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Wednesday, July 19, 2006

Luck plays a major role in success

As I've stated often before, too many people confuse luck with skill or being smart. Hal Varian (link above) and Brad Delong both provide examples where this is the case. In my career, I've seen alot of hardworking, talented people in unsuccessful companies, and untalented lazy people in successful companies. The latter always did better than the former, hence the phrase quoted to me by a stock broker, "I'd rather be lucky than good."

If you believe that luck plays a major part in our success or failure, then you'd want progressive taxation --- let the lucky subsidize the unlucky. And you'll soon learn to respect wealth come about by selling companies during a dotcom boom less than personal success that's achieved by a means less amenable to luck (e.g., finishing a marathon, or completing a long trek). If you think about man in his natural state, the last two are rarely instances of pure luck, which is why we over-emphasize monetary success in the modern world and under-estimate the importance of luck.

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