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Comment by pjc50 | Hacker News Reader

Gambling addiction does seem to be a modern problem; not just unregulated forex and options trading, and not just in bitcoin, but also gatcha games and good old fashioned sports betting.

Perhaps this is why Netflix Korean lethal gambling TV series Squid Game is so resonant in the West.

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It's always been a problem. Religions and governments have historically banned or heavily regulated gambling, going back at least as far as Ancient Rome, Ancient China, and Ancient Egypt.

The modern problem, perhaps, is that now we have new forms of gambling (crypto! day trading! spread betting apps!) which are perhaps not as obvious, are not as visible in society, and fall outside of existing regulations?

The growing wealth inequality probably also produces more desperate people willing to risk it

It's not just desperation, wealth disparity has also contributed to the erosion of any value that used to be given to where the money comes from. The spectrum from speculation to gambling used be be linked to a certain kind of stigma (more so for straight up honest gambling, but also for speculation), these days it's more like "hard-earned? you got no-one to blame but yourself!"

And how could it not erode? It's difficult to take pride in your hard-earned cash when it's all coming from a stack of advertising media fueled by advertising media, as if all the way down.

Do you believe there’s more wealth inequality in America today compared to medieval Europe or ancient Egypt?

There's surely more visible wealth inequality. A peasant villager would never visit the Royal Court, and if they did visit the local manor or landlord they would find one family with fine clothes and plenty of food who also went to Church on Sunday and suffered toothache and pissed in a pot under the bed at night.

They would never have an endless Instagram feed of fashion model people with jetset lifestyles, building on decades of TV shows like "Lifestyles of the rich and famous" or "Keeping up with the Kardashians". Consider how much you have heard about a Hollywood star or Jeff Bezos compared with how much you have heard of Hugh Grosvenor, the world's richest person under 30. Before TV, before newspapers, before most people could read, you'd never have heard of either of them.

( https://en.wikipedia.org/wiki/Hugh_Grosvenor,_7th_Duke_of_We... )

There’s another key difference: say you were a peasant who did happen to live near, maybe even worked for the king, so you knew exactly what you were missing out on. Nobody told you that was a life option: quite the opposite, god had put you in your station and you’d be slapped down hard if you tried to change that. Your baseline for comparison was far closer: maybe apprenticing or marrying a child into a skilled trade, ending up in one of the coveted relatively stable service positions, etc. but nobody expected you to ascend too high.

Medieval peasants weren't told their place in life is a matter of personal responsibility (within reason), they were told the hereditary social hierarchy is divine will and can't be overcome. "Trading" is the ultimate example for the opposite, since it promises to directly translate "skill" into wealth.

Wealth inequality is an important factor but expecting everything to boil down to one simple factor is overly simplistic.

> Medieval peasants weren't told their place in life is a matter of personal responsibility

I assume wealth inequality is worse today than Ancient Egypt, but regardless of how it is, this point is key.

> "Trading" is the ultimate example for the opposite, since it promises to directly translate "skill" into wealth.

Tell that to the sweatshop worker who made your jeans.

Or to those poor restaurant owners who now have to pay a 30% fee to the likes of Uber eats to maintain a steady income.

(If it's up to Apple, developers are next!)

I don't have to tell them that, what do you think why gambling is so popular in poorer communities? Yes, everyone "knows" it's a game of chance but they secretly tell themselves it's a game of skill and that there are rules they just have to get better at recognizing. The gambler's fallacy is a prime example of that.

Trading is only different from gambling in that we don't view the belief in "skill" as a sign of addiction and instead feed into it with the mainstream news cycle. There's no practical difference between betting on stocks and betting on horse racing except the levels of complexity permitted.

The trick to winning at stock gambling is that unlike with regular gambling if you have enough money, you can effectively "be the bank". The more money you, the easier it becomes to diversify your investments and in some cases you can effectively bet on black and red at the same time and still turn a profit.

It's less about skill and more about having the wealth to feed complex financial vehicles that practically guarantee an ROI over time.

> Tell that to the sweatshop worker who made your jeans.

The sweatshop worker doesn't believe their skill at their job translates into wealth. The sweatshop worker knows they're in a deadend job barely making enough to feed their family and that they'll be cycled out if they get sick, injured or simply have a few bad days.

They might still believe their "skill" at gambling could make them money. But they probably don't have enough money to be able to "invest" in trading.

These days all of them have their perception permanently saturated with the lie that they had all the opportunity and just didn't take it. No surprise many are eager to jump at imagined opportunities whenever they arise. Gambling, speculation, falling victim to some "get rich by becoming a get rich mentor" mentors and so on.

Some poor industrial age miner with no better case scenario than becoming a respected poor miner would have been far more resilient (and surely many fell victim to similar schemes nonetheless)

Who believes they had all the opportunity and just didn't take it? The zeitgeist appears to be there's no opportunity and it's someone else's fault.

Between the very top and bottom? Yes.

https://voxeu.org/article/europe-s-rich-1300

Do you believe the pareto distribution of resources/wealth has changed, or that the over-all growth in total wealth maintaining a similar pareto distribution results in the chart you posted?

I think that resources in stable system (for example peacetime) tend to be increasingly horded by successful competitors. When rent seeking from those at the top becomes too expensive there is sometimes a reset that is usually violent. Sometimes the reset (war or plague for example) can be from external sources, but is still violent.

This is how I would put it. Do you agree?

Pareto distribution is the norm, marked by brief transitional periods during which the people at the top of the pareto distribution change. These transition periods correlate strongly with wide-scale disasters such as war or plague.

What does that have to do with anything? People are only realistically able to compare with what they know during their lifetimes, and we're a very technologically and socially different society. Perhaps it might be more appropriate to compare 19th-century England or Tsarist Russia? Or, if we're going to restrict to what people actually know, the boomer childhood era?

(although if you're going to the Tudor era, maybe consider the legal restrictions on conspicuous consumption: https://bluffkinghal.wordpress.com/2012/05/17/sumptuary-laws... )

Why are you participating in a subthread about desperation and wealth inequality's influence on gambling and its reach back in history to at least Ancient Egypt?

Maybe this topic doesn't interest you.

Dude the wealthy today have their own personal space programs while the labor class can barely afford food and medicine. We have more wealth inequality than we ever have.

Estimates says a Pyramid took half a million man years to build. Assume modern wage of $50k a year, that would sum up wealth of a single pyramid to $25 billion if we translate those hours to modern wage hours.

So by that rough estimate wealth inequality between top and average seems about the same back then compared to now. Jeff Bezos might be worth more than half a million man years, but not 10 times more. Also the Pharaohs owned more than the Pyramids so the estimate underestimates their wealth.

So you’re saying the situation where the pharaohs used slave labor to build the pyramids is analogous to the time we’re living in? On that we can agree.

At what point in history do you believe resource/wealth distribution began to follow the pareto distribution model?

Easy; the colonial era (so right around 1500). Movement of wealth before then was limited by zero-sum resource conflict and patriarchal inheritance of the nobility. But the new world opened up a way for noble second and third sons (who were trained and had the resources) to build their own fortunes if only they can be ruthless enough in seizing them.

What are your thoughts on the wealth distribution in Babylon between Hammurabi and his subjects? His reign was around 1700 BCE.

This has to be a key factor. Your average 20-something has terrible life-prospects. If they have a little political nous they will correctly deduce that their parent's generation stole their wealth and wellbeing (through a house price bubble, destruction of pensions, wages growing slower than inflation, climate crisis round the corner, student debt coupled with credential inflation, national debt, privatization, knee-capping of unions, a ruinously expensive military-industrial complex, etc etc).

Could you blame them for thinking that anyone who works for a living is a mug, paying for the lifestyle of kleptocratic boomers? Cryptocurrencies provide an emancipatory (and entirely false) narrative. Why not gamble, and try to defeat the system?

Those 20-somethings are strong proponents of at least half the things that are screwing them over.

The biggest thing robbing people of generational wealth is Social Security that takes 7% of your earnings for your entire life and when you die you have nothing to give to your children.

One of the largest contributors to wage stagnation is immigration policy. Previously a path to higher wages was higher education. Except those Universities (and big business partners) bring in immigrants to perform their high skilled labor and call them "graduate students" to crush middle class wage growth.

Another path to wage growth was previously to start your own small business. Try having a discussion with a group of 20-somethings that with very little money they could buy a pressure washer or other relatively inexpensive equipment and start a small business making $40/hr+. You'll be barraged with responses about how it's crazy because not every person in the country can get a job doing the thing I happened to give an example of, or how starting a business is really hard, or insurance, or licensing requirements in the state that they support.

You're absolutely right that the Boomers have fucked their kids and grandkids. But those grandkids, already in a hole, are shoveling down as fast as they can.

We now have forms of gambling in videos games for the last 5-10 years, a good way to teach kids from the beginning, that probably doesn't help either

I think the devastating problem today is that because investing and trading can be done responsibly, that all forms of investing and trading are ok even if it’s nothing more than gambling. People see a few success stories like DFV and it becomes a new American dream: get rich quick by shrewdly allocating a bit of capital.

But most people are just being fooled by randomness.

I can't find a meaningful distinction between gambling and investing.

It's not about knowledge / skill (picking index funds blindly is actually recommended form of investing these days)

It's not about odds (lottery with positive return is gambling, and insurance with negative return is not)

It's not about frequency (we're encouraged to contribute to 401k on every paycheck but not to play the lottery every week)

And to top it off, if you have a positive expected return on gambling (pro poker player, hedge fund manager), it stops being gambling either.

https://mleverything.substack.com/p/gambling-versus-investin...

Ordinary investing tends to be positive expectancy and positive-sum. That is, there are economic reasons to expect stock prices to go up so both parties to a trade can gain instead of one making a gain equal to the other’s loss.

Gambling is either negative expectancy* with a bookie/casino or zero-sum. The zero-sum case is a bit more interesting: if you are better at betting then you can make a profit, but the people who succeed are not problem gamblers.

There is probably some argument to be made that trading some financial instruments in certain ways is similar to this latter type of gambling.

So my claim is basically that investing is an activity that should be positive sum and gambling is not.

* if you are smarter than the casino or bookie you will be kicked out so maybe you can make a small positive amount of money.

It's not just about the instrument because you can gamble with stocks, which in general have positive expectancy and positive sum. Day trading meme stocks is definitely gambling, so I would say it also has to do with behavior.

I agree there is a big difference between day trading meme stocks and sticking your money in an MSCI World Index Fund or whatever.

That being said, I still constantly feel tempted to check how my portfolio of very boring index funds is doing, despite having absolutely no intention of selling anything for many years.

Trading is an activity with supply and demand for trading. It's behaving like any old business. You're offering a product to a customer (the investors).

The problem with this is obviously that consumer markets can be saturated. The number of investors does not grow with the number of traders. Adding more traders just results in a fight for market share.

When traders are pretending that other traders are their customers they basically started a game of musical chairs where someone has to lose.

Well there is a meaningful difference between gambling and investing, but probably not between gambling and day-trading on limited information.

Investing is a broad term that ranges all the way from buying a property to lease to short selling GameStop.

Investing is technically a gamble, but a characteristic of gambling in common language usage is the ability to get quick returns - we don’t usually use the phrase gambling to describe something that involves a 3% annual return. It’s also not usually called a gamble if you can spread your ‘bets’ enough to provide a high confidence of a low return (eg why the insurance industry isn’t usually called gambling, even though an individual transaction will be a win/loss from a profit loss perspective).

> why the insurance industry isn’t usually called gambling

I feel that both the Lloyds names (https://www.theguardian.com/money/2000/nov/04/business.perso...) and the famous https://en.wikipedia.org/wiki/Long-Term_Capital_Management were engaged in a gambling-like strategy - positive expected return with possible downside vastly exceeding initial investment - even if it doesn't "feel like" gambling. But there isn't really a good phrase for that. Finance people sometimes say "picking up pennies in front of a steamroller".

Yeah, I think I'm just saying if you use a broad enough definition for gambling then everything in the world is gambling through a certain lens (i.e. Apple are gambling that a nuclear device doesn't get detonated in Cupertino).

It's a distinction of degree; is crossing the road gambling? Or is it an extreme sport given that it's a physical activity with a risk of death? No, that just renders the categories useless.

One of the sibling comments talks about adrenalin; perhaps (and this is only half joking) it's like the "sexual content" censorship boundary in that it's only bad if people enjoy it.

quite a lot of forms of investing are pretty much gambling but one key distinction is that investing has a market function, it's a price discovery mechanism. Investors who lose in a market still serve a purpose. even if individual investors might incur losses at the very least there are external benefits to their behaviour for everyone else. Without active investing allocation of capital does not work. gambling taking place in purely isolated environments has no such benefit.

Picking successful long term investments is highly knowledge/conviction/skill based. Picking winners consistently is very doable for a good investor.

But that just further muddies the distinction between gambling and investing if you contrast with poker.

Poker is highly skill/knowledge based. Winning tournaments consistently is very doable for a good player.

In both cases "consistently" doesn't mean without losing from time to time. Even Buffet makes mistakes. As does Negreanu.

A Random Walk Down Wallstreet illustrates it is luck. To claim it is skill is survivor bias.

That’s not quite right: that book is about consistently, significantly outperforming the market. That doesn’t mean that you can’t invest and see consistent solid returns, unlike gambling, but sets a ceiling on how much you can sustainably expect.

What is DFV?

DFV stands for /u/deepfuckingvalue a reddit user who became famous for his bullish investment on gamestop which resulted in him becoming a multi-millionaire.

You may know him from his part in the congress hearings regarding gamestop.

Thanks.

The person behind the Gamestop (GME) saga.

DeepFuckingValue is his username

It comes with the adrenalin rush. Similar addiction some have to extreme sports, or people who shoplift even when they have plenty of money.

I heard that in Iceland after the 2008 financial crash wiped out the banks traffic accidents went way down, as there were fewer traders speeding when driving home from work, as they were still buzzing with the adrenaline rush while trading (could just be of course their cars were all impounded to pay off debts...)

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