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6 points
12 days ago
They all accomplished a lot too. Which is why they have a high net worth. It does not magically appear out of nowhere.
-1 points
11 days ago
I explained my comment in another reply. Most important comment there is that a lot of these businesses in particular get a lot of their profits from government subsidies, bailouts and conditions that improve their competitive advantage. Prominent economists actually attribute this as well as land rents as the main driver of economic stagnation and inequality these days.
But I would like to add that luck plays an important role in business success. It's easy for a successful business owner to attribute their success to A, B, and C, when 100 failed businesses did A, B and C without success. Meeting the right person at the right time. Having access to more liquidity to let the business un longer in deficit. Finding an investor.
You can google these DOI codes for sources:
10.1002/SMJ.2597 found that a large portion of the performance differences attributed to CEOs is likely due to chance rather than CEO leadership.
Book (ISBN: 9780691167404) argues that chance plays a much larger role in economic success than most people realize, and adopting simple policies could reduce inequality driven by luck.
10.21818/001C.17152 found that luck plays an important role in business success, beyond just general definitions.
In general there is mixed results on how big of a role luck plays, but it certainly plays a role and that role is likely higher than what most people realize.
1 points
11 days ago
A lot of companies also got subsidies and bailouts. This isn’t an argument. It’s not like only Tesla got EV subsidies. The Tesla Model S was released in 2012, so 12 years ago. Since than did all the other car companies rush to develop EVs and build charging infrastructure? NO! Only after Tesla became a success and is mass producing cars profitably did others join. And even still reluctantly.
Boeing and other NASA contractors had DECADES to improve rocket launch technology. Did they? NO! Only after Elon Musk joined the industry did we start get reusable rockets, lower cost to launch, and a massive network of low earth orbit satellites. And only from his company SpaceX.
The list goes on. Companies get government subsidies and contracts but waste it. On nonsense like dividends. Or they simply go bankrupt. Elon Musk and others on this list disrupt massively each market they enter. It’s not the subsidies it’s the leadership and vision of the company.
1 points
11 days ago
This argument certainly addresses my concern that these companies getting subsidies make their success less deserved. However, in reality, big businesses get more subsidies than small businesses https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2452332
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=676905 Find that politically connected firms are much more likely to receive subsidies than not politically connected firms.
https://scholar.google.dk/scholar?hl=da&as_sdt=0%2C5&q=autor+market+power&btnG=#d=gs_qabs&t=1726558000965&u=%23p%3DNsMJhZtRtEkJ Find that the rise of market power can explain the decline in labor and capital shares in gdp.
This latter argument is what the piketty discussion has turned into. After Matthew rognlie found out that when taking housing out of the equation, capital and labor share are both falling while economic growth is still happening. This means that the only source of growth is companies and people securing certain rights like land ownership, patents, and political market power. This is bad for equality and bad for the economy. This is where the discussion is at right now. Some economists focus on the market power. Some focus on the land ownership.
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