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It's interesting that you focus on the individual when it comes to wealth creation. This is not random, and it predisposes you to believe that there is a pie fa

It's interesting that you focus on the individual when it comes to wealth creation. This is not random, and it predisposes you to believe that there is a pie fallacy going on when in fact there might not be one. The truth is that almost no wealth creation is done by individuals. There is a vast range of levels on which wealth creation is a shared enterprise and it would be boring to trot them out again, but usually, all or at least most of society is involved directly or indirectly (if only by agreeing to the social contract of peacefulness towards one another). Because of this, the question of the rewards for wealth creation is one of distribution from the very beginning. Logically speaking, there is no single point in time where the startup founder's product can be declared to be just his or her own according to a universal philosophy.[1] There is no neutral default distribution that you can derive from first principles. Instead, in the example of startups, to what extent the overall benefit of the creation should go to the startup founder, and to what extent it should go to employees, the people providing the underlying tech stacks, and other parts of society depend on your value system and on your objective function. So, to make explicit what this has to do with the pie fallacy: Since wealth creation is generally not done by individuals, inequality is a concern even when the pie is growing, and even when each individual's absolute income or wealth is growing, because despite all this growth, the resulting distribution might still be unjust.[2] Graham tries to side-step this discussion, and unfortunately our society is generally not well-equipped to defend against such rhetoric moves. You may end up agreeing with him,[3] but I hope you at least recognize that if you do, you do not do so by purely applying logical deduction from first principles. There is necessarily a subjective value judgement that reasonable people with different values and objectives will disagree with. [1] It is also no accident that Graham chooses the example of a woodworker at the beginning of his essay. Since woodworkers have existed for millenia, including through time periods where people really were more self-reliant than today, it makes the reader subtly predisposed to be mislead into accepting the story of wealth creation by individuals. [2] And/or it might be inefficient, but that's a different can of worms. [3] And you may well be right to do so, depending on your values!

noobermin 11y ago
To you and foldr, I was only responding to his comment, that such reasoning still sounded like the pie fallacy. If you really need my personal opinion, I believed that wealth inequality is a problem before I read pg's essay because it seemed persuasive. I still disagree with a bit of it, but I don't like shutting off others' ideas due to my biases[0]. You make an interesting point though, the idea of how wealth is distributed after does have an underlying value judgement, as you point out. To be fair to pg, he is responding to an often used argument that assumes wealth is a zero sum game rather than it being who gets more of the wealth created. He is right then to claim that given his values (and those shared by most people in America, remember, we still are center-right on most things) and within that moral framework where ownership determines who reaps the benefits, his logic is correct. However, with your values where it seems that benefits should go to those who invest more[1] should earn a proportional amount, it may be suspect. [0] At least the ones I can identify. [1] On second thought, many in America would agree this is a worthy moral framework. I do too.
- foldr 11y ago
  >he is responding to an often used argument that assumes wealth is a zero sum This is not an often-used argument. It's obviously false that wealth is only ever redistributed and not created, and someone as knowledgeable as Stiglitz would obviously not believe something so silly. He even goes out of his way to explain that he doesn't believe this. And yet pg still decides to make out that he's fallen for the "pie fallacy". The pie fallacy is, in essence, the fallacious argument that one person can get rich only at the expense of another. Approximately no-one thinks this is true as a matter of economic or metaphysical necessity. Some people think that as a matter of fact, the enrichment of the 1% in the U.S., in the last decade, has to a significant extent been at the expense of the rest. To deny this because "pie fallacy" is to commit the inverse pie fallacy: to assume that individual wealth is always gained from creation and not redistribution. How wealth was gained in any given instance is an empirical question, not a logical or moral one.

noobermin 11y ago

To you and foldr, I was only responding to his comment, that such reasoning still sounded like the pie fallacy. If you really need my personal opinion, I believed that wealth inequality is a problem before I read pg's essay because it seemed persuasive. I still disagree with a bit of it, but I don't like shutting off others' ideas due to my biases[0]. You make an interesting point though, the idea of how wealth is distributed after does have an underlying value judgement, as you point out. To be fair to pg, he is responding to an often used argument that assumes wealth is a zero sum game rather than it being who gets more of the wealth created. He is right then to claim that given his values (and those shared by most people in America, remember, we still are center-right on most things) and within that moral framework where ownership determines who reaps the benefits, his logic is correct. However, with your values where it seems that benefits should go to those who invest more[1] should earn a proportional amount, it may be suspect. [0] At least the ones I can identify. [1] On second thought, many in America would agree this is a worthy moral framework. I do too.

foldr 11y ago
>he is responding to an often used argument that assumes wealth is a zero sum This is not an often-used argument. It's obviously false that wealth is only ever redistributed and not created, and someone as knowledgeable as Stiglitz would obviously not believe something so silly. He even goes out of his way to explain that he doesn't believe this. And yet pg still decides to make out that he's fallen for the "pie fallacy". The pie fallacy is, in essence, the fallacious argument that one person can get rich only at the expense of another. Approximately no-one thinks this is true as a matter of economic or metaphysical necessity. Some people think that as a matter of fact, the enrichment of the 1% in the U.S., in the last decade, has to a significant extent been at the expense of the rest. To deny this because "pie fallacy" is to commit the inverse pie fallacy: to assume that individual wealth is always gained from creation and not redistribution. How wealth was gained in any given instance is an empirical question, not a logical or moral one.