WEALTH INEQUALITY AND SKIN IN THE GAME
A well functioning society isn’t one in which people are equal but one in which people have equal *probability*. So measuring static inequality is severely flawed. Take the United States. Less than 10% of the people in the 1982 list of richest 500 were there in 2012. Compare to France where 60% on the rich list today have inherited their wealth. And there are other more robust metrics: 56% of Americans will spent at least a year in the top 10% (in income not wealth). Not in Europe. So a good society is one in which people at the top have *skin in the game* hence can lose their money. Wealth generation should not lead to protected position at the top. Social mobility isn’t in elevating people, it requires the top to open a position. So in Europe a civil servant from the “mandarin class” is safe for life as they extract rent from the system, while a good entrepreneur will run a chance of getting poor, leaving room for others.
For all of his statistical prowess, all of his mathematical acumen, and the renowned strength of his bullshit-o-meter, Nassim Taleb, a Levantine-born New Yorker, is evidently so infatuated with the American entrepreneurial spirit and so repulsed by European Union bureaucracy that he not only makes a logical error in his aforequoted historical assessment, but he also misses the bureaucratic quagmire right under his own nose. Seriously, I have a great deal of respect for the man’s intellectual rigour in general, but conflating can with do and then deriving a moral position therefrom is an elementary error, one rivalled here only by Taleb’s inexplicable preference for “the land of the free” over, well, almost any place on earth.
As to the first point, that “a good society is one in which people at the top have *skin in the game* hence can lose their money” and that Europe is therefore less of a good society because wealthy Europeans are markedly more adept at knowing when to head for the exits than their American counterparts, to quote an earlier article:
Getting rich, though it rarely is, can be just blind luck. That’s why everyone plays -EV state lotteries, right?
Now staying rich, on the other hand, as our Russian friend Mikhail Prokhorov illustrates, is the next level in measuring those deterministic causes. After all, money is merely an effect, not a cause; and holding on to wealth, growing it, caching it away from the prying eyes of states and similar hordes of bandits is no small task. Many fail at it, as the corpses of a thousand Bitcoin “early adopters” well demonstrates, which makes multi-generational wealth one of the most impressive feats man can accomplish.
In essence, a statistical artifact suggesting that America’s soi-dissant “elite” are categorically unsuited to managing the sums of capital they fortuitously accumulated should
i) Come as no surprise to anyone who understands that basic principle that wealth is more than just a number in a bank account and that the dark poverty of the uneducated, which is to say African/American, mind will always burst through even the whitest clouds of fluffed-up prosperity in the end, leaving its bearer as empty as the day he was born and far closer to death.
ii) Be no indication of the opportunities available to citizens.ii
iii) Be no indication of the “goodness” of a society, because seriously, culture is measured in art, not percentages moving up and down like a demented yo-yo.
vi) Be a clear indication that Americans are by-and-large – and I really do mean overwhelmingly so – an objectively worthless, naively destructive, neotenic scum-sucking plague that have polluted the planet with disposable plastic trivialities for the better part of a century ; and that their 500 “richest” are no different.iii
Another, more favourable hypothesis is that Americans are generally speaking more risk-tolerant than Europeans, a theory that would make some intuitive sense given that the former are the descendents of those who could cut it at home and weren’t about to leave when the going was good, while the latter are the sons and daughters of the pioneers who struck out into the new world to make a better life for their children because they were materially unable to do so back in the old country. Of course, the flip side of this theory is that its the slow ones who are left behind. I can see both sides, really.
Needless to say, contrary to Taleb’s proposition, social mobility doesn’t require a spot to open at the top. As Bitcoin is so aptly demonstrating in real-time, spots at the top are created not only in spite of the best efforts of the old guard, but quite often because of the best efforts of the old guard. After all, had Goldman Sachs offered everyone now in the #bitcoin-assets aristocracy a guaranteed career and full pension when they were coming right out of high school, assuming said individuals could be known beforehand and that said individuals gladly accepted, GS wouldn’t be in the unenviable position they are today, where the cat is out of the bag and it’s too late to buy their way out of this mess, no matter how much “consensus” they stir up at their conference freakshows.
As to the second point, that America > Europe because the former is in any way free of its own rent-seeking mandarin class, to quote an alf, look no further than USGavin, Paul Graham, Blablalawsky and their continued ability to buy groceries and pay rent. As to the products of these swine, we’ve got American Idol, Louis Vuitton degrees, ph4iled ph0rks, and not a whole lot besides. The differences between post-post-modern Europe and America are exceedingly slim, the minor difference that Taleb jumps on being that Yurapeans have had a few more generations for parsing the lemma of skill from the palea of luck.
Of course, Bitcoin has an excellent track record of serving up on platters of silver the heads of soi-dissant “people’s champions,” “entrepreneurs,” and “old money” from both sides of the Atlantic – and it shows no signs of letting up off the gas.
Because that’s how social mobility actually works.
___ ___ ___
- While yes, Taleb does seem to be becoming a little more tech savvy of late, he’s still using the shitstains of mass-market media “consensus building” as his online journal. Though I readily grant that he uses the platform to its fullest and that the quality of comments and conversation there are admirable relative to the usual FB cruft, this is a bit like being the best trash can digger in the projects. Oh, you found a used AA battery with some charge left in it ? Good for you.
Really, when Facebook deletes Taleb’s posts at some point in the not-so-distant future for being “criminal” (i.e. belonging to “a thinking person“), he’ll rune the day he trusted Silicon Valley’s most successful scam artists. [↩]
- Some Americans continue to be “lucky” over a longer stretch of time, like The Donald, which I’m more inclined to call “skill,” but the data would seem to suggest that skilled Americans are like skilled leprechauns : sure, they probably exist, but have you ever met one ? [↩]
- The bubble gum barnacles the USians can find no other practicable use for than as water-resisting objets tacked to the hull of The Most Serene Republic certainly don’t point to the contrary. [↩]