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The Refragmentation

• kenjackson 11y ago
  A tldr on this one would actually be appreciated. :-)
  • venomsnake 11y ago
    And they are made out of tiki taki and they all look just the same was a historic fluke.
  • harryh 11y ago
    Some unusual forces caused a temporary change in the US during the 20th century that pushed us towards equality and conformity, but these forces have largely eroded and we can expect greater fragmentation moving forward.
  • rsync 11y ago
    I think you could start here: "By no coincidence it was in the early 1980s that the term "yuppie" was coined." ... and then read the remaining 15 or so paragraphs - that gets you the whole gist.
  • kelukelugames 11y ago
    World War 2 and large companies like GE and IBM kept everyone the same.
  • sfk 11y ago
    WWII had a cohesive effect on the American society and economy that lasted approximately until the 1980s. The results were more equality and less fragmentation during that period. Since the 1980s technological progress and also social factors brought an ever increasing re-fragmentation, which, if not properly addressed, might lead to problems soon. Acknowledging these problems is remarkable -- I think it's the first time pg did that.
  • hwestbrook 11y ago
    A (mostly) golden age in the US was caused by conditions that forced the population to work together. The conditions have disappeared, so the economic and social order is unraveling. Let’s acknowledge the issue and let that acknowledgment guide our policy decisions. We want this golden age back(?).
  • rpgmaker 11y ago
    Disappointing article filled with pseudo historian rubbish. pg should stick to his SV startups gig.
  • yodon 11y ago
    pg provided his own tldr; in the first paragraph of the essay: "One advantage of being old is that you can see change happen in your lifetime. A lot of the change I've seen is fragmentation. US politics is much more polarized than it used to be. Culturally we have ever less common ground. The creative class flocks to a handful of happy cities, abandoning the rest. And increasing economic inequality means the spread between rich and poor is growing too. I'd like to propose a hypothesis: that all these trends are instances of the same phenomenon. And moreover, that the cause is not some force that's pulling us apart, but rather the erosion of forces that had been pushing us together." In general he tries to look for a net positive outcome resulting from these changes, but is not confident there will be one.
  • stephengillie 11y ago
    An old man wants the time of his youth to return, and he sees the increasing individualism as an erosion of our culture. The world has changed and he wants the old one back because he understands it.
• rsync 11y ago
  "Obviously the spread of computing power was a precondition for the rise of startups." If you live in San Francisco (or are visiting) you can visit the USS Pampanito - a retired WWII submarine.[1] One thing I think you will notice is the manufacturers plaques attached to every little piece of equipment in the submarine ... every one of them the plaque of some tiny little supplier that you have never heard of. Some little Detroit Turbine Supply Company or American Radio Corporation of Maryland ... Seriously - every single component has a label on it from a firm you have never, ever heard of. I guess I don't have a deep knowledge of military procurement and supply circa 1942 (or whenever) but it sure looks like startups to me ... [1] http://www.maritime.org/tour/index.php http://www.maritime.org/tour/index.php
  • kuschku 11y ago
    Yes. This concept of small manufacturers that excel in their niche has been the oldest business model in history. Especially in Japan and Germany many companies have existed for over a millenium like that, and even today half of the made profits are by small, (50 people or less) companies that are hidden champions. You probably never heard of http://www.walterwerk.com/en/ http://www.walterwerk.com/en/, but they’re the world’s leader in machines that produce ice cream cones. As you said, it’s not just since computers that these companies existed – they’ve existed for centuries. But what is different this time is that for the first time investors are trying to invest in these small businesses, and try to make a huge profit out of them.
  • cushychicken 11y ago
    Good observation. Paul's definition of "startup" seems to be "company that grows explosively to a massive size/valuation in a short number of years". The sort of businesses you cite seem to fall under the "small business" moniker, and would probably be one of the mouse-sized companies he referenced in the essay as one that tried to avoid trampling by the elephants of BigCo.
    • gotchange 11y ago
      Here's the specific part in question: " People did start their own businesses of course, but educated people rarely did, because in those days there was practically zero concept of starting what we now call a startup: a business that starts small and grows big. That was much harder to do in the mid 20th century. Starting one's own business meant starting a business that would start small and stay small."
• cronjobber 11y ago
  He takes the easy way out on the war theory: It would be awful, of course, so let's not think about it. But think about it. Would historical WWII be possible in today's United States? Introduce the draft and send current US population off to die in Europe? I think you'd see intense levels of political resistance, draft dodging and desertion in the field. Fragmentation means you probably can't unite the whole country to die for... whatever anymore.
  • lettergram 11y ago
    Historically, prior to pearl harbor you also would not get the United States population to back you for a war. The political resistance would have likely been armed revolt, the general population was strongly against war. However, after pearl harbor, the average citizen took a blow and was more than willing to fight. They wanted to protect their homes, and they felt if they didn't the Japanese would bring the fight to them.
  • iandanforth 11y ago
    If we generalize to say that foreign threats can be used to create massive economic, policy, and social change through government fiat, then this is absolutely possible. We're still living with the Patriot act after all. Also recall that prior to WWII there were "intense levels of political resistance" but as soon as our territory was directly attacked that changed. (It took 4 days from Pearl Harbor to our declaration of war)
  • AJ007 11y ago
    A full scale war today, excluding skirmishes, between two large conventional armies would be nuclear. It would be over very fast. Perhaps there is little to nothing to compare with WWII. A war in Europe could happen again but it would be quite different. The use of militarism and nationalism does not require a full scale global war. Certainly it is being used right now in several nations under structural duress. The enemy may be real or imagined, and if you oppose or speak out against the changes you may be the enemy too.
    • msandford 11y ago
• harryh 11y ago
  This essay is excellent, but I wonder a bit about the fact that it focused on the US only. On a global scale I think that experiences are continuing to compress and will continue to do so for at least a few generations. If this is true, does it invalidate pg's overall thesis? I'm not sure. Interesting to think about though.
  • wutbrodo 11y ago
    > I wonder a bit about the fact that it focused on the US only. On a global scale I think that experiences are continuing to compress and will continue to do so for at least a few generations. There's actually a little allusion to this in footnote 21: > [21] Globally the trend has been in the other direction. While the US is becoming more fragmented, the world as a whole is becoming less fragmented, and mostly in good ways. He didn't elaborate, but I suppose the essay was already pretty hefty.
    • harryh 11y ago
      Ah, I missed that footnote. Thanks!
• roeme 11y ago
  If this piqued your interest; or left you wondering, I'd recommend reading Piketty's "Capital in the twenty-first Century". As Graham's piece concludes; if we don't do something, we'll get into trouble. - « Terrific work causes us to think of additional questions. »
  • warrenmar 11y ago
    The Economist has a four paragraph summary of the book. http://www.economist.com/blogs/economist-explains/2014/05/economist-explains?fsrc=scn/tw/te/bl/ed/explainscapital http://www.economist.com/blogs/economist-explains/2014/05/ec... Low growth causes more income to come from capital, which causes more inequality due to inheritance and the rich getting richer. The solution is a global progressive tax on capital.
    • r0muald 11y ago
      There's a 20 minute summary by Piketty here: https://www.youtube.com/watch?v=JKsHhXwqDqM https://www.youtube.com/watch?v=JKsHhXwqDqM and even the short overview by Cory Doctorow is quite good: https://boingboing.net/2014/06/24/thomas-pikettys-capital-in-t.html https://boingboing.net/2014/06/24/thomas-pikettys-capital-in... After reading the first paragraphs in pg's essay I immediately went CMD + F Piketty and was somehow disappointed that he didn't choose to cite him since that's the crux of C21C. But, glad to see that others on HN resonated with the same ideas.
  • sjy 11y ago
    Generally Piketty is dealing with inequality produced by differences in income from capital, not labour. His reason for focusing on capital income is explained in depth, especially in chapter 7. In short, the distribution of capital ownership is always more concentrated than the distribution of income from labor, so we should be worrying about wealth inequality and inheritance. This is why Piketty proposes a wealth tax, not an income tax of the kind that pg says will 'be fighting a losing battle against increasing variation in productivity.'
• pg_is_a_butt 11y ago
  PG is a butt.
• mbrock 11y ago
  David Chapman wrote an interesting set of posts about fragmentation from the perspective of culture, counterculture, and subcultures. http://meaningness.com/meaningness-history http://meaningness.com/meaningness-history That's the intro for a series of posts listed at the bottom. Here's a "gigantic chart that explains everything": http://meaningness.com/modes-chart http://meaningness.com/modes-chart Here's "systems of meaning all in flames": http://meaningness.com/systems-crisis-breakdown http://meaningness.com/systems-crisis-breakdown
• mwcampbell 11y ago
  > The creative class flocks to a handful of happy cities, abandoning the rest At least this trend is one that individual programmers can choose to resist, assuming we don't have to move to Silicon Valley or Seattle to get good jobs. I, for one, don't have any desire to leave my home town of Wichita, Kansas.
• wtbob 11y ago
  Very interesting, particularly the idea that the rise in inequality is a ntural consequence of fairness. I wonder, then, if those opposing the rise in inequality aren't like King Canute ordering the tide to recede.
  • wutbrodo 11y ago
    > the rise in inequality is a ntural [sic] consequence of fairness. I wonder, then, if those opposing the rise in inequality aren't like King Canute ordering the tide to recede. The subset of people complaining about inequality that I actually take seriously[1] are concerned with its effects (for example, on the health of the economy[2]), not what the cause of the rise was relative to the previous era. Another factor in the (reasonable) complaints has to do with the perception that income inequality is driven by (and driving) inequality of _opportunity_. Basically, the rising inequality is seen as an unfortunate side effect of a positive thing (the aforementioned "fairness"), and the good (IMO) proposed solutions involve increasing said fairness, instead of just rolling back to what we had earlier (warts and all). [1] i.e., excluding the people who dislike it without any understanding of what its potential causes or implications might be (IME these people exist for every single possible POV). Included in this are people who think that we can magically re-create the economic environment of the 50s (wherein half the world had blown itself to pieces and the other half was emerging from under the heel of colonialism or being smushed by the heel of Communism). [2] http://uk.reuters.com/article/uk-imf-inequality-idUKBREA1P1PH20140226 http://uk.reuters.com/article/uk-imf-inequality-idUKBREA1P1P...
• chrispeel 11y ago
  It seems to me that much of the fragmentation that the post discusses is just economic specialization, which we should encourage (see Adam Smith). I do think it is reasonable that one limits the 'fragmentation', i.e. that one puts negative feedback in the economic loop in the form of a progressive tax. Negative feedback is used everywhere in electronics and even sometimes by the Fed to control interest rates. Even so, many economists [1] throw up their hand and say macro economics is too tough and we just can't predict how it will work. This seems like nonsense to my engineer brain; I think that a sharply progressive tax with an accompanying universal basic income is the right way to encourage economic diversity. [1] I get my impression of economists from EconTalk by Russ Roberts.
  • clarkmoody 11y ago
    As an engineer, you should be familiar with chaotic systems, which produce vastly different trajectories based on small changes in initial conditions. Very simple mechanical systems[1] exhibit chaotic tendencies. Control of such systems is possible on the small scale, but large scale chaotic systems may become uncontrollable. Now imagine an economy made of millions of people who all have different needs, desires, abilities, environments, intelligence, etc. How accurately can you predict how a single policy decision will shape the trajectory of such a collection of people? Now the State pushes thousands of policy changes per year into the system without ever really monitoring the response to a single change. > many economists throw up their hand and say macro economics is too tough and we just can't predict how it will work The smart ones do, but the mainstream Keynesian school have the hubris to think they can predict the responses of millions. Most Western leaders have been advised by Keynesian economists for much of the 20th century, and the decisions of those leaders have caused vast displacement, pain, and suffering in the form of economic turmoil and war. Remember, the State is also an economic actor, and it derives its income by coercive force. Progressive taxes simply point a bigger gun at the heads of those who perform better in the economy. [1] https://en.wikipedia.org/wiki/Double_pendulum https://en.wikipedia.org/wiki/Double_pendulum
    • chrispeel 11y ago
      > ... thousands of policy changes ... I'm all for reducing the size and complexity of govt, including the frequency of policy changes. A progressive tax can be a small-govt solution. > ... Progressive taxes simply point a bigger gun at the heads of those who perform better in the economy. A progressive tax certainly takes more from those who have performed better in the past. I'm concerned about creating jobs and encouraging situations where people can succeed in the future. The people who will create the jobs of tomorrow are not the ones who created past jobs. It's small companies who create jobs, so don't tax them as much; it's the struggling entrepreneur who will create jobs, so don't tax them as much. Instead, tax those who have already succeeded and who are not creating as much relative economic output.
• venomsnake 11y ago
  I think that the field in US in urgent need of refragmentation is the political systems. The two parties are oligopol that don't care about their customers and they don't deliver enough political product to the people. We need more smaller parties that could represent the increasing diversity of opinions.
  • ericd 11y ago
    Agreed, and some system of voting that allows people to express near-substitutes, to avoid a Gore-Nader situation. I don't know the name of it off-hand, but there was a system proposed where you could assign up to 10 points for candidate, so if I happened to like Nader, but also Gore slightly less, I could give Nader 10 points, Gore 9, and Bush 1, rather than give my one vote to Nader with the knowledge that I was probably helping Bush win.
    • venomsnake 11y ago
      Not only that but actual diversity of issues - if let's say I am pro/anti gun control right now - I also (involuntarily) make statement on access to abortion (which is topic that I just don't care about at all)
    • clarkmoody 11y ago
      Look into instant-runoff ballots, where you simply rank your candidates in order of preference. If your first choice does not reach 50% of the vote, your ballot is reverted to your second choice. This allows you to vote for a candidate who most accurately reflects your views with a second-choice of the next-most-accurate, etc. https://en.wikipedia.org/wiki/Instant-runoff_voting https://en.wikipedia.org/wiki/Instant-runoff_voting
• dreamdu5t 11y ago
  Unlike Paul's other essays, this one did not offer me any insight. WWII bringing the country together, America becoming less culturally conformative since WWII, etc... these are obvious trends that most everyone is aware of, and which people talk about quite often.
  • visakanv 11y ago
    What I thought was useful/interesting was the idea that it doesn't make sense to try and fight the fragmentation, and that it makes sense instead to focus on how to live well with it.
  • tomasien 11y ago
    That's one of the reasons I like it. It's too controversial and complex a topic to be prescriptive about it, but it's such an important topic that it deserves to be laid out clearly and plainly. That's what PG is so good at, regardless of whether you agree with his conclusions. I feel like I could share this with anyone I know and they would get value out of it, and further, it would help us get on the same page when discussing our feelings about what to do (if anything) about it.
• rpgmaker 11y ago
  Disappointing article filled with pseudo historian rubbish.
  • sfk 11y ago
    It's an essay, not a comprehensive treatise that might fill 1000 pages. I was glad to see some of the old pg back. His startup essays tended to be bit artificial, as if he had to force himself to write them.
    • visakanv 11y ago
      > His startup essays tended to be bit artificial, as if he had to force himself to write them. He was basically doing content marketing for YCombinator, which is understandable and probably served him/them well. But this is probably the sort of thing he's actually more interested in writing.
  • visakanv 11y ago
    Mind elaborating? What's psuedo-historian about it? What would make it less disappointing?
  • jonathanwallace 11y ago
    Shallow comment with no provided insight. vs. I read the comments on HN looking for the dissenting view as that's where I often appreciate the most value. I'd love to see you expand upon your reason for both disappointment and then provide some concrete counter examples that highlight Paul's lack of historical rigor. Which of my comments do you prefer? (Note: I prefer the latter. Since you're the only dissenting view I've seen so far, I'm asking you to expound if you would, please.)
• clamprecht 11y ago
  I love that The Refragmentation references Economic Inequality, and Economic Inequality references The Refragmentation.
• Alex3917 11y ago
  Great essay. I would quibble with the following though: > [Technology] means the variation in the amount of wealth people can create has not only been increasing, but accelerating. The problem with this is that success = ability * motivation * opportunity. There's no question that technology is increasing ability. But it's less clear what's happening with opportunity. Networks tend to be winner-take-all, which means that technology actually depletes opportunity at the same time as it increase ability. Which I think means that we're actually going toward integration, not fragmentation. Only this time we don't need another WWII to integrate society because it's already happening, it's just less visible. E.g. the vast majority of the traditional media is controlled by the same six corporations. And to quote Fred Wilson's 2015 wrap up, "10 of the top 12 mobile apps are owned by Apple, Facebook, and Google." There's no question that individuals are way more free than they were in 1950 or whatever. But I think it's more analogous to free-as-in-beer, as opposed to free-as-in-speech.
  • tomjen3 11y ago
    Opportunity has increased massively. When I was a lad I got my hand on a great prize: a copy of Delphi 3 (already obsolete by then), which got me started coding. Today anybody can download much better tools (Visual studio, IntelliJ, etc for free). Any question you have can be searched on the internet, etc. Opportunity has increased _massively_ the last 20 years.
    • 13of40 11y ago
      Seconded. I learned assembly code on a DOS 2.0 machine by disassembling tons of random bytes and making a hex->assembly lexicon that I could use to write programs in hex. Not because I was trying to be hardcore, but because I was in an information, and software, and hardware desert. My kid, on the other hand, has a 24-hour, 50 gigabit connection to any information he wants, a computer made in 2015, and his choice of nearly any IDE and any programming language he could possibly want. > Opportunity has increased _massively_ the last 20 years. The only problem is that it's increased for everyone else, too. Used to be you were a king if you had a board with a nail in it. Now everyone's packing Uzis.
• sce 11y ago
  Regarding income inequality, I recommend listening to some of the speeches/debates with Bernie Sanders. E.g. he argues that the greatest receiver of welfare in the US is the wal-Mart family, because they get even richer paying their workers so little that the workers have to live on welfare. (In other words the welfare is "paying" the workers so that Wal-Mart don't have to.) He proposes to rise the minimum wage. https://www.youtube.com/watch?v=eYFueqv0iIQ https://www.youtube.com/watch?v=eYFueqv0iIQ
  • harryh 11y ago
    This assumes an obligation on Wal-Mart's part to pay people according to their need. In a market economy, people are paid according to their ability.
    • beagle3 11y ago
      But welfare payments are paid according to need. My understanding on Sanders' statement is that it could be paraphrased: "If walmart employes didn't get state welfare, waltons wouldn't be as rich, because they would have to pay more (employees who can't afford food and shelter can't work for you) ... ergo, walmart employees are, at the moment, practically, a conduit of welfare from the state to the waltons". (That is how I understand his statement -- I don't agree or disagree, I don't know the details well enough to do either)
      • harryh 11y ago
        It's not clear to me that they would have to pay more. In previous generations people leaved in much worse poverty and still managed to show up to their various jobs.
        • sce 11y ago
          In the case of minimum wage, they would indeed be forced to pay more, rendering the need for welfare to those same people unnecessary, thus shifting the cost from the state/government to the employer. That is in effect wealth distribution, which again closes the big income inequality. (That's the intended effect anyway.)
• golergka 11y ago
  > Version 1 of the national economy consisted of a few big blocks whose relationships were negotiated in back rooms by a handful of executives, politicians, regulators, and labor leaders. Version 2 was higher resolution: there were more companies, of more different sizes, making more different things, and their relationships changed faster. In this world there were still plenty of back room negotiations, but more was left to market forces. Which further accelerated the fragmentation. I find this curiously close to a description given by a late-soviet economist who was working on economic reforms in the 80s: he described soviet economy as a bunch of heavy hard rocks, incredibly powerful, but without any flexibility and connection to each other, and small new cooperative movement as a sand that should've taken all the space in between.
• msvan 11y ago
  I think this is one of the most interesting essays he's written in a while, and it echoes many of my own thoughts better than I could express them. PG seems to argue that the fragmentation of society is a question of efficiency. A natural effect of this is that the world will become more cut-throat. Efficient systems turn hyper-competitive, as seen in university admissions, startups, financial markets. It seems to me that too much "liquidity" mostly causes burnout, depression, dumb risk-taking, and a few really successful winners. Tech is really guilty of this phenomenon by tending to produce one winner for every thousand losers. In many ways the 20th century was an anomaly -- the wars were more violent, the rate of growth was faster, the cultural shifts were huge and multifaceted -- but we still use tend to see it as a normal state of things. A hundred years into the future we'll be looking at an entirely different world and consider it normal.
  • ThomPete 11y ago
    In other words and to paraphrase that now famous paraphrased. It's the technology stupid
  • randcraw 11y ago
    PG's perspective is quite US-centric. The aftermath effects of WWII in Europe or Asia was rather different. Among most nations' peoples there's long been little cohesion due to the lack of unifying forces like media or of ethnic homogeneity. I agree that the economic dynamics of 20th century America won't repeat. But I'm not sure most countries will enjoy a stable predictable trajectory this century. Asia and China are far from being mature ecosystems (economically or politically), and the likely loss of jobs due to further globalization and automation, just as the promise of US-style consumerism is arising portends a bumpy ride, especially for totalitarian-ish societies like China, Saudi Arabia, and even Turkey.
• wbl 11y ago
  I think this essay ignores the impact of the Civil Rights Movement and feminism in undermining the 1950s. The world of the 1950's wasn't one where women could work, despite that having been the case since the 1920's. It was also the world in which Brown v. Board of Ed. lead to federal troops being deployed in the south to safeguard the rights of citizens, and ultimately lead to the Freedom Summer which radicalized a lot of New Leftists. So perhaps the 1950's was a world based on certain kinds of exclusions, that once removed, broke down.
  • ArkyBeagle 11y ago
    There's no real reason/mechanism for the exclusions to have made anything work better. Compared to the US being the Arsenal of Democracy, the economic effect of liberalization was very small, ignoring long-term government debt. The New Left in the 1960s mostly just failed outright. Any change then was due to judicial or executive action.
    • wpietri 11y ago
      Exclusions certainly make things work better from the point of view of the excluders. Slavery, for example, worked wonderfully for the slavers. When we abolished slavery but kept former slaves from full participation in society, they mostly ended up as underpaid servants and laborers. Women restricted from earning a living on their own still had to survive somehow. Which in the 50s often meant attaching themselves to men and providing them with a lot of unpaid support.
      • ArkyBeagle 11y ago
        Nope. The economy is bigger than you are, and it's keenly in your enlightened self-interest to have each other person in your economy producing at maximum. The "excluders" in the antebellum South lived under a rather delusional post-hoc rationalization of slavery. John C. Clahoun wrote of this belief system at length. This was minimally modified in the Reconstruction South and after. My maternal grandmother raised 9 kids during the Depression without the assistance of any men after divorcing her husband. She worked very hard; so did the kids.
• bhuga 11y ago
  Interesting piece. It will take some time to digest. I wonder about the arrow of causation for conformity back in the 40's. This essay describes WWII as a spark of a generation of conformity (preceded by the New Deal for some). But it's really hard to imagine modern society signing on to a world war. What's to stop parents afraid of vaccinations from taking their draft-age children to New Zealand? Was there something else that was already more conformist? Or was there another proximate cause, maybe even one as simple as a perceived global threat (communism, fascism) combined with a lack of individual physical mobility? The essay is good and makes a strong point in and of itself, but I wonder if there's other variables it (and I) are missing. If pg is reading, one piece of concrete feedback: > the LBO wave? LBO wasn't defined in the text previously and I had to google it (it's leveraged buy-out).
  • 13of40 11y ago
    > What's to stop parents afraid of vaccinations from taking their draft-age children to New Zealand? This reminds me of something a friend of mine told me over Christmas: Her 65-year-old uncle is not currently allowed to travel abroad from Ukraine because 25 years ago he was an Army officer and anyone with military experience is being held in reserve. So the answer to your question is simply "police at the borders".
  • ams6110 11y ago
    really hard to imagine modern society signing on to a world war Military service used to be seen as an obligation and an honorable thing to do, and wars were seen as being a necessary part of defending one's country and way of life or eradicating great evil. That fell apart after Korea and especially Vietnam, which were perhaps unnecessary and certainly bungled by politicians. This forever changed the trust and confidence of the public in politicians who send young people into battle.
• frik 11y ago
  On the one side we have very huge corporations that have a (near) monopoly on a sector (big, small or niche). On the other side we have many small players "fighting" [not the best word] for the remaining niches ...the rest. And they dream to be the next big player by betting on a raising sector (new technology) and sometimes disrupt old players that are too slow to adapt. Or they fix it with cash. Absolute monopoly is often bad (for everyone except a few (shareholders)), so anything else (fragmention) is better.
• csense 11y ago
  Interesting to see that PG agrees with something I've been saying here for a long time, about the role of globalization in economic inequality [1] [2] [3]. Of course I grew up in the Rust Belt, where the average person used to be able to make a good living with a high school education in the steel or automotive industry, but now most of the factories are idle, rusting eye-sores, most of the ambitious, talented kids want to go somewhere else -- anywhere else -- and the closest thing to a growth industry is health care for the folks who earned a good retirement during the glory days and are starting to get old. [1] https://news.ycombinator.com/item?id=9868017 https://news.ycombinator.com/item?id=9868017 [2] https://news.ycombinator.com/item?id=9560872 https://news.ycombinator.com/item?id=9560872 [3] https://news.ycombinator.com/item?id=7152378 https://news.ycombinator.com/item?id=7152378
  • csours 11y ago
    I read a comment once that the steel industry collapsed in the US because they failed to innovate or continuously improve (much like the Big 3 automotive companies). Do you know of any concrete examples of this? or books about how US Steel lost?
    • wpietri 11y ago
      I don't know about steel, but Rother's Toyota Kata makes this case for cars. There's one graph in particular that shows carmaker productivity per worker over several decades. Toyota, working in a Japan decimated by war, definitely came from behind when competing with Detroit's big 3. Toyota starts lower than the other 3, and all of them improve gradually together. But at some point US carmakers plateau. Toyota just keeps on climbing for decades more as the big 3 stagnate. Eventually, US automakers try to copy the Toyota approach, and Toyota works hard to teach them. But they never quite get it, because US automakers basically miss the point, copying visible behaviors rather than the deeper structures that really make the difference. Those curious but not wanting to read a whole book should start with the This American Life episode NUMMI: http://www.thisamericanlife.org/radio-archives/episode/403/NUMMI http://www.thisamericanlife.org/radio-archives/episode/403/N... It tells the story of a joint Toyota-GM plant in California. Basically Toyota takes one of GM's worst plants and makes it one of the best. But GM is never able to adopt the differences, or even to really understand them. The worker-level stories are particularly powerful.
• paulpauper 11y ago
  Small observation: why title the file re.html? Why not just spell fragmentation? Is there a reason to do it this way? Why .html? Doesn't that make it hard to update all the pages at once such as menus and footers? The design is very minimalist, but it's effective. We're definitely in a winner-take-all economy, whether it's real estate, stocks, the dominance of companies like Google, amazon, and amazon, or web 2.0 valuations.
  • tomjen3 11y ago
    PG used the system behind yahoo stores (which he wrote) to make the not-a-blog. It may serve HTML, it may very well generate it statically, but I am almost certain that he does not edit the layout by hand.
  • visakanv 11y ago
    PG's urls are simple and memorable enough that you can type them into a text message. I direct people to paulgraham.com/wealth.html, paulgraham.com/love.html, paulgraham.com/hs.html and paulgraham.com/essay.html all the time, from memory. It's useful!
  • frik 11y ago
    He probably still uses the ViaWeb tech: https://en.wikipedia.org/wiki/Viaweb https://en.wikipedia.org/wiki/Viaweb and https://en.wikipedia.org/wiki/Arc_(programming_language) https://en.wikipedia.org/wiki/Arc_(programming_language) (HN tech)
• tdaltonc 11y ago
  > Globally the trend has been in the other direction. I think that this is misleading. Every global culture is fragmenting, but the biggest fragments within countries tend to get along much better then they used to. There is a "global culture" now that contains a bigger share of humanity then ever before, but inside each nation it still looks like fragmentation.
• jusben1369 11y ago
  The thing to me is Silicon Valley is the place in the US that still looks like that post WWII America. Large monopolies like Google, Apple and FB utilizing fantastic profits and paying amazing perks to employees. Everyone working in and on the same mission acting as a social fabric tying people together. Glass Door and the Internet in general replacing trade unions by helping balance a knowledge imbalance so that workers can maximize their benefits. The irony of regularly lecturing the rest of the country and world about what the future holds from the position as a final bastion on unassailable US hegemony of last century (2nd only to Hollywood?) perplexes me.
  • flatline 11y ago
    Agreed 100%, that was one of my take aways from the article as well. I suspect that this dominance is next to fall, and I feel that SV has already passed its zenith, perhaps some time ago, and that locals and those intimately tied to its fabric like PG will not be the first to notice. I think the talk of the last few years about a "bubble" may have been noticing symptoms of this rather than a true "tech bubble". There was a WP article the other day about how people are priced out of homes in SV, with the median home price at nearly a million dollars. We are in the early, possibly mid crisis of student debt, and despite a certain lauding of the dropout culture in the tech industry, this debt has fueled its rise over the last 40 years. It is unsustainable.
  • HillaryBriss 11y ago
    It's certainly true that SV's days as a big tech hardware manufacturer are past. I am not at all certain, but I have to wonder if something magically keeps SV software innovators glued to SV. This is something I've never understood. But there must be SOME reason why software innovation/work didn't completely disperse from SV ten years ago.
    • jusben1369 11y ago
      One very simple answer is VC money. They want you local and their talent network (of people for your growing startup) is local. Who knows how different Boston would be if Facebook stayed there? (Just one small example)
• tlogan 11y ago
  > A lot of the change I've seen is fragmentation. US politics is much more polarized > than it used to be. I really do not want to be jerk here but this is 'white guy point of view'. The US politics is more polarized than it used to be because black, latinos, women, gays, socialists, etc. have some voice in politics now. Before they had absolutely no voice or very little.
• Typhon 11y ago
  I remember when Paul Graham pointed out that, « internally, most companies are run like communist states » (in http://paulgraham.com/opensource.html http://paulgraham.com/opensource.html ) The picture he paints here of postwar-America as a bland, uniform country dominated by a few mega-institutions reminds me of the USSR. How ironic.
  • 13of40 11y ago
    I knew a fellow who used to do some trade with the Soviet Union back in the day, and he made the opposite point: In the US, your government is democratic but at work it's a totalitarian hierarchy. In the USSR, the government was totalitarian, but at work everyone got to vote on major issues. (This would have been in post-Khrushchev times.)
  • _delirium 11y ago
    There was a kind of interesting boomlet in the 1930s-40s when U.S. and Soviet management literature had a lot of interests in common, and pretty openly borrowed ideas from each other. Some aspects of the Soviets' rapid industrialization were seen by American management theorists as very modern, basically taking to the next level the "scientific management" idea that the U.S. industrial trusts had pioneered. The Soviets were in turn also very interested in American management literature, especially the more rationalized/scientific approaches aiming to quantify and optimize factors of productivity. They would've loved the current trend towards pervasive metrics!
• bawana 11y ago
  Refragmentation is the result of the fungibility of money. When we wanted to make things (stuff people could use to make war or make a better life) money was spent to make those things. Like the water cycle, money would be transformed from one phase into another so that work could be accomplished that directly impacted humanity. But we have short circuited that cycle. Now money is being used directly to make more money through financial instruments. People and the stuff that people want are excluded from this new cycle. (Most people anyway) Money goes directly from its production right back into wagers on the production of more money. For example, the currency markets dwarf the actual gdp of the planet. To restore balance to the ecology of our civilization, we need to make money a tool for humans. By requiring the use of money only for investment in real stuff, we will deflate the artificial valuations that dwarf the real value of human labor. We will necessarily find ways to restore value to human endeavors and new ways to measure the value of human efforts. More people will thus have value to our civilization on this planet. Otherwise, the refragmentation will continue until it reaches its logical conclusion - a scary picture for humanity.
  • vzcx 11y ago
    Bold claims. Forgive me for saying so, but your knowledge of finance does not strike me as particularly deep! Do you not think that use of financial instruments is vital for allocating resources in a world of imperfect information? For me, their utility and necessity is obvious. If you think about it, making stuff that people want is actually rather complicated. The world is rife with hazards and risk; the intricate supply lines upon which production depends are all vulnerable to disasters both natural and human. Naturally, those whose business it is to produce things and not to speculate on future events would like to be free of such risks. This is true the source of fundamental demand for financial instruments. All the derivatives markets, and zero-sum game apparatuses exist in order to transfer -- and in so doing compute a consensual value of -- these risks to those who believe they are better informed about reality. While I understand not wanting to personally engage in this process, I claim that that the world is better that these contracts and exchange machinery exist!
    • randcraw 11y ago
• deleted 11y ago
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• paulpauper 11y ago
  In the early 20th century, big companies were synonymous with efficiency. In the late 20th century they were synonymous with inefficiency. To some extent this was because the companies themselves had become sclerotic. But it was also because our standards were higher. ------------------------------------ Huh? His memory must have stopped in 2000 at the peak of the dotcom bubble. Everything has become much more efficient (both in the stock market and in corporate america) and competitive, with droves of college graduates applying for jobs that can be completed by a high-school dropout.
• api 11y ago
  I think there's a fascinating flip side to what PG calls the refragmentation: the decline of counterculture both materially and in terms of relevance. PG talks about his yearning for something outside the mainstream bubble. For decades the major source for that was the various mostly youth oriented subcultures that made up what we called the counterculture. Hippies, punks, goths, 80s rockers, hip hop, ravers, geek fandom, and a dozen smaller variants provided something that... well... wasn't "red delicious." Those things still exist but today they feel more like just another culture in the marketplace. They no longer seem to have such potency or power. Maybe I'm just old but I get the strong sense this is true for young people too. Today young people might visit these little subcultures as tourists, but when I grew up they were a much bigger deal. They became your identity. They were almost religious, like modern mystery cults. Rave was probably the last great youth counterculture. I haven't noticed another one unless you count the "hipster" artisan living thing and that seems more like a lifestyle brand than a true counterculture of the postwar music+fashion+drugs+ideas mold. In retrospect those subcultures were more like alternative conformity molds. They didn't really alter the underlying zeitgeist of conformity but just provided another channel on the cultural TV dial. Still I do mourn them a bit. Their greatest legacy was as artistic and musical crucibles and nothing has really replaced them. I don't think it's a coincidence that there has been no major musical innovation since the 90s. There has been good music but it all follows stylistic currents set down before 2000. Rave gave us techno and all its various sub-forms and... that's apparently the end of history music-wise. Edit: would be curious to hear a counterpoint on the last item. Show me a musical style that is as much of a step change today as hip hop and electro in the 80s or drum and bass in the 90s or acid rock in the 60s.
  • abvdasker 11y ago
    I tend to think the diminished role of counterculture in the US is the result of having a lot more choices available within the mainstream. The narrow conformity of the 1950s PG discusses has been supplanted by a much wider range of acceptable/marketable cultural styles. Generally people today are more tolerant, meaning there is more room for more diverse people and lifestyles under the tent of the mainstream.
• leot 11y ago
  "A physicist who chose physics over Wall Street in 1990 was making a sacrifice that a physicist in 1960 wasn't." The trouble is the proportion of those who have the highest technological leverage and are engaged in rent-seeking rather than wealth creation. The 1960s physicist was creating wealth they couldn't capture, while the 1990s physicist was capturing wealth they didn't create. If physicists (and other Ivey grads) all only chose wealth-creation, we'd see far less inequality (at least outside the Bay Area). The trouble is the pull of the largely zero-sum (or negative-sum) world of finance, which more than startups has increased the pressure to "make your fortune". Inequality begets more inequality, because when half my cohort is suddenly making 10x more than me, there are real consequences to my own social, personal, and civic life. This is all on top of the relatively novel wealth imperative introduced by the progress of biotech. It used to be that, beyond a certain point, money only really conferred social status (and even then, only within a certain peer group): if I don't care about status within that particular group, then why should I care about making more than (say) $200k/year? Except now, with the rapid development of fancy unaffordable therapies and med-tech devices, having an extra 10 million $ lying around can have a much larger impact on quality of life than it did even a couple decades ago. And then there's the significant (if small) possibility that, if Kurzweil + co. end up being right, a bit more wealth might mean being able to "live long enough to live forever". Current tax policy is heavily skewed in favor of the already wealthy, and wealth inequality is currently orders of magnitude worse than income inequality. So rather than just asking everyone to get comfortable with it, why not do something to actually address it? We need to make significant adjustments to (a) strongly discourage rent-seeking, (b) encourage those with the highest technological leverage to make the most of their talents, knowledge, and access, and (c) greatly increase everyone's ability to create, capture, and save wealth.
  • lightcatcher 11y ago
    > If physicists (and other Ivey grads) all only chose wealth-creation, we'd see far less inequality (at least outside the Bay Area). Choosing wealth-creation rather than rent-seeking has nothing to do with distribution of wealth as far as I see it. The hugely wealth-creating SF bay area is one of the most unequal places in the world. I think redistribution of wealth is absolutely necessary to reduce poverty and increase average quality of life. Sadly, I don't have much faith in this happening due to the argument that selfishly motivated wealth-creators or rent-seekers will flock to wherever taxes them the least.
• jakozaur 11y ago
  Great article, but it misses two triggers: 1. Globalization. A lot of manual labour was tied to USA, not so ago to local labour. In last 20-30 years a lot of things get imported from China or outsourced to India. 2. Software (briefly mentioned in original article). Previous technology advancement can give someone leverage, but software got probably the largest leverage in humankind history. Single program can automate what used to do an army of employees. Natural monopolies are common thanks to network effect, economy of scale or technological advances. Winner takes all market (e.g. Apple has almost all profits in smartphone market, Android got some market share, alternatives are niches).
  • gist 11y ago
    Interesting. If you are correct (I don't know if you are actually) it means that none of the 16 people who read drafts of this came to that conclusion. I say because I've always wondered why PG does this (so many people reading drafts I wonder if this is common in book publishing that can easily be updated and corrected just based on HN comments) and can't just leave his own thoughts to stand on their own.
• gotchange 11y ago
  A very fascinating article that I have truly enjoyed reading minus the last 10 or so paragraphs where Paul expressed it unequivocally that he's a status-quo warrior and that nothing can be done to remedy the problem of the ever widening gap of income inequality in the global economy and more specifically in the US and that it's a "natural" product of the state of affairs in our world. A classical example of « the naturalistic fallacy » [0]. Also, it's also worrying the degree of infatuation or affection for the early 20th century years with central planning of the economy, crony capitalism, robber barons, an all-powerful big government, centralization and concentration of power at the hands of a few, regimented and uniformed society ...etc. No leftie is arguing or longing for any of these policies. What we're looking for is just more equality in economic opportunities and esp capital and that distribution of capital to be more fair across all the classes and not to be a privilege only for rich and highly connected people. That's how we envision the solution to fix this problem of "fragmentation" as he put when it exactly is more like a "segregation" problem but not based on racial or cultural factors but on economic one into two completely separate societies between the haves and have-nots, between the 1% and the 99% of the population and it's getting worse and uglier by the day. [0]: https://en.wikipedia.org/wiki/Naturalistic_fallacy https://en.wikipedia.org/wiki/Naturalistic_fallacy
  • dinkumthinkum 11y ago
    I don't think Graham is being a status quo warrior here at all and I would have to reread carefully to see if he was really committing the naturalistic fallacy, I think that is an odd reading. I think his reasoning is fairly sound here. He actually laments that solving income inequality is very difficult, which it is. A lot of lip service is paid to this topic and usually all an politician has to say about it is something about manufacturing jobs. I almost feel you may change the entire field of economics with committing the naturalistic fallacy under your reasoning ...
  • wyager 11y ago
    The appeal to nature fallacy us to claim that something is right because it's "natural". It's not necessarily wrong to say that something can't (practically) be changed because it's natural. In this sense, natural means "an (emergent) property of nature". For example, as much as we may dislike it, people will continue to fall to their death in the near future, as gravity and its associated risks are natural. I believe Paul means that these economic properties are to be expected because they arise naturally and it is not practical to eliminate them.
• markbnj 11y ago
  I'm older than Mr. Graham, and grew up in the heart of the period he focuses on. I think this is one of the smartest essays about the economic and cultural after-effects of the great wars of the 20th century, and all the accompanying and related social phenomena, that I have ever read.
• djyaz1200 11y ago
  The book "Coming Apart" by Charles Murray is a thoughtful read on this topic.
• return0 11y ago
  This was very insightful. One thing he doesn't tackle though, is how this re-fragmentation affects the idea of the national state itself.
• three14 11y ago
  One taboo on HN is pointing out that even though software is a huge lever, there's no sign of the end of raw human labor. In every industry you can point to jobs being lost to automation, yet you still need many, many people in health care, or construction, or manufacturing, or police, or teaching, or mining, or working for utilities, etc. It's complete speculation to suggest that jobs are disappearing faster than they could be replaced. It's not surprising that people who used to work for big auto manufacturers can't continue to work for those same manufacturers, and that says nothing about whether those same people could find low-skill jobs in other industries, nor whether investment in sectors other than GM or Ford could create more unskilled jobs. If there was a larger market for unskilled labor, the competition for workers would tend to drive up wages and lower inequality.
  • randcraw 11y ago
    When jobs move from a developed / high wage country to one with cheaper labor, they effectively disappear. That pattern then repeats until the job finally ends up in the least regulated sweatshop in the darkest corner of the planet. Eventually automation will 'outsource' that job too, thereby completing the defragging process. Does another job necessarily arise to replace each lost job? That's a question that only a religious person would answer.
    • three14 11y ago
      This is exactly the taboo I'm talking about. Police, health care, mining, teaching, and surprisingly many others aren't going overseas right now. A lot of jobs are disappearing, and a lot aren't. Why assume that e.g. the American economy won't have enough jobs in the near future? There's no data on HN in all these discussions, and no real trends to extrapolate from except in very specific sectors.
      • zanny 11y ago
        Mining is becoming heavily automated. The work of a dozen men even twenty years ago can now often be done by two with a good computer model. We are pushing very hard for computer vision, which is the real barrier to practical robotics that could replace your electrician, plumber, nurse, miner, driver, etc. There is no sacred cow of labor besides what is mandated by the molasses slow state (because I would absolutely argue that learning systems like Khan's Academy, the availability of resources online, and the technological organizational potential of software solve all the criteria to substitute teachers with a security guard watching the kids while they listen to robo-instructor, solve the problems themselves, and ask the neural-net for help when they run into problems - and the kids are of course not all in the same room in an expensive upkeep building called a school). That kind of change though must also be culturally accepted since a lot of effort goes into separating public education from market forces. Point is, the jobs that we could not send overseas have tremendous pressure on them as a result to be absolved entirely by AI, robotics, and software. It is why the pencil pusher desk job of 1980 - rows of typists at typewriters transcribing documents - went the way of the Dodo and did generate a ton of unemployment that we still have not seamlessly solved.
• MBCook 11y ago
  Click the link (I'm on an iPhone), see a few lines as a 'read more' link. All apparently so I can see the 'sidebar' menu below the content? When I follow a link to an article why should I have to press a button to read the article? I'm getting so tired of this crap on so many sites. I'm really disappointed to see it here. 2nd big story in two days that I found unreadable due to poor web design on someone's relatively simple site (i.e. not crammed with junk like Bloomberg).
• CloudYeller 11y ago
  I think Paul missed an opportunity to identify economies of scope, not scale, as a major lever in advancement. He says: > Incumbents faced new competitors as (a) markets went global and (b) technical innovation started to trump economies of scale, turning size from an asset into a liability It's true that innovation trumps economy of scale, but that's because economy of scale doesn't really apply to software; all software is instantly scalable to 100% of humans at virtually 0 cost, more or less. But the software giants have something up their sleeve that no startups have: economies of scope. Look at Shazam/SoundHound. Google has released Play SoundSearch which leverages all of their internal AI research + advanced computational and human resources that aren't available to the public. In effect, a megacorp can replace an entire company by saying "Let's throw 15 engineers on it for a year and see what happens." And if a startup pops up that seems promising? They buy it out, adding it to their trophy wall of innovations they can leverage. And megacorp employees can easily stand on the shoulders of giants; instead of stackoverflow, megacorp employees can search through massive archives of top-notch, fully-working code that was designed by some of the best engineers on Earth. More and more, it takes something truly amazing for a startup to grow enough to compete with a megacorp. Not only does your technology have to be profound, but you need to withstand aggressive buyout deals from several megacorps.
• ThomPete 11y ago
  I have one word. Technology. Think about technology as outsourcing and you realize what the problem is because you are realizing the trend; Technology will compete with higher and higher levels of abstraction and so you either have to be really skilled in an increasingly competitive space or you need to accept taking jobs at wages that are as low as they are because of the increased competition from technology. And until economist stop treating technology as an externality they wont understand whats going on and we will keep debating this as if its a political problem. In my opinion its not. And so because technology ends up favoring the one winner paradigm it pushes wealth into the hands of very few.
• pcmaffey 11y ago
  "And as long as it's possible to get rich by creating wealth, the default tendency will be for economic inequality to increase." This seems to be the ontological point of his essay, which reads as a loosey historical narrative manufactured to defend his belief that the fight against "economic inequality" will undermine innovation by disincentivizing the next Zuckerberg. But it misses the underlying point of wealth creation: if more people create more wealth, then naturally, there should be less poverty. Adding value to the world makes the pie bigger. The real issue is distribution. Our current economic model distributes wealth as a factor of capital, which is hoarded at the top and systematically protected. It would be silly to say that the top 1% of the population, which owns more than the rest of the 99% combined, creates more wealth or is more productive than everyone else on the planet. They just have a monopoly on capital.
  • acqq 11y ago
    Exactly, no matter how much some people try to mystify everything, the "rich get richer, the poor become slaves" is something that history told us happened even before the democracy was introduced to the Ancient Greece, some 2600 years ago. It's nothing specific for the current times. The golden age and democracy we adore since then didn't start with the "more of that inequality" but with the total opposite: https://en.wikipedia.org/wiki/Seisachtheia https://en.wikipedia.org/wiki/Seisachtheia "the relief of burdens" "The seisachtheia laws immediately cancelled all outstanding debts, retroactively emancipated all previously enslaved debtors, reinstated all confiscated serf property to the hektemoroi, and forbade the use of personal freedom as collateral in all future debts. The laws instituted a ceiling to maximum property size - regardless of the legality of its acquisition (i.e. by marriage), meant to prevent excessive accumulation of land by powerful families."
  • jcalvinowens 11y ago
    > his essay [...] reads as a loosey historical narrative manufactured to defend his belief that the fight against "economic inequality" will undermine innovation by disincentivizing the next Zuckerberg Well put. The argument that general taxation disincentives innovation has never made any sense to me: no matter how high the tax rate, your post-tax income still scales linearly with your gross income. If your object is to make increasing amounts of money, how does a tax give you less incentive to do so?
• skybrian 11y ago
  This history is pretty well-written as far as it goes, but it's centered on the white American male worker's experience, and particularly on the sort of person who had a chance at being a manager. It barely mentions women and doesn't mention the civil rights movement at all. A majority of Americans living at the time had no chance at being an executive at a large corporation. There has never been a time when all workers were treated equally.
• hoodoof 11y ago
  >> With the centripetal forces of total war and 20th century oligopoly mostly gone, what will happen next? Or I could just read The Atlantic.....
• WoodenChair 11y ago
  > It would be insane to go to war just to induce more national unity. It's probably out of the scope of this essay, but we have in fact been at war for 14 years. It's not at the scale of WW2, but it's war none the less. I think it has not induced national unity due to precisely what Graham describes - fragmentation in society.
  • clarkmoody 11y ago
    Of course he means command economy total war when he says "go to war". The US has been involved in foreign conflicts almost continually since the end of WWII, but none of them have been total war.
    • WoodenChair 11y ago
      Yes, I think you're right. But since we are at war, I guess it's worth pointing out the difference, to help elucidate why the current war is not generating social cohesion. It just rings a bit hollow to not acknowledge that we have been in a very serious war now for 14 years.
  • Zigurd 11y ago
    That's right. The GWoT is the failed last hurrah of a feeble politician attempting to drape himself in war-leader glory. And that's a good thing. The future is about the ability to create, not coerce and extract, and America needs to retool for that world.
• Simorgh 11y ago
  PG writes that the 20th Century was "a world in which it was socially acceptable to work for Henry Ford, but not to be Henry Ford". I feel that this viewpoint is still common today. Success is often glamourised, far more than hard work.
• unimpressive 11y ago
  >If total war was the big political story of the 20th century, the big economic story was the rise of new kind of company. Typo.
• rmason 11y ago
  PG you may want to rethink the idea of networks of cooperating companies work better than a single big company. Just finished reading Ashlee Vance's biography of Elon Musk. Real revelation for this Michigan boy was that at both Tesla and SpaceX Musk had failures trying to use existing supplier networks. By doing a lot of manufacturing in house Musk not only realized cost and time savings but gained an agility and nimbleness that blew away his competitors. Granted Musk didn't need to manufacture his own raw materials. But in doing his own manufacturing he was able to gain a further competitive edge by making his products better. For example the Big 3's supplier networks add to their sloth and look-alike products.
  • listingboat 11y ago
    I think big single companies work when you are creating a new market and innovating with new technology. As a market and technology matures, the network takes over.
  • restalis 11y ago
    Actually, Tesla and SpaceX are outliers. They are not so much natural offspring of our time as are the outcome of an ambitious person with resources. They started in a desert. There weren't really neither a serious market for them¹ nor a sturdy supply structure that could have gained maturity with the market support. Besides the difficulty of getting into the high-barrier entry and heavy-regulated automotive industry, the existing electric cars related businesses were under constant attack by petroleum cartel. It was only natural to have difficulties in finding healthy suppliers for his Tesla. SpaceX? Well, the existing suppliers for space-ware were not the result of a free market, because there didn't really existed (or still exists) one (for that matter). What existed was either imported from overseas or come from only a narrow circle of small design labs that use to custom-build pieces required by someone for which the cost didn't seem to be an issue - NASA. This obviously doesn't count for something SpaceX could rather rely on. ¹ Here I expect at least some people to bring up something like Henry Ford and his horse & carriage replacement offering as a counter-example in favor to Elon Musk's enterprise. The car vs. existing livestock-based transport and the electric car vs. existing fossil fuel car are not really comparable.
• rmason 11y ago
  PG you may want to rethink the idea of networks of cooperating companies working better than a single big company. Just finished reading Ashlee Vance's biography of Elon Musk. Real revelation for this Michigan boy was that at both Tesla and SpaceX Musk had failures trying to use existing supplier networks. By doing a lot of manufacturing in house Musk not only realized cost and time savings but gained an agility and nimbleness that blew away his competitors. Granted Musk didn't need to manufacture his own raw materials. But in doing his own manufacturing he was able to gain a further competitive edge by making his products better. For example the Big 3's supplier networks add to their sloth and look-alike products. I think as 3D printers improve this advantage may make its way down to smaller companies.
• AstroChimpHam 11y ago
  PG started off talking about the fragmentation in politics, and I wish he would have wrapped that back in at the end. It feels to me like the two party system in the US is dying now as the oligopolistic system of just a few big companies began dying in the 90s. The two party political system is more unnatural than the few-big-companies system. Libertarians and Evangelicals agree on very little yet they've been voting for the same party for years. Proponents of extreme reform on the other side don't want to vote for a moderate candidate. A Trump vs Clinton election is going to leave too many people without a candidate and force the beginning of the end of the two party system.
  • timdellinger 11y ago
    Politics is a bit of a different beast than business. Things that occur to me off-hand are: - Political entities get large not to achieve economies of scale (i.e. increased efficiency and effectiveness, which may or may not materialize in business... thereby sowing the seeds of future fragmentation when they don't), but rather to achieve scale itself: more votes. - There's been no de-regulation akin to what occurred in business in the 70s and 80s, mostly because the big parties literally write the rules. - Elections are pretty much a zero-sum game.
  • golergka 11y ago
    > The two party political system is more unnatural than the few-big-companies system. Libertarians and Evangelicals agree on very little yet they've been voting for the same party for years. Proponents of extreme reform on the other side don't want to vote for a moderate candidate. A Trump vs Clinton election is going to leave too many people without a candidate and force the beginning of the end of the two party system. Two-party system is awful in representing people's opinions, but it's much better at another task, that might be even more important — reaching minimal acceptable compromise. Also, you might be overlooking another danger of multi-party system: political force that significantly over-powers all competition. Once something like this appears and gets the power over government, it gets the positive feedback effect and very often becomes a beginning of authoritarian and un-democratic regime. US and UK two-party systems server as a natural safeguard against such a thing happening. Really, selecting the best possible leader and making best possible decisions are not necessarily the main tasks of a democracy.
• r2dnb 11y ago
  Interesting article, the insight of PG is much valuable but I find his attempt to depict a fragmentation model unconvincing. While this model captures the dynamics at play, it fails to explain them and to introduce an easier way to act on them while this is the point of a model. This sums up an extensive feeling about this article. I'd like to react to three of my picks. First of all PG conveys with its fragmentation model that long careers in the same company are a thing of the past. I explain an opposite view and support that new companies will have people work longer for them (10 to 20 years) by hiring them much earlier, for much cheaper. This challenges the dynamics presented by PG. http://read.reddy.today/read/7/hire-high-school-graduates-instead-of-college-graduates http://read.reddy.today/read/7/hire-high-school-graduates-in... The second thing is that I found intriguing that PG write "Your prestige was the prestige of the institution you belonged to" talking about college graduates, as if it was a thing of the past and thus presenting himself as a hacker of this system while YC overly represents Stanford alumnis. But this is a paradox that I found with YC in general. They position themselves as a hacker of the system while they really are a cornerstone of this system in many regards. Therefore - third thing - it wasn't a surprise for me to find in the last paragraph that PG envisages centralization as a better alternative and with a certain nostalgy thinks that the effects of this "defragmentation" need to be contained. Overall, PG thinks like a wealthy man who made his fortune in the late 90s and who has the graduate syndrom - about which I will write momentarily. His insight is certainly valuable but his proposition isn't disruptive.
• Animats 11y ago
  He quotes Rockefeller in 1989: "The day of combination is here to stay." The amusing thing is that he writes this just as the era of fragmentation in the US is coming to a close. We have one winner in search - Google. We have one winner in social - Facebook. We're down to a few retail Internet providers, a few big banks, a few big airlines, a few telecom companies, and a few commercial real estate owners per city. There would be more concentration in those sectors without regulatory pushback.
  • zanny 11y ago
    His article is about social fragmentation, not economic. We recognize the economics are consolidating, but we are then talking about hundreds of combinatorial factors leading us to where we are today. Specifically, we are seeing more collective isolationism of social circles - there is an absolute Internet culture of connoisseurs of the blogosphere / reddit / social media today that is distinct from anything before, but you also have all the regional cultures of peoples now splitting from the whole because of incohesion with everyone else. Its harder to fit the mold when the mold broke because it was forged from flimsy material to begin with.
• marshray 11y ago
  Seems I was born around the same time and this is how I remember it too. Another major economic factor he seems to have left out is government policies encouraging (sometimes actively) the US manufacturing base to leave to other countries. This utterly destroyed the formerly thriving US manufacturing-based small businesses, eliminating a huge percentage of semi-skilled jobs in the process.
• coldtea 11y ago
  Amazing how he can describe the post-war era (an era, including the 50s and 60s remembered as a period of ever increasing prosperity, integration, intellectual achievements, scientific and technical progress, powerful movements of social change, job security, every generation having it better than before, etc.) as some kind of "equality disaster". Yeah, we're moving past it now, but towards something that resembles the pre-war years of robber barons, crony capitalism, and maybe even share-cropping (in modern form) more than some glorious future.
• Zigurd 11y ago
  It's a very American take on fragmentation and cohesion. The idea of wars creating cohesion is only valid in big, powerful, victorious nations. In Germany, defeat resulted in the rejection of nationalism. If you don't live in a great and powerful nation, or if you don't think your nation is as great as advertised, you might not miss cohesion on national lines. Good thing PG is a realist: "we'd be better off thinking about how to mitigate its consequences." But even that point of view is reactionary. What mitigation is good? The kind that preserves mass-market politics as practiced in America? The kind that can take us to war with some distant threat that is not even a blip in terms of national survival? The kind that tells us cops and doctors and uniformly good and competent? Surely not the kind that says "What's good for GM (or Disney, or Goldman Sachs) is good for America." Skeptical, questioning, objective people with loyalty only to those we can personally qualify will be people less likely to be taken for a ride by the kinds of cynical mass-market charlatans it takes to harness national cohesion. The weakest part of this article is about taxation and the wealth gap: If taxes rates are weakly related to wealth creation, the spectre of wealth-destroying taxation remains a boogie man, if a popular one these days.
  • wozniacki 11y ago
    I understand that Germany is no small country (even if much smaller than the United States) and thus does not thereby have one single national mood. However what is the general sentiment of the peoples there about where the German republic as a monolithic entity is headed, given the recent developments? Are people generally optimistic or are there significant pockets of dissenting populaces who heavily disagree with the choices Chancellor Merkel has made, in recent times?
    • Zigurd 11y ago
      That is a very complex question. I suppose the relevant part of the answer, relative to your question, might be that more Germans are forgetting about why nationalism was bad. The US escaped being crippled by GWoT costs. no lessons learned. It may take President Trump to teach the lesson.
• basicplus2 11y ago
  Imagine a society of four people, one grows rice for four, one grows chickens for four one grows vegetables for four, one builds and maintains houses for four there is no profit and there is equality. If one person is profiting... or in our world a person is profiting more than the others it is inequality in action. Progressive tax rates are the simplest solution. The thinking that one persons work is more important than another's is a dangerous and slippery slope.
  • hueving 11y ago
    That's ridiculous because it eliminates all incentives to invest time in training. Why would anyone risk harm and spend years training to be an expert welder when he/she will get the same results as some person that throws some seeds in the ground to grow food for 4 people? The fact is that some people's work is more important than others. That's why society in general is willing to pay more. The kid that rips my ticket stubs at the theater doesn't deserve the same thing as a neurological surgeon that spent the first 30 years of life in training.
    • zanny 11y ago
      Markets do not care how "important" your work is when it values how much you are worth. All it cares about is supply and demand. If people want food, and nobody is growing it, but you have a surplus of welders and nobody wanting steelwork done, of course the farmer is going to make more money. Farming is more valuable than welding, regardless of training. The training itself is not a cost center. It is a barrier to entry to providing goods and services in the exact same way possession of seeds and land to plant them in is a barrier to farming. If there is not enough market demand for welders to make people train to be welders over farmers that is not a tragedy, it is an optimization of the economy. The economy is the will of all the money in the system. Albeit its not the will of the people, but thats because people are not equal in wealth. But its a strong reflection of what is worth being done, because money would not trend towards something that is not beneficial. And sane progressive taxes wouldn't be disicentivizing welding over farming - if people stopped training to weld because of reduced profit potential because of taxation, the demand for welders will go up to compensate. Not all of it, but your losses are counterbalanced by any sticky demand. Additionally, almost anyone arguing for taxation today better be doing it as an equalizer of people. If you are being taxed as a welder it means you have a baseline to fall back on in case of a dramatic oversupply of your skills, so rather than being destitute and homeless you just have to downsize your standard of living. And anyone proposing progressive income taxes better not start advocating taxation until at least the happiness threshold of income, or I'd laugh them out of the discussion. A conversation about taxation should be about excess, not what constitutes a successful life.
• riffraff 11y ago
  I am unconvinced that fragmentation actually happened. Sure, maybe there are more airlines, but are there more airplane-making companies or car companies now then in the '60s? Or consider this: > Kids who went to private schools or wished they did started to dress "preppy," and kids who wanted to seem rebellious made a conscious effort to look disreputable How didn't this happen in the 50s too? "Greasers" are _the epitome_ of rebellious kids. Or consider politics: I have no idea what politicians said in the US at the time, but back in western europe we had a political spectrum that went from "fascism is okaish" to "praise lenin". At least, didn't the US had basically everyone on the same side regarding abortion and divorce, compared to now? Looks to me the essay suffers from sampling bias, even if most likely unintentional. Sure a few things are examples of increased "refragmentation" but I am unconvinced this is a general, uniform, and strong trend.
• ams6110 11y ago
  I like PGs essays normally, but he didn't address two huge societal changes since WWII, that is the rise in welfare and single-parent families. More people than ever are being paid to be non-productive and to procreate without any means or even real chance of supporting their offspring (a single parent poor household has significantly less opportunity to move up in income compared to a two-parent poor household). This can't not have an impact on the social order. Perhaps he implies or assumes that this is an effect rather than a cause but to leave it unmentioned seems like a big omission.
• abalashov 11y ago
  It's an insightful perspective and, along with PG's stance on the essence of economic inequality per se, a welcome antidote to the populist outrage machine, which does indeed the frame issue largely in zero-sum terms. However, there are some counterpoints that don't receive adequate representation in this account, in my opinion: One is the size and scale to which rent-seeking behaviour dominate the American economy. PG does acknowledge here and elsewhere that rent-seeking behaviour accounts for the wealth of many, but dismisses it relatively quickly as a seemingly self-evident byproduct of the expected variance in a society that permits economic opportunity. I think the situation is a lot worse than that; the amount of such parasitism, in the form of regulatory capture, lobbyist influence, outright Gilded Age-style purchase of legislation, revolving-door career paths, etc. account for an extremely significant percentage of US economic output and the unequal concentration of wealth. Consider for example how our healthcare system works (even post-ACA), Big Pharma, the military-industrial complex, intellectual property law and software patents, etc. A great deal of our government is for sale, and the sole purpose of a lot of our legislative projects is to route money into private hands, with the support of the government's monopoly on force, while socialising risks and losses onto the taxpayer. In my specialisation of telecom, I have seen this at work with the hundreds of billions in effective subsidies given to the AT&Ts and Verizons of the world, ostensibly to support the build-out of competitive next-generation broadband infrastructure but in fact to line their own pockets. All in all, the total dimensions of corruption at the top of the economic food chain are in the trillions of dollars, and I feel this insight is not given a fair shake with the same diligence as other aspects of corporate-industrial history of which PG treats. The second issue relates to the optimal amount of economic inequality we can sustain while maintaining social order and an environment conducive to ongoing innovation. Many revolutions and upheaveals in modern history attest to the fact that when a sufficiently large class of poor and disefranchised people arises and is left to twist in the wind, at some point "radical discontinuities" will occur. Pervasive, festering social ills don't serve the self-interest of the wealthy and the middle class, either; they ultimately impact the security of their lives and their property, requiring them to resort to increasingly drastic measures to keep what's theirs. The market for mass-market and/or consumer products--on which a lot of startup business models depend--is inevitably limited or shrinks when large segments of society see eroding disposable incomes. Instability also negatively impacts the transaction of business by making the outer world less predictable and dependable; lopsided opportunity in savage inequality leads to lopsided and inconsistent educational outcomes and, ultimately, a more heterogenous and troublesome work force. As other countries around the world periodically assert, there may be a formula for state economic involvement, taxation and social programmes that better maximises more desirable social outcomes, even if it comes at the expense of bridling notional economic opportunity and the smoothing out of some peaks. Is it not true, for example, that much of the significant innovation in computing and networking from which we benefit today came out of Bell Labs, a quasi-governmental institution whose decidedly mid-20th century model of economic existence created the right incentives for long-tail R&D? The work done in such places, as in the pharmaceutical industry for example, is now fiercely subordinated to narrow, short-horizon commercialisation objectives, and while that may be a better way for some actors to get rich faster, is it really where we want to go? It seems to me one can raise the same kind of objection about the incentives set up by unicorn-seeking VC funding and California startup capitalism. All this leads me to say that perhaps these issues need to be considered in a more global, integrated, and holistic way, rather than narrowly construed as problems of economics. If we want to evolve toward a better future, we may need to take up more thinking from the "normative" sphere, which economists hate.
• vasilipupkin 11y ago
  I enjoyed the essay, but I completely disagree that the 1945-2000 represented years when America was most cohesive. That seems like a perfunctory reading of history. American history of mid 20th century is that of strife, disagreement, political battles, fights for race and gender equality, etc. America today seems much more cohesive to me than ever before. Does a New Yorker today have more or less in common with someone from Texas or Alabama than 50 years ago ? I think way more. So, I think the rest of the esay falls down like a colossus with feet of clay, once you demolish the central thesis of cohesion
• Pyxl101 11y ago
  Other recent Paul Graham writings on inequality that I thought were interesting reads: http://paulgraham.com/inequality.html http://paulgraham.com/inequality.html (Inequality and Risk, 2005) - economic inequality goes hand-in-hand with risk. If you remove the payoff rewards of risky bets like founding companies, then you remove the incentive to do those things in the first place. http://paulgraham.com/ineq.html http://paulgraham.com/ineq.html (more on Economic Inequality)
• pravda 11y ago
  What does "Duplo" mean? "the Duplo economy" "Duplo world"
  • alan-crowe 11y ago
    When pg writes "a Duplo world of a few giant companies dominating each big market." he is referring figuratively to double size lego bricks, https://en.wikipedia.org/wiki/Lego_Duplo https://en.wikipedia.org/wiki/Lego_Duplo Notice that Duplo bricks are twice as long, twice as wide, and twice as tall as ordinary Lego. I wrote "double size" but they are, in a sense, eight times the size of ordinary Lego. They appear hugely larger. Also one tends to have far fewer Duplo bricks than Lego bricks ( 1/8 ?), about the same total volume, limited by storage space in the toy cupboard. This lets the figurative use of the word Duplo serve double duty, both suggesting that the parts are eight times the size, while also suggesting that the grand total is about the same, there are just one eight as many of the big ones. It is literally a childish metaphor, but still an apt one.
• stefantalpalaru 11y ago
  Oh look, another millionaire under the impression that the rich accumulated resources only by being ambitious. > creating wealth The kind of wealth that will vanish when the next bubble bursts? It will come a time when we'll look back at these profit-free unicorns and ask ourselves how were they even possible.
• ZenoArrow 11y ago
  I enjoyed the article, and found it an interesting point of view for the most part. However, I don't agree with this... > "The form of fragmentation people worry most about lately is economic inequality, and if you want to eliminate that you're up against a truly formidable headwind—one that has been in operation since the stone age: technology. Technology is a lever. It magnifies work. And the lever not only grows increasingly long, but the rate at which it grows is itself increasing." Tackling inequality has nothing to do with technology. Let's put it like this, we have a minimum wage already, the balancing force with regards to economic inequality would be a maximum wage. There are no technological issues blocking a maximum wage, it's just a matter of political will.
• thadd 11y ago
  Good read. Not sure if I agree with everything, but fascinating.
• SeaDude 11y ago
  We are at war remember...with terror. And winner-still-takes-all... some extremely large corporations were made in the last 15 years. Sorry, don't see the difference between then and now. I appreciate you attempting to identify the cause of our current crisis, but alas, I believe you may be too entrenched to find it.
• SeaDude 11y ago
  We are at war remember...with terror. And winner-still-takes-all... some extremely large corporations were made in the last 15 years. Sorry, don't see the difference between then and now. I appreciate you attempting to identify the cause of our current crisis, but alas, I believe you may be too entrenched to find it.
• anoncoder 11y ago
  It's tax policy, plain and simple. Stop paying taxes and you'll get richer, relative to those paying taxes. All the communication and technology changes have made it much easier to evade taxes. That and government complicity. For the last 40 years, we were promised a better living standard in exchange for lower taxes. It backfired. We forgot about the vice that has no bounds - greed. That's why we have to set limits. Paul alludes to the correct and only solution - make tax rates so high to discourage accumulating wealth beyond a certain point. It's a wave, but the wave has crested. Tax rates will rise, the loopholes will be removed, and the existing tax laws will start to get enforced. Too bad, it could have been different.
• Gravityloss 11y ago
  Well, we have things like access to education and access to capital, in contrast to a nebulous "ability to create wealth". I think the former two are more fruitful ways of thinking towards fixing the worst aspects of income inequality.
• twelvechairs 11y ago
  This is a great article which raises many important issues, but I'd like to offer a couple of criticisms. I'm not convinced 'fragmentation' is the best way to summarise these trends. Small businesses are in fact still losing ground and importance to larger businesses (see for example http://www.businessweek.com/smallbiz/running_small_business/Small%20Business%20GDP.png http://www.businessweek.com/smallbiz/running_small_business/...). What definitely is happening compared to the mid 20th C is that the economy is more complex and thus there are more diverse industries represented in government, and also the lifespan of large companies is reduced, particularly as technology advances faster now than ever before. Jobs are also becoming ever more centralised in cities due to their increased need for direct communication which hasn't been countered by technology yet (despite a minor trend for remote work). These are the major trends for me. I'd also add that while networks of smaller companies may have some innovation advantage over large companies (depending on the industry and innovation), many are focussed on industries where they can reduce labour rights, safety standards, avoid tax and lower wages e.g. in construction industry subcontracting, clothing manufacturing, hardware manufacturing, etc.) Whats also glossed over here is the advances to society made through mechanisms which aren't people trying to get rich, or seek a 'market price' for their 'wealth creation'. Lets not forget that most of the true computer pioneers were people in the corner of some university or military institution somewhere. Similarly in medicine and most sciences, research which is not profit-driven has been core to much of the 'wealth' of the 20th century across the world.
• jcfrei 11y ago
  While the article is rather long and touches on many subjects, I believe I agree with the underlying sentiment. Namely, that income inequality is rising and social cohesion is eroding (whereby the former is largely responsible for the latter in my opinion). Looking at historical income inequality in the US, we see that it's just returning to pre 20th century levels. This is not surprising, since the 20th appears to be at odds in many ways with other centuries. Especially the rise of the middle-class (which quickly was understood as a society's default state) seems like a purely 20th century phenomenon. The real question is whether societies in developed countries will accept a return back to more divisive wealth distributions (where people are either clearly upper or clearly lower class). Furthermore I think it's very important to differentiate between total wealth and wealth distribution. Some (probably rather right-wing politicians) advocate total wealth creation and others (rather left-wing politicians) promote (equal) wealth distribution. Economically speaking the former is clearly preferable, while for social cohesion the later is clearly preferable. Which way we go is (hopefully) up to the democratic electorate (ie. you). And should that not be the case, then at the very least we can all agree that fixing the democratic (legislative) process must be our very first priority - no matter if you seek more or less taxation.
• graycat 11y ago
  Very nicely done. Awash in insight about the past and likely also about the future. Should connect with the role of social media. In particular, explains much of why the heck I, first, got a technical Ph.D. and then became an entrepreneur. Did I mention very nicely done and full of good insight. Gee, all that time people spent in courses in history, economics, political science, B-school, and STEM field education, and the really good stuff is right there in PG's essay!
  • stephengillie 11y ago
    Everything old is good, everything new is bad. Remember when TV was the poison that was ruining family social time? Experts feared families would watch instead of conversing. And yet he praises it.
• stevefolta 11y ago
  > But once it became possible to make one's fortune, the ambitious had to decide whether or not to. A physicist who chose physics over Wall Street in 1990 was making a sacrifice that a physicist in 1960 wasn't. This is perhaps not the best example, as a physicist in 1960 might've faced a choice between academia and Fairchild Semiconductor.
• Tycho 11y ago
  Terrific essay. It's really impressive how much of the world it explained and tied in with history. One thing I would like to discuss though is this line: The creative class flocks to a handful of happy cities, abandoning the rest. This suggests that there are entire cities, even states, lacking in creative people. Now I'm sure PG was consciously generalizing, or else referring to the extraordinarily creative entrepreneurs like Musk, Dorsey etc. (creative in the business sense), so I don't want to nitpick. But what do people think about this? Everywhere I've gone in life I've found creative, dynamic people somewhere in my midst. I know a frequent complaint from the Left is the slightly galling idea that if the capitalists abandoned us, society wouldn't be able to fill the ranks of the managerial positions and keep things going. What do other people think? Have you lived in (developed world) cities which felt entirely stultified and lacking the human capital to make things better?
  • webwright 11y ago
    "This suggests that there are entire cities, even states, lacking in creative people." It just suggests a migration. Smart/educated/creative people often head to opportunity when they can. Go to any small town and many of the best/brightest have left. Go to Greece and you'll find the same thing. Certainly some folks stay out of necessity (family ties, poverty, and other reasons) or by choice (a love for the place).
• Thomas_Lord 11y ago
  A lot of this essay seems pretty fast and loose with history to me. I hope nobody passively accepts this as an accurate account of social, economic, or governmental history from the Great Depression, through WWII, the mid-20th century, through to today. Perhaps a ycombinator readership can appreciate a telling example of the problems is in Graham's account of IBM's decision not to exclusively license PC-DOS. Per Graham, this "must have seemed a safe move at the time. No other computer manufacturer had ever been able to outsell them. What difference did it make if other manufacturers could offer DOS too? The result of that miscalculation was an explosion of inexpensive PC clones. Microsoft now owned the PC standard, and the customer. And the microcomputer business ended up being Apple vs Microsoft." OK, first, every indication is that IBM sought to deliberately create an explosion of inexpensive PC clones -- and that they were better off for it. Briefly, IBM made a strategic decision that their position would be better if personal computers were a commodity with competitive suppliers rather than an artificial monopoly like Apple products. IBM achieved this aim. Competition meant that PC hardware margins were low, therefore IBM was ultimately better off letting other people make sell them. For years, this was a harsh blow to Apple which thrashed badly after the PC took off. Second, it is misleading to say that "Microsoft now owned the PC standard, and the customer." Microsoft has heavyweight influence but does not quite own "the PC standard". More to the point, figurative "ownership" of that standard is not a particularly valuable asset. The "standard" is the definition of a competitive commodity. Competition is hot. Therefore nobody "owns" the standard enough to exclude competing manufacturers in any significant way. Nobody "owns" the standard enough to extract significant rent on it. Microsoft did gain a monopoly on DOS (then Windows) rents in the deal but (a) There does not seem to be any way IBM itself could have kept those rents while still making the PC a commodity; (b) Microsoft's rents on DOS and its control of what is in DOS have never once hurt IBM. (c) Microsoft's creation of a vast market of developers targeting DOS then Windows platforms has only helped IBM. In short, Graham's snapshot of that bit of history is just plain counter-factual. I hope careful readers will look pretty skeptically on his accounts of "socialism", economic management during WWII (which was widely understood at the time to be fascist, not socialist), the typical experience of 20th century employment (not nearly as described), his armchair sociology....
  • pravda 11y ago
• echochar 11y ago
  A phrase used repeatedly throughout is "creating wealth". This is contrasted with "zero-sum game" to get rich. Does anyone have a precise definition of "creating wealth"?
• lifeisstillgood 11y ago
  weirdly this is the most useful insight to me of a insightful article [6] I wonder how much of the decline in families eating together was due to the decline in families watching TV together afterward
• orthoganol 11y ago
  If people enjoy reading history like this, I highly recommend Jeffrey Frieden's "Global Capitalism: It's Fall and Rise in the Twentieth Century." Overall, I think a dimension perhaps lacking in PG's otherwise fantastic writeup is that this 'fragmentation' opens up a space of freedom. I mean, our society basically interpolates individuals (younger generations at least) as existential subjects - no set path on what we should do with our lives, no God, no religion, we have to make our own meaning. Painful and difficult, but a source of freedom either way. Today I can travel as a digital nomad, found a startup, work for a rocketship, work for a stable, high paying company, freelance, or switch careers altogether. I get to choose who I associate with and date and marry (and it's even acceptable to not marry), while choosing from a much larger, more open pool, and for the most part, I get to choose who I am. Not everyone has access to this freedom, but it's still the point in human history when the largest number of people have ever had access to this freedom.
  • weisser 11y ago
    > Not everyone has access to this freedom Exactly! Completely agree. You and I are rather fortunate. People who have this freedom should realize it and be advocates for others so they might have similar opportunities.
  • orthoganol 11y ago
    Based on the downvotes this received, I can only conclude that either people really aren't aware of how free they are (or deny it because it's comfortable and easier to not change), aren't interested in going through the struggle of setting out a life for themselves (as opposed to mimicking others, which is also easier), think I'm being elitist, or they are religious and object to my saying young generations are born without God and religion (even though here in the first world Angloshpere, we are, for the most part, born without God and religion). Whatever your reason, it is still difficult to deny (IMHO) that more than ever today we have the freedom to set our own path, in a way we never have before.
• deleted 11y ago
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• rdiddly 11y ago
  I'm old too, and I think the issue is quite a bit simpler than this rather sprawling essay makes out. The "two forces" (WWII and large corporations) that are now receding in memory, that supposedly used to push us all together, were actually both manifestations of a single force, which is the "growth phase" of fossil-fuel energy production. This has been a boon to economies the world over for the past 100, 150 years or so. When the world is a place where an ever-increasing amount of energy is available to drive an economy, the best way to exploit resources (energy, labor, materials) is by doing it "at scale" i.e. big corporations. And the best way for Hitler to create Lebensraum and accomplish all his other now-familiar goals is by using that selfsame large-scale industrial infrastructure. And the best way for the Allies to fight against it, was more of the same. It's all the same thing. But economic activity grows and shrinks hand-in-hand with energy availability. And when your energy source goes through a growth phase, hits a peak and stops growing, the "large-scale" strategy slowly starts to become unviable. So a given corporation, suddenly finds itself resource-constrained, and has to find some way to reorganize itself and reconcile itself to the new paradigm, or face becoming less and less profitable. PG correctly pegs the timing of when the "disintegration" and "fragmentation" starts to make itself evident in the US - the 1970s. By no coincidence that is also the time when America reached and passed its domestic petroeum-production peak. Then came all the economic stagnation, hyperinflation, factories closing (offshoring), etc. And on the social side there was pervasive unease... the "ennui" of the like-named Carter speech. Many subcultures came out of the woodwork then, because it becomes less desirable to fit into and conform to a system that seems to be faltering and becoming unstable, no longer gives you any upward mobility, and might even be rigged against you. In fact, for the people against whom it truly is rigged, why not outwardly display symbols proudly showing just how thoroughly "outside the system" one is? Hence the baggy pants of the prison parolee (who upon release gets back the same pants he was arrested in, but finds he's lost 30 lbs eating prison food) that became the stylistic signature of gangsters. Hence all the tattoos, formerly the symbol of exotic and unseemly characters, now sort of the neutered and ubiquitous symbol of wannabe unseemly characters. Anyway it took a great pretender to hide the obvious, and that guy's name was Reagan. Luckily for him, people were all-too-willing to get on-board and believe a pleasant lie, rather than face a bunch of hard work. Computers were a great invention but it's no coincidence that anything that "gets done" and any wealth that gets created in the US today is by doing "more with less" in the digital realm, and not by doing "more with more" in the physical. All the physical stuff has been offshored to take advantage of labor arbitrage and, ironically enough, cheaper energy. (Because of course there are still countries that export energy.) Anyone looking for why "we once were cohesive and now we're not" should be looking at this, as the transition is a crisis-level problem. But PG seems to have a persistent blind spot about it. The same blind spot is common among optimistic tech-minded people because they're used to thinking "anything is possible," and I imagine "startup people" all the more so. I hope that can-do spirit is able to make renewables replace the orgy, the buffet, the glut of energy we use and deploy today. An honest look at the problem might be a prerequisite to tackling it though. Look at the numbers (something measured in joules or watts) and it may give you pause. And given that the initiative depends so heavily on the continued existence of the current interconnected and fossil-fuel-powered industrial infrastructure, I would say, better get a move on. Tangent/epilogue: And obviously, fucking autonomous cars are not going to fix anything, nor is any kind of car. Who fantasizes about autonomous cars when ordinary passenger rail has so much room for improvement? Californians, that's who. Hyperloop is closer to the mark, but suffers from Musk's attention-whoring narcissism and is likely to be egregiously energy-inefficient. (Since speed, not efficiency, seems to be the main design criterion.) That's enough for you to think about, I know I'm not making any friends but that's not what challenging ideas (an endangered species) are for.
• matchagaucho 11y ago
  Finally, a PG essay returning to true form.
• tmaly 11y ago
  something not touched upon, 1 the huge pension liabilities that have been accumulated by states 2 the excess credit/currency devaluation and excesses risk taking created by central banks.
• tammer 11y ago
  Some interesting theories - at first appears quite reductionist but I think succeeds in highlighting something very symbolic. Odd, though, that pg can write an entire essay about identity politics without naming it.
• auferstehung 11y ago
  And the cycle continues swinging back and forth. "Let them eat cake" is not sustainable either. It usually ends in violence despite the rationalizations of the elite.
• bsder 11y ago
  What people forget is that what the big, old, sclerotic, 20th century companies did well was provide a functional wage for the 50% of people who were below average. It's lovely that the 1% are paid what they are worth. It's not so lovely that 50% are now paid minimum wage or, worse, zero.
• jzd 11y ago
  The inequality gap is the direct result of an education gap
• caf 11y ago
  And the second reason is that if you want to solve a problem using a network of cooperating companies, you have to be able to coordinate their efforts, and you can do that much better with computers. Computers reduce the transaction costs that Coase argued are the raison d'etre of corporations. That is a fundamental change. I wonder if the same is true of coordinating efforts in a centrally planned economy - would computers be the same kind of fundamental change there?
• kmonsen 11y ago
  "The ultimate way to get market price is to work for yourself, by starting your own company." This seems to be one of his main points here, and for me it is not true at all. There are many people that bring real value, even if they would not be good founders (and maybe not even good as first 1-10 employees). That is just one specific set of skills (in addition to common skills), a person can bring a lot of value without being a good founder.
• huuu 11y ago
  Imho it's much simpler than PG explains. If we feel more or if we feel less than someone else we create separation. Ofcourse there are forces that stimulate this separation (like PG says) but in the end it's just us. The solution it to listen to yourself. Am I feeling less than this person? Am I feeling more than this person? If so: stop that thought.
• justinhj 11y ago
  Consider one ycombinator company,Uber. Do they generate wealth? From the point of view of a NYC taxi driver they are directly taking both the customers and the value of the drivers medallions. In return,uber drivers work giving 1/3 of their earnings to a company because that company built the software and lobbied the governments (presumably eventually) to allow this new form of public transport. It doesn't seem any different to the past. Those with the connections, capital and technology take a large share of the wealth being generated by the actual workers.
  • ohthehugemanate 11y ago
    I think this explanation ignores a lot of value. If all the value is really generated by the workers and the boss is just coopting it through connections and technology, then the workers individually should be able to to generate as much value,or at least wealth (as a proxy for value). But that's not the case. You can drive around all day as a freelance taxi driver sure. You'll get sued by the taxi monopoly of course, and riders won't trust you, and you won't have stable rates or work, and you won't know where to go to get fares, and you'll have to deal with your own payment system and accounting, and and and... The value that a business owner generates is, at a minimum, coordinating the diverse people and elements to make regular work at regular pay possible. And that's if there is NO management required, or technology, or special access, or or or. In fact the "technology and connections" which you dismiss, is an important part of the value that the owner brings to
  • dkural 11y ago
    Most drivers prefer Uber. Uber takes value away from the middlemen, takes a smaller share of the middleman cut, and redistributes the remaining value to the driver and the passenger. Hence its popularity. Most of the profit in the old system accrues to the taxicab company + medallion holder. Uber does hurt these folks, by giving more of the pie to the driver, who can now drive without owning a medallion & is not hurt by this barrier-to-entry, and Uber provides the rest as a discount to the passenger, who receives a better overall service at the same time (you see where the car is + estimated time, ratings, GPS, etc.)
    • 11y ago
• dkural 11y ago
  A counter-example, and a different framework to think about equality: Most of Scandinavia has fragmentation, freedom of expression, and genuine diversity of choice, diversity of lifestyle, of opinion, but it also has more equality. One can have a more equal society without raising taxes or massive wealth distribution. This is possible if a society ensures that its children receive adequate and equal access to healthcare and education in their earliest years, in other words, an equal start. This is where the US fails the most compared to Europe. Property taxes are the levers through the poor are priced out of good school districts. It acts as the algorithm through which self-segregation is made possible, often resulting in racial segregation as well. Education being a local affair ensures the wealthy and the educated have no incentive to fight for the rights of the poor and the ignorant, since they can get their fix via simply moving to a better neighborhood, leaving the others behind. Not so in Europe. The leaders of the community put pressure on officials and the system, and as the one system improves, so does the lot of all.A similar dynamic is true in healthcare as well, in Europe: A single-payer system ensures all get the same healthcare, and suddenly fixing it becomes a problem of upper-classes as well, but the entire society benefits from the improved system. PG's post is self-justifying and self-interested. Here's an alternative explanation of fragmentation: It is the sign of a new industry. It'll consolidate once it matures. Look at semiconductor & hardware consolidation. Google, Amazon, Apple, MSFT, Intel, Oracle etc. absorb a lot of software biz over time. There used to be hundreds of car companies, dozens of aircraft manufacturers.
  • tim333 11y ago
    Not very in line with the Hacker News Guidelines - "Avoid gratuitous negativity. When disagreeing, please reply to the argument instead of calling names." Plus I don't think your judgments on PG are true.
    • dkural 11y ago
      Agreed re: guidelines. Edited to keep it about the argument.
• drewm1980 11y ago
  His distinction between "wealth generating" and "rent seeking" behavior isn't obvious to me. Is investing in a start-up (so that you hopefully get a cut of the wealth generated by thousands of people and machines) a form of rent seeking?
  • tim333 11y ago
    Wikipedia: "In economics and in public-choice theory, rent-seeking involves seeking to increase one's share of existing wealth without creating new wealth." So investing in a start-up is not rent seeking.
• lsc 11y ago
  >The ultimate way to get market price is to work for yourself, by starting your own company. see... this (and the implication that people working at large companies get less than market rate) doesn't ring true for me. The real "free markets" of labor, like craigslist and the rent-a-coder marketplaces pay about 20% of what you get if you go through a recruiter who has "a relationship" with a large company... for doing essentially the same thing, and from what I've seen, contractor pay (after the middleman takes his cut) is about the same as base pay (for the same work) at a large company. Now, when I started contracting in the early aughts, base pay was basically the same as total comp, and so I subtracted the payroll taxes and health insurance and could pretty much directly compare contract vs salary wages. In the early aughts, it was pretty unusual for individual contributors to get big bonuses or even stock refreshes (or that was my perception; I was considerably less senor at the time.) But, from what I've seen, if you are full-time at a big company here, you get a pretty significant bump now, in terms of bonuses and stock. My point here is just that my experience has been that when I'm selling my labor, the further I move away from "the free market for labor" and the closer I get to a system of rank and privilege as pg describes 20th century corporations, the more I get paid.
  • r2dnb 11y ago
    True, but PG doesn't consider selling your time as starting a company, you're not talking about the same thing
    • lsc 11y ago
      right, but running a company requires a rather different skillset from working for someone else as a programmer. It's a different job. My point is just that as a full timer at a big company, you are at the top end of "market rate" for programmers. If you start your own company, you are on the 'business person' payscale, which is a rather different thing.
      • r2dnb 11y ago
        Your point makes sense, however look : You develop a software and are the PM / product lead. You get paid 8 months, while your client makes $8,000 per month during the next 5 years. This is the market rate. The market PG refers to is not the labour market but the consumer market where the metric used is not time but value.
• ivoras 11y ago
  Simply as a reference to how biology supports the human society and how biological signals can be gamed for short term benefit, this lecture was an eye opener for me: https://www.youtube.com/watch?v=ReRcHdeUG9Y https://www.youtube.com/watch?v=ReRcHdeUG9Y
• jgalt212 11y ago
  His arguments on taxes simply don't hold water. Income inequality is expanding because those at the very top either pay taxes much lower than all others (HF, PE, VC) or just don't pay taxes at all (AAPL). The other problem with income inequality is simply interest rate related. If you look at all asset classes over the last 30 years, real estate gains have far outpaces every other asset class. Real estate prices are very sensitive to interest rates. If the Fed keeps raising rates, the value of these real estate holdings will go down and well inequality will reverse itself somewhat. To do that significantly, I think we need Fed Funds at 5-6%. I don't see that happening for a long time, though. Another longer term trend which may help wealth inequality reverse itself is global warming. The global elite own a disproportionate portion of coastal real estate. With rising ocean levels these assets will be wiped out.
• marincounty 11y ago
  Wow! He's seems a little self-aware of his own wealth, and what exactly he's given society? Sorry--I read this bloated, post holiday, thesis, and was not impressed. Why take so long to say a few thoughts? The're just thoughts? Yes, we rebelled, or "fragmented". Yes, unions are not perfect. (Good luck getting rid of certain unions, like any Union San Franciso. I have seen entire buildings go dim when the painter's Union went on strike.) If I were a psychologist looking for a theme to his writing it would be basically two thing; He is one percenter--trying to rationalize his own wealth? He trying to look for flaws in society that makes it o.k. to be very wealthy? Paul--take a basic writing class. You need to funnel your thoughts. You could take out 3/4 of your sentences, and your readers would have a better grasp of what you are trying to convey. Paul--certain unions will never go away. Paul--this is the downside to being very wealthy. You are living the "dream"? I wasen't going to read that essay another time. I think we are about to see a lot of tech billionaries wondering if they ultimately ruined the party, or helped it? Let's get real. In the U.S.--a lot of us didn't have to worry about missing out on the party. All we had to do was try. Now--it's not as easy. Do I fear the future. Yes--I do. Do I think tech will make things better. No--I don't. That is unless we get serious about overpopulation. I have a question to any developer here. We are constantly trying to make tech easier. We all know, and like DRY. What's going to happen in a few years when our skills are no longer needed? Even local politians are writing our obituaries. Willie Brown said, 'I'm wondering what we are going to do with all the future homeless tech people.' It's not an exact quote, but it was said in retort to a complaint about all the homeless we step over every day. My hope is we don't turn into Mexico. A country where someone like Paul couldn't take a leisurely walk in the park?
• jgalt212 11y ago
  Paul Graham used to be one of my heroes, now I just see him as just another fat cat apologist in the vein of Ken Langone.
• netcan 11y ago
  Great essay. Though obviously, such a big hypothesis is very speculative. I think the use of the "market price" concept so heavily here might be taking away a little. It sort of assumes some objective (if unknowable) value to human contribution or achievement. I think in the labour market in general, and specifically the components that he's talking about in the lang term, are hard to describe well this way. Between the difficulty to evaluating labour quality, the variability in "quality" depending on specific circumstances, the bargaining/liquidity issues and other problems, I think we enter a (Ronald) Coase-esqu problem where markets do not play out efficiently enough to reveal an information rich market price. I wonder if this essay would be much different without market price.
• unusximmortalis 11y ago
  This is a great sign, to see so many comments on the topics this article is reaching. It shows a lot to me at least. Thank you all for giving your honest and insightful opinions.
• h2077545 11y ago
  > The effects of World War II were both economic and social. Economically, it decreased variation in income. Like all modern armed forces, America's were socialist economically. From each according to his ability, to each according to his need. More or less. Higher ranking members of the military got more (as higher ranking members of socialist societies always do), but what they got was fixed according to their rank. And the flattening effect wasn't limited to those under arms, because the US economy was conscripted too. Between 1942 and 1945 all wages were set by the National War Labor Board. Like the military, they defaulted to flatness. And this national standardization of wages was so pervasive that its effects could still be seen years after the war ended. [1] Just another article by a hypocrite capitalist talking about "socialism" without a clue.
• be21 11y ago
  not even wrong :)
• bitwize 11y ago
  Graham leaves out one crucial thing: A more equal society is a better society. Always. This was borne out in the work of Wilkinson and Pickett for their book The Spirit Level. You may have less technology. You may have less innovation. Tough. Creating more of what Earl Dunovant called "cute and useful monkey tricks with energy and matter" at the expense of your fellow man and the planet does not put you ahead, and societies should not seek to optimize for monkey tricks over the betterment of their fellow man. Inequality (along with the environment) may be the defining issue of the twenty-first century, and once recognition of inequality and its consequences goes mainstream, laissez-faire capitalism will join royalism in the dustbin of discredited political philosophies.
  • ignasl 11y ago
    Oh great lets get back into the trees. Then we will be very advanced society.
    • sawwit 11y ago
      This is not what OP is saying.
      • ignasl 11y ago
        This is exactly what he was saying. I just put it this way to show how absurd his idea is if we follow through with it till the end.
        • sawwit 11y ago
          Nonsense, please quit that strawmanning. Reducing the pace of consumer technological progress to the benefit of more equality would very likely beneficial for humanity; and it does not imply returning to underdeveloped times (assuming it would reduce it significantly in the first place).
          • ignasl 11y ago
• Mindphreaker 11y ago
  Very interesting article. I mostly agree with the idea of social fragmentation. I think it is no coincidence that we like to call ourselves "individuals". Maybe the thought reflects our current zeitgeist but it seems almost natural (nowadays) for humans to emphasize our differences / our individualism. However, it seems very interesting, that as much as we like to differentiate ourselves we also tend to some kind of collectivism (e.g. trending sports, technology (iPhone/Android), etc.), even working for the same corporations (Google/Facebook/Apple...) which also appears contrary to the article. It may be true that the speed of change is accelerating but I can't agree with the idea that we already reached a fully fragmented society (yet) which is here to stay. Another interesting part was the analogy to Ford's vertical integration. The trend definitely went from fully integrated mega corps to fragmented networks of corporations. The car industry is a perfect example. It would be exciting to know if PG thought about Tesla/SpaceX and it's current move towards a higher level of integration (producing more and more parts by themselves) in order to control the quality of their products. It may be sign that we are on the edge or maximum of fragmentation and there are trends emerging which pull us back into consolidation (maybe in another form than it used to).
• Wissmania 11y ago
  I don't see how someone can credibly argue that raising income tax rates discourages innovation. As if Zuck or Gates wouldn't have started their companies if they only would have made $25 billion instead of $50 billion. He even argues in earlier writing that most of the innovation comes from genuine passion for solving a problem, rather than profit motive. People who have worked a lot to increase their wealth understandably don't want a portion of it taken away, even if it probably won't make them less happy, or motivate people less in the future.
• MichaelMoser123 11y ago
  >Not everyone who gets rich now does it by creating wealth, certainly. But a significant number do, and the Baumol Effect means all their peers get dragged along too. [23] And as long as it's possible to get rich by creating wealth, the default tendency will be for economic inequality to increase My question is: significantly more wealth seems to be generated by big corporations by means of financial 'instruments' rather than by value creation; is that correct? Also this lecture [1] says that scientific and technological breatkhroughs are much harder to achieve these days - because all the shallow fruit is already taken and it costs more to digg deep. Now doesn't that make value creation harder for the coming decades? (for example the PC revolution was based on breakthroughs in physics/semiconductors/electronics - these will be harder and harder to achieve) So it is hard to tell which one will dominate for the near future: value extraction by means of financial trickery (my guess is that this makes society more hierarchical, and the top of the hierarchy will try to enforce equal standing for the lower ranks) or the possibility of real value creation (this one would create a chance for a wider audience) ? [1] Collapse of Complex Societies by Dr. Joseph Tainter https://www.youtube.com/watch?v=G0R09YzyuCI https://www.youtube.com/watch?v=G0R09YzyuCI
• andrewjl 11y ago
  I wonder if multinational corporations are the last bastion of 20th century centralization. In a power law driven world, players that make better long term decisions will ultimately rise to the top and dominate their markets. This is not something most multinationals are known for. (If so, then this process would likely play out over several decades.)
• mhb 11y ago
  For those (few?) of us who read the endnotes at the end, it would be nice for the endnote numbers at the end to link back to the text. (In addition to the normal link from the text to the endnote)
• thesz 11y ago
  From each according to his ability, to each according to his need It is a communism motto, not socialism (from each according to his ability, to each according to his work). And this shows how little PG knows about socialism.
• spopejoy 11y ago
  Nice read, but completely oblivious to the central role of FIRE (finance/insurance/real estate) industries, plus industrial stagnation, that has obtained since the 70s in creating today's ridiculous wealth gap. I don't have the exact statistics on hand but finance represented something like 16% of GDP in the 70s compared to now around 40%. PG's a techno-capitalist and he wants to say that somehow technology has created all this wealth, but it's simply false. Tech has only been able to "create wealth" because of the overheated financial forces behind ridiculous valuations, stock prices unhinged from any fiscal reality, etc. If we were to actually price tech on the money it makes it would pale in comparison to the giants of yesteryear. There's an interesting, but now practically unknown, marxist economist named Paul Sweezy who correctly predicted in the early 70s that the monopoly capitalism of the time would fade into permanent stagnation -- closing factories etc -- with increasing financialization of the economy. Pretty much nailed it.
• neelm 11y ago
  "The Big Sort" by Bill Bishop is a well researched book that explains the political fracturing of America. The topic is explains is expressed visually in these two maps, which shows county election results from 1976 to 2004. http://www.thebigsort.com/maps.php http://www.thebigsort.com/maps.php One of the point is that due to economy, mobility and choice, Americans decide to settle where people are like them the most, and that this results in deeper political boundaries, especially in the context of our electoral system. One takeaway is that individually we are not all different, and a single Democrat and Republican in a room would likely come up with compromises on differing issues. However when on Democrat/Republican is in a group of many like themselves, they tend to take the most extreme view, on average. The other is that there used to be more friendly relationships between senior senators on both sides of the aisle. They would gather regularly to have a few cocktails even if they have strongly differing views. These bonds made it possible for them to work as a bi-partisan team to get legislation passed. These relationships no longer exist the way they used to, and many politicians are much more transient in the time they spend in DC.