Atlas Shrugged

The Weight of Wealth and the Balance of Fortune

This week is another post rescued from the Medium archives. Though its foundation was written almost ten years ago, it has been enhanced with more thought-provoking references. Enjoy!

Wealth and its accumulation have always been subjects of fascination and debate. Common sayings and beliefs about wealth often contrast starkly, leading to a myriad of perceptions about the wealthy.

The Rich Get Richer

The Rich Get Richer is sometimes followed by the phrase “and the Poor Get Prison.” I am sure you are familiar with:

It Takes Money to Make Money

I am sure there are others, but somehow these are the ones that have been burned into our minds as seemingly accepted facts for the world we live in. However, there is an old joke:

Q: What is the easiest way to become a millionaire?

A: Start with a billion dollars.

Numerous tales abound of lottery winners who swiftly reverted to their previous financial states despite their windfalls. Similarly, there are accounts of sports stars and celebrities who, despite amassing vast fortunes at the peak of their careers, eventually faced bankruptcy. Beyond these individual narratives, a common sentiment echoed across various cultures is that wealth often doesn't endure through multiple generations.

1. English: Shirtsleeves to shirtsleeves in three generations

2. Britain: Clogs to clogs in three generations

3. Chinese: 富不过三代 (fu bu guo san dai) — Wealth does not pass three generations

4. Italian: Dalle stalle alle stelle alle stalle — From stables to stars to stables

5. Spanish: Quien no lo tiene, lo hace; y quien lo tiene, lo deshace — He who doesn’t have it, makes it and he who has it, wastes it

6. Japanese: 三`代目が家を潰す’ — The third generation ruins the house

Is it that the affluent perpetually amass more wealth, or do they eventually deplete their fortunes? The reality might be more nuanced than either extreme suggests, a contemplation worth considering regardless of one's current financial standing. When observing from a less privileged perspective, it's crucial to recognize that many wealthy individuals began with humble beginnings. Paradoxically, while wealth is often viewed with skepticism, it remains a coveted aspiration for many. Society readily accepts individuals investing vast sums in lotteries, hoping for a singular windfall. However, eyebrows are raised when someone, through hard work and innovation, establishes a successful business. Such individuals often face criticism for not redistributing their wealth more broadly, be it through taxes or other means.

President Obama made this somewhat controversial comment some time ago:

There are a lot of wealthy, successful Americans who agree with me — because they want to give something back. They know they didn’t — look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there.

A common misconception is that the accumulation of wealth by one individual inherently prevents others from achieving the same success. However, wealth is not a zero-sum game. One person's prosperity doesn't diminish another's potential for wealth. Here are some assumptions that need reevaluation:

1. Wealth as a Finite Resource: The idea that if one person becomes wealthy, it limits the opportunities for others is a fallacy. The economic pie can grow, allowing more people to partake in its benefits.

2. Born Wealthy: It's a misconception that all affluent individuals have been wealthy from birth. Many have climbed the ladder from humble beginnings.

3. Seeking Assistance: There's a notion that seeking help or mentorship is a sign of weakness or that success should result in equal rewards for everyone, regardless of effort or innovation.

4. Philanthropy: The belief that the wealthy don't give back is far from the truth. Many affluent individuals are at the forefront of philanthropy and charitable endeavors.

For instance, Chuck Feeney, as highlighted in "The Billionaire Who Wasn’t: How Chuck Feeney Secretly Made and Gave Away a Fortune," went to great lengths to donate his wealth, leaving lasting legacies worldwide. Bill Gates, through The Giving Pledge, has committed to using his wealth for greater societal benefit. Furthermore, even if wealth diminishes over generations, it often creates employment and opportunities for countless others along the way.

In essence, the journey to wealth and how it's used can have a positive ripple effect, benefiting many beyond the individual.

Building a successful business can sometimes feel akin to using all your savings to buy lottery tickets. Both scenarios involve a significant element of risk, and while hard work and determination can tilt the odds in favor of entrepreneurs, luck remains an undeniable factor.

Many ambitious individuals venture into the business world, but a significant number find themselves in the metaphorical graveyard of failed enterprises. There's no shortage of hardworking individuals who pour their savings, time, and energy into bringing their visions to life. In doing so, they often place everything on the line, much like an all-in bet. While purchasing a lottery ticket at your local convenience store might offer a straightforward chance at winning, the entrepreneurial journey is more intricate. It demands not only hard work but also a considerable amount of luck.

Consider Steve Jobs, who reinvested almost everything he earned from Apple into Pixar, long before it was recognized as a major player in the animation industry. Warren Buffett's biography, “The Snowball: Warren Buffett and the Business of Life,” sheds light on instances where sheer luck played a pivotal role in shaping his illustrious investment career. Elon Musk, when quizzed about the essence of a great entrepreneur, responded with, “A high tolerance for pain.” He reflected on the tumultuous period in 2008 when both SpaceX and Tesla were on the brink of financial collapse, compounded by his personal challenges. Similarly, in the early 1990s, my family's business teetered on the edge of bankruptcy.

In essence, while hard work, determination, and resilience are cornerstones of entrepreneurial success, the unpredictable hand of luck is undeniably interwoven into the fabric of business triumphs and failures.

In the intricate dance of wealth and success, it's essential to understand that the wealthy do not inherently create the impoverished. Wealth is not a zero-sum game; one's prosperity doesn't automatically result in another's destitution. However, the journey to wealth, marked by its highs and lows, can sometimes inadvertently contribute to economic disparities on both ends. Entrepreneurs, in their pursuit of success, often risk everything. When they face setbacks, whether due to changing global dynamics or mismanagement by subsequent generations, they can inadvertently add themselves to the ranks of the less fortunate. Moreover, the many aspirants who embark on the entrepreneurial path and face early failures might find themselves grappling with significant losses.

Yet, it's crucial to remember that these outcomes are not deliberate acts but rather the unpredictable results of ambition, risk, and the ever-present hand of luck. As we navigate discussions on wealth and poverty, it's vital to approach them with nuance, understanding the multifaceted nature of success and the myriad paths that lead to it.

Choosing to embark on the entrepreneurial journey is akin to deciding whether to play the lottery: there's no victory without the risk of defeat. Those observing from the sidelines should strive to understand the full spectrum of the entrepreneurial experience. It's easy to spotlight the glaring success stories and cry foul over perceived inequities, but it's equally crucial to recognize the silent majority who dared to dream and faced setbacks. Remember, every success story is but the tip of an iceberg, with countless untold tales of struggle and perseverance submerged beneath