It's a lot easier to make billions when you already have millions (like Elon Musk's dad, who joked about how he had too much money in his safe to be able shut the door when his gemstone mine was doing well).

It's a lot riskier to be an entrepreneur when you're living paycheck to paycheck and don't have a family fortune to fall back on.

Extraordinary people also often have extraordinary childhoods. Most teenagers can't borrow their dad's private jet to go sell emeralds to Tiffany&Co, but I imagine that sort of experience comes in handy for a businessman

The fact that Musk's dad had millions does not imply that Musk himself had access to them; according to Wikipedia, their relations were not very good. But yes, being around people who have businesses and millions does give you certain experience and perspective. Despite that, Musk was heavily bullied at school; apparently dad's money could not buy him a private school, or maybe just a better school.

Indeed some childhoods of billionaires are special, like that of Steve Jobs, a highly problematic adopted child who suffered at school so much his working-class family decided to move to get him to another school district.

OTOH, neither Mark Zuckerberg, nor Jeff Bezos appear to have had extraordinary childhoods, or family wealth above a normal middle-class level.

Many of them, though, were exposed to electronics and computers early, and their parents were wise enough to encourage it, or at least to allow.

[Edited: typos.]

Musk’s family probably didn’t own an emerald mine. There’s only one source - Errol Musk - and everyone else who’s willing to talk about it denies it (including Elon) https://www.insidehook.com/article/history/errol-musk-elon-f...

The same is true about that drivel about Tiffany.

Yeah, but they benefited from a system that coerces people to trade their labor for less than it is worth.

Zuckerberg is worth >3x the annual income of all surgeons in the US. It is implausible that his net worth reflects his replacement cost. Even PG has said (to Zuckerberg) that if it wasn't him, it would have been someone else.

The amount of value you can obtain by trading something is by definition what it is worth. If nobody is willing to pay you an amount for something, it's not worth that much.

> It is implausible that his net worth reflects his replacement cost.

Why should it? His net worth reflects the expected value of the portion of Facebook that he owns. Why would it have anything to do with his replacement cost?

Hmm, not really. The cost of labour is actually generally agreed to be the replacement cost of the labour.

As a society, the only thing that we take out of Zuckerberg is his labour, so he shouldn't get anymore than the replacement cost of his labour. In other words, if someone would have done Zuckerberg's work for less compensation - and the GP asserts it is the case - then we as a society lose by having Zuckerberg do it instead of the lower compensated alternative.

In other words, when someone gets paid more than their replacement cost, there is a market inefficiency that causes loss to the vast majority.

He doesn't "get" anything. His net worth is due to ownership in the company he made. When people talk about his net worth increasing, that's due to the shares appreciating. He didn't get more of anything. He owns the same number of shares, they just became more valuable.

Zuckerberg is not employed by society. We're not all collectively paying him a salary.

If you're saying we should completely abolish private property, that's a different thing altogether.

Private property exists because it is an organization of things that is useful to society. That's why we heavily limit it using taxation and so forth.

We allow people to own capital because it motivates them to do some types of work. If we allow people to concentrate more capital than necessary to motivate them to do that work, we lose.

There is no "we" allowing or disallowing anything. Who is this "we" and why do use suppose they have some divine insight into the ideal allocation of capital?

> There is no "we" allowing or disallowing anything. Who is this "we" and why do use suppose they have some divine insight into the ideal allocation of capital?

You only really own something if enough people in society ("we") agree that you do own it. If enough of "us" change our mind (for instance, if your ownership is no longer useful to us), then you don't really own that thing anymore.

We, that is you are free to devalue Facebook stock at any time by not buying it.

The fact that most people are not doing that should tell you that you are not as much a part of the dominant "we" as you think.

> We, that is you are free to devalue Facebook stock at any time by not buying it.

> The fact that most people are not doing that should tell you that you are not as much a part of the dominant "we" as you think.

You missed the point that I was making entirely.

"We" is the People, the Sovereign, the Government, whatever you like, whatever makes laws that allow for private property and regulates it. We suppose they have some divine insight into the ideal allocation of capital because empirically, so far, this system has shown to be the best way to allocate capital in many situations, so we allow it.

Outside of it, capitalist ideology also has the idea of the divine invisible hand of the free market, which is certainly an exageration, but in the real world markets with the proper conditions and regulations are pretty good at allocating capital.

LLCs and copyright law are rather arbitrary constructs which our laws have created in the belief that they promote some benefit to society - be it better allocation of capital, rewarding creators/inventors, etc.

Shares of stock, the secondary stock market - these are also arbitrary constructs which have been created to serve some purpose.

There’s some magical thinking regarding capitalism - that it practically runs itself; that is ensures efficient allocation of capital.

Capitalism may tend to decentralize economic decision-making, and it may tend to align production incentives with actual demand. But, that doesn’t mean it’s efficient. Efficiency would mean that incentives would nearly match the minimum to ensure satisfaction of demand. What we in America have is a system which highly rewards people who control the labor of others. Our society values wealth, not work.

What you wrote is very scary. As someone who grew under a communist party rule, I have come to realize that there is no way to rationalize with communist. I think McCarthy came to the same realization.

This is literally the argument for why communism hasn't worked. Without private property it was impossible to motivate people to do some kinds of work - taking on risk, organizing production, and some kinds of innovation - to a sufficient degree and without many drawbacks.

If someone found a way to motivate people to do those kinds of labour properly - and force doesn't work well for many reasons, so it would have to be non-violent, but without having to allow ownership of capital and wealth concentration, why wouldn't we consider it? The Communists of old thought they found a way to do so and were wrong, but if someone today found a way to do it that doesn't cause many drawbacks, it would be foolish and dogmatic not to consider it, and if it works well, implement it.

Capitalism automatically allocates more resources to those who uses the resources well via markets mostly choosing to buy better or cheaper products. That works much much better than allocating resources via committees or strict laws, until you have a better solution for resource allocation any replacement for capitalism will fail.

However this also means that as long as we keep the resource allocation thing mostly intact you can manipulate all other aspects of it, like adding lots of taxes, giving aid to the poor etc. None of that messes with the main feature of resource allocation, which is why Scandinavian countries still have good economies.

Ah, but you have to make the difference between resources. There's capital, which I agree are often better allocated in capitalism, but other kinds of resources aren't problematic.

Which is pretty much what I said :). Organizing production was a proxy for capital allocation.

> The amount of value you can obtain by trading something is by definition what it is worth.

That is one important definition, but it's just a statement of ideology.

Was Instagram only worth $1bn when they sold to Facebook in 2012. Are we supposed to ignore the fact that Instagram's options were sell for $1bn or face "Zuckerberg destroy mode"?

I feel like there's a false equivalence being made here. You're comparing wage to net worth. Zuckerberg's net worth is not a function of his replacement cost. It's the percentage of his own company that he owns, valued at market price. This happens to be worth $100B at current market levels, but it is independent of whether he continues to work at Facebook or anywhere else. It's not compensation for labour.

Your point is truthful but not completely relevant: Bezos, at least, did receive a considerable amount of money as funding for Amazon from his family. My point is that the money received from parents most often is, in fact, an advantage. Now that I wrote it down explicitly, I wonder why is it that I have to argue this, seems quite obvious.

(Note: I'm not saying the funding from parents was sufficient, or even necessary in Bezos' case.)

I see! It's a transfer between generations, though not an inheritance (which some people suggest to tax heavily).

Again, Bezos got about $300k from his family (both his parents were doctors), which, I think, is far below the level of "unjust inherited fortune" or what is usually people suggest to tax into oblivion.

Yes, when your parents help you, it's helpful — it's nearly tautologically true. This is why I as a parent do help my grown-up son sometimes. Limiting this behavior is not quite realistic, and would be met with a huge backlash (justly, to my mind).

The problem is not intergenerational help, that existed at least as much if not more in times of less inequality. The problem is the size of the spoils. Intergenerational help is only brought up as a counter to the tired "it's your fault if you aren't a billionaire" defense (which is rarely brought up by billionaires themselves but all the time by their broke admirers)

>>> I always like to say that we live in an exponential meritocracy, where your accumulated merit enhances your ability to accumulate more merit, eventually resulting in a small minority rapidly pulling ahead of the pack. Goes with the old adage: turning $100 into $120 is work; turning $100 million into $120 million is inevitable. Perhaps we need a linear meritocratic function.

>> So basically, some way to prevent wealth from being passed across generations?

> Neither Gates, nor Jobs, nor Zuckerberg, nor Bezos, nor Musk inherited their billions. At best they inherited access to the social circles of their parents, and maybe paid-for education (too lazy to check). Knowing the right people is not something you can, or want, to limit or forbid.

But, there are others who did. For instance, just off the top of my head: the Koch brothers, who combined inherited wealth with extensive political activism.

Also, the fortunes of most "self-made" meritocrats can be traced to building exponentially on some elite inherited opportunity, then that kneecaps a lot of the moral reasoning used to justify that those people deserve full control of those fortunes (and thus shouldn't be subjected to heavy taxes).

Gates, Zuckerberg, Bezos, and Musk were all in the top 1% before they started their companies. Jobs's family was middle class, but well off enough to own a house with an empty garage and enough money to get him started. They also fed, housed, and clothed him while he started his company.

Point is, hundreds of millions of people have access to a garage, food, and clothing, yet cannot mirror the success that these men have achieved.

That's not the point at all. The point is that starting a company was not a risk for these men, because they would be just fine if they failed.

And I think you're way off with that hundreds of millions number. I doubt there are that many people that can fully support their adult children, including footing the bill for all startup costs.