6 ms·

Central thesis (hidden a bit): "ending economic inequality would mean ending startups". So, who is the straw man who advocates completely ending economic inequ

by rst 11y ago

Central thesis (hidden a bit): "ending economic inequality would mean ending startups". So, who is the straw man who advocates completely ending economic inequality? Even left wingers in Europe (far to the left of anyone mainstream in the US) talk mainly of reducing it. So, if economic inequality were substantially reduced, would there still be startups? I believe another piece of common advice in this field is that you should only do a startup if you want to change the world, not just to get rich...

jrlocke 11y ago
Exactly. There would still be sufficient economic motivations for startups and startup founders in a world where startup founders were taxed at a 75% rate.
- rst 11y ago
  When the Beatles found themselves taxed at 95%, they wrote a song about it ("Here's one for you, nineteen for me..."), but they didn't hang up their guitars.
  - WalterBright 11y ago
    They did break up. Also, many wealthy Britons moved to Barbados to avoid the taxes.
    - wstrange 11y ago
      I never heard the theory that they broke up because of the tax rates. Thought it had something to do with Yoko :-) Tax avoidance is a significant issue that will require some international coordination - but I do think it is a solvable problem. See for example the Facebook co-founder who had to pay an exit tax to move his assets offshore.
      - muzz 11y ago
        Current share price of Facebook is roughly ~4x what he sold many of his shares at
- orangecat 11y ago
  I'm not sure about that. Work your ass off for four years, successfully exit with equity worth $4 million, and you only keep $1 million? That's about what you could have made at Google.
  - aaronbrethorst 11y ago
    This is the case for any and every startup today, which is why it can be a mistake to work at one, unless you're doing it for reasons other than the theoretical future value of your equity.
  - nhaehnle 11y ago
    The interesting thing is that if the potential outcome of founding or working at a startup were less, salaries at Google would likely be lower, too. After all, those Google salaries are so high in part because of competition by startups.
- bko 11y ago
  Perhaps, but as the higher the tax rate, the higher the greater the incentive to avoid taxes. As PG mentioned in his essay, when the marginal tax rate was at 90%, there was a lot more tax avoidance and lavish, wasteful benefits companies offered their employees in lieu of wages (health care, housing, first class flights). If the tax rate were high enough, the government would actually bring in less revenue as there is more avoidance but it would also have negative externalities like padded expenses, people fleeing the country, shell companies, etc.
  - wstrange 11y ago
    A lot of those lavish benefits would inject money into to the system instead of sitting in an offshore account. That helps everyone. As Paul Krugman says, "your spending is my income", and visa-versa
- stuaxo 11y ago
  That is so far away from anything that is likely to happen in even the medium term, it's worth filing under "cross that bridge when we come to it". In the meantime, making things just a little fairer could help a vast amount of people.
- pandaman 11y ago
  I hear this from liberals all the time, often in more extreme form of "even if only a cent of a million is left there will be motivation to make that million!". But wtf are you so sure? I for one am not looking for a smaller bump in salary at 50% tax already as I don't see how additional effort would pay for itself. I imagine a lot of people don't consider an effort to found startups at this rate too.
  - iandanforth 11y ago
    Because the self-made rich don't stop working. Because hugely productive people work on open source. Because hugely productive people work at non-profits. Because hugely productive, active, socially beneficial people spend their lives in poverty working for the benefit of others. It's a bizarre mind that can simultaneously believe that you need huge rewards to motivate people AND know that 95% of startups fail. Startup founders I know well (n=20) are intrinsically motivated and only superficially extrinsically motivated. They don't stop once they get "f-u" money. They do the same thing over again, with a nicer car.
    - pandaman 11y ago
      I am sorry, I don't see how it follows. Even if such people exists in statistically significant quantities, a lot of people don't work for free at all.
  - nhaehnle 11y ago
    Trying to put in the effort to get a bump in salary is very different from the kind of creation that is the main benefit of startups to society. To counter your anecdote with another one, if only half of the characterization of Steve Jobs is true, do you really believe the exact amount of potential financial upside was ever really a question for him? Sure, if the economic environment had been so extremely bad as to make it impossible to make a living off founding Apple it's likely he would have gone somewhere else. But that's a strawman and you know it.
    - pandaman 11y ago
deleted 11y ago
[deleted]
- rst 11y ago
  Huh? The question isn't even about whether it's possible to create a "vast internet property". The question is about how much of the money the creator, heirs and descendants get to control personally.
  - deleted 11y ago
    [deleted]
    - danharaj 11y ago
      Do you think no labor can occur unless someone owns its product? I mean, that's the implicit conclusion of bourgeois ideology, but it's ridiculous when made explicit.
      - deleted 11y ago
        [deleted]
- RobertoG 11y ago
  It is a straw man. In general when people worry about inequality, except the most radical commentators, they worry about a trend, not about differences in net worth. Maybe unconsciously, PG try to sell the idea that this a binary thing, you have 0 inequality or you should leave the market do its thing. This is not true. There is a balance and we have a lot examples that show that. The pie thing don't pass the smell test, neither. Is PG denying that the pie is now bigger than in the 70? I don't think he does, actually he is arguing the opposite. Then why low and medium income people is increasingly in debt and have to worry if tomorrow will have enough money to pay the rent? When you have a bigger pie, and inequality is the same, you get the rich more rich and the poor more rich. This is hardly what we observe even if we know that the pie is bigger. So, the pie is bigger but people should to work more hours and should retire latter, and, of course, we can't afford healthcare for everybody. He says "let's attack poverty, and if necessary damage wealth in the process." I totally agree there, good luck with that.
asift 11y ago
Reducing economic inequality is merely a lesser form of eliminating it. I think the tough question people should consider here is whether relative inequality or absolute standard of living is the more important metric. If absolute standard of living rises faster as economic inequality increases, why should we try and limit economic inequality?
- bko 11y ago
  The ironic thing is that the wealthiest now try to live a rather stoic, normal life with a focus on whole, local foods and simple agrarian pleasures. Sure, they don't fly coach, but honestly, they don't exactly live extraordinary lives when compared to that of the middle class in America. Reminds me of a Warhol quote: > What’s great about this country is that America started the tradition where the richest consumers buy essentially the same things as the poorest. You can be watching TV and see Coca-Cola, and you know that the President drinks Coke, Liz Taylor drinks Coke, and just think, you can drink Coke, too. A Coke is a Coke and no amount of money can get you a better Coke than the one the bum on the corner is drinking. All the Cokes are the same and all the Cokes are good. Liz Taylor knows it, the President knows it, the bum knows it, and you know it.
  - foldr 11y ago
    >The ironic thing is that the wealthiest now try to live a rather stoic, normal life w Erm, maybe some of them. I don't think extravagant displays of wealth have gone extinct just yet.
  - gethoht 11y ago
    This correlation of equality breaks down in regards to the justice system however, where the poor are systematically curb-stomped and viewed as revenue generators for local governments while the rich can literally destroy the world economy through fraudulent mechanisms and walk away scot free.
    - jordanb 11y ago
      Not justice, nor healthcare, housing, education, or political influence. But when it comes to sugar water Virginia yes it's true: we're all equals.
wstrange 11y ago
Exactly. Warren Buffet has said an increased tax rate would not make him work any less hard. The desire to change the world is a more powerful motivator than money.
lazyjones 11y ago
> So, if economic inequality were substantially reduced, would there still be startups? There would be - but as the article points out correctly elsewhere, they would be in other countries. > I believe another piece of common advice in this field is that you should only do a startup if you want to change the world, not just to get rich... Nobody does it just to get rich, but (as the article also points out...) few founders would go through that pain if there wasn't a chance to get rich. I can assure you from personal experience that working 100 hours/week as a founder is much less attractive if you can live very comfortably from exit money for the rest of your life, no matter how great your ideas are.
- js8 11y ago
  > few founders would go through that pain if there wasn't a chance to get rich I don't understand why should economic system be based on heroism. I frankly don't think anyone should be required to work more than 40 hrs/week (or even less) unless they want to. And I think basing economic system on these extremes is misguided. So it will take couple more years to invent, I don't know, Snapchat.. what is the big deal?

by rst 11y ago

jrlocke 11y ago

Exactly. There would still be sufficient economic motivations for startups and startup founders in a world where startup founders were taxed at a 75% rate.

rst 11y ago
When the Beatles found themselves taxed at 95%, they wrote a song about it ("Here's one for you, nineteen for me..."), but they didn't hang up their guitars.
- WalterBright 11y ago
  They did break up. Also, many wealthy Britons moved to Barbados to avoid the taxes.
  - wstrange 11y ago
    I never heard the theory that they broke up because of the tax rates. Thought it had something to do with Yoko :-) Tax avoidance is a significant issue that will require some international coordination - but I do think it is a solvable problem. See for example the Facebook co-founder who had to pay an exit tax to move his assets offshore.
    - muzz 11y ago
      Current share price of Facebook is roughly ~4x what he sold many of his shares at
orangecat 11y ago
I'm not sure about that. Work your ass off for four years, successfully exit with equity worth $4 million, and you only keep $1 million? That's about what you could have made at Google.
- aaronbrethorst 11y ago
  This is the case for any and every startup today, which is why it can be a mistake to work at one, unless you're doing it for reasons other than the theoretical future value of your equity.
- nhaehnle 11y ago
  The interesting thing is that if the potential outcome of founding or working at a startup were less, salaries at Google would likely be lower, too. After all, those Google salaries are so high in part because of competition by startups.
bko 11y ago
Perhaps, but as the higher the tax rate, the higher the greater the incentive to avoid taxes. As PG mentioned in his essay, when the marginal tax rate was at 90%, there was a lot more tax avoidance and lavish, wasteful benefits companies offered their employees in lieu of wages (health care, housing, first class flights). If the tax rate were high enough, the government would actually bring in less revenue as there is more avoidance but it would also have negative externalities like padded expenses, people fleeing the country, shell companies, etc.
- wstrange 11y ago
  A lot of those lavish benefits would inject money into to the system instead of sitting in an offshore account. That helps everyone. As Paul Krugman says, "your spending is my income", and visa-versa
stuaxo 11y ago
That is so far away from anything that is likely to happen in even the medium term, it's worth filing under "cross that bridge when we come to it". In the meantime, making things just a little fairer could help a vast amount of people.
pandaman 11y ago
I hear this from liberals all the time, often in more extreme form of "even if only a cent of a million is left there will be motivation to make that million!". But wtf are you so sure? I for one am not looking for a smaller bump in salary at 50% tax already as I don't see how additional effort would pay for itself. I imagine a lot of people don't consider an effort to found startups at this rate too.
- iandanforth 11y ago
  Because the self-made rich don't stop working. Because hugely productive people work on open source. Because hugely productive people work at non-profits. Because hugely productive, active, socially beneficial people spend their lives in poverty working for the benefit of others. It's a bizarre mind that can simultaneously believe that you need huge rewards to motivate people AND know that 95% of startups fail. Startup founders I know well (n=20) are intrinsically motivated and only superficially extrinsically motivated. They don't stop once they get "f-u" money. They do the same thing over again, with a nicer car.
  - pandaman 11y ago
    I am sorry, I don't see how it follows. Even if such people exists in statistically significant quantities, a lot of people don't work for free at all.
- nhaehnle 11y ago
  Trying to put in the effort to get a bump in salary is very different from the kind of creation that is the main benefit of startups to society. To counter your anecdote with another one, if only half of the characterization of Steve Jobs is true, do you really believe the exact amount of potential financial upside was ever really a question for him? Sure, if the economic environment had been so extremely bad as to make it impossible to make a living off founding Apple it's likely he would have gone somewhere else. But that's a strawman and you know it.
  - pandaman 11y ago

deleted 11y ago

[deleted]

rst 11y ago
Huh? The question isn't even about whether it's possible to create a "vast internet property". The question is about how much of the money the creator, heirs and descendants get to control personally.
- deleted 11y ago
  [deleted]
  - danharaj 11y ago
    Do you think no labor can occur unless someone owns its product? I mean, that's the implicit conclusion of bourgeois ideology, but it's ridiculous when made explicit.
    - deleted 11y ago
      [deleted]
RobertoG 11y ago
It is a straw man. In general when people worry about inequality, except the most radical commentators, they worry about a trend, not about differences in net worth. Maybe unconsciously, PG try to sell the idea that this a binary thing, you have 0 inequality or you should leave the market do its thing. This is not true. There is a balance and we have a lot examples that show that. The pie thing don't pass the smell test, neither. Is PG denying that the pie is now bigger than in the 70? I don't think he does, actually he is arguing the opposite. Then why low and medium income people is increasingly in debt and have to worry if tomorrow will have enough money to pay the rent? When you have a bigger pie, and inequality is the same, you get the rich more rich and the poor more rich. This is hardly what we observe even if we know that the pie is bigger. So, the pie is bigger but people should to work more hours and should retire latter, and, of course, we can't afford healthcare for everybody. He says "let's attack poverty, and if necessary damage wealth in the process." I totally agree there, good luck with that.

asift 11y ago

Reducing economic inequality is merely a lesser form of eliminating it. I think the tough question people should consider here is whether relative inequality or absolute standard of living is the more important metric. If absolute standard of living rises faster as economic inequality increases, why should we try and limit economic inequality?

bko 11y ago
The ironic thing is that the wealthiest now try to live a rather stoic, normal life with a focus on whole, local foods and simple agrarian pleasures. Sure, they don't fly coach, but honestly, they don't exactly live extraordinary lives when compared to that of the middle class in America. Reminds me of a Warhol quote: > What’s great about this country is that America started the tradition where the richest consumers buy essentially the same things as the poorest. You can be watching TV and see Coca-Cola, and you know that the President drinks Coke, Liz Taylor drinks Coke, and just think, you can drink Coke, too. A Coke is a Coke and no amount of money can get you a better Coke than the one the bum on the corner is drinking. All the Cokes are the same and all the Cokes are good. Liz Taylor knows it, the President knows it, the bum knows it, and you know it.
- foldr 11y ago
  >The ironic thing is that the wealthiest now try to live a rather stoic, normal life w Erm, maybe some of them. I don't think extravagant displays of wealth have gone extinct just yet.
- gethoht 11y ago
  This correlation of equality breaks down in regards to the justice system however, where the poor are systematically curb-stomped and viewed as revenue generators for local governments while the rich can literally destroy the world economy through fraudulent mechanisms and walk away scot free.
  - jordanb 11y ago
    Not justice, nor healthcare, housing, education, or political influence. But when it comes to sugar water Virginia yes it's true: we're all equals.

wstrange 11y ago

Exactly. Warren Buffet has said an increased tax rate would not make him work any less hard. The desire to change the world is a more powerful motivator than money.

lazyjones 11y ago

> So, if economic inequality were substantially reduced, would there still be startups? There would be - but as the article points out correctly elsewhere, they would be in other countries. > I believe another piece of common advice in this field is that you should only do a startup if you want to change the world, not just to get rich... Nobody does it just to get rich, but (as the article also points out...) few founders would go through that pain if there wasn't a chance to get rich. I can assure you from personal experience that working 100 hours/week as a founder is much less attractive if you can live very comfortably from exit money for the rest of your life, no matter how great your ideas are.

js8 11y ago
> few founders would go through that pain if there wasn't a chance to get rich I don't understand why should economic system be based on heroism. I frankly don't think anyone should be required to work more than 40 hrs/week (or even less) unless they want to. And I think basing economic system on these extremes is misguided. So it will take couple more years to invent, I don't know, Snapchat.. what is the big deal?