Luck And Capitalism

Sometimes we might wish we had a father who could give us a small loan of one million US dollars. If only we had money, we could buy a fancy car, we could pay off the mortgage, we could pay the utilities on time. Sometimes we might wish that the family we were born to were more wealthy or better off. Sometimes we wish we might invent the next big thing. But I mean it could have been worst. The fact that you have time to spend reading on this platform means you have it better than someone, even if you are dead broke. It means that you are lucky whether you think you are or not.

You probably were not born here, most people with internet access aren't

Daddy's Money: Inheritance and Generational Wealth

Some people are born with no money. Some people are born with a little money. And a lucky few are born to a huge fortunate. One could criticize capitalism because some people are born to a certain amount of wealth while others aren't. Thus, we should tax the rich people more so that we can give the less fortunate better opportunities. However, inheritance really isn't the issue. A person should be free to share their fortune anyway that they please. Sure, their kids are in a better position than some stranger on the other side of town, but parents have no obligation to give their money to their kids. They just happen to do this a lot, because I mean they are their kids.

Nobody Deserves Success

Success is determined by two things. Luck and "Hard" Work. If you work at something and are lucky, then bang: You have success. Some people claim that they deserve their success. But that is like saying that a kids who receives money from their parents deserves their success. Nobody deserves success.

In case, you missed that: Nobody deserves success.

You may disagree with me, but take a look at the equation for success. One part work. One part luck. Now if you do lots of hard work then maybe you need less luck than somebody who puts a little effort hoping to reap huge rewards. A person that starts a business and puts in 80 hour work weeks needs less luck than someone who drives to the convenience store to buy a lottery ticket. But you still need luck. In this world, there are people who win the lottery and there are people who put a lot of effort into a business that ultimately fails. The person who wins the lottery is not undeserving. You could have played the lottery. They simply are lucky.

Capitalism: A Lottery

Many people claim there are problems with capitalism. But all of these problems can be reduced to a single problem. Luck. The fact that deserving people fail and undeserving people succeed. That some rich people get richer with little effort and some poor people struggle to gain enough security to pay the day to day expenses. We need social safety nets because there are those who are less fortunate. People critique capitalism because they cannot control it.

Capitalism facilitates the trade of value between different parties. Everybody with they are born starts out with zero value. But some people win the lottery with their parents. They are lucky enough to receive value in return for being a child of a wealthy parent. Most kids receive value in return from their parents, but it is often not a lot. Some people are lucky enough to be born at the right time. If Bill Gates was born twenty years later, I'm willing to bet you that he wouldn't have been a billionaire. That fact that he was born when he was allowed him to conquer a then infantile software industry.

Outside of birth, some people in life just happen to meet the right people at the right time. Some people have great mentors or teachers earlier in their life. Some people just happen to have a novel idea at the right time and are able to capitalize on it. All of this stuff is luck. With a little work and some luck anyone can find an opportunity where they are on the right side of a deal. Those who invested in bitcoin at a few dollars a piece are lucky. Bitcoin could have just as easily be worth nothing now.

Life is like a lottery, you never know the winning numbers

There Is No Certainty

People like certainty. I want certain things to go certain ways. I want to know that if I put in the hard work, I'm guaranteed success. But certainty is impossible. But that doesn't stop people from attempting to build systems that seek to control uncertainty and promise everyone some level of success. Sure, that system may work for some limited period of time, but that is because that system is lucky, not because it is working.

One could consider Venezuela "a success" fifteen years ago. But their system was lucky in that oil was given a certain value that it simply does not have anymore. Certainty is impossible even for those systems that try to implement it.

For the meanwhile that means we will have to accept that luck plays a major role in determining winners and losers. We can at least take some solace in the fact that the hard work plays into the success equation. People who work harder tend to earn more. This is because they are minimizing the impact the role that luck plays in their lives. A person who studies more is more likely to answer the questions better since they have more information. They don't know what is on the test but are more likely to see something they know because they know more. There is still luck involved there, but you can minimize the impact of luck in a lottery by buying more tickets.

So buy more tickets. Just in real life. The real lottery is mathematically rigged against you.

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