Post No.: 0285
Continuing on from Post No.: 0253 and the topic of how it’s easier to get richer if you’re already rich, whether one inherits one’s initial wealth or earns it…
Anyone can become self-made (or ‘self-made’) rich but the difference in luck is that it’s far, far more difficult for some than for others. And it’s down to luck because they cannot change it to make it easier for themselves (e.g. they cannot choose their own parents or upbringing environment). Where there’s inequity, the poor have to work much harder than the rich to get the same desired results. If you have to ‘work harder to be just as lucky’ then you’re logically not one of the lucky ones.
Rich people tend to hang around with other rich people hence their networks and contacts get even stronger, which benefits their own children. (Rich people are occasionally leeched upon by people pretending to be their true friends but are only really there for their money though, so for this reason it’s understandable that most rich people end up preferring to hang around those with a similar level of wealth, but that’s hardly the only or main reason they do so.) Rich parents influence their children’s ambitions, encourage them and can support them financially too. This is not a criticism of their parenting – it’s just to point out that not every child is as fortunate.
When children are naturally gifted but come from poor families, their parents often try to curb their ambitions to become, for example, music stars or sports stars, because they’d rather them do something relatively safer like become a doctor, accountant or lawyer. If you want to become a professional race car driver then you’ll probably need around $200k in total, so even if you have the proven raw talent to drive fast as a youngster, you’ll still need to have lots of money to have the opportunity, which means that it’s who you know that’ll make the difference, which may mean the parents you never chose and what they invest in time and other resources into you. Some parents do make huge sacrifices for their children but they still need to have something to sacrifice and to offer in the first place if so. And they’ll need to be there for a start.
Of course, rich parents can also directly give large inheritances to their children to help them on their way (and what some rich parents consider a ‘small’ inheritance is actually quite large), which is unfair against their poorer peers of the same age i.e. it’s not even nearly a level playing field. Evidently, many existing rich businesspeople received massive leg-ups, even if some of them arrogantly and out-of-touch disregard them as being insignificant for their careers. With a ‘small loan’ of a million dollars from one’s parents, one might even end up as President of a large country one day!
Eventual politicians and/or eventual billionaires both need money to start – often a lot of money. There are examples of those who make it into government and/or make billions who started from a ‘working class’ background but these are the relative exception rather than the rule – the odds are so low that it’d be irrational to think you’d make a billion in your lifetime unless you were born into significant riches already. But if the rational life path for a poor person is to just play it safe and settle for a simple career that puts food on the table then it shows that the opportunities are hardly equal for everyone.
It’s also far easier to be ‘brave’ when you’re rich. If you try something risky but will lose a lot of money if it fails then you’ll still be fine because you’ll still have a lot more money left or you’ll know that you’ll be bailed out by your family – so go for it! So with the backing of wealthy parents, children can start businesses and seem entrepreneurial, but if their businesses fail then they will still be fine. These businesses might not get bailed out but these children will not go homeless or even sometimes car-less, holiday-less or struggle to start another business again – so they are essentially bailed out. Despite some parents claiming that they wouldn’t ever bail out their own children – they ultimately will if they can because it’s family and it’d be heartless not to, which in that sense is fair enough. But this all means that the personal risks of entrepreneurship for children of wealthy parents are less than for children of less wealthy parents.
Some rich parents fraudulently help their children get into college if they can afford to pay the kickbacks (e.g. bribing coaches to provide fake athletic scholarships) and/or if they have the internal connections – including, in the US, ‘legacy’ considerations i.e. if a relative is an alumni member then this helps admission. But where’s the meritocracy?! (And what happened to ‘affirmative action’ because these legacy members are more likely going to be white and rich?) Well if you’re super-rich then you could donate an entire building or something large to improve the chances of your children getting accepted in a college! Philanthropy sometimes has an ulterior motive, such as gaining influence or publicity to serve other self-interests indirectly. And every undeserved student means a deserved student is denied. (This scandal has only been relatively recently exposed in undeniable fashion, with some rich celebrities buying their way to get their children into elite US universities. Some employers instantly shortlist candidates based on which top university they went to so this matters.)
Children in households that cannot afford a computer and broadband Internet, or even simply books or other materials, are at a huge disadvantage. Poor pupils are often bullied just for being poor too. If poor pupils are hungry then it’s hard to concentrate and have the energy to learn at school. They’ll likely live with anxiety about the money worries and strife they’re exposed to at home itself, and living conditions may be cramped. It’s obviously not the children’s fault but it’ll profoundly affect their development and the adults they’ll become.
In the UK under the current system – although it should be regarded as a ‘graduate tax’ rather than a ‘loan’ – a child of wealthy parents who’ll upfront pay their full university tuition fees and living costs can save on the years of accrued and compounding above-inflation interest that a student loan would build up over time. This doesn’t seem so bad since to fully pay back the ‘loan’ one must be earning a lot compared to those who won’t fully pay back even the principal of the ‘loan’, but it’s still not as good compared to those who have parents who could help them out from the very start. Now there is risk involved because the child might not end up earning enough to have needed to pay back their ‘loan’ in full had they taken out a ‘loan’ instead, but if they’re from a rich and connected family then they’ll likely get a well-paid job after university so this risk is minimised. Thus comparing a talented, high-earning graduate from a poor family with a talented, high-earning graduate from a rich family – the latter still has some advantages that arise from originally coming from a rich family.
It’s actually the living costs (and therefore maintenance loan) that are the more immediately crucial factors – parents are supposed to contribute towards that according to their means. Children from the lowest income families will be entitled to a full maintenance loan but if that’s not sufficient then only the really rich parents can give more to their own children. And if poor students are taking on extra jobs to pay for their living costs then that might impact on their studies and long-term outcomes. Going to university and taking out loans might still be the best course of action a person from a poor background can take though. The point is that the playing field is still not exactly level for people of equal furry talent. To compensate for having less luck from the situations they were born into – in general, the poor must be smarter and work harder to achieve the same desirable results in life. I suppose some could otherwise possibly get lucky in some other way instead, but they cannot count on luck nor affect it.
Money (an environmental factor) can mask genetic weaknesses. A more comfortable life provided by wealth logically means less survival pressure, which can allow ‘weak’ genes to pass on. We only inherit 50% of our genes from each parent, so which 50% – the ‘good’ or ‘bad’ stuff? Therefore it’s not guaranteed that the children of successful people will inherit their ‘good’ genes and, well, monetary success from risky ventures is a lot down to external factors like opportunities anyway, including educational opportunities to train the portion that’s down to skill, rather than innate skill due to one’s own genetic endowments alone. All in all and overall, rich children aren’t likely to be genetically better than poor children.
‘Rich lists’ may have more self-made (or ‘self-made’) people than ever before, but that’s relative to dismal historical benchmarks, and currently the vast majority of them were still born relatively privileged and had at least a leg-up. ‘Self-made’ or not, ‘hard working, driven and talented’ or not – luck still plays a key role. A person may have benefited from the fame of his/her family name and connections, even if he/she wasn’t directly or indirectly given a lot of capital for a start-up. The key question is whether their products involve anything truly innovative and not seen before? If so then there’s a greater chance they would’ve made it on their own regardless, but if not then it’ll be hard to ever know if they would’ve made it without playing on their family name, connections and money.
Already-rich people also tend to receive a lot of freebies too, and not cheap stuff either but really expensive stuff (e.g. expensive jewellery inside goodie bags). Lots of people worship celebrities for their level of wealth, so such material gifts help make them become even more powerful, worshipped and influential. They sometimes even receive honorary degrees and titles! Rich and famous people are sometimes paid to go on holiday or will receive other expensive things in exchange for a simple review. Famous and popular people can just hold a certain drink or wear a certain item of clothing and get paid highly for it. This must require a certain amount of ‘talent’ to do(!) If a famous person damages something like a rare car then gets it fixed then it can end up being worth more afterwards than if a non-famous person did it, because of the story behind it!
Whenever we see people suddenly discover expensive heirlooms and antiques that they’ve found in their family home’s attic (“Oh look, I think I’ve just discovered a Vermeer in here”) – it tends to be already ‘upper-middle class’ to ‘upper class’ families. So it’s normally a ‘riches to riches’ story! If not, then others tend to be suspicious of how a poor family acquired such an expensive piece in their possession.
So whoever thinks that all wealthy people morally deserve what they have are mistaken; and this concerns legally acquired, as well as illegally acquired, wealth. (Some who give their inventions or efforts away for free could be conversely said to be not as wealthy as they deserve to be.) Some people deserve their millions but most of them don’t and never have, and arguably just about all of them don’t deserve all they manage to keep.
The posts in this series will hopefully eventually build up a coherent picture of the general cumulative advantages of wealth and the general cumulative disadvantages of poverty… if the logic is not clear already.