The Millionaire Myth

A chance encounter the other day led me to a short discussion with a couple of ultra conservatives.  These are people who believe that our system is not rigged and the greatest thing about America is that anyone can become a millionaire… or can they?

So, I put together a spreadsheet and did some actual math.  The results are quite interesting and I want to share them all with you.

First, the median income for US households in 2006 was just over $50,000.  That median salary includes employee benefits like retirement and insurance, but does not include taxes.  This is the median, that means that 50% of US households made less than $50,000 and half made more than $50,000.  Since 50k is the median, it makes sense to start there and see if, the majority of US citizens can actually become millionaires.

My model

Using a simple spreadsheet, I set up a model that allows for monthly compounding of any interest earned on savings and investments.  I also allowed for 25% taxes.  Since I currently make about $50k a year, that 25% tax rate matches my net income each month pretty closely.  The model also allows for expenses and the ability to have a person invest at various interest rates.

I’m also using a 46 year run of the model.  That would assume that a person started working about the age 25 and retired at about the age of 70.  The model doesn’t allow for increases in salary.  But honestly, most of the people I know make less than $50k a year and always will.  These are people like teachers, professors, law enforcement, retail employees, etc.

I’ll do this in a assumptions/results framework.

The first run was just $50,000 annual income, with a 25% tax rate.  If a person was able to save every single dime of that money, then they would have $1,725,000 at the end of year 45 (January year 0 to Dec year 45 is actually 46 years).  That doesn’t include a single expense of any kind.  So, I guess it’s technically possible, but is it realistic that one lives with mom who pays for everything for one’s entire life?

Now, I’m going to use figures from around where I live.  These figures should be roughly valid anywhere in the south and southwest of the US.  The northern US might need more heating and less cooling.  City residents MIGHT have less need of a car, but rent’s are higher, etc.

First, a 1 bedroom 1 bath apartment in my area goes for around $900 a month.  That sounds like a lot, but it can get you a new apartment in the suburbs or an… apartment in the downtown area.  There’s a big downtown scene around here.

But, you say, what about rural or not-so city living.  Well, there’s some pros there.  You can usually get a larger place more cheaply.  Notice I didn’t say better.  But the number of available apartments tends to be small and job opportunities are severely limited in smaller towns.  Besides, the majority (of population growth and employment growth is in metropolitan areas).

So what does that 1 bedroom, 1 bath place do to our lifetime earnings.  Well, $900 a month is $10,800 a year.  Over 45 years, that’s $486,000 dollars.  So starting with zero at age 25 and saving everything except $900 a month for rent brings our lifetime down to $1,173,000 dollars.  That’s a huge chunk, in fact, it’s one third of our total income.  Which makes sense after all, if 1/3 of each paycheck is rent, then 1/3 of your income is gone.

We’ll talk about buying a house and what a disaster that is for the budget briefly.  First, you really need to have a down payment to get a house.  That comes from your savings, while you are living in the apartment.  So, after some years of savings, you then buy a house.  If you don’t buy the house outright, then not only have you lost a big chunk of your savings, but now you still have that payment going out each month.

In other words, you’re starting over in the savings department, except you’re now 30 instead of 25 and have less time to get that million bucks.  Of course, now you also have to buy a lawn mower, house insurance, etc. etc. etc. All expenses that you probably won’t have with an apartment.  Don’t forget about maintenance.  Replacing an AC unit, fridge, even a dishwasher every 5-10 years is expensive and things you don’t have to deal with in an apartment.

So, we’re still north of a million dollars, but no one buys an apartment and doesn’t use electricity, water, gas, etc.  So let’s figure those in as well.  Again, I’m using my figures, slightly reduced for the size of an apartment.  My house with 3 people is very different from a 1 bedroom apartment.

Electricity isn’t too bad.  Let’s figure an even $100 a month for that.  That’s half of what I pay on average.  Gas for the water heater and stove is only about $20 a month, on average.  Water, well that depends on where you are.  My average is $120 a month.  A city a few hundred miles away on the coast has average water bills of about $45 a month.  I’ll go with $50 a month for water.  So, we’re up to $170 for basic utilities.

With basic utilities we are now just a hair over one million dollars for lifetime earnings.  But, we can’t stop yet.  We have to have… food.

A single person, living alone and never going out to eat could probably be just fine on $200 a month for food.  I’m including toiletries and cleaning supplies in this value.  My family of 3 gets by for just less than $400 a month for food and sundries.  But with a small child, I have to buy new clothes every year too.

Well, that did it.  We are now below one million dollars in lifetime earnings for a person making $50,000 a year.  A household making 50k would be worse because there’s more people.  You would have to have more than a 1 bedroom apartment and more food and sundries too.

Still, it’s pretty close to one million dollars at $968,760.  But let’s look at the life.  This is no car, no internet (hah!), no telecommunications (phone, TV, etc), no vacations, no going out to eat, heck not even anything to read.  Humans can’t live like that.

OK, let’s add in internet (including netflix) and a cell phone.  I’ll average the cost of equipment in over time as well.  My phone with a data plan, for two people, is about $160 a month.  We’ll half that, our hypothetical kid making 50k a year will need a cell phone.  My internet is $50 a month.  There’s no competition here and in most of the US, so I’ll use that for basic DSL.  So, $130 a month for telecommunications.

Now we’re below $900,000 for lifetime earnings.  Still no car.  In many cities a car isn’t really a luxury, it’s a necessity.  Unless you live in one of the few US cities with a good public transport system (Chicago, New York , DC metro, and a few other), then you have to have a car just to get to the grocery store.

Now a car isn’t good fit for my model because in general a car is something you pay four to six years on then you keep it for another 4-6 years.  But we’ll average it out and include gasoline and insurance figures.  These are hugely variable, so you can do this model with your own numbers or accept mine.

BTW: I do know people who live with only a bicycle.  It’s not very practical in Texas when you would ride to work in 90 degree temps with 80% humidity.

OK, the car, say a decent car, not fancy or anything like that, still you pay about $350 a month.  We’ll halve that to pay out over a longer monthly period throughout our model.  Then you need insurance.  Me with no wrecks ever, no tickets, and my age, I pay about $40 a month for full coverage.  Gas, even with my short commute (less than 5 miles), I still use about two tanks a month.  Since the price of gas is pretty variable, but not expected to go down to $1 a gallon anytime soon, we’ll go with $65 a month for gasoline.

So, $275 a month for everything.  That’s being super generous in my mind.  I’m paying $400 a month for my car, another $100 a month for gas and the $40 for insurance.  And my car isn’t super nice, it’s big, but very base.

We’re down to just under three-quarters of a million dollars in savings.  That’s saving $1350 a month, every single month, for 45 years.  Heck, this doesn’t include anything else.  No hospital visits, no vacations, heck not even a single bender on a long weekend.  And you still don’t get to a million dollars at the end.

But wait!!!!

This is where investing comes in.  “It’s not the value of the savings, it’s investing that really makes people millionaires.”  That phrase came up in my conversation.  That’s so wrong, I can’t begin to describe it… but I will, because it’s vitally important to the entire point I’m making here.

If you have an interest bearing bank account, go take a look at it.  What’s your AYP?  For my bank, it’s 1%.  Let’s put it this way, for 12 months, the average amount of money in my savings was more than $3,000… my interest earned was $4.

Look at it another way.  To figure out how long it takes your money to double at any interest rate, divide your interest rate into 72.  That’s how many time periods it takes for your money to double.

For my 1% annual percent interest rate savings account, it takes 72 years!! for the money to double.  So if, I put in $10,000, after 72 years, I will have $20,000.  That’s all.  Seventy two years is almost twice as long as my little model runs for.  The average lifespan of in the US is only 78.2 years.

I just checked CD rates and the best in the nation is 1.10%… but only if you invest $25,000.  Geez.

Now, what’s the interest rate on your car?  Compare that to your interest rate that you earn (when you give the bank your money that they loan out to other people).

I’ve been pretty lucky over the past few years with my retirement account.  I’ve been getting 3% interest on my retirement account.  That means, if I can maintain it, the money I have in that retirement account today will be worth twice as much… in 24 years.  When I’m 65 and (maybe) about to retire.

However, in that amount of time, I will have put in over $200,000 of my own money.  So let’s compare interest rates to savings.  $200,000 worth of savings vs. $24,000 gained from interest.  Hmmmm…

Well, let’s just put that 3% interest rate into our model and see what happens.  So, right now we’re saving $1405 a month and over 45 years we’ll end up with $775.560 dollars.

Now, with 3% we save the same amount, but end up with… $1,602,753.  Hey, not bad.  We actually become millionaires.  In fact, we hit 1 million dollars after 34.5 years of saving $1350 a month.

I’d like to consider one other thing.  The cost for those student loans.  Mrs. Ogre is paying $300 a month for her student loans for her Master’s degree… and will continue to do so for some time.

That $300 a month (in the early years, when you get the most bang for your buck with interest) results a $400,000 drop in your final amount (assuming 3% interest).

Again, that’s not very much of a life.  Heck just playing World of Warcraft at $10 a month reduces your final income by $12,000.

The annual cost to own a dog or cat is about $680.
The estimated cost to raise a child to the age of 17 is $150,000.
The average vacation costs $2,000.
A pack of cigarettes a day for a year is $3050.
Average cost of a 4 year-degree with in-state tuition $28,920.

Now, I ran one more model… at what point, given the above stipulations, is it impossible for one to get to 1 million dollars? Now, I’m not including the student loans or WoW.

The answer is $41,500.  If you make less than $41,500 a year and don’t have ANY debts and never take any vacation and never go out to eat and don’t smoke and don’t have kids, and don’t have cable or satellite and have your college paid for and never own a cat or dog and live in a 1 bedroom apartment…

you will still NEVER have $1,000,000.

According to the US, the average income of the middle 20% of earners is $44,000.  That means the middle class, for all intents and purposes, cannot ever become millionaires.  If  you have a kid, forget it.  If you buy a house, forget it.  If you buy a boat, forget it.  If you have an accident that requires hospitalization, forget it.  (No, medical insurance doesn’t cover everything.  Shocking isn’t it?)

Of course, averages like that don’t make a lot of sense.  There are many people that don’t have an income, but there are also some people whose yearly income is in the hundreds of millions of dollars.

Can the interest increase such that it’s possible?  Sure.  The interest rate can also crash and even go negative.  Remember, the mutual funds and such that are most likely to get you that interest rate invest in stocks and bonds.  Stocks in companies that can fail and bonds that may not be paid back.

One last comment.  What about a small businesses?  Research from the Small Business Administration suggests that 1/3 of small businesses fail after two years and 56% fail after 4 years.  Now, go ask all the small business owners if they are millionaires.  Go ahead, I’ll wait.  I’m willing to bet that you don’t find a single one… with the possible exceptions of doctors and lawyers.

The middle class and lower class do not start out rich and it is very, very difficult to get rich.  Occasionally, you get a Bill Gates and Steve Jobs.  But not very often.  The game is rigged against the ‘lower classes’.  The upper classes look out for each other and provide advance notice on stock prices and such that we can’t get.  We’re at the mercy of a system designed by the wealthy to keep them wealthy and us not.

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6 Responses to The Millionaire Myth

  1. Dobby says:

    That’s an awful lot of theory crafting. Shame you didn’t include the fact that the majority of new millionaires are self made and don’t come from millionaire families.

    It seems a fairly trivial economic analysis to go “Here’s a yearly wage that with a reasonable level of expenses will never add up to millions of dollars over the course of someones working life, lets see if it adds up to over a million dollars. Oh, it doesn’t, so its not possible to become a millionaire.”

    What did you think would be the outcome of that thought experiment? Are most millionaires millionaires because they work an average wage job for their entire life? That whole section seemed like wheel spinning for a conclusion you’d already arrived at.

    Is anyone arguing that most people are millionaires? Then why go through all that work to show the average person won’t be a millionaire? You could have just said “most people don’t make enough money to be millionaires”. The math just makes that argument seem more substantive than it is. The argument you’re addressing isn’t that everyone will become a millionaire but everyone has similar opportunities to become a millionaire if they want to take them.

    Instead of theory crafting on “can someone who makes $40,000 become a millionaire”, you would have been much better off asking “does the average person have the opportunity to make the kind of money you need to make to become a millionaire? if not, why not? what blocks the average person from making more than $40,000? how much start up capital does it require to start a business that can make that kind of money?”. Although that’s an argument you have to get external evidence for, you can’t just pick numbers you know will lead to the conclusion you want.

    If you want to see how easy it is to become a millionaire in the US, wouldn’t it be better to look at objective metrics, rather than just pulling random numbers?

    http://en.wikipedia.org/wiki/Millionaire#Number_of_millionaires_by_country

    (this is obviously not a definitive metric, just an example of one out of dozens you would need to look at to meaningfully address the issue of how millionaires are created and what factors/opportunities are necessary for their creation).

    The US actually has one of the highest number of millionaires per capita in the world. So while “its easy(er) to be a millionaire” might be trivial economic reasoning, it’s even worse reasoning to try and argue against that, because the US system actually does better than most at generating millionaires, and millionaires who weren’t previously millionaires ,unlike the oil based royal families of the middle east (not that I think that’s a particularly important metric).

    If the US is bad because its hard for the average joe to become a millionaire, then nearly every other country in the world is worse than the US. (of course given the disparity in PPP, “millionaire” is a relativistically useless term).

    Of course you don’t necessarily agree with such a standard, but in which case its pretty pointless arguing against it since even if the US far and away made the most average people into millionaires, I’m assuming you’d still hold relatively similar beliefs about government intervention in the economy.

    “What about a small businesses? Research from the Small Business Administration suggests that 1/3 of small businesses fail after two years and 56% fail after 4 years. Now, go ask all the small business owners if they are millionaires.”

    A pertinent question would be, go ask current millionaire business owners and see how many of them never had a failed business.

  2. OgreMkV says:

    Right, so you didn’t actually address any of the points I made and attacked things I didn’t say. That’s a good way to work out an argument. You also assume a lot of things that may or may not be true about me personally, but OK. Whatever.

    Now, the whole point of this is the GOP leadership says that “to be a millionaire, you just have to work harder”. As I’ve shown, that’s a lie. Their point, and the point of the people I was in a discussion with, is that a good salary and investing is all it takes to become a millionaire.

    I never said you can’t be a millionaire or become one in the US. I never said that the US has fewer millionaires that the rest of the world. I’m taking a very specific point and showing it to be fundamentally wrong.

    Tell me, how do you start a small business? You have to have money. The reason that most small businesses fail is not through lack of business, but from lack of cash. That means they couldn’t pay their bills… again not from a lack of business (necessarily), but from bills.

    Let me ask you, how did Romney get his millions? Did he work harder? Again, this is a specific example to show that the simple facts you proclaim may not be totally accurate. Some of the richest people in the US all inherited their money. You may have heard of them, the Sam Walton family. They didn’t build Walmart, Sam did.

    The average person in the US, with the average US salary, cannot do those things. Software is the big deal now because anyone can write good code, no infrastructure, no stores, no offices needed. And still there are few millionaires from software.

    Are you a millionaire? How did you earn it?

  3. OgreMkV says:

    Something has been bothering me about my reply and I wanted to set the record straight.

    1) Since there is very little evidence one way or another about small business, I shouldn’t have included those statements in my article. However, the reason I didn’t is because of people like Dobby who would immediately say that small business would be the valid path to millionairism.

    2) This model is specifically about two things mentioned to me on how to become a millionaire: Saving and investing. As my model shows (and copies in Excel are available on request) for about half the US population, it is mathematically impossible, by saving and investing, to become a millionaire. That’s what the model was intended to show and that’s what it does show. Remember that I’m being extraordinarily generous in many areas of my model (because of the massively variable nature of things like electricity bills) and even so, people under the median income cannot ever save enough to become millionaires.

    3) The statement “ask how many millionaires had small businesses fail?” is completely the wrong question. The mere fact that Dobby thinks this is a valid question saddens me and really makes me want to push for better science education. What question do I ask? Can the average US citizen become a millionaire? How does asking is millionaires had a business fail help that question? It doesn’t. It’s a red herring.

    Think about it a second. If a small business, owned by someone who is making less than median income anyway, it’s not a dust yourself off and start a new business. It’s an abject failure, probably involving bankruptcy, which means no more loans for other businesses. If you don’t need a loan to start a small business, then you’re beyond median income anyway and the whole model is moot. Now, here I’m referring to a small business that has a store-front and inventory or other capital expenses rather than an internet business (like where you act as a salesperson for another company) or software development (which can make someone wealthy, but it’s still not common).

    OK, that’s probably not everything, but I wanted to get that out there.

  4. Dobby says:

    (not sure if you can use blockquotes on this so apologies for the formatting. Also length, but I like to be thorough)

    “Right, so you didn’t actually address any of the points I made and attacked things I didn’t say. ”

    I was trying to explain why the points you were making weren’t particularly relevant to addressing the issue of how easy it is to be a millionaire. Apologies for not doing a better job of making that clear.

    “Now, the whole point of this is the GOP leadership says that “to be a millionaire, you just have to work harder”. As I’ve shown, that’s a lie. ”

    All you’ve shown is that working all your life for a certain wage won’t make you a millionaire. This shouldn’t be news to anyone. I’m not sure the people you’re arguing against would agree working your entire life at the same wage counts as “working harder”. Also I’m not sure its wise to conflate “opportunity to be” with “hard worker”.

    You have the opportunity to become a famous musician on youtube. That doesn’t mean you will become one simply if you work very hard. you still need other attributes, many of which are genetic, some of which are metacognitive abilities to improve your ability to learn.

    “How does asking is millionaires had a business fail help that question? It doesn’t. It’s a red herring.”

    I was posing this question in a sense of objective empiricism not in the sense of anecdotal subjectivism.

    If it turns out that a significant percentage of millionaires were average joes who just started a lot of businesses that failed (until one didn’t), instead of say, rich people who never had a failed business because they had so much start up capital, that would say significantly different things about the nature of becoming a millionaire.

    “I never said you can’t be a millionaire or become one in the US. I never said that the US has fewer millionaires that the rest of the world. I’m taking a very specific point and showing it to be fundamentally wrong.”

    You’re answering “America is good because there’s lots of opportunity to be a millionaire” with “most people aren’t millionaires/most people don’t earn wages that you need to be a millionaire so that’s wrong”.

    Do you not see the leap to conclusion here?

    You’re not doing the necessary work of showing that the reason most people aren’t millionaires is because of lack of opportunities. The argument you’re arguing against is that people have the OPPORTUNITY to be a millionaire, not that they WILL become a millionaire if they do XYZ.

    You would have to show that the reason most people work a $50,000 or less job is because they lack opportunities to do more. (of course we need to define opportunity before getting into this).

    There are lots of things people have the opportunity to do that they don’t do. Most people in the US don’t write their own political blog. Most people in North Korea don’t do it either. This doesn’t mean this is because they both lack the opportunity to do so.

    “Now, here I’m referring to a small business that has a store-front and inventory or other capital expenses rather than an internet business (like where you act as a salesperson for another company) or software development (which can make someone wealthy, but it’s still not common).”

    That’s why its an absolutely terrible idea to start a business that you cannot recover from if it fails. Entrepreneurship is a skill like any other, and requires practise to excel at. The inability to fail means the inability to learn. What has this got to do with the opportunity to be a millionaire? Not being able to gamble big and get away with it is not the same thing as not having an opportunity.

    The average person can’t afford to sink $50,000 into a business and just hope that they get things right first time round.

    Not being born rich just means that you have to start with smaller businesses.

    Richard Branson is a good example of how to fail right. He had two failed businesses under his belt before he was 16. The first businesses he started that succeeded were only modestly profitable.

    “The average person in the US, with the average US salary, cannot do those things.”

    This is getting closer to a proper argument. Addressing the can vs cannot of “opportunity”. However, most of your work so far has been to show that people DO NOT do things that make them a millionaire, not that they CANNOT. You haven’t presented any evidence that you need substantial capital for a successful business.

    “Tell me, how do you start a small business? You have to have money. The reason that most small businesses fail is not through lack of business, but from lack of cash. That means they couldn’t pay their bills… again not from a lack of business (necessarily), but from bills.”

    I started mine by selling every birthday and Christmas present I ever got which amounted to about 800 USD. most people spend more than this per year on useless materialist shit that does nothing to make them happy. I taught myself HTML/CSS in my spare time, I registered a domain for $15 and I got the cheapest hosting I could find for about $7 a month, and designed my own ecommerce site (based on OScommerce). I then put the rest of the money into buying stock, google adwords and leaflets to advertise in my local area. By this time I had already dropped out of college (thats senior high, not university for you yanks).

    I had just about broke even and made back the money I invested when PayPal decided to cut me off due to the legally ambiguous nature of the business I was involved in (it was legal but Paypal don’t like taking any chances).

    Now I’m self employed, using the skills I learned designing my own website to design ones for other people, and hoping to start another business fairly soon, using the lessons I’ve learned from my mistakes first time round. Except now I wouldn’t put any more than $400 into a start up.

    The idea that you need a lot of money to start a business is a myth based on an ignorance of iterative development cycles and a general self sabotaging attitude that there are more barriers in life than there actually are. Fail early and fail often should be the motto for anyone looking to get into business. The kind of people who fail utterly as businessers are people who put their life savings into their very first business, usually something that seems “cool”, like a restaurant.

    The internet has removed the gatekeepers for business just as its removed the gatekeepers for music. You no longer need a bank (or record label) to give you permission. Unfortunately they don’t teach this in schools, so most people think being a worker is all they can do.

    “As my model shows (and copies in Excel are available on request) for about half the US population, it is mathematically impossible, by saving and investing, to become a millionaire. ”

    This would be an excellent argument if the argument was “It’s easy for more than half of the US population to become millionaires through saving and investing”.

    “Let me ask you, how did Romney get his millions? Did he work harder? Again, this is a specific example to show that the simple facts you proclaim may not be totally accurate. Some of the richest people in the US all inherited their money. You may have heard of them, the Sam Walton family. They didn’t build Walmart, Sam did.”

    This is a very poor argument. The fact that some people have inherited vast sums of money does not mean that MOST millionaires have inherited their money. In fact they haven’t. A better argument would be “Here’s some stats that show 67% of millionaires had millionaire parents”. But those stats don’t exist, so you rely on anecdote.

    If I find an example of someone who was a hobo and then became a millionaire by starting their own business, does this prove me right? Then why would an example of someone who inherited all their wealth prove me wrong? I’ve said nothing like “every single millionaire today made all their money from scratch”. Anecdotes are not meaningful in answering this question.

    I think there’s also also an assumption here about what constitutes “hard work” that should be explicated. In modern mixed capitalist economies, what is rewarded is valuable work, not “hard work” in the sense of difficulty, effort or time expended.

    This wraps into Marx Labour theory of value. The idea that something was worth something because it took a lot of effort to do. Of course this was dispelled during the industrial revolution when it was shown that a machine worker could produce 10x the amount of cloth a hand worker could produce for the same amount of effort.

    Hard work is only very loosely correlated with valuable work. Cleaning a bathroom with a toothbrush is hard work but its not any more valuable than cleaning it with a mop. What is much more correlated with valuable work is the rarity of the skills/attributes needed do said work.

    That’s why the lowest paying jobs (cleaner, fast food server, button pusher) tend to be jobs virtually every able bodied person can do whereas the highest paying jobs tend to be jobs that less than 1% of the population have the necessary skills/knowledge for.

  5. OgreMkV says:

    There are two problems with everything you’ve said. 1) I already admitted that I shouldn’t have included small business information, since actual information on success/fail rates are so sketchy and the actual income of the owners of said businesses are also extremely sketchy. There are people who own there own business who will never be millionaires. They happen to like what they do and that’s enough.

    The point here and the point that you appear to be missing is that my original post was to cover the fact that through hard work, savings, and investing anyone in the US can become a millionaire. It’s not possible.

    Finally, I’d like to point out that working hard does not equal to increased income. That’s a massive huge mistake (purposeful or not) made by many in the rich/conservative side. There’s a very large group of people who are paid a salary. It doesn’t matter if they work 20 hours/week, 40 hours/week or 80 hours per week. They get the same amount of pay.

    Obviously, it’s better for the worker to work 20 hours, but more than likely that will only happen one or two weeks before they will be looking for another job. Those that work 40 hours per week and those that work 80 hours per week get the same income, the same benefits etc. In fact, many companies in the past two decades have what is basically mandatory overtime (unpaid). It is expected that you will work for 45-50 hours per week at your job instead of the mandated 40 hours per week.

    So, again, working harder, saving, and investing will not get you to millions of dollars… unless you make more than the US median income and (probably) make some pretty extreme measures to save money.

  6. Dobby says:

    “The point here and the point that you appear to be missing is that my original post was to cover the fact that through hard work, savings, and investing anyone in the US can become a millionaire. It’s not possible.”

    That’s a significantly altered premise from:

    “These are people who believe that our system is not rigged and the greatest thing about America is that anyone can become a millionaire… or can they?”

    Note the original statement is not “anyone can become a millionaire through hard work, savings and investing”.

    You’ve narrowed the premise so much that there can’t possibly be an answer that doesn’t fit to what you wanted/expected to be true before you started. That doesn’t strike me as honest truth seeking.

    Especially when you constrict “hard work” to meaning jobs that don’t pay enough to make you a millionaire. Then you’ve asked a question which by definition only has one answer. Which is not a question but a statement made to look like inquiry. I would expect the vast majority of people who hold to the idea that “hard work” matters would say that “hard work” leads to better paying wages, which is not something you’ve addressed. Your calculation automatically assumed that no amount of hard work can increase the annual salary, without reference to criteria or empirical evidence that would be need to demonstrate such a thing.

    Whether you are going to claim that you only meant that specific narrow premise from the start, you’ve tied it into a much larger question which your work does very little to actually address since the vast majority of millionaires are not millionaires through the criteria you narrowed your work to.

    “Finally, I’d like to point out that working hard does not equal to increased income. That’s a massive huge mistake (purposeful or not) made by many in the rich/conservative side.”

    I believe I already addressed this “hard work != valuable work” in my previous comments. Maybe you skipped past them, I did write quite a lot and the formatting wasn’t great.

    Anyone who can see why the labour theory of value is wrong can see why “hard work” is nothing to be applauded or rewarded.

    “Hard work” is a clumsy turn of phrase, often used by politicians in speeches (which has basically nothing to do with economics or ethics, and everything to do with appealing to the common denominator with meaningless emotive platitudes). Most people who use “markets reward hard work” in any meaningful sense are using it as a clumsy short hand for “valuable work”. If pushed to follow through most would admit that its not hard work that should be/is valued but providing value to others. This is the essence of ethical free trade.

    By and large this is how most trade in most market economies goes down, with notable exceptions of corporate privilege, patents, military contracts, government make work, subsidies, tariffs etc.

    In fact it is almost tautological that what is rewarded in a market system is what is valued by people, since thats how the price system works (assuming pricing is free, which for the most part it is). Of course the value of things is greatly distorted by many market interventions. Something become artificially cheap (such as corn and oil through subsidies), others become artificially expensive (such as milk, patented drugs, or services from restricted professions like barber, masseuse , plumber etc)

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