How people get rich now (2021)
49 comments
·February 22, 2025999900000999
It wouldn't bother me if the richest had tens of trillions.
The issue is no normal people can buy homes now. You need to make, what 300k as a couple to buy a home in LA. You can't buy a home you can't hedge against rising rent.
You can't leave your family a dime.
If you can keep housing and food affordable, Zuckerberg can declare himself Czar and most people would be just fine with it.
BurningFrog
> You need to make, what 300k as a couple to buy a home in LA.
This is almost entirely about California not allowing enough housing construction. Which is decided by the mean California voter, not the billionaire class.
izzydata
I'd wager it is more decided by people that own a lot of real-estate or at least by people that already own homes. How often is there a democratic vote to zone populated areas that would allow building more homes? Rather than lobbying of local governments by real-estate owners to prevent it from going to a vote.
renewiltord
In most parts of the nation, homeowners outnumber renters. In LA it’s closer but I think it’s like 50-50 and renters vote less. The loss is the votes of “people who would live there”. So any narrow constituency voting will fail since one of the strongest principles of Americans is “I’ve got mine; fuck the other guy” stated generously as “This place is full! Let’s not ruin the community.”
downut
This leaves out the fact that billionaires are acquiring media. All kinds, cf Sinclair vs. eg The Washington Post or Twitter. If we assume those billionaires are somewhat rational, then IMHO the simplest conclusion is that those billionaires think there is material value in influencing the mean voter's opinion.
porridgeraisin
Not really. Although it seems like building more will help, the primary reason is that all the extra money created since covid reserve requirements going to 0% has been parked in safe assets real estate, instead of devaluing the reserve currency. It is still inflation, just manifested elsewhere.
bluecheese452
The two issues are directly related. You can’t have extreme wealth and affordable housing.
SapporoChris
"There is one rule for Industrialists and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible. Nothing can be right in this country until wages are right. The life of business comes forth from the people in orders. The factories are not stopped for lack of money, but for lack of orders, Money loaned at the top means nothing. Money spent at the bottom starts everything." -Henry Ford
thaumasiotes
Why not? Why can you have extreme wealth at the same time that everything other than housing remains affordable?
the-grump
Wealth is stored in assets.
slibhb
They aren't in the least related. The reason housing is expensive is that, in places where there is high demand, it is illegal to build housing. Housing isn't expensive where there is low demand.
999900000999
If housing is viewed as personal property vs an investment it's possible.
How much of Zuckerberg's wealth was created from buying up single family homes and renting them out at 10% over what a mortgage cost ?
https://orchard.com/blog/posts/how-much-the-typical-home-cos...
If housing prices remained consistent with inflation you'd be able to buy a home in California for 120k.
Imagine, for a second. You buy a starter home after high school working as a secretary for Amtrak or something. 10 years later you have a positive networth. Starting a family in your 20s, is possible.
At 45 the house is paid off, the kids are in college. Your able to put money in your savings. And if you're really lucky you'll be able to watch your grandkids grow up.
That's how things used to work. Not everyone wants a family, but I don't think anyone wants to pay 40% towards rent well into their 50s since they never had a chance to buy a home.
It's a massively complex issue with no clear solution. Liberals are to blame, you need a dozen environmental studies on how you might disturb local caterpillars before building anything.
Conservatives are to blame, Prop 13( CA's fixed property taxes, buy a home for 100k in 1995, you'll pay property taxes on that original value until you move) has horribly distorted property values.
dragonwriter
> Prop 13( CA's fixed property taxes, buy a home for 100k in 1995, you'll pay property taxes on that original value until you move)
In the interest of accuracy, Prop 13 doesn't have fixed property taxes. It has (relevant to property taxes):
1. a low cap on property taxes (1% of tax basis value annually)
2. a limit on tax basis value increases outside of sales and other qualifying events (annual increase capped at 2% or the rate of inflation, whichever is less).
renewiltord
Amusingly, many of the tech rich are very pro building homes. Some of those are liars, like Marc Andreessen, but many of them would rather have the rules prohibiting building removed. It’s normal people who resent new things and oppose more homes being built, and consequently act to make prices higher.
rznicolet
The 100 richest people are (by design) going to be very unrepresentative of the whole, depending on how "rich" is defined. How does the balance between inheritance and other sources of wealth shift if we look further down the list?
I suspect the late 1800s, another era when inheritance was a lesser source of extreme wealth, may also be unrepresentative of the "typical" state. Massive upheavals in technology (mass production, computerization/Internet) seem to me to be more likely to be exceptions, rather than the rule, over very long time horizons.
Regardless, we may be entering another era of consolidation since this article was written. It will be... interesting... to see how it shakes out.
pclmulqdq
Also, the top 100 on a list like this are going to be the 100 who can't hide their wealth well. That usually will bias you towards "new money" since those are people who have gotten rich through things like IPOs rather than through things like owning large tracts of land under shell companies.
jbs789
Yeah this was more my take - Industrial Revolution was a step change, and you saw that flow through to future generations / inheritance.
margalabargala
The Industrial Revolution was a step change, sure, and unrepresentative of the last 1000 years. But is it unrepresentative of the next 1000? As technology advances, there are increasing numbers of things unlocking new industries or efficiency gains.
Microprocessors and the internet were another step change. What will be next? AI? Biotech? Robotics? Energy? The fact that there are so many options that could be, makes me think that the 1890 and 2020 states are more likely than the 1982 state to be present for at least the next couple decades.
surfpel
I don't see any compelling reasons that the next 1000 years will even have the social structures that largely defined the previous 1000. This is because production has never been completely automated in history. Humans have always had to play a direct role in production, so society has always had to structure itself in a way that is conducive to maintaining at least subsistence levels of it.
I think the next 1000 years of society/social relations between people will be more directly defined by human nature itself rather than actual material conditions, because some of the major constraints on how society can function will be lifted.
jbs789
(Making no judgment on the next 1000. Only making the observation that the inheritance is the result of the prior step change.)
rawgabbit
What PG describes is an economic philosophy where “tech” is used to create fortunes that rivals the oil and real estate magnates of yester year. In the past, great wealth was gained from extracting resources from the earth. Now “tech” extracts great wealth … through Ad Technology (Google) and online shopping (Amazon) and monopolistic business practices (Microsoft) and relentless hype in the AI magical money machine (Nvidia). The dismissive attitude towards employees remains the same. If they could replace all employees with AI or H1B, they wouldn’t hesitate for a second. The only tech today I see that has increased productivity is AWS movement of automation to the cloud and limited applications of LLM to remove some white collar drudgery. At least the oil fortunes of the past provided the fuel that powered the machines that powered our economy. “Tech” imo is mostly hype and a ponzi scheme to get more suckers to invest in shitcoin.
01HNNWZ0MV43FF
Power is fungible. Money can be traded for political power. The existence of multi-billionaires is a threat to democracy because it means power accumulates, as it naturally does, and isn't distributed among all people
I say this because I recently changed my mind on it after seeing president musk buy the election
wslh
There's an interesting contradiction in that capitalism: it ultimately embeds one of the main criticisms of Marxism: the centralization and control of decisions. If we assume power is fungible and the market becomes very imperfect (or virtually non-existent at that scale), then we aren’t really talking about capitalism anymore.
jakeinspace
There is no free-market libertarian argument I've ever seen that fixes the problem of monopoly being a fixed point. Monopolies can out-compete others through economies of scale, and then use that concentrated wealth to exert control. All I'll ever hear in response is that it's the regulatory framework monopolies lobby for which secures their position against competition, and I just don't believe it. It helps, sure, but it's just part of the toolbox.
I don't think any system can perfectly ensure that power stays distributed. Marxism-Leninism doesn't, to me, provide any compelling argument that corruption can be avoided when power is concentrated in a bureaucracy, the leap from dictatorship of the proletariat to utopic socialism is extremely tricky. I do at least think that the communists have spent a lot of thought on these things, both in critiquing capitalism and in proposing alternatives, while modern "libertarians" just sound entirely naive on this issue, to my ears.
actuallyalys
It is a bit funny the era he compares today to is 1892—the gilded age.
Anyway, 1982 may not be a very appealing low-Gini coefficient period to return to, but 1892 also seems like a bad time. I actually found the comparison interesting enough, even though the arguments fall flat, but I think we need to look more broadly to understand inequality.
la64710
How people get rich now begs the question of how many people get rich now? What percentage of the population?
bbor
That's why founders sometimes get so rich so young now. The low initial cost of starting a startup means founders can start young, and the fast growth of companies today means that if they succeed they could be surprisingly rich just a few years later.
Silicon Valley's truly unique era was long over by 1990, much less 2000[3]; everything since has been marketing, monopolization, and hilarious amounts of confidence from people who lucked into millions as a byproduct. The most entertaining/terrifying version of this in 2025 is of course the recent quote "Silicon Valley built the modern world. Shouldn't we get to run it?" by, I shit you not, the creator of Roblox.[4]
[1] https://en.wikipedia.org/wiki/Viaweb
[2] https://en.wikipedia.org/wiki/List_of_Yahoo-owned_sites_and_...
[3] https://en.wikipedia.org/wiki/Silicon_Valley#Rise_of_Silicon
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porridgeraisin
> The most entertaining/terrifying version of this in 2024 is of course the recent quote "Silicon Valley built the modern world. Shouldn't we get to run it?" by, I shit you not, the creator of Roblox.
Lol. That's really funny. He's serious as well.
I thank god every day that I'm not one of those people.
armSixtyFour
[flagged]
n_ary
There is a saying we all know but often ignore. One needs money to make money. Large volumes of money/wealth can magnify one’s chances of success(or careless failure) faster than any other apporoach.
mistrial9
it's worse than that .. certain nexus points (social,financial,legal) like Palo Alto California, are exactly the fertile grounds for rampant valuation escalation. When "guy with some financial safety" starts a business selling lawn mowers with a new motor.. or perhaps builds them to sell.. no way at all is that going to experience the exponential growth seen in the past 20 years in Silicon Valley valuations. There are thousands of easy examples of solving real world problems, in real ways, that will not scale financially in the ways seen around Silicon Valley.
gizmo
> 250k investment from his parents that sure helped
I looked it up: 250k in 1995 is about 520k today.
ryandrake
I worked with a founder who tried probably a dozen ideas before the one that made it, and each time, he had his relatively wealthy family to backstop the effort and provide a sofa to sleep on when it failed. Eventually, one of those businesses made him very well off, and he became an insufferable libertarian. Whenever he had a company pep talk for the employees, he would go on and on about how he started the company all by himself with nothing, and built it into this big thing that employs all of you, blah, blah, blah. No acknowledgment of the incredible fortune needed to weather all the previous failures.
jorvi
There is a beautiful short webcomic about this called "On A Plate"[0].
[0]https://www.rnz.co.nz/news/the-wireless/373065/the-pencilswo...
ryandrake
Yep, it's an excellent response to the complex topic of merit.
giantrobot
> No acknowledgment of the incredible fortune needed to weather all the previous failures.
Or, I'm sure, thanking all of the people in that room that actually do all the work day to day.
amelius
Also, luck and survivorship bias.
ryandrake
PG is contrasting getting rich through inheritance vs. through starting a business, and saying "look, different kinds of people are getting rich!" I'd argue these are two sides of the same coin. The people getting rich are, by and large, the people who already have money. Sure, there are a few notable exceptions, that HN commenters will no doubt point out. How many of the top 100 richest people in the world today had already-well-off families backstopping their risk-taking? That's really not that different than just being an heir.
gizmo
A decade ago the vast majority of YC founders came from middle-class or upper-middle families. Maybe it's different today, but I doubt it. The people who got rich through YC would otherwise have lived unremarkable lives working for Apple or Amazon or wherever.
ryandrake
I dunno--I think "upper middle class" is a clever euphemism invented by rich people to try to convince the actual middle class that they're a lot like us, just a little more "upper." Someone with the means to send their kid to Cornell or Harvard doesn't strike me as being very close to middle class. Being in tech, I've worked with a good number of Director-level people discussing their kids' private schooling, their -multiple- live-in nannies, and their Tahoe vacation home, yet they'd insist they were middle class.
alexashka
The way people got rich since the 1970s is finance.
A venture capitalist of all people surely knows this.
Zuckerberg owns 13% of meta and that's high. Where did the 87% go? Finance.
Sure, go start a company and find out you're entirely dependent on finance to get anywhere.
If Paul's essays reflected real life - 95% of them would be about finance because that's how much of your company they'll have within 10 years if you succeed.
"People who don't look any deeper than the Gini coefficient look back on the world of 1982 as the good old days, because those who got rich then didn't get as rich. But if you dig into how they got rich, the old days don't look so good. In 1982, 84% of the richest 100 people got rich by inheritance, extracting natural resources, or doing real estate deals. Is that really better than a world in which the richest people get rich by starting tech companies?"
this is a really stupid point, even for paul grahm. no one looks back at 1982 as the good old days, and the gini coefficient can be low without enriching oil barrons, and to see this is true, remind yourself that other countries exist.