. But he wrote "Coney Island of the Mind", and the money rolled in. :) I still have my copy. :D

    Ah, well. No rich guy ever hurt me by getting rich.

    'Rat
     
  6. mactastic macrumors 68040

    mactastic

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    #6
    'Rat, it's not some line of BS, he meant that your paycheck alone (unless you head up the NYSE) won't put you in the catagory of rich. It takes investments to really get rich, that's all he was saying. How many people actually make over a million dollars in a year from their paychecks? A few CEO's and athletes. For the rest of us, his advice was to save money and invest it if you really wanted to become rich.

    I sure hope you just misunderstood what I was trying to say with that quote, first of all the professor that said that to me is a VERY conservative fellow. Not to mention he's a land developer to boot, and a heckuva construction manager. When the Northridge U library nearly went over in the '91? quake in LA, he was the guy who was in charge of getting it back together before school started, so he's not some fly-by-night jerk off.

    You even got what I meant when you said " No one ever got rich from merely being a hired hand." Right after you called my statement BS. Go figure. You can disagree with me by stating the exact same thing in a different way! Nice goin.
     
  7. IJ Reilly macrumors P6

    IJ Reilly

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    #7
    You know 'Rat, probably without intending to do so, you helped make my earlier argument for allowing people to accumulate wealth tax free during their lifetimes and then having to give it all up to the government when they pass on. Your reference to the Walton clan is especially telling. None of them would be managing one of the world's largest corporations but for the accident their of birth. Sam earned it. They did not.

    "No rich guy ever hurt me by getting rich" is a nice sentiment, but it ignores the effects of wealth concentration over generations. This is the United States -- we don't need no stinking aristocracy.
     
  8. mactastic macrumors 68040

    mactastic

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    #8
    And what if we could find somebody who was hurt by someone else getting rich? Would that make a difference to you? Or is that sentiment because you personally were lucky enough to not get hurt?

    There have been lots of examples throughout history of employers skirting saftey laws (not to mention before there were things like OSHA) and saving money by putting employees at risk. Sometimes workers got hurt because the person making the money didn't want to give up any of it to help make the workplace safer.
     
  9. zimv20 macrumors 601

    zimv20

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    #9
    i'm going to put in another plug for "The Millionaire Next Door." it'll clear up a lot of the confusion here about who gets their million dollars how.

    in short, there are a lot more millionaires than you think who got that way from being a "hired hand." and we're talking 5-figure salaries.
     
  10. Taft macrumors 65816

    Taft

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    #10
    A lot of people have recommended this book to me. I'll have to check it out.

    It sounds as though its pretty much a recipe for how to live your live and manage to accumulate wealth. Interesting...

    Taft
     
  11. Desertrat thread starter macrumors newbie

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    #11
    Hey, look: If being an accountant or an office engineer is working, then why isn't investing considered work? Warren Buffet made it from investing. Anybody wanna say he didn't work? It's not work to study corporations, doing one's proper homework and learning whether or not any particular business is worthing putting money into?

    As written, the good professor's quote was not correct. I agree with the restatement of what he meant--obviously.

    IJ, do you know as fact that none of the Walton kids helped "grow the business"? IIRC, some of the internal squabbling about the will had to do with who put out how much effort in working in the fambly bidness.

    One thing you can take to the bank: If all of one's estate reverts to the feds upon death, the GDP will sink like a stone. A great part of the incentive to invent and produce is that of improving the lot of one's offspring. This is particularly true of small-business people. Without this incentive, there would be little residual estate for the gummint to glom onto. "If my kid can't have what I piled up, to Hell with it. I'll die broke, after not working any more than I have to."

    mac, "not being hurt" refers to the belief that I have that economics is not a zero-sum game. Your invention of some better mousetrap doesn't hurt my billfold. My restoration of an old car or construction of a spec-house doesn't hurt yours. Bill Gates and Stephen Jobs and Michael Dell haven't hurt my billfold one iota. Your making a million or a billion or a trillion dollars doesn't mean there's no other money left for me to find my own way to a million--if I wanted to try.

    The only thing that I believe that anybody owes me is their effort to be as close to economic self-sufficiency as they can get by their own efforts. After that, everybody is free to test their own limits as to how far up the economic ladder they can earn their way. And I want no institutionalized barriers to anybody's progress toward legally-acquired wealth.

    Ain't that easy?

    'Rat
     
  12. mactastic macrumors 68040

    mactastic

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    #12
    Sorry you didn't understand the meaning of the quote, but it was correct as stated.

    My invention of a better mousetrap might not hurt you... unless my mousetrap factory in your town spews some toxic fumes. Or I shirk my saftey requirements and your kid (or someone elses) gets hurt. Come on, there were employers who have considered employees expendable in our country's history. At one time it was cheaper to replace employees than to install saftey equipment. I'm under no illusions that if OSHA didn't require the stringent saftey measures it does that many employers would not spend the money. Many places do it only with much griping (from employee and employer oftentimes) and would do away with mandatory "saftey meetings" in a heartbeat if they thought they could.

    Just because no one's ever hurt you doesn't mean that someone else hasn't had your good fortune.

    There's investing, and then there's playing golf while your accountant invests for you.
     
  13. Ugg macrumors 68000

    Ugg

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    #13
    So all those jobs shipped overseas are perfectly acceptable? And what about the abysmal working conditions at WalMart? Walmart has become what it is by treating its employees like slaves.

    There are legal ways to aquire wealth and there are moral ways. Legality and morality are not synonymous and if we are to believe that government has a right to guide our moral behaviour then there will be an effect on our economic behaviour as well. A certain amount of intervention on the part of government isn't a bad thing.

    Other governments have been able to find a middle ground, maybe their economies haven't been as robust as ours but their people seem to have much more comfortable lives. Lives freer from murder, mayhem and social chaos.
     
  14. IJ Reilly macrumors P6

    IJ Reilly

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    #14
    Well for a fact I don't. But the business was the creation of Sam Walton. The kids just fell into it. How they acquitted themselves afterwards is beside the point.

    So I'm always hearing about how income taxes sap incentive. Ok, I propose doing away with them. Completely. You earn the money, you keep it. Wealthy and successful parents could still give their kids cushy upbringings and great opportunities -- much more then would ever be available to the children of the poor. Under my plan, what they can't give them is a huge fortune. That, they would have to earn themselves.
     
  15. Desertrat thread starter macrumors newbie

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    #15
    Spewing toxic stuff ain't legal. Unsafe workplace ain't legal. Quit huntin' boogers that are irrelevant to legal and moral ways to make money.

    Industry doesn't "send jobs" anywhere. Any commercial entity sets up operations where business is profitable. Doesn't matter if it's a car manufacturer or a pushcart peddler. At the beginning of the 20th Century, half the workforce was on-farm. So what? We then went into the heavy-industry age of manufacturing, which is now ending here. So what? We don't make buggy whips anymore, either. Cars replaced buggies. But we don't have to make cars here, in those dirty old factories you decry. Ever worked on an assembly line? Yuck--and I've only watched. So now we're in the information business, exporting ideas.

    And get off the idea that only a Walton-type kid can add to the family fortune. What did old Sam start with?

    Bill Gates inherited? That "Harry Potter" gal inherited?

    Go back and look at the 400. Check and see how many started out pretty small-time.

    You come up with the right idea and you, too, have a chance to get as rich as you want. There ain't no guarantees, but that's your problem.

    Life's never been fair. Ask the Jews of Treblinka. Ask the survivors of a car wreck. Hell, I got colon cancer; what's "fair" got to do with anything? My wife worked her butt off to build a small business, and her thieving bookkeeper danged near bankrupted it. The deal is, you can't waste your time and energy worrying about a bunch of "fair". Your time is the only real capital you have.

    Sure, there's Lady Luck. "The harder I worked, the luckier I got." I just didn't want to work hard enough nor do the proper "stuff" to climb the corporate ladder to become the General Manager of Chev Div of GMC. I went back to Texas and piddled around and did small-time entrepreneuring as well as a day job and had a lot of fun. A lot of my friends got rich, but I had more fun and more freedom. Freedom was more important to me than a bunch of money over and above my overhead. Still is.

    Always enjoyed the freedom to run my mouth, too. :D

    'Rat
     
  16. mactastic macrumors 68040

    mactastic

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    #16
    Speaking of Walmart...
    Link
    'Rat are you just going to ignore the point I'm trying to make unless I actually go find someone who was hurt on the job by an unscrupulous employer? 'Cause they're out there. You say it's illegal to spew toxic waste, but isn't it also illegal to kill people? Still happens thought, right? The average CEO nowadays makes some 400 times what his entry level employee does, and this level has been rising over the years.

    I understand perfectly well that life is not fair. But when the "smartest and hardest working" among us get to make the rules of the game that the rest of us play by, something is fundamentally wrong. Without a population of middle and lowe class folks out there to do the actual work, the rich would not be able to accumulate much wealth. You just can't have all rich people. You MUST deal with the reality that others out there are less fortunate than you, that some of them may not have worked as hard as you did, but that most of them did. Just under different circumstances. And for less pay. And maybe, just maybe, were taken advantage of by an employer at some point in their lives.

    I'm gonna be gone today, but when I get back I will find you evidence of an employer who skirted saftey laws, and got someone hurt EVEN THOUGH IT WAS ILLEGAL! Just off the top of my head though, those miners that were rescued from underground a year or so ago were working with incomplete maps of an area that anyone who had been there for any length of time knew where a maze of tunnels. Don't know if anything illegal happened there, but it's gotta come pretty close. Or how about those "smart, hard working" fellows at Enron? Did they manage to hurt anyone? Their employees? Was what they did legal? [/RANT]
     
  17. pseudobrit macrumors 68040

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    #17
    I know plenty who have gotten hurt. Usually exploited workers, often exploited customers.

    Also, I noticed that if you sort the list by age, most of the self-made multi-billionaires are at least in their 60s.

    Very few are young and disgustingly wealthy while having earned it.

    Just because the "source" doesn't say "inheritance" doesn't mean it isn't.
     
  18. IJ Reilly macrumors P6

    IJ Reilly

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    #18
    Hey 'Rat, I'm not sure what you're going on about above. I'm not even sure it was directed at me.

    Just to be clear, I'm not casting any aspersions at the self-made. I am casting some aspersions at the mommy and daddy made (non-biologically speaking, of course).
     
  19. SPG macrumors 65816

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    #19
    There isn't some black and white rich=evil poor=lazy equation here. Different people earn money in different ways, some more noble than others. Wal Mart has been pointed out as being a very lousy employer, low wages, harsh rules, illegal anti union behaviour. Microsoft doesn't even allow most people who work there to actually work for them, they work instead for temp agencies that force them to not work for three months out of the year.
    I would love to see a little more emphasis on how working people are treated, how it affects their lives, how people can get ahead and live well. All too often the emphasis is on the numbers of the business bottom line at the expense of the real living and breathing people.
     
  20. Desertrat thread starter macrumors newbie

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    #20
    I've never denied that some employers skirt or just flatout trample health and safety rules. But is somebody gonna tell me that's the ONLY way to riches? Or that ALL corporations are ALWAYS like that? Or ALL privately-owned businesses?

    Out of curiosity, how many here have worked on an automotive assembly line? An oilfield drilling rig? In a refinery? A steel mill?

    I'd expect the working-wealthy to be older. Success is not an overnight thing. You start in in your middle-twenties, say, and work and invest and do whatever for twenty or thirty or even forty years, and then how old are you?

    The rise of "Temps" has parallelled the rapid change in needs for employees, among other causes. It costs a lot of money to hire an employee, and if a contract-job plays out in a year, what do you do with that employee? One problem is that IRS rules make it extremely difficult to directly hire a "Temp" as a contract employee. (You can hire a contract employee for some short-term job and pay them what you would pay the Temp-boss for a Temp. The TempBoss gets a rather high percentage of the gross charge.)

    However, even with cost-savings efforts such as the use of Temps, the profitability of U.S. corporations has been declining in real terms for almost 30 years, now. Sale prices vs. overhead in the face of foreign competition has been tearing butt. When you're looking at P/E ratios of 30 and more, you might wonder why they stay in business.

    'Rat
     
  21. Ugg macrumors 68000

    Ugg

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    #21
    No to all four of them. Not many if any auto assembly lines or steel mills west of the Mississippi and they are somewhat endangered as well. Increased productivity and technology have increased the rarity of such jobs and the unions have increased their desirability. Refineries and oil rigs are more widespread but it's also hard to come by such jobs. Fishing and forestry are as close as I've come.

    Post WWII, the US had some incredible advantages. Europe, including Russia was a mess, China and Japan the same so the US was able to rise higher and faster than any other country. Detroit has utterly failed to recapture the market after the Japanese auto invasion. Admittedly the JCB's efforts to restrain the Yen are part of it but it's mostly about the quality of their product, not cheaper labor. China is a big problem but US companies keep buying stuff from them and WalMart has become the single largest US importer of Chinese goods. It'll only be a matter of a few years before that bubble bursts.

    Welcome to the world of unlimited free trade. I'm a big fan of BC but IMO, NAFTA and the other trade bills he pushed were too much too soon. The reason he did it was to help US exporters, the result was a net loss in well-paying US jobs. The ag bill that gw signed means that corporate farmers (sort of an oxymoron anymore because small, family owned farms are in the minority) will get richer than ever before but the peasants in Mali, Mexico and other countries around the world will be put out of business because imports from the US are cheaper than homegrown products. I read recently where ag exports are the one bright spot in the trade balance sheet for the US, of course the impact is miniscule.

    The biggest problem facing US manufacturers is the focus on short term profits. Growth needs to be sustainable and steady in order to be labeled growth. If it's not, the end product will be lopsided, stunted on one side and lush and heavy on the other. It's time for the economic boom and bust cycle to be thrown out and long term stability to be encouraged.
     
  22. Desertrat thread starter macrumors newbie

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    #22
    Yeah, Ugg, a lot to agree with, there.

    The comment "It's time for the economic boom and bust cycle to be thrown out and long term stability to be encouraged." has been the subject of many an argument among many an economist and many who frequent the various boards on the subject of money.

    IMO, it's less the rise and fall of economic cycles as much as it is the scale. How high a boom rises; how far it falls. For instance, instead of raising interest rates a bit in the early or mid 1990s, they were lowered, and the boom boomed higher than it "should have", whatever "should have" means. :) Now, with interest rates already ridiculously low, Greenspan has no tools with which to work.

    What's amazing is that the stock market has declined in paper value by over eight trillion dollars since mid-2000, and we're not in some sort of deep recession...

    Governments have been trying to control economies for a long, long time, but "Mr. Market" keeps on whipping butt on all of them. Every effort at control has not only not really controlled, but has made life worse for the citizenry in general. The best one can expect from government is some reasonable effort to keep the playing field level--and it can't do even that in any absolute fashion.

    'Rat
     
  23. Sayhey macrumors 68000

    Sayhey

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    #23
    'Rat,
    One major exception to what you say. The regulation of the market has, by in large, been very succesful. We have yet to see a repeat, knock on wood, of 1929. The many reforms made since then have something to do with that.

    And by the way, 'Rat, while I haven't held any of the jobs you listed, I raised two kids by working as a teamster - driving truck, working on a loading dock, driving a bus and just about anything else with a motor and wheels. No silver spoons here.
     
  24. mactastic macrumors 68040

    mactastic

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    #24
    Nope. Most are fine. I just take exception to your claim that just because you personally have never experienced someone getting rich at your expense that no one has.
     
  25. Desertrat thread starter macrumors newbie

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    #25
    Sayhey, the reason I asked was that anybody who's even been around certain occupations knows that there is inherent danger, no matter how hard Management and OSHA try for safe conditions.

    The only way an oil-drilling rig is "safe" is if it's shut down and not working.

    I saw the GM bus-assembly plant at Pontiac, Michigan. Dust and dirt. NOISE! from all the riveting. To work there for any length of time with air-filter and HearGuards would have driven me totally nutzoid.

    Passenger car assembly line? BOW-ring! A union guy joked to me, "We don't strike on account of more money; we strike on account of boredom." Somehow I can't envision a career of putting the left-side wheels on some model of Chevy sedan...

    mac, in the sense you're talking, I agree. Again, though, making big money is not a zero-sum game. In a solo act, your brain (management) and your hands (labor) can combine to create new value--and thus new wealth. Doesn't matter if it's a painting, a book, a house or a space craft, or whether it's a solo effort or a group effort.

    :), 'Rat
     

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