It is shocking that people continue to cite Piketty. His results have been more or less shot down completely - his measurements are unstable (taken), and insofar as he has shown r > g, this is primarily due to middle class household wealth (rognlie). Further, his results are only within country and don't apply globally (c.f. Milanovic).
But his results are just so convenient and sound so cool. How can we discard them for something as silly as being totally wrong?
Is that actually true? In my research, i found that a number of scholars (including the ones you cite) critiqued aspects of Piketty's theory, but their papers read like either additions or clarifications. Further, the results are definitely not "convenient" - indeed, they go against a lot of prior research, and Piketty has done a remarkable job being open with both the data he uses and responding to others' arguments. He has certainly started an important scholarly debate.
I agree with you that the mood affiliation of the field agrees with what you say. Taleb agrees with you as well.
I'm also agreeing with Taleb that the specific facts don't support Piketty, yet no one even discusses them. They just appeal to the zeitgeist. Somehow Piketty can survive Taleb and Rognlie knocking down what he asserts to be his core claims, as well as Milanovic showing that his work is hopelessly myopic (Piketty mentions Balzac and Jane Austen more than China and India). Specific facts don't matter, only the mood does.
The central thesis of Piketty's Capital[1] is that inequality is a core feature of capitalism. He backs this with meticulous research[2] into centuries of wealth, income, and tax data. You can argue about what is the "right" level of inequality or with the policy recommendations (that massive government interventionism via a global tax on wealth is required). However, the results and data are solid.
That word is the problem. It means something different for every person. To you it means one thing, to him it means another. When people criticize capitalism their arguments are always convincing because you project your own negative connotations into the word.
Well said. It always pains me to see people criticising capitalism for easy points, when despite its flaws it has brought us an age of unprecedented equality and prosperity. That's not to say it's necessarily the best "system" for the future, but tearing it down because it is the Establishment and tearing down the Establishment is cool is counterproductive.
"it has brought us an age of unprecedented equality and prosperity"
People say this, yet when I have traveled in some of the poorest countries in the world (Zambia and Nepal for example) they seem a lot more capitalistic than Europe / the US. It seems to bring some people wealth at the expense of others.
Unprecedented equality means that in a capitalistic (Western) society almost everybody eats a hot meal everyday day, has free time to enjoy, has an assortment of clothes, furniture and things, has a place to live with running water and electricity and appliances that run with said electricity.
All things that only the richest people could dream of enjoying just a couple of centuries ago.
> It always pains me to see people criticising capitalism for easy points, when despite its flaws it has brought us an age of unprecedented equality and prosperity.
That's an achievement of a hockey-stick rise in exploitation of fossil fuels and energy use per capita, not some esoterically defined system called capitalism.
Just about the only core tenet of capitalism are strong protections of property rights. All of the negatives typically associated with capitalism are due to failures in regulation (over or under) and the irrationality of human beings and their policies.
And while we're communicating, you're also completely ignoring the time axis. Global warming and other neat things on the horizon, anyone? We can't even be arsed to take that seriously. We have super awesome equality because progress wasn't exponential for millenia, no, capitalism came up with that, and when civilians get murdered more or less nilly-willy, and we wreck our long-term prospects for material comfort and social cowardice you just keep having polite conversation about the table cloth and think that's civilized. You can talk about how the masses do or think this or that, but you can't deal with any sort of discussion with bite it seems. When people are having dinner and someone suddenly kills their wife, or "just" the maid or some random stranger, you can continue eating, and I can call it out.
You're definitely not getting away without providing a citation for that. In the couple months after Capital was published, I saw a couple attempts at refutation, including one in the Financial Times, but Piketty responded to all of them with convincing rebuttals. I would like to see this "complete shoot-down" you claim exists.
Taleb's article specifically cites articles which prove mathematically that Piketty methodology would show rising inequality among the super rich even if it didn't exist. Did you even read it?
I will provide others when I'm not on mobile. You can also Google "Piketty rognlie" and it'll be near the top.
Taleb talks about a couple of articles he wrote, but unfortunately does not cite them, nor does he provide any details from them that would support your assertion that they "prove" anything, mathematically or otherwise. And none of the third-party articles linked from the footnotes contains any such critique of Piketty.
The gist of the paper as far as I can tell is that when sampling fat-tailed distributions, it's easy to 'miss' outliers on the tail that would significantly change the average observed. So in Piketty's historical analysis, the rise in inequality might simply be due to better samples as data becomes easier to get. If you actually read the book, though, it's not clear that data became uniformly better over time---there's some indication that recent data actually became worse. It's also clear from the book that Piketty's conclusion wasn't based solely on aggregations of equality data, but also historical returns on capital that would not be subject to Taleb's bias. In short, at best, Taleb offers an alternative explanation for the historical inequality data. More of a caveat than a refutation.
I think the idea of "skin in the game" as described in the intro is close but not quite right. It's not about "falling from the pedestal" as such; it's about bearing the costs of your actions in fair proportion. This is an old argument: politicians make war, but it's working-class teenagers who actually go to war. Therefore people resent politicians for starting wars because the people being sent to die are not responsible for the war, while the people responsible for the war are not being sent to die. It's about fairness.
While I think you're close, the war example is not fitting unless people are forced to go to war. If they decide to do go to war voluntarily, then it's IMO partly their fault.
Probably a better example is CEOs who get big bonuses if the company goes well but will get a good pension and other benefits ("golden parachute") if they are fired after a few months because of bad performance.
It's kind of win / win for them, so a loss for everyone else.
Same holds for a risky bank that keeps its profits (if there are any) or gets a (taxpayer funded) bailout if "profits are negative".
And as long as the general consensus is that a good CEO can change everything, CEOs will be able to attract these contracts that has serious assymetric risk/benefit profiles.
Fairness is not apropos, the idea of skin in the game is a heuristic to identify decision-makers who are likely (or not) to expose others to harmful risks. If anything, the skin in the game should be even more than proportional. The system can survive local failure (death of a general or economist) as the price of encouraging better risk-taking.
I think the distinction between those who have "skin in the game" and those who survive on arbitrary indicators of prestige is an important one culturally, but especially as applied to Trump, I still think it's weird Taleb doesn't address any distance between perceived skin in the game and actual. Saying "Trump's a businessman who takes real risks, Krugman's just a writer who will never answer for mistakes" ignores that Trump is a media figure at least as much as he's a businessman, and has put effort his entire career towards presenting that image (as a businessman who takes real risks) regardless of the truth. Is Trump really more likely to end up going to a soup kitchen than Krugman? Are the elaborate terms of his bankruptcies really "losing your own money, not someone else's?" Or is he just trying to present himself that way?
I agree that there's a serious problem in society of people coasting on their arbitrary degrees/status/reputation in a way that lets them take no responsibility for their mistakes; see Theranos/general examples of VCs focusing on style over meritocracy, see diploma mills and rent-seeking prestige colleges, see Ross Douthat's career (if the mainstream media wants to restore faith and trust, the best thing they could do would be to fire people who continue to screw up...) But the other issue, of resentment against the mandarin class, people waking up and getting angry against those without skin in the game; that's a matter of perception, not reality. Heck, Trump switching to the Apprentice after facing bankruptcy seems exactly the sort of coasting based on arbitrary celebrity Taleb might despise in a different context. If we want to understand the effects of the mandarin class, we should figure out not just who has "skin in the game" or not, but the level of cultural and media fluff that leads people to believe that someone has skin in the game or not.
I'm sure Nasim is talking about perception and not 'reality.' As the saying goes "perception is reality," I think you'll find that objective reality is not very important in the domain of culture.
Yes Trump did make most of his money using borrowed funds and leverage. However, the lenders in that case have skin in the game and the debtors presumably exert some restraint on Trump. Trump did have his credit on the line as well as whatever personal assets he pledged. For every high profile bankruptcy there were likely many more in which everyone made out, otherwise no one would extend him any credit.
Bankruptcy laws add a lot of value to a functioning capitalism and debtor and obliger are both aware of the laws. Perhaps you don't agree with them or Trump abused them but that's a different story.
Trump was smart in that he likely structured his financial dealings in a way to limit his personal losses, but the banks knew they and Incorporated that into their offer.
But it's true that more recently he has been a celebrity and leased out his name. However, since his name is his primary asset, you can still say he has skin in the game.
Also I would add that Trump's celebrity is due to something in his control. Whether it's because he's a demogouge, visionary or marketer extrodinaire, he is successful on his merits. Taleb would probably contrast that to some academic on an unelected government panel somewhere due to personal connections
So I'm not criticizing Trump here per se (I mean I really dislike him, but that wasn't what I was getting at.) My point is more that this distinction between "skin in the game"/"no skin in the game" that Taleb portrays as binary is really quite murky, and people's perceptions of who's taking risks are affected by factors other than the truth. I agree that bankruptcy laws often add value, but that wasn't the point; they add value precisely because they reduce the "skin in the game" of the person going bankrupt, whereas Taleb had indicated that Trump had shown his risk-taking by losing his own money. And it's exactly this idea that leasing out one's name, putting one's reputation on the line, turning yourself into a celebrity could also be considered having "skin in the game" that makes this distinction murky: isn't that what Taleb's IYIs do? Aren't all columnists, academics, journalists and so on playing in the same system, and self-promoting as a form of hustling their way to the top? It depends more on your perspective than on any objective definition of "skin in the game."
Also with respect to Trump being "successful on his merits"... being born into hundreds of millions is better than most connections. More importantly, Taleb isn't talking about success/failure on one's own merits, but taking on risk, and I think that's one of his better points. That's the difference between the "skin in the game" concept and judging based on some abstract idea of meritocracy: people understand that Trump was given advantages in his life, but they respect him because (they perceive!) he's opened himself up to risk and put those earnings, unfairly gotten as they may be, on the line.
This is unfair of me; there are lots of pundits as bad as him or worse, but he's become the designated punching-bag on parts of the internet of people who thought Trump would never make it. Throughout the primaries, he was incredibly dismissive towards anyone who thought Trump had a chance, mocked the idiots who didn't see the obvious truth that Marco Rubio would win every primary, responded to every Trump dip in the polls with "I TOLD YOU SO I TOLD YOU SO I TOLD YOU SO YOU DIDN'T BELIEVE ME," then predicted that Rubio and Cruz would never endorse Trump, then predicted someone else would snatch the nomination at a contested convention... and still has a job for the New York Times, educating the masses on what the future holds. No punishment for being wrong: no skin in the game.
This guy's writing style is insufferable. Basically, 'let me introduce an abstract, technical concept, criticize the reader for not knowing it, and then not define it until halfway through the article'
Dropping words like 'Markov Chain' in a Medium post without any context or explanation just makes the author seem like he wants us to think he's smart.
But it is one that you need to already have been educated about. The author seems to be assuming that all their readers have CS degrees or have read a certain narrow slice of technical content elsewhere. It's bad writing for a generalist platform like Medium.
Markov Chain is a pretty elementary concept. Anyone interested in having a serious discussion of economics should at least have a passing familiarity with it.
If anything I find his writing more sympathetic to a layperson.
He consistently likes to disparage those he thinks portray false intellectualism and academia (whenever you see IYI in his writing it means Intellectual Yet Idiot).
For me as a French reader, Taleb's writing style feels familiar, just like French sentences translated in English: long and constructed sentences with articulations, and some soft punch inside.
Maybe it is not the proper style for English native speakers, but it feels a clear and well organised writing style to me. On a higher level, Taleb's thought may have weaknesses, some contradictions, some unmomtivated leitmotives. But still interesting and thought provoquing.
I was introduced to Markov Chains in high school - it's not that strange of a concept. And yeah, Taleb has some rough edges, is unapologetic about his arguments, and enjoys calling people out. But it's refreshing to find that someone isn't dumbing a topic down so that it can covered at an "8th grade" reading level like the NYT.
Taleb's style is generally... insufferable, but it's a good way to remind yourself that how nice someone's writing is isn't necessarily a sign of how good their ideas here. He takes great joy, for better or for worse, in pointing out critics who call him arrogant and pretentious rather than criticize his ideas.
Rent-seeking is an attempt to obtain economic rent (i.e., the portion of income paid to a factor of production in excess of what is needed to keep it employed in its current use) by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. Rent-seeking implies extraction of uncompensated value from others without making any contribution to productivity. The classic example of rent-seeking, according to Robert Shiller, is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee (or rent of the section of the river for a few minutes) to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is helping nobody in any way, directly or indirectly, except himself. All he is doing is finding a way to make money from something that used to be free.
Thanks a million! Had to read the first line a few times, but then read through it all and understood the concept. Thank you very much for the thorough explanation.
I don't have anything to add to the blog post itself, but I find the complaints about the writing style pretty strange, especially to HN. I never even try to read New Yorker articles anymore, which get shared and upvoted here so abundantly: lazy, wordy writing that concentrates on people instead of concepts, tries to reason about important things through emotions instead of logic and in general tries to be prose instead of journalism is insufferable to me.
After that, Taleb's writing is like fresh air: straight and to the point, logical and precise. He's using concepts that I myself utilize in analysis of outside world, shows great intellectual honesty and backs his claims with a plethora of sources. If anything, I expected HN to be full of fans of this writing style, not New Yorker's.
This is anything but straight. New Yorker is also not straight, but hackers are not the intended audience of New Yorker articles. Normal people prefer stories about people to conceptual discussions. FWIW I think there's some good reason for this. Discussions purely about high minded concepts over the lives and experiences of individuals tend to wind their way inexorably toward stupidity or irrelevance. When you're discussing policy making, all that really matters is how it affects people. That's not to say you can't use anecdote to mislead, but that's a different class of sin.
"Reputationism" might be a good way to describe a system with "no skin in the game". I agree that a world where nobody has skin in the game is bad.
And yet, who do we admire in Silicon Valley? "Thought leaders". Guys like Ben Thompson of Stratechery, VCs with blogs, Elad Gil, etc.
I'm very torn about this. On one hand, the whole enterprise of being famous without taking any risk feels so dirty, and yet, it's so effective in today's world.
Who in their right mind would want to be a military leader, small-business owner, or elected politician, when you could be a VC, investment banker, journalist, or mid-level corporate executive? All of the upside, none of the risk! It feels "rational" in a way to want to have no skin in the game.
It was Taleb himself who said in the bed of Procrustes (another of his books) something like, "it's the sign of the loser to lament human nature without any attempt to exploit or profit from it". Does that apply here?
Another thought: is reputationism inevitable?
Taleb is a hardcore empiricist -- someone who values experience and firsthand knowledge over all. The problem is that we live in a global world, where knowledge, products, and ideas flow all over the place, and we can't have firsthand knowledge of all of it. So we rely on words, symbols, brands, and other "experts" to help us make sense of all of it. Perhaps inevitable, but it does take my smugness down a peg or two when thinking about medieval peasants consulting the local priest for advice. Maybe these reputationists today are the modern capitalist priestly class?
Man, what a great article. This guy kind of reminds me of Ignaz Semmelweis. Great example of a guy who is right, but pisses people off so much that the uptake of his ideas is severely hindered.
Speaking personally, having "skin in the game" matters very little to me when it comes to resenting those who have achieved great wealth. What matters to me is someone's effect on the rest of society. It matters how someone made their money but it also matters who else benefitted from that person's success and who else suffered.
For instance, I don't begrudge Larry Page or Sergei Brin their billions. Neither had much skin in the game, they were just pursuing a project they were passionate about after college, largely using someone else's money. Had they failed, they'd likely have incurred some opportunity costs of not having worked a more lucrative job, but wouldn't have lost much else. But what makes their wealth acceptable to me is what they created. Google has made my life and billions of other people's lives easier.
Contrast this with a hedge fund manager who's also a billionaire or a Mitt Romney -esque corporate raider who doesn't create anything and often leaves human misery in their wake. These billions are often made while incurring far more risk than that borne by the creative types and, yet, I still find their wealth the more detestable.
Buddhists have the concept of "right livelihood" that followers are supposed to adhere to. And it's always resonated with me. Whether or not one gets rich is independent of what truly matters...how much your life and work benefit others. I don't dislike people for being rich, I dislike people for living their lives in service only to themselves. Having "skin in the game" is a tangential property that is meaningless to me on its own.
A lot of hedge fund and private equity guys make money by doing necessary things management is unwilling, or politically incapable, of doing.
Unprofitable businesses, by definition, destroy their owner's wealth. Saying an unprofitable business has to continue operating is basically saying, "I think business owners have to operate charities", which is something I don't believe. Sometimes the best thing is the big job cut, at least that way, the employees, landlords, lenders, etc. can all start fresh, and put whatever bad situation exists today, behind them.
I think of private equity as corporate garbage collection. Sometimes adjustments is painful.
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[ 3.9 ms ] story [ 139 ms ] threadBut his results are just so convenient and sound so cool. How can we discard them for something as silly as being totally wrong?
If I'm wrong, mind citing the correct sources?
I'm also agreeing with Taleb that the specific facts don't support Piketty, yet no one even discusses them. They just appeal to the zeitgeist. Somehow Piketty can survive Taleb and Rognlie knocking down what he asserts to be his core claims, as well as Milanovic showing that his work is hopelessly myopic (Piketty mentions Balzac and Jane Austen more than China and India). Specific facts don't matter, only the mood does.
[1]: https://www.amazon.com/Capital-Twenty-First-Century-Thomas-P...
[2]: http://piketty.pse.ens.fr/files/capital21c/en/Piketty2014Fig...
That word is the problem. It means something different for every person. To you it means one thing, to him it means another. When people criticize capitalism their arguments are always convincing because you project your own negative connotations into the word.
People say this, yet when I have traveled in some of the poorest countries in the world (Zambia and Nepal for example) they seem a lot more capitalistic than Europe / the US. It seems to bring some people wealth at the expense of others.
Right. Which is why when I kill someone, I go to jail, and when George Bush attacks a country, the crickets chirp.
> tearing it down because it is the Establishment and tearing down the Establishment is cool is counterproductive.
More importantly, it's a straw man.
edit: if anyone is seriously debating that's a straw man, use your words.
Unprecedented equality means that in a capitalistic (Western) society almost everybody eats a hot meal everyday day, has free time to enjoy, has an assortment of clothes, furniture and things, has a place to live with running water and electricity and appliances that run with said electricity.
All things that only the richest people could dream of enjoying just a couple of centuries ago.
That's an achievement of a hockey-stick rise in exploitation of fossil fuels and energy use per capita, not some esoterically defined system called capitalism.
Just about the only core tenet of capitalism are strong protections of property rights. All of the negatives typically associated with capitalism are due to failures in regulation (over or under) and the irrationality of human beings and their policies.
That simple claim would also not imply the conclusions you claim, namely that some global disincentive for saving is needed.
What specific claims must one refute to prove Piketty wrong? Or can one refute every claim, yet Piketty will still be part of the zeitgeist?
I will provide others when I'm not on mobile. You can also Google "Piketty rognlie" and it'll be near the top.
FYI, I believe this is the paper you were referring to: https://arxiv.org/pdf/1405.1791.pdf
The gist of the paper as far as I can tell is that when sampling fat-tailed distributions, it's easy to 'miss' outliers on the tail that would significantly change the average observed. So in Piketty's historical analysis, the rise in inequality might simply be due to better samples as data becomes easier to get. If you actually read the book, though, it's not clear that data became uniformly better over time---there's some indication that recent data actually became worse. It's also clear from the book that Piketty's conclusion wasn't based solely on aggregations of equality data, but also historical returns on capital that would not be subject to Taleb's bias. In short, at best, Taleb offers an alternative explanation for the historical inequality data. More of a caveat than a refutation.
I think the idea of "skin in the game" as described in the intro is close but not quite right. It's not about "falling from the pedestal" as such; it's about bearing the costs of your actions in fair proportion. This is an old argument: politicians make war, but it's working-class teenagers who actually go to war. Therefore people resent politicians for starting wars because the people being sent to die are not responsible for the war, while the people responsible for the war are not being sent to die. It's about fairness.
Probably a better example is CEOs who get big bonuses if the company goes well but will get a good pension and other benefits ("golden parachute") if they are fired after a few months because of bad performance. It's kind of win / win for them, so a loss for everyone else.
Same holds for a risky bank that keeps its profits (if there are any) or gets a (taxpayer funded) bailout if "profits are negative".
I agree that there's a serious problem in society of people coasting on their arbitrary degrees/status/reputation in a way that lets them take no responsibility for their mistakes; see Theranos/general examples of VCs focusing on style over meritocracy, see diploma mills and rent-seeking prestige colleges, see Ross Douthat's career (if the mainstream media wants to restore faith and trust, the best thing they could do would be to fire people who continue to screw up...) But the other issue, of resentment against the mandarin class, people waking up and getting angry against those without skin in the game; that's a matter of perception, not reality. Heck, Trump switching to the Apprentice after facing bankruptcy seems exactly the sort of coasting based on arbitrary celebrity Taleb might despise in a different context. If we want to understand the effects of the mandarin class, we should figure out not just who has "skin in the game" or not, but the level of cultural and media fluff that leads people to believe that someone has skin in the game or not.
Bankruptcy laws add a lot of value to a functioning capitalism and debtor and obliger are both aware of the laws. Perhaps you don't agree with them or Trump abused them but that's a different story.
Trump was smart in that he likely structured his financial dealings in a way to limit his personal losses, but the banks knew they and Incorporated that into their offer.
But it's true that more recently he has been a celebrity and leased out his name. However, since his name is his primary asset, you can still say he has skin in the game.
Also I would add that Trump's celebrity is due to something in his control. Whether it's because he's a demogouge, visionary or marketer extrodinaire, he is successful on his merits. Taleb would probably contrast that to some academic on an unelected government panel somewhere due to personal connections
Also with respect to Trump being "successful on his merits"... being born into hundreds of millions is better than most connections. More importantly, Taleb isn't talking about success/failure on one's own merits, but taking on risk, and I think that's one of his better points. That's the difference between the "skin in the game" concept and judging based on some abstract idea of meritocracy: people understand that Trump was given advantages in his life, but they respect him because (they perceive!) he's opened himself up to risk and put those earnings, unfairly gotten as they may be, on the line.
Anything specifically that one should see or do you just not like him or his writing?
Dropping words like 'Markov Chain' in a Medium post without any context or explanation just makes the author seem like he wants us to think he's smart.
He consistently likes to disparage those he thinks portray false intellectualism and academia (whenever you see IYI in his writing it means Intellectual Yet Idiot).
However, if this was extracted from a book it makes a little more sense.
Maybe it is not the proper style for English native speakers, but it feels a clear and well organised writing style to me. On a higher level, Taleb's thought may have weaknesses, some contradictions, some unmomtivated leitmotives. But still interesting and thought provoquing.
[1] https://en.wikipedia.org/wiki/Nassim_Nicholas_Taleb#Early_li...
[2] https://en.wikipedia.org/wiki/Nassim_Nicholas_Taleb#Educatio...
https://en.wikipedia.org/wiki/Rent-seeking
After that, Taleb's writing is like fresh air: straight and to the point, logical and precise. He's using concepts that I myself utilize in analysis of outside world, shows great intellectual honesty and backs his claims with a plethora of sources. If anything, I expected HN to be full of fans of this writing style, not New Yorker's.
People are more likely to comment about things that piss them off though, right?
> Simply, it looks like it is the university professors (who have arrived) ...
I wonder whether some over enthusiastic (or automatic) editor has changed https://en.wiktionary.org/wiki/arriviste into
"(who have arrived)"
And yet, who do we admire in Silicon Valley? "Thought leaders". Guys like Ben Thompson of Stratechery, VCs with blogs, Elad Gil, etc.
I'm very torn about this. On one hand, the whole enterprise of being famous without taking any risk feels so dirty, and yet, it's so effective in today's world.
Who in their right mind would want to be a military leader, small-business owner, or elected politician, when you could be a VC, investment banker, journalist, or mid-level corporate executive? All of the upside, none of the risk! It feels "rational" in a way to want to have no skin in the game.
It was Taleb himself who said in the bed of Procrustes (another of his books) something like, "it's the sign of the loser to lament human nature without any attempt to exploit or profit from it". Does that apply here?
Another thought: is reputationism inevitable?
Taleb is a hardcore empiricist -- someone who values experience and firsthand knowledge over all. The problem is that we live in a global world, where knowledge, products, and ideas flow all over the place, and we can't have firsthand knowledge of all of it. So we rely on words, symbols, brands, and other "experts" to help us make sense of all of it. Perhaps inevitable, but it does take my smugness down a peg or two when thinking about medieval peasants consulting the local priest for advice. Maybe these reputationists today are the modern capitalist priestly class?
For instance, I don't begrudge Larry Page or Sergei Brin their billions. Neither had much skin in the game, they were just pursuing a project they were passionate about after college, largely using someone else's money. Had they failed, they'd likely have incurred some opportunity costs of not having worked a more lucrative job, but wouldn't have lost much else. But what makes their wealth acceptable to me is what they created. Google has made my life and billions of other people's lives easier.
Contrast this with a hedge fund manager who's also a billionaire or a Mitt Romney -esque corporate raider who doesn't create anything and often leaves human misery in their wake. These billions are often made while incurring far more risk than that borne by the creative types and, yet, I still find their wealth the more detestable.
Buddhists have the concept of "right livelihood" that followers are supposed to adhere to. And it's always resonated with me. Whether or not one gets rich is independent of what truly matters...how much your life and work benefit others. I don't dislike people for being rich, I dislike people for living their lives in service only to themselves. Having "skin in the game" is a tangential property that is meaningless to me on its own.
Unprofitable businesses, by definition, destroy their owner's wealth. Saying an unprofitable business has to continue operating is basically saying, "I think business owners have to operate charities", which is something I don't believe. Sometimes the best thing is the big job cut, at least that way, the employees, landlords, lenders, etc. can all start fresh, and put whatever bad situation exists today, behind them.
I think of private equity as corporate garbage collection. Sometimes adjustments is painful.