Rich Folks and Lottery Winners

Charles Kenny considers billionaire Tom Perkins' recent notorious remarks speculating that talk of increasing taxes on the wealthy is comparable to Kristallnacht in Nazi Germany, and that votes in elections should be determined by wealth (he claimed that was a joke).  He says Perkins' luck in getting wealthy is comparable to winning the lottery:

Perkins had a successful career as a corporate executive before he co-founded his VC firm. Given that he made the bulk of his money gambling on startups, he should understand the role that luck plays in wealth accumulation. For example, what if Kleiner Perkins’s first investment had been to plow $38 million into Segway, the personal transportation flop? Or $100 million in Fisker Automotive, which recently laid off most of its staff? What if the firm had backed solar panel manufacturer MiaSolé, sold to a Chinese clean-energy company at a huge loss? The venture fund did make all those investments—and, as a result, has had lackluster returns over the last decade (although Perkins hasn’t been involved in investment picks for a while). Indeed, Perkins wouldn’t have his soapbox today if his VC firm had been similarly unlucky in its early years—it probably wouldn’t have survived that long.
And, of course, Perkins had the chance to be a successful executive in the first place because he was born privileged enough to enter the Massachusetts Institute of Technology as an undergraduate in 1953, when a little more than 5 percent of Americans aged 25 to 29 had a bachelor’s degree. If he had been born in Liberia, perhaps to a single mother, all bets of billionaire status would be completely off. He surely worked hard, and took risks informed by smarts and insight, but he was incredibly lucky to start where he did and end up where he is now, with enough money for a classic car collection and a massive yacht....A
study by British economists Nattavudh Powdthavee and Andrew Oswald released last week looked at lottery winners involved in a general survey of attitudes in the U.K. Comparing views before and after lottery wins, the economists looked at winners’ political allegiances and views toward income distribution. Those surveyed were asked if they agreed or disagreed with the statement “ordinary people get a fair share of the nation’s wealth,” and if they supported the (more right-wing) Conservative Party or the (left-leaning) Labour Party.
A win of just £500 (about $840) made survey respondents 5 percent more likely to change their vote to Conservative from Labour and significantly more likely to think that the current distribution of income was fair. The larger the lottery win, the bigger the impact on the respondents’ beliefs—even though their income rankings rose purely by chance. Considering that Perkins’s earnings from betting on tech startups are more than 1 million times the £500 that Powdthavee and Oswald found sufficient to shift attitudes, and since he did far more to earn his wealth than the lottery winners did, his views on redistribution aren’t surprising.

I think if you talked to some of these folks, they'll say they got where they are because of being smart and working hard.  Perkins is almost certainly very intelligent, as the MIT reference on his resume would tend to indicate.  I'm probably not quite as dumb as my writing would indicate (some folks might even refer to me as somewhat intelligent), but I can tell you that I never really worked hard at school or at work.  Most of that stuff came pretty naturally to me, and the vast majority of folks out there could attend the best schools and work 20 hours a day and never be able to do things that seem second nature to the really smart folks like Perkins.  I'm pretty sure that if he was born with somebody else's genes and environment he wouldn't be where he is today.  It would be nice if he were to realize that being born on third base doesn't mean he hit a triple.

I have a hard time believing that winning $1000 makes somebody markedly more conservative, politically, but I do think that becoming a billionaire might.  As the article says, though, making a fortune at venture capital is a hell of a lot like winning the Mega Millions, except one takes somebody else's product, funds it, then take a massive slice of the windfall if there is one.  That seems like a high-risk, high-reward gamble, with more than it's share of luck.  As the article points out, the system Mr. Perkins has flourished in is especially kind to entrepreneurs, who can walk away from bad debts and failed ideas, and not be saddled with paying them off forever.  Likewise, massive amounts of public expenditures, funded by previous generations of wealthy taxpayers, went into the infrastructure that made Mr. Perkins success possible.  He wasn't operating in a vacuum, separated from the rest of society.  While his time, money and effort paid off in a massive windfall, many other as worthy, or maybe more worthy folks saw watched as the figurative dice of their lives hit craps.  Maybe he ought to shut the hell up and appreciate how lucky he has been.