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0 pointsscarmig2y ago0 comments

Wage income is nearly irrelevant in understanding wealth inequality. It's easy for the working class (which we are!) to see someone else working and making $10M a year and to think, wow, that's where inequality comes from! But that's a rounding error when it comes to wealth inequality. It's capital formation driving it. A wage income in the top 0.01% is extraordinarily well-off, but it would never put you in the top 0.01% of wealth.

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therealdrag02y ago· 2 in thread

Isn’t getting “put” in the top 0.01 wealth essentially just winning the capitalism lottery by betting all your labor and assets on a single venture and having it skyrocket? There was an interesting blog post that said if the early janitors of Amazon took their wages in stock and held it they’d be hundred millionaires. In one sense the mega rich are way overvalued, but in another they “just” played a game we all typically agree too and they wagered harder than most think is sane and got lucky.

scarmigOP2y ago

Hard work, intelligence, and preexisting resources are typically prerequisites, and then a whole lot of luck comes into play.

I suspect taking their wages in stock wasn't an option actually offered to janitors, and even if it had been, they wouldn't have taken it: unmarketable equity doesn't put a roof over your head or put food on the table. Bezos, on the other hand, could afford to take below market compensation (at least liquidity-wise) because he had a pile of money already from his time in finance.

therealdrag02y ago

Totally agree. It’s just an analogy to illustrate the gamboling nature of getting rich and how the starting conditions are more widely available than many people think, it’s just start to finish is very risky low chance of success. For example, as an average well paid engineer, I could afford to gamble with a lot of money and my company even offers reduced pay for extra stock plans but I don’t take it and I sell every RSU I get the moment it vests. And that choice means I’ll never get rich off the stock.

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