"Why do the poor stay poor and the rich get richer?"

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BRUTE
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Re: "Why do the poor stay poor and the rich get richer?"

Post by BRUTE »

vezkor wrote: The strongest correlation, IMHO, between personal success and personal ruin seems to be whether or not an individual has a generally internal locus of control
of course, the correlation could also be due to everybody being correct, and people not having control being unsuccessful ;)

in other news: playing basketball makes humans tall.

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Sclass
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Re: "Why do the poor stay poor and the rich get richer?"

Post by Sclass »

Spartan_Warrior wrote:@Sclass: Yeah, I've had this debate here re: mindset vs. bank account. If you want to put it that way I might concur that ERErs have the mindset of the wealthy er...
Mindset. That's the right word for it. Well said.

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Re: "Why do the poor stay poor and the rich get richer?"

Post by jacob »

Bank accounts are paramount by construction of the socio-economic scale ... but only someone from the middle-class cares about the socio-economic scale. That's how you recognize the middle-class ppl ;-)

My dislike for travel---in the geographical sense, at least when it comes to places reachable by airports---is somewhat notorious. I often remarked that all developed countries are more or less the same and that you can learn more about the human condition [in the developed world] by travelling a few miles across town from 'University Campus' to 'Government Facility' and then to 'Trailer Park' or from there to 'Financial District' and from there to 'School Teachers and Firemen' or 'Military Families' than you can by flying across the world to hang out with your own kind at the local cuisine offerings while talking about the "'istory, culture, food" as spoken in some self-important travel-blogger accent.

In regards to "anthropological studies" in the developed world, I think I'm rather very well "travelled", much more than most. I find it [this kind of travel] interesting and have kind of made of life mission out of it. This is partially what made the ERE book possible. Basically, I think have a good idea about "the territory". I know a nine-fig and few eight-figs [in USD]. I know a DC lobbyist. I know people in high science. Or top google-ranks (that's a thing now) ... I've also been to "trailer trash funerals" and invited to a wedding where most guests belonged to a gang and mostly talked about taking falls and going to prison. (That was weird :shock: ) Not really intended to start a d*-measure-contest here but more to point out that I've been "places" and that my Kevin-Bacon numbers both in the direction of the supreme top whether it's politics, finance, academia, not art though, ... or rock bottom, where people are barely scraping by, is quite low, at most 2 degrees: In all likelihood, I know someone who knows the [kind of] person you want to talk to.

Point being, I've covered most of the territory within a 2-sigma distribution. I might have some clue about how the developed world works in terms of "classes" :? :geek: or maybe rather that I have more of a clue than most but that the problem is extremely complex, so I might be wrong (even if that's hard to believe :? :lol: )

Feel free to disagree. I might learn something. But here's how I see it ...

First, most people/academics/theories only consider a single idiosyncratic dimension of the territory, e.g. income. Basically most theories presume to explain everything by some kind of intersection along a single dimension. I think this is misguided. I see multiple different kinds of "capital". In particular, different people focus on different kinds of that capital.

The socioeconomic poor focus on favours and tribe. "I'll mow your lawn. No, definitely don't pay me. Maybe you'll watch my dog for me some day." "Of course I'll do that. You're in my tribe. Don't mention it." (Most important kind of capital: Social/tribal)

The socioeconomic middle class. "You gave me some tomatoes or watched my dog. Now I feel obligated to reciprocate so as to even out the balance, maybe I give you a cake [of equal value] or pay you $100 or whatever the going market rate is. At work, if I do something quantifiable, like, I work really really hard, then you'll obviously reciprocate and promote me." (Most important capital: money/metric scores)

The socioeconomic upper class. "Don't worry, I know some people. They're great people. I'll connect you to them. We'll make a deal." (Most important capital: information) [No, not all of them talk like Trump :mrgreen: But Trump is a great example of the upper class. Notice how he doesn't give a fark about supreme middle class values such as being educated/informed/consistent/... that's because his life/values haven't been built up around the idea of being a good professional drone, unlike most people who vote D or most politicians who speak "middle class" (that's the job of politicians by the way; it's why the upper class pays them!). Incidentally, if you want to dispute this, please start another thread!!!]

The ERE class. Very different. Has certain values in common with all groups. It's intentionally designed this way.

In many ways, the middle class is special. It's an exception or an aberration. Whereas the upper class is quite like the lower class but with lots of money + the vocabulary to impress the middle class. After all, the middle class has been well trained to worship money and education as a metric.

Now, each group has their own methods for maintaining group coherence. For the underclass, it's crab mentality. For the middle class, it's debt, "education" (especially the kind that's taught at 'liberal universities') and careerism. For the upper class, it's surnames, tradition, and family. The upper-class sends their offspring to Harford, not for the superior education (I have it on reliable sources that it's not) but in order to hook up with the offspring of other families. The goals are different.

This is entirely separate from the observation that any kind of capital tends to grow where it's treated well... but please consider how different kinds of capital are treated in different kinds of places. Then it should be obvious that the question why the poor remain poor and the rich remain rich is an oversimplication and also why it's a fact.

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Re: "Why do the poor stay poor and the rich get richer?"

Post by Dragline »

jacob wrote:
My dislike for travel---in the geographical sense, at least when it comes to places reachable by airports---is somewhat notorious. I often remark that all developed countries are more or less the same and that you can learn more about the human condition [in the developed world] by travelling a few miles across town from 'University Campus' to 'Government Facility' and then to 'Trailer Park' or from there to 'Financial District' and from there to 'School Teachers and Firemen' or 'Military Families'. In regards to "anthropological studies" in the developed world, I think I'm rather very well "travelled", much more than most. I find it [this kind of travel] interesting and have kind of made of life mission out of it. This is partially what made the ERE book possible. Basically, I have a good idea about "the territory". I know a nine-fig and few eight-figs [in USD]. I know a DC lobbyist. ... I've also been to "trailer trash funerals" and invited to a wedding where most guests belonged to a gang and mostly talked about taking falls and going to prison. (That was weird :shock: ) Not really intended to start a d*-measure-contest here but more to point out that I've been "places" and that my Kevin-Bacon numbers both in the direction of the supreme top whether it's politics, finance, academia, not art though, ... or rock bottom---people who are barely scraping by---is quite low, at most 2 degrees: I know someone who knows the [kind of] person you want to talk to.
There is another book here -- it will be "Hunter S. Thompson"-esque. "Fear and Loathing in Anywhere USA", maybe.

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Re: "Why do the poor stay poor and the rich get richer?"

Post by Spartan_Warrior »

@Jacob: For the most part, I agree with your post, except one critical difference of opinion (or definition?): You say the most important capital of the wealthy is "information", but I would characterize it as "access/influence", which your Trump-talk example actually exemplifies. "I know someone. I have connections. I have (socio-political) power and influence. (And the reason I'm having this conversation is probably to gain more of it.)" To me that is what epitomizes the wealthy class. Maybe I'm wrong.

I only brought up the class issue because, personally, my answer to Olaz's question might differ* depending on whether "the rich" means "the rich as a socioeconomic construct" or "the upper middle class/early retirees/anyone with above average wealth".

*Only slightly; I still think the primary reason people with money end up with more money is the nature of money to compound and grow. With "the rich", it's a much bigger factor IMO. The other big factor for them being their ability to influence politics in their favor to accelerate and/or remove hindrances to that natural tendency of money to pool. On the other hand, with "the upper middle class/ERErs/etc", I would say things like spending habits, staying out of debt, having valued skills, etc, would be more important factors to "getting richer".

Basically, I x2 this:

"This is entirely separate from the observation that any kind of capital tends to grow where it's treated well... but please consider how different kinds of capital are treated in different kinds of places. Then it should be obvious that the question why the poor remain poor and the rich remain rich is an oversimplication and also why it's a fact."

Also, x2 Dragline. :D

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Re: "Why do the poor stay poor and the rich get richer?"

Post by jacob »

Spartan_Warrior wrote:@Jacob: For the most part, I agree with your post, except one critical difference of opinion (or definition?): You say the most important capital of the wealthy is "information", but I would characterize it as "access/influence", which your Trump-talk example actually exemplifies. "I know someone. I have connections. I have (socio-political) power and influence. (And the reason I'm having this conversation is probably to gain more of it.)" To me that is what epitomizes the wealthy class. Maybe I'm wrong.
Trading information is how you build up the "access/influence" capital. People go to the Ivies to learn how and who (the children of other well-connected families) to trade such information with. Similar to how the underclass sends their kids to "college" to get a shot at the middle class---in the sense of lifting 50 pounds and managing a few people; the upper class sends their kinds to Ivy to maintain the "aristocracy"---it's like going to court and playing Machiavelli. What's unique about the US system is that the "aristocracy" actually allows for middle class phenotypes to enter it if they figure out how to play they game. You don't have to be born into it (genetics) unlike most other countries. The US system is actually superior in this sense because it attempts to gain the best of both worlds. It allows for stability through the interconnections of the ruling class but on the other hand it mostly selects for merit (over a timespan of 2-3 generations) while rooting out stupidity. Of course, sometimes this process is not fast enough :? However, it's not nearly as bad as a traditional monarchy and it has more stability because everybody in principle has a shot. See what I did there? :(

Another example of the information asymmetry is how the middle class mainly dabble in the secondary markets: they trade in stocks, bonds, etc. The upper class dabble in the actual economy of businesses... power... the primary market. If a business is highly profitable, they keep it for themselves (private equity). If it sucks or becomes too big, then it's sold to the middle class who'll happily accept it because they believe they're "investing" when they're mostly eating ... well ... crap. Also known as an IPO, the middle class actually thinks these are good things. They're not. However, before anyone gets their panties in a twist, consider that crap with a ROI of 6-10% is still pretty yummy. It's just not same as the 25-50% ROI that the informed and consequentially connected people enjoy.

Now, if you'll excuse me, I need to go dip myself in bleach and have a drink :|

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Re: "Why do the poor stay poor and the rich get richer?"

Post by tommytebco »

the question is posed as axiomatic. IN FACT IT ISN'T ALWAYS. Some poor people migrate to better circumstances. Some Rich scions piss it away.

In my opinion, the80% median seem to stay in the status that they were born into.

So that "thus is has been, and so shall it always be" is more or less statistically true. But, the stories (good and bad) were written based on truth. Horatio Alger stories happen some of the time. The robber barons were real, if not as evil as portrayed. And some scions were given a sense of purpose to share the wealth (Rockerfeller family for one).

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Re: "Why do the poor stay poor and the rich get richer?"

Post by Locke »

jacob wrote:
Another example of the information asymmetry is how the middle class mainly dabble in the secondary markets: they trade in stocks, bonds, etc. The upper class dabble in the actual economy of businesses... power... the primary market.
Jacob,

Your ideas are always enlightening. Your quote above goes against my intuition... Many investors attempt to create a primary business, though only about 1 in 30 succeed...Many fortunes have been destroyed through primary ownership of unprofitable businesses (See professional athletes for examples). Whereas, the ownership of index funds (mostly middle class owners) seem to have much lower risk and a large chance for success. Serendipity plays an important role in the creation of upper class wealth through profitable primary ownership of businesses...At the end of the day, you're right that primary ownership is the key to substantial wealth; however, those of us working on early retirement have a greater chance of finding it with help from the secondary ownership than taking a chance with primary ownership.

On a related note, I was quite surprised to see a lawsuit from the faculty at MIT and Yale, who believed that they had too many options for their retirement plans...In one case, the complaint alleged that there were over one hundred funds to choose from. Apparently, the brightest minds in the world (MIT and Yale professors) have not taken the time to become financially literate! I would have been excited to see so many options.

Locke

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Re: "Why do the poor stay poor and the rich get richer?"

Post by thrifty++ »

jacob wrote: But Trump is a great example of the upper class. Notice how he doesn't give a fark about supreme middle class values such as being educated/informed/consistent/... that's because his life/values haven't been built up around the idea of being a good professional drone, unlike most people who vote D or most politicians who speak "middle class" (that's the job of politicians by the way; it's why the upper class pays them!). Incidentally, if you want to dispute this, please start another thread!!!]

The ERE class. Very different. Has certain values in common with all groups. It's intentionally designed this way.

In many ways, the middle class is special. It's an exception or an aberration. Whereas the upper class is quite like the lower class but with lots of money + the vocabulary to impress the middle class.
I have experienced this during the rare occasions I have been in the company of the upper portion of the upper class> Upper upper class"? Multi millionaires in any event. A few people I have met have had terrible manners. Would eat with their mouth open, swear, spill their food, be inconsiderate and rude. One lady of such class I had dinner with along with another friend was virtually indistinguishable from homeless people on the street. I was so embarrassed. She also did a cheers and said "to the one percent".

I think the rich behave with bad manners because they think they are too powerful to lose and the poor behaves with bad manners because they think they have nothing to lose.

BRUTE
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Re: "Why do the poor stay poor and the rich get richer?"

Post by BRUTE »

maybe they're both right

Spartan_Warrior
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Re: "Why do the poor stay poor and the rich get richer?"

Post by Spartan_Warrior »

@Jacob: "...everybody in principle has a shot. See what I did there?"

Took me longer than I'd like to admit. :lol: But, yeah... pretty much.

"Another example of the information asymmetry is how the middle class mainly dabble in the secondary markets..."

Thinking on this more... isn't this still an access/connections issue, though? I'm thinking of the thread I made a few weeks ago regarding investing in potable water, for instance. It appears that big money investors are buying up farm land with water rights as part of this play. As a middle class investor, I can't get close to that kind of trade. Is that for lack of information or lack of access? Granted, lack of information can be seen as part of it--I don't necessarily know the exact details in how to invest in farms--but that seems far less insurmountable an issue than my simple lack of access to those kinds of deals, due to my lacking the (presumably tremendous) capital required to do so. It's not that I'm unaware of the primary markets or even what play to make (information asymmetry), it's that I just don't have access to the primary markets.

I definitely get that trading information is how you build the access--especially if we're considering social capital as a kind of information, e.g. "Who you know". Maybe I'm quibbling.

BRUTE
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Re: "Why do the poor stay poor and the rich get richer?"

Post by BRUTE »

Spartan_Warrior wrote:@Jacob: "...everybody in principle has a shot. See what I did there?"

Took me longer than I'd like to admit. :lol: But, yeah... pretty much.
brute's analysis indicates that a joke has been made by jacob and understood by Spartan_Warrior. brute requests explanation as it went completely over his head.
Spartan_Warrior wrote:Thinking on this more... isn't this still an access/connections issue, though?
brute suspects that what Spartan_Warrior means by "access" and jacob by "information" is almost the same thing in this case. having really valuable, really scarce information is akin to having access, and access, if not defined by the physicality of a key or what not, is a type of information ("who does brute have to talk to").

everybody's a winner :)

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Re: "Why do the poor stay poor and the rich get richer?"

Post by Spartan_Warrior »

@BRUTE: Homophone pun, principle vs. principal. Compare "everyone in principle has a shot" to "everyone (with) principal has a shot". ;)

BRUTE
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Re: "Why do the poor stay poor and the rich get richer?"

Post by BRUTE »

jesus F. christ

thanks. brute will go back on his humor medication.

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Re: "Why do the poor stay poor and the rich get richer?"

Post by jacob »

Nooo! God, no! :cry: That's not it at all.

The key difference between classes(+) is Orwellian in nature. Mostly in lenses (frameworks), but also in words and values. The frameworks are entirely different. Even if the words (e.g. "investor" or "wealthy") that are used are the same, they invoke entirely different concepts in the minds of people of different classes.

Controlling vocabulary, values, and frameworks is an extremely effective means of human mass-control. I wrote the ERE book trying to do some deprogramming of the middle class salary man(*). Plato's Cave for starters. A meta-framework to indicate what if anything you're missing. This was done mostly in labor-financial terms (salary, work, business, renaissance) as it was aimed at "normal people" or at least anyone who could be reached by such levels of abstraction.

(+) I didn't say _the_ classes, because how do you know that your classification is accurate. Like, how do you know you aren't being unconsciously (as in "unconsciously incompetent"---stage 1 of the stages of competence) controlled by unquestioningly accepting the standard framework as being handed down to you by .. who? (Key-point: Most people have never considered this. They are not aware of their own prejudices.)

(*) Just as an example of the depth of which this widespread inability to think outside the box went, I was almost immediately attacked by a few people because I said "man" and not "person". These, uh, persons had been trained to realize that some [women] wouldn't realize that "man" also applies to "woman", whereas in my mind/framework (growing up in a country about 3-5 decades ahead of the US in terms of social liberty evolution), those two terms are interchangeable. So keep that metaphor in mind when considering other kinds of classes. Are you oblivious to a class distinction? Or are you extremely focused on the distinction? Or do you think it should be obvious to everybody already?

What I didn't do (in the ERE book) was to go into politics and government at a similar "why it works and this is what you're missing". A strong test for middle class is if you think that "left-right" (D/R) matters or that the difference between rich and poor is money. It's not. That distinction only holds within the middle class to distinguish upper and lower middle class.

Anyhoo, what "I just did there" [in what was not intended as a joke] was to sell you the dream of progress (a middle class concept) by strictly using words and arguments that ONLY the middle class would find appealing: _education_ is good; education is a way to get _ahead_; making it possible to get ahead creates _stability_. In other words, I made an argument for the current system using middle class values which I underlined for your convenience. I added some oomph by taking advantage of the widespread belief [based on exceptionalism] that the _US_ system is the _best_. (The best at what, you should ask yourself?!(&)) Did it work...hook, line, and sinker?

(&) Not meant rhetorically. It's certainly better at certain things than other systems.

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Re: "Why do the poor stay poor and the rich get richer?"

Post by Spartan_Warrior »

Looks like the joke's on me! I thought your use of the word "stability" was peculiar, TBH, but otherwise, no, I didn't catch that you were... demonstrating Orwellian diction-entrapment? Or what have you. That doesn't mean I bought what you were selling, though, for the record. Naturally, talking about merit and our system being the best and "everyone having a shot in principle" fits my worldview much better, perhaps only, with the pun assumed. Guess I must be middle class. Who knew? :)

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Re: "Why do the poor stay poor and the rich get richer?"

Post by jacob »

@SW - Yeah, sorry, but you walked right into that. Now I didn't even expect that to happen, so no entrapment intended. But I had to respond before my original point was dismissed as a pun (I didn't realize it when I wrote it.). You just missed all the fnords.

This is why I've changed my mind about education (another word that means different things to different classes). For a long time (during most of the ERE blog era), I kinda went along with the Good Will Hunting quote that a college education is the equivalent of a library card and 50 cents in late fees. I've changed my mind on that since then. At least for some people going to college, it's a chance to change their lenses (as in "mind blown"/never thought what way... not to be confused with "never thought about it that way"). I had similar opinions on travel until I realized that for those who've never left their State [of birth] more than once, travel really is a great way to gather some more lenses.

Edit: I should be clearer here. That's not just going to "some college" and it's definitely NOT about getting a laserprinted diploma. Going to college should primarily be an exercise in meeting people from other classes (that includes professors and their ways of thinking!). This is the valuable social experience---compare to getting drunk/naked with people from your own class during a $50,000/semester student loan resort hotel experience complete with climbing walls and interactive edutainment lessons. The same goes for travelling. In terms of perspectives: If the goal is to "see" Italy, Spain, Portugal, Belgium, Luxembourg, the Netherlands inside of 2 months along with your fellow tourists, it's useless from the perspective of expanding perspective. Much better to live outside the US in some place for long enough to see the US from some _rooted_ perspective.

In my experience, most people are rather devoid of lenses, save the one they grew up with. This, incidentally, is also why the system is stable. Note, I'm not saying that the current system is bad. I rather enjoy that we don't have ongoing revolutions, progroms, or other kinds of mass instability. Maybe it's the best we can hope for wrt a human society. (I do somewhat display my middleclass origins---I'm not sure where I belong anymore---but my affinity for stability is definitely rooted in M-class)

Also see, http://earlyretirementextreme.com/what-is-freedom.html

PS: Diction is just a matter of fortunate convenience, e.g. that the middle class actually think of themselves as "investors" when they have Fidelity et al. DCA'ing 15% of their paycheck into a predictable rebalanced asset allocation on day 25 or 27 of every single month. The [different] frameworks are the important ones. Don't dismiss vocabulary as a straw man.

BRUTE
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Re: "Why do the poor stay poor and the rich get richer?"

Post by BRUTE »

brute is pleased to learn that jacob has come around on "travel" - maybe another vocabulary straw man victim, as many people (middle class?) equate it to cruise ship tours and visiting all of Europe in 7 days.

brute wouldn't say that only having the "starting lens" makes individuals more prone to crave stability.

in brute's experience, collecting more lenses makes individuals a)more interesting, and b)more cynical. they learn that what people believe in any given place at any given time is ridiculous when removed from that context, but very important to them there and then.

individuals with enough lens-span (i.e. not just many lenses, but enough different ones) become somewhat nihilistic/deterministic/fatalistic, but in a good sense. in a "nothing matters, let's take our time finishing lunch" type of sense. they also become a bit lonely. it's hard to identify with humans that just can't imagine anything greater than a friday night football game vs. that scumbag rival team from one town over.

brute is also convinced that it's impossible to really appreciate one's native lens/country/culture in an adult way unless one has seen it from afar through another lens. humans that love their home town more than anything else, but merely because they've never left it, always strike brute as naive and childlike. not in a bad way, but it's hard to take the claim serious when they haven't tried anything new, ever.

"education" has traditionally been a way to collect lenses, but so has travel of the way jacob has described.

Dragline
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Re: "Why do the poor stay poor and the rich get richer?"

Post by Dragline »

Sometimes I wonder if what really ails America is that many if not most Americans are unwilling to just pick up and move the way their ancestors did when their lives weren't working out the way they wanted or hoped.

Loyalty to birthplace/origin just seems like a foolish consistency.

BRUTE
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Re: "Why do the poor stay poor and the rich get richer?"

Post by BRUTE »

Dragline wrote:Loyalty to birthplace/origin just seems like a foolish consistency.
loyalty to anything

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