This is a very rosey interpretation of Al-Fayed and glosses over vast swathes of fraud and misrepresentation. A more balanced view can be gained from the Guardian, itself no fan of the British establishment: https://www.theguardian.com/world/2023/sep/02/mohamed-al-fay...
You don't make 2 billion dollars just by doing honest work for 94 years.
If the average man's labor is worth $15/hr, and he never spent (nor was taxed) a dime of that, Al-Fayed was either more than 700 times smarter, faster, stronger, and harder-working than the average man... or he acquired that wealth by doing something other than hard work.
> You don't make 2 billion dollars just by doing honest work for 94 years.
It is absolutely possible to make that (and more) by doing honest work.
> If the average man's labor is worth $15/hr, and he never spent (nor was taxed) a dime of that, Al-Fayed was either more than 700 times smarter, faster, stronger, and harder-working than the average man... or he acquired that wealth by doing something other than hard work.
Other reasons someone can vastly outperform others:
- more leverage from one's work (e.g. plumbing vs. software engineering, or starting a business that employs 100 people rather than sole proprietorship)
- higher demand for one's skills
- capitalize on luck (e.g. he had very influential connections early on that he leveraged)
> It is absolutely possible to make that (and more) by doing honest work.
I’d agree with you under our current ethical system.
Under my personal moral system, I think anyone “capturing” $1 billion as a “portion of the value they created” most likely involves greatly undervaluing the contributions of the system they built upon/in (which should have been captured by taxes and reinvested into that system), as well as much of the labor they employed (other key employees were probably given too little equity, and much of the bottom rings are likely underpaid on an hourly basis for the value they provide).
Personally I’d like to see significantly higher taxes on top-end earners to help allow the “system” which provided the infrastructure, skilled and educated labor, and favorable market environment, to capture a little bit more of the value it provided to billionaires and reinvest that in K-12 education to create a strong workforce for the next generation of business owners to rely on.
I personally think even with say, an absurdly high tax rate of 90% on earnings over a billion dollars, folks like Elon Musk and Sam Walton and Bill Gates and Jeff Bezos would still have nearly as much personal incentive to earn money past their first $1 Billion.
I personally feel that Jeff Bezos would absolutely still fight for growing his net worth from $1B to $13B at 90% tax rate, instead of $1B to $130B at his current tax rate.
That is an incredibly shallow and fairly snarky response. I can do a lot of legwork to fill out a more robust position based on assumptions about people’s beliefs who make quips like this.
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I think the most important thing this misses are that there are more parties to an economic enterprise than just a single seller and their buyers. At one extreme, let’s envision a fictional world:
Walmart builds a small empire on the back of public highways. They pay fair taxes which allows the highways to capture and reinvest the value they created for Walmart.
Walmart then lobbies government leaders to eliminate their taxes. Walmart now pays no taxes.
Walmart continues to extract value from the public highways but no longer shares that value with the government which created the value.
I’m not saying this is literally what’s happening - I’m just using it as an example to show how a company can provide great prices to customers, while inappropriately capturing value created by others. This is just to show that your model posited above fails to take into account some pretty large effects in the real world.
Plus the system lets you do highly risky things and be paid handsomely if you are right, so by definition you will get these guys and this is wonderful because we keep a lot of the benefit they create. This is the main end feature that makes it work in my opinion. There is a smart and large part of the population motivated to take huge risks on their ideas by guys winning like this and when they win we usually benefit because they cant capture 100% of the value they create and if they lose they absorb the cost. As more of the downside is socialized (i.e. crony capitalism and marxism) the system breaks down.
> If the average man's labor is worth $15/hr [..] Al-Fayed was either more than 700 times smarter, faster, stronger, and harder-working than the average man
Wonder what the average HN reader's labor is worth, and whether our output would be described as "honest work".
I'll agree that it's rare for people to get to the top in life without taking some dubious shortcuts but that maths doesn't seem right. Someone being 1.2 times smarter than average (or some other metric) can probably extract orders of magnitude more value out of the system with enough intent and motivation (without being dishonest). I think it takes much less than you're thinking, but I don't have anything to prove that.
I personally wonder whether “luck” is underestimated more among most, or whether they’re moreso overestimating the degree of the value creation of the person who was lucky to find themselves in a position where they could create lots of value.
There’s a perception that guys like Ballmer created $10B of value and managed to capture $1B of it. Just because he was lucky to be there doesn’t mean he didn’t hold a pivotal role and make a huge difference in the outcome of the enterprise, and may have been awarded a small % of that value created.
Maybe other people could have created that value too, but he was lucky to be there, they were lucky to have him there instead of someone worse, and he still only captured “10%” (or whatever) of the value created.
My thought is that many of these billionaires do have a large “value over replacement” where replacement is just some random person with the resume for the position.
But I don’t think the enterprise creates nearly as much value as has been assigned to it. I think much of the value is created by the public infrastructure, an existing public education system which provides affordable skilled labor, and much of the laborers themselves.
So personally I think Steve Ballmer did get lucky, did create a lot of value for Microsoft, and captured some portion of that MSFT +value, but Microsoft captured a lot of value that was created by others (the government/public) and likely more should have been captured by them instead.
Yeah. Lebron James (or whoever the best paid NBA player is right now) is probably only marginally better then the average or even worst or even almost but didn't quite make it to the NBA player.
Everyone is paid for the last 5% of performance though not the first 95%. People get confused about that when they complain about the BS of jobs. You're not getting paid for the BS - you're getting paid for the moments when you bring something to the table.
I think your model is a bit flawed - it’s likely value scales faster than linearly with increases in “smarter”.
So, while I philosophically agree that it’s obvious anyone with a billion dollars has not earned the vast majority of it, I also personally believe it’s slightly harmful to suggest that we should be paid in direct proportion to how hard we work.
There’s a lot more to be said on the topic, but I think the truth for “how much value can one person create; and how much of that value should they capture for themselves?” lies in-between “scales linearly with hard work and smartness” and “it’s great that they were able to capture a tiny $1B slice of the value they created in their lifetime”.
I've always been completely baffled by the point of view of hard-left-wingers.
But if there are many people who truly believe that economics is linear and zero-sum, that explains how they got there.
From this point of view, CEO's and billionaires are of course overpaid because they couldn't possibly type/talk/work/think a million times better than a thousandaire.
It's only when you internalize concepts that came up in the last couple of centuries, like leverage, positive sum growth, exponential economic growth, and exponential technological development that modern life makes sense.
The Guardian is absolutely a British establishment newspaper. You can simply observe how they reported during the lead up to the Scottish independence referendum, or when Jeremy Corbyn became leader of the Labour party.
As soon as there's any perceived threat to the British establishment they'll be running the same stories as The Telegraph.
Yeah, sadly the days of the Manchester Guardian are long gone. It's now thoroughly captured by the same London-centric, Oxbridge-born cliques that dominate the other papers.
I'd characterise it as blatant propaganda. What wasn't misleading was outright lies. When they're repeating verbatim a story from the Daily Mail you know there's something wrong.
Why do you ask? Has that enlightened you any further?
The main lesson I got out of it that you need to marry a billionaire's sister.
Without the right connections, you get very few opportunities and even when you see a mediocre opportunity, you seize it as if it's your last.
But with the right connections, it seems like amazing opportunities just fall on your lap and whatever ones you choose will yield great results. Surely it's not difficult to succeed in such situation.
I struggle to believe the idea the British establishment had no clue what he was up to. He was in reality doing their dirty work and aggrandizing them in the process with his apparently endless desire to be accepted into their ranks.
For decades the rumour has been that he is bankrupt and just putting up a huge facade. (Comparisons to Maxwell). If such a hole exists it did not catch up to him in life, which is an achievement one way or another given the scrutiny he was supposedly under.
Of course they know, just like they know about dirty money from abroad propping up the economy, empty properties owned by rich foreign nationals pushing up house prices for UK residents etc. but there are several steps between that and doing something about it:
1) They have to know (they probably do)
2) They have to care
3) They have to know what to do about it
4) They have to accept the potential disadvantages of taking action
5) They have to decide it is more important than everything else they have on their plate
6) They need to actually do something about it
7) They have to succeed in the Court case, Tax investigation etc.
8) Eventually, worse-case, the wealthy criminal just dusts themselves off and finds something else to do
I'm sure that's why most Politicians just talk about stuff. It's too hard to actually do things.
All of these articles discuss his desire for citizenship, and being refused.
I've yet to read one that explains what a person of his standing would gain from British citizenship in practical terms, surely he was wealthy enough to permanently reside wherever he wanted.
More than a document allowing him to reside somewhere, it was a status symbol to him, and something he thought important for his family moving forward. Think of the fictional Barry Lyndon in his quest for himself (and sons) to become part of the English Aristocracy.
Things are not always rational in life, particularly with strong characters like him. He was probably influenced by the last remains of colonial Britain, getting his formative break under English-educated Kashoggi.
> In 1964 Fayed arrived in Haiti, one of the world’s poorest nations, hailed as a rich sheikh from Kuwait. He romanced one of Papa Doc’s daughters and persuaded Duvalier to give him an oil concession and a contract to manage the Port-au-Prince harbour. The Duvaliers’ love affair with Fayed was short-lived. Early in 1965 the fake sheikh left Haiti, never to return. More than $100,000 (almost $1m today) was reportedly found to be missing from the port authority’s bank account.
I think portraying him as having "built his empire from the ground up" is misguided at best and very dishonest at worst.
Please add something more substantive and less divisive than “hmmmmmmmm”. There’s so much interesting about this fellow’s life which can add some fascinating narrative here, we can all avoid cheapening it with aggression and flame wars.
Honestly even as a person who believes that anyone with a billion dollars has effectively stolen it (captured more than their personal share) from the people and systems which enabled the value-creation of their enterprises…
If I won a $1 million lottery (after taxes) I’d have no idea how to turn that into $100M. I’d probably spend 75% of it on a house, 10% of it to pay off other debts, and then be still solidly in the labor class.
The guy obviously built an empire out of nothing, through both grift and grit. His first major win may have been ingratiating himself with the Haitian leadership, but how do you do this with nothing?
I don’t admire it, but I recognize that it doesn’t just happen either. The guy didn’t really win with a lottery ticket, he did something to put the fix in at the lottery.
I think portraying him as having "built his empire from the ground up" (apologies if I misquoted you, I can't see your post anymore as it was flagged) is misguided at best and very dishonest at worst.
Theres literally zero chance for us to know if that is true or not, you're taking the word of a blatantly corrupt government on face value. Given that, it's probably a false story and the money has gone somewhere else.
How? The modern narrative for a majority of people is that it is impossible for them to progress in life because they're held back by "invisible forces", like racism, lack of education or other similar issues. Al-Fayed is in stark contrast to all these.
At the time of posting, 40% of the comments on the article were pointing to a Guardian hit piece basically trashing the man's legacy.
- Al-Fayed started out over 60 years ago, in the late 50s and 60s, with a very different world than what we have today.
- These kind of "narratives" are about averages, and there's always exceptions. This is really just a variant of the ol' "my uncle chain-smoked his entire life and lived to be 89 therefore smoking isn't harmful!", "it was chilly this winter in Chicago therefore climate change is a hoax!", and similar non-arguments.
For these reasons I feel that any conclusion derived from Al-Fayed's life – positive or negative – are invalid. It doesn't prove "you can only become rich by being a crook" but also doesn't prove "anyone can get ahead with enough skills". It's a single data point, nothing more.
As for "trashing the man's legacy", Al-Fayed didn't exactly beat around the bush when it came to other people. I'm reminded by a Christopher Hitchens quote, which goes something like "I don't expect any kindness after my death, because I'm not dishing out any", or something along those lines.
I wasn't quoting from the article posted - I can't see where you quoted from OP's posted article - so I'm not sure what you mean. All I see is you referring to the guardian article as a "hit piece".
The other commenters are merely presenting the rest of the facts about him - I don't know why you're uncomfortable with this.
"He began his life as a porter — carrying bags and selling soft drinks and, later, sewing machines — in Egypt’s bustling Alexandria ..."
So I didn't "invent it", it's a direct quote from the article. Whether you judge the Guardian as a more reputable source of information than arabnews.com, that is your personal preference. (also note: news are not facts, they are interpretations of events written by laymen on a salary and a time constrain)
That wasn't the narrative I was referring to, and wasn't what I was questioning. I meant your apparent insistence that he was flawless and that any assertion of the contrary is "trashing his legacy".
I told GP the same thing as you (to read the HN guidelines). However, I don’t see any characterization happening in the comment above. What am I missing?
I believe they are referencing the other comment you made:
> When in Rome, do as the Romans do
Which in this context is snarky, not substantive and likely to be flamebait.
People are of course complicated, but Fayed seems, uh, more complicated than most [1]:
> In 1964 Fayed arrived in Haiti, one of the world’s poorest nations, hailed as a rich sheikh from Kuwait. He romanced one of Papa Doc’s daughters and persuaded Duvalier to give him an oil concession and a contract to manage the Port-au-Prince harbour. The Duvaliers’ love affair with Fayed was short-lived. Early in 1965 the fake sheikh left Haiti, never to return. More than $100,000 (almost $1m today) was reportedly found to be missing from the port authority’s bank account.
> A dangerous opponent, [Fayed] would make the wildest allegations in public as well as private against enemies or those he blamed for setbacks. He fabricated documents and paid witnesses to perjure themselves. It was often difficult to detect whether Fayed himself believed the allegations he repeated with such conviction.
> There were repeated allegations of sexual harassment of female staff. Some who complained were accused of theft and on occasions arrested by local police only too willing to accept allegations (later dropped) from a powerful patron. In 2009 the Crown Prosecution Service decided not to charge Fayed over the claim he had sexually assaulted a 15-year-old girl at the store. Fayed had been interviewed by Scotland Yard under caution. He was interviewed again in 2013 after a woman alleged he had sexually attacked her at his Park Lane apartment after a job interview. The police reopened the case in 2015 but took no further action. Fayed always denied the allegations. Further sexual harassment allegations were made by former Harrods employees in a Channel 4 documentary in 2017 and to Channel 4 News in 2018. One ex-employee claimed to have accepted £60,000 to drop a sexual harassment claim. Fayed again denied the allegations and the police took no action.
I guess you could also claim that the British press has had and continues to have it out for him, so these are just skewed portrayals of a bon vivant, or something. But from the uninformed outside he certainly looks like a guy who made his money as a fixer/corruption specialist (like the people who built industrial empires after the collapse of the USSR -- they certainly won a hard game, but it's difficult to say they did something good) and mostly used it to make life unpleasant for people around him.
Back issues of Private Eye from the late 80s and 90s almost certainly cover a lot of his dodgy dealings for anyone wanting to know more. Probably mention him in their next podcast too (~20th Sept? Their output is erratic.)
(I don't mean to pile on to what runnerup already (and correctly) posted, but I also want to make sure you see this, so I'm posting it as a reply to your most recent comment.)
Could you please stop posting unsubstantive comments and flamebait? You've unfortunately been doing it repeatedly. It's not what this site is for, and destroys what it is for.
