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Economic Inequality: The Simplified Version

92 points by jordanlee 11y ago

rudi-c 11y ago
This is a pretty neat response to a debate that has had a lot of strawmen and arguing against statements nobody said. The longer an essay is, the further apart the main arguments are and the easier it is to forget parts of the essays. The ones we remember most saliently, of course, are the controversial claims that trigger an emotional response, not the paragraphs of simple history fact-stating that builds up to the conclusion. As a result, responses to the essay tend to strip out the context of claims and argue against them in a vacuum.
joelrunyon 11y ago
Original discussion here => https://news.ycombinator.com/item?id=10839314 https://news.ycombinator.com/item?id=10839314
spikels 11y ago
Paul Graham TLDRs Paul Graham because people can't resist misinterpreting him. Doubt it will help...
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ThomPete 11y ago
I am kind of surprised that PG insist on confusing extreme economic inequality (which is the one most people are talking about when they say it's bad) with normal economic inequality (which most people are totally fine with.) Edited to clear up confusion
- chubot 11y ago
  This comment doesn't make any sense without defining "extreme" vs "normal" income equality. That is far from obvious. Do you think that technology alone can't produce extreme income inequality? Why?
  - chongli 11y ago
    This comment doesn't make any sense without defining "extreme" vs "normal" income equality. The argument is over economic inequality which I believe most take to mean wealth inequality, not income inequality. Do you think that technology alone can't produce extreme income inequality? Why? Of course not. You need people using the technology as well. Extreme inequality results from the simple fact (as exhaustively supported by Piketty) that r > g. Capital, by definition, is technology.
    - mdcox 11y ago
      For any other casual viewers unfamiliar with but interested in economics, the 'r' refers to return on capital and 'g' refers to the growth rate of the economy. This section of the wikipedia article on his book seems to give a quick and decent high level overview that puts this (and a few other comments) into perspective: https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century#Contents https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
      - viraptor 11y ago
        The whole book is great. It may be ~700 pages, but it's more of a story than a heavy economy book. If anyone is interested enough to comment on this issue, this book is definitely something you'd be interested to read.
  - viraptor 11y ago
    Income (in)equality doesn't depend on the kind of work the company does. One of the basic trends you can find in Picketty's "Capital ..." is that instead of investing 1/3 of company income into workers ("reasonable" split), the owner/worker salary gap grows more than ever - and that's the extreme inequality. What the company does is irrelevant in a more general overview.
  - nickpsecurity 11y ago
    Market forces and legislation. Simple caps would defeat all attempts to do that. Realistically, the design of a system dictates how it will behave in many scenarios. Our system's properties lead to accumulation and concentration of extreme wealth. Even Citigroup's leaked docs describe it as a "plutonomy:" a system designed to shift most wealth to already rich. I like how they mentioned that voters were the greatest threat with the defense being to promote the illusion that everyone can get ahead. Combine stuff like that with executives making 300x the average (not worst) employee to see system is clearly rigged against the many for a very few. Not even top 1%: a fraction of a percent.
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nickbauman 11y ago
Economic Inequality Simulation: The Simplified version http://nbviewer.ipython.org/url/norvig.com/ipython/Economics.ipynb http://nbviewer.ipython.org/url/norvig.com/ipython/Economics... "Many have preconceptions about how economies work that will be challenged by the results shown here"
- rudi-c 11y ago
  This is cool. One pet project that I want to do (one day...) is to generate what a wealth distribution graph based on answers to a questionnaire such as: - How much more should a 50 year old earn more than a 20 year old on average ideally? - How much should the lifetime earning of someone holding a PhD be over someone with only a high school degree - there should be at least some premium for going through extra years of school right? - What's a reasonable amount of inequality due to people choosing a career in which they will be happier, at some cost to the paycheck? - Should people be allowed to work more (e.g. 50h/week) if they wish? This will increase inequality. - etc A lot of those questions would be very difficult to model, but I bet the graph would look a lot more inequal at the end than most people envision their "ideal" graph to look like (which is shown in this classic video on wealth distribution: https://www.youtube.com/watch?v=QPKKQnijnsM https://www.youtube.com/watch?v=QPKKQnijnsM)
balsam 11y ago
Only the last paragraph is original, but it is probably also wrong. So PG is saying that the major cause of inequality is technological advancement. But for example see that economic inequality decreased after WWII, but is it really that farfetched to imagine that technological power did not decrease during the war years? (E.g. Manhattan Project.) It is also not hard to imagine that wars would distribute technology more evenly.
- tempestn 11y ago
  There are multiple factors that affect inequality, so a short term decrease in inequality can certainly still occur while technology continues to advance. In his other recent essay[1], pg goes into more detail on why inequality decreased in the postwar years, despite advances in technology. [1]: http://www.paulgraham.com/re.html http://www.paulgraham.com/re.html
awakeasleep 11y ago
>But economic inequality per se is not bad. It has multiple causes. Many are bad, but some are good. This shows the confusion of the original essay, and this response. There is the thesis, "economic equality is not bad", and then the support for the thesis, "some drivers of inequality are bad, some are good" that doesn't actually support it. Saying that some things that concentrate wealth are not bad overall does nothing to shed light on whether vast disparities of wealth between classes of people is beneficial for a society.
- rntz 11y ago
  It's wonderful when simplifying an argument exposes its problems more clearly. I now wish more writers would do this. Omit needless words, indeed!
nostromo 11y ago
Most people I know that are concerned about economic inequality aren't super bothered by self-made billionaires (Jobs, Zuck, and Gates to a lesser degree.) Mostly they are concerned about dynastic wealth (Waltons, Kochs) particularly when it's economic power intertwined with political power (Kennedys, Bushes, Clintons, Romneys). Outside of San Francisco, where many people feel real downward economic pressure from tech, most of the US seems pretty happy with the self-made uber rich. In fact, I think people are downright fond of these people. The real discomfort comes when those oligarchs look to preserve dynastic wealth and power for generation after generation using trusts and other tax avoidance strategies.
- cconroy 11y ago
  You are obviously biased. Im sure those tech gods affect politics as much as the Kochs -- but it is the kind of political choices that you are ok with. Therefore, they are the good guys and the Kochs are the bad guys. Not so sure things are that simple. E.g. Bill Gates and patents. Haha, I cannot believe I defended the Kochs.
  - toomuchtodo 11y ago
    You and parent both make excellent points.
  - humanrebar 11y ago
    The name Koch is all over NYC arts philanthropy, but don't tell anyone.
- obrero 11y ago
  Income inequality, unemployment etc. are necessities for that dynastic wealth as well. If you're not going to make money by working and creating wealth, you have to make it as a rentier, expropriating wealth created during surplus labor time of those who do work. It causes a struggle for where the money goes - the worker who created the wealth by their labor, or to the heir in the profit of that expropriated labor time. Poverty and unemployment are backbones of pushing that wealth towards the heir and away from the worker creating the wealth. That's why his note on ending poverty etc. is so phony. Heirs aren't trying to lower unemployment or end poverty, they work hard to create it. It's not a secret. It's said openly in Businessweek - http://www.businessweek.com/1999/99_44/b3653163.htm http://www.businessweek.com/1999/99_44/b3653163.htm . The problem as they see it is when unemployment gets too low. It puts a crimp on their parasitism on those of us who work and create wealth.
gajomi 11y ago
I agree with the basic claim of this response: economic inequality itself it not a problem. I don't really think I would care too much about an extravagant billionare class if the lower classes had 100K household incomes in a robust democracy where the proletariat would have have fair representation. The problem of poverty, generalized, is a problem of access to essential resources. What counts as "essential" of course might be debatable, but the metric for improvement should be about reducing the fraction of the population that doesn't have access to essential resources. However... >We will not do a good job of fixing the bad causes of economic inequality unless we attack them directly. I would replace "will not" with "may not". If the "good" and "bad" forces at work are sufficiently correlated in their ultimate causes then a blunt metric of reducing overall inequality might turn out to be a nice strategy. EDIT: In particular if per capita income is known then the total variance and behavior in the tail may place strong constraints on the fraction of the population below a threshold.
hackuser 11y ago
> economic inequality per se is not bad. A lot of research shows that high society-wide economic inequality causes many bad effects, economically, politically and socially. I believe that is the basis of many concerns. According to that research, high inequality is per se bad (I don't know enough to define "high", but many others have). > [inequality due to startup founder success is good] Generally I agree, but: 1) The question isn't whether all inequality is bad but whether current levels are bad. Nobody argues for perfect equality. 2) It overlooks the problem that many are denied the opportunity of such success because of their race, gender, social networks, or economic class,[1] which deny them access to the important resources such as education, financing, contacts, or jobs. That's bad for the people who otherwise would succeed; it's bad for our society socially and politically to have people who are and feel excluded; and it's very bad for our economy to not utilize the >70% [2] of human resources that aren't middle-class or wealthier white males. ---- [1] AFAIK, plenty of research shows that education depends significatly on the economic class of your family [2] Around 33% of the U.S. population is white male and some of them are poor; therefore 70% seems a safe estimate.
- jamiequint 11y ago
  You still misunderstood the point of the essay, even when simplified. > denied the opportunity of such success because of their race, gender, social networks, or economic class ... which deny them access to the important resources such as education, financing, contacts, or jobs. This is not "economic inequality", reducing "economic inequality" might reduce this or it might not. Its a proximate cause, whereas we should be focusing on ultimate causes. You even list them here: access to education, access to financing, contacts, jobs. Focus on "economic inequality" is less likely to fix these problems than focus on fixing these problems is (likely even more detailed versions of them).
- zachlatta 11y ago
  Isn't he saying that the problem is that economic inequality is seen as the cause, not the effect? I think that's in line with all of the points you brought up.
  - 11y ago
egusa 11y ago
great article. i know it was written to clarify earlier misinterpretations, but i really found i took away more from this one than from the prior article. it reminds me of the mark twain quote "If I had more time, I would have written you a shorter letter.”
spydum 11y ago
'I didn't have time to write a short letter, so I wrote a long one instead.' -- Mark Twain
pervycreeper 11y ago
Really the correctness of this argument hinges on what definition of inequality one uses. A single factor like standard deviation, for example, tells one much too little. Outliers have a disproportionate effect on this. On the other hand, the gap between what might be called "poor", and "middle-class" affects almost everybody, and the power imbalance that results from this difference leads to many negative effects for those who can't keep up. In summary: the disproportionate influence of the super-rich, and the relative condition of the lower classes are separate issues that are both sloppily discussed using the term "income inequality".
tedmiston 11y ago
I wish we had a cliff notes version for every PG essay. It's a nice way to make good ideas and arguments more approachable when you have just a few minutes to read.
Alex3917 11y ago
> economic inequality per se is not bad So let's grant that economic inequality is good in some cases. Even if this is the case, reducing economic inequality may be the most efficient way to solve a wide variety of societal issues. E.g. how many societies are there with high inequality where the poor aren't discriminated against or pushed around by those with money? Sure, in theory inequality isn't the same as: - Regulatory capture - The political system being owned by the super wealthy - Endless war - Environmental atrocities - The dismantling of public infrastructure - The completely dysfunctional healthcare system - The privatization of public resources But 'not the same as' doesn't mean unrelated, since inequality is what enables these things to occur. E.g. the rich can bribe politicians to pass laws that make them richer by allowing them to poison low-income minorities or whatever. And while reducing inequality may not be the perfect solution for the reasons stated, it's not clear that a better solution exists. (Sort of like how democracy is the worst form of government, except for all others that have been tried or whatever.) Even if economic inequality is intrinsically good, which I think it is, it doesn't follow that reducing inequality is bad.
- jamiequint 11y ago
  Its almost certainly true that well-implemented policies of reducing income inequality would fix some of these problems, but that completely ignores negative side effects. The negative side effects are what makes that type of high level policy making bad.
  - Alex3917 11y ago
    > that completely ignores negative side effects What I'm saying is that if you take all the possible wealth distribution curves, the efficient frontier probably won't be at the extremes. That's not ignoring the negative side effects, rather it's cost-benefit analysis.
vasilipupkin 11y ago
economic inequality is a mathematical fact referring to the idea that growth in outcomes in the US has diverged over the years between various income brackets. see this https://www.cbo.gov/publication/42729 https://www.cbo.gov/publication/42729 when people say that inequality is bad, what they are talking about is that it is bad that, even though average incomes grew a lot, incomes for the lower brackets grew a lot less than incomes for the higher brackets. As you can see from my link, even taking out successful startup founders ( by not looking at 1%) shows the same trend. It is a separate discussion whether or not startups increase income inequality ( just because startup founders get rich, it doesn't mean overall inequality has to increase because their products could raise average incomes in other brackets by raising productivity, for example ). But, focusing on startups is just not terribly relevant for the inequality debate, again, as demonstrated by the fact, that there is a lot of inequality in the 60%th percentile vs 20th percentile, which has nothing to do with startups
- vasilipupkin 11y ago
  I am curious which specific point downvoters think here is incorrect. I am backing up what I am saying with data Edit: to those downvoting, here is some more data http://www.motherjones.com/mojo/2011/10/one-percent-income-inequality-OWS http://www.motherjones.com/mojo/2011/10/one-percent-income-i... does it look like income growth of the 1% has much to do with startups from this data ?
midnitewarrior 11y ago
This is a disappointing article. Economic inequality created by startups is ~0.0001% of the problem.
- vasilipupkin 11y ago
  exactly the point I tried to make with very specific data above and got downvoted :)
balsam 11y ago
A better last paragraph which would make sense is: if technology distribution lags behind technology advancement, economic inequality would increase. But that seems like a tautology.
geofft 11y ago
Why do startups necessarily increase economic inequality? I agree that they do now, but is it impossible to have the good of startups without also increasing economic inequality? Out of the usual reasons people encourage you to either found or work for a startup, "get rich" is not the primary motivator, and "get richer than other people" certainly isn't. (To claim that "get rich" implies "get richer than other people" is to invoke the pie fallacy, which Paul Graham debunked recently.) "Change the world," "have more freedom / creative control than a traditional job", etc. are, and those don't seem to require economic inequality. For instance, Paul Graham writes in http://paulgraham.com/mit.html http://paulgraham.com/mit.html : "For nearly everyone, the opinion of one's peers is the most powerful motivator of all—more powerful even than the nominal goal of most startup founders, getting rich. [...] Even if you start a startup explicitly to get rich, the money you might get seems pretty theoretical most of the time. What drives you day to day is not wanting to look bad." If you want to imagine startups not causing economic inequality, one approach is a radical restructuring of society, probably involving heavy taxes, as I suggested in a comment previously. But another simple one is to have more people do startups, and to explicitly invest primarily in people and communities that don't have other easy routes of getting rich.
- jamiequint 11y ago
  Is it impossible to have the good of startups without also increasing economic inequality? Yes. This is discussed in detail in the original essay and in The Refragmentation essay here: http://paulgraham.com/re.html http://paulgraham.com/re.html
  - vasilipupkin 11y ago
    I don't think that is correct. For example, a startup could make its founder a billion dollars, but if hundreds of millions of people are able to raise their incomes because they became more productive as a result of using that startup's product, then overall inequality would decrease. Does Coursera lower or increase inequality? I would argue it lowers it in the long run.
  - geofft 11y ago
LordHumungous 11y ago
>startups are on the whole good Are they? Seems to me that question is far from settled.
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rntz 11y ago
> And in the unlikely event I left no holes, some will say I'm backpedalling or doing "damage control." There's nothing particularly wrong with doing damage control if you think people have misunderstood or misrepresented you. And PG is doing damage control here. Why else post such a "simplified version"?
jondubois 11y ago
Economic inequality is bad because it has a profound negative effect on most people's self-esteem and ability to enjoy life. With high inequality, money becomes more valuable and people start to think of everything in terms of money. Even romantic relationships become money-oriented. It's not uncommon for marriages to break up because of financial reasons. Wealth inequality causes more human suffering than moderate poverty. People who lived in communist Russia will often tell you that people were happier under communism, even though they didn't have much - Often, they had to farm vegetables from their own gardens to supplement their diets. But they were happy because they knew that they had the same as everyone else. Also, people had no ulterior motives to do anything - When people liked you, they liked you because of who you were. When people did something nice, they did it because of purely altruistic reasons. In capitalist society, money underlies the behaviour of everything done by everyone. You can never know if a person is good or bad because you never know their true intentions. I think the media coverage of wealthy people is itself a bigger problem than inequality itself. The media motivates people to work harder and acquire more wealth. Without media, only innately passionate people would launch startups. Today, most people who start a company do it because they want financial rewards. It is human nature to want equality. It reminds me of a Russian joke about a man who finds a genie in a bottle. The genie tells the man that he can get anything he wishes but that his neighbour will get twice as much of whatever he gets. The man pauses to think for a moment and then says: "Take out one of my eyes."
- the_cat_kittles 11y ago
  this is essentially how i feel as well- do you know of any good longer form essays on this?
- melted 11y ago
  Much of that "people were happy under communism" BS is just that: BS. As anyone past the age of about 30 would tell you, you tend to forget the shitty stuff a lot faster than the good stuff. As a result we often hold these romanticized notions of how things used to be. Yet if you actually go ahead and look at some videos from 20-30 years ago from those parts of the world, you see North Korea. No one seriously wants to go back to that, except for US "progressives" who believe rich people should not exist.
HSO 11y ago
> But economic inequality per se is not bad. Both essays feel like they are built on a strawman argument. Nobody serious said inequality was bad or good, not even Piketty. The discussion is about degrees, and PG adds nothing to it by arguing categorically. That we are talking degrees of inequality is also the reason why economists argue with statistics and do not differentiate much between specific causes or mechanisms on the micro level. Sorry to burst that bubble but PG is not a "creator of inequality" on the level that is interesting. Shifting a few hundred people around means nothing given that we are talking about income and wealth distributions over millions of households in the US alone (and increasing inequality is a global phenomenon). Clearly, tax policy, financial (de)regulation, labor market policies, even the fall of the Soviet Union, etc. are more relevant than petty arguments over whether this startup or that high freq trader made a few mega- or even gigabucks in a nice or not so nice way. On a sidenote, the relative impacts of the trader vs the startupper on aggregate welfare is not as clearcut as intimated by PG at all, once you take second- and higher-order effects into account. Furthermore, creating wealth for some individuals may also decrease overall inequality; it depends on the starting and end positions of said individuals in the wealth distribution and the other ongoing processes in the economy. Lastly, economic systems have a lot of feedback mechanisms, both positive (ie destabilizing) and negative (stabilizing). We should at least consider the possibility that past a certain degree of inequality, wealth becomes self-perpetuating. This is especially pertinent for US Americans, given the degenerate nature of their "democracy".
- dools 11y ago
  Nobody serious said inequality was bad or good Lots of very serious people say that inequality is bad: http://digitalcommons.bard.edu/hm_archive/333/ http://digitalcommons.bard.edu/hm_archive/333/ https://www.youtube.com/watch?v=cZ7LzE3u7Bw&mid=5328 https://www.youtube.com/watch?v=cZ7LzE3u7Bw&mid=5328 http://www.economonitor.com/lrwray/2013/07/09/how-big-is-big-enough-would-the-basic-income-guarantee-satisfy-the-unemployed/ http://www.economonitor.com/lrwray/2013/07/09/how-big-is-big... http://bilbo.economicoutlook.net/blog/?p=11245 http://bilbo.economicoutlook.net/blog/?p=11245 http://moslereconomics.com/2009/09/30/inequality-nothing-to-worry-about-according-to-summers-geithner/ http://moslereconomics.com/2009/09/30/inequality-nothing-to-...
Mikeb85 11y ago
The reason that economic inequality has become such a talking point is that economic inequality has far reaching ramifications for our society. Many see a return to higher levels of inequality as a reason for slower growth and social problems. The reason why inequality is the problem and not simply poverty is because when the 'target' is poverty, all we do is basically put a band-aid on the problem. We look at the poor with pity, segregate them, throw a minimal amount of money at them, maybe a social program or two, and forget about them. However when you study inequality as a whole, you begin to see a bigger picture - one where the erosion of the middle class, the widening gap between those with capital and those without, and how that relates to poverty levels, economic growth, living conditions across society, etc... As PG and others have said, back in the day you could be a factory worker, or any sort of blue-collar labourer and afford to have a stay at home wife, 4 children, a house and a car. Now that lifestyle is a luxury only the rich can afford. What's the difference? We know it's inequality, yet for some reason people make up all sorts of excuses and reasons for why this inequality is somehow 'better'. Anyhow, economics is hard enough without trying to come up with overly simple explanations like "inequality is good because start-ups". There are start-ups in socialist countries (France, Sweden, Finland, Denmark, etc...), in less socialist ones (US, Canada), even in countries that barely have functional governments. Not to mention, all the research that shows a safety net actually contributes to entrepreneurship (in the US, that means upper-class family).
- s_tec 11y ago
  It seems like you are actually agreeing with Paul Graham. You see the concentration of political power and the resulting erosion of the middle class, and you want to fix them. Great! Those are the kind of "bad" sources of inequality the original article is talking about. Paul doesn't want to ignore these problems, he just wants to call them what they are. The only problem I see is that we don't have a good term to cover all these related concepts. Alternatives like "creeping feudalism" don't have the same ring as "inequality", even if they may be more accurate.
  - Mikeb85 11y ago
    I agree with some of what he says. His second (? the one before this) post was pretty decent. I disagree with what he thinks are the causes of both poverty and extreme wealth. An apt proverb is that the plural of "anecdote" is not "data". Generally speaking, people do not 'become rich' through entrepreneurship, nor do they 'become poor' because they were incarcerated. We can see through actual data, that being poor makes one more likely to commit crimes, and being rich (or at least in the top whatever % of the population) makes one more likely to become an entrepreneur. PG's goal is desirable, but that doesn't make his analysis any more correct.
balsam 11y ago
But it is the relative balance of technological advancement versus technology/knowledge distribution that matters here. Technology distribution would decrease inequality and not necessarily at the expense of technology advance either.
sly_foxx 11y ago
How about fixing dating/sexual inequality? You know, one guy sleeping with 15 girls is not fair to all the losers/ugly_guys like me who can't get a date. We have to redistribute partners and make sure that even the unattractive guys can get a date. We'll have to kidnap women who are into attractive/successful guys and then take them to losers like me. You think this is rape? It's not, just like taxes on goods are not theft, because the only reason attractive people can get partners is because a lot of unattractive people like me contribute by building roads, bridges, apps, infrastructure, schools, which enables attractive people to arrange dates and then use roads to get there. We are also in the friend zone all the time, while the attractive guys are getting deep inside our female friend. They have to give something back. I am proposing a 'sexual tax'. ALSO, since pretty people inherited good genes and didn't work for it, I also propose taxing physical beauty by making pretty people look uglier by 30-40%(call it 'inheritance sexual tax'). That way, already ugly people will look great in comparison.
- deleted 11y ago
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nso95 11y ago
People want higher taxes in the rich. They also want better access to healthcare, education, and higher wages. This is what the people complaining about economic inequality want.
hcayless 11y ago
I don't buy the assertion that startups increase economic inequality. I mean, I suppose some of them might, but a few people getting rich by producing something of value doesn't equate to an increase in general poverty. A startup might even improve economic inequality. Depends what it does. The whole argument seems to boil down to a fear that improving the general welfare might involve slamming the brakes on innovation, but I don't see anyone making the argument that we should do that. If anything, poverty, and its associated problems, is itself a huge brake on innovation. How can you innovate if you're worried about feeding your family tomorrow? Wouldn't people be more likely to take risks like startups if they were less worried about the downsides, like losing their health insurance? Wouldn't there be more innovation if people didn't have to worry about starving because of going without a steady income for a couple of years?
- romaster 11y ago
  I'm a little bit surprised that the closing remark of his blog post was "even if you remove all the bad causes, the good causes far outweigh the bad and will cause inequality to further increase." I guess if one so brazenly believes that to be true, then it must naturally follow that PG would support further inequality. So it is not that he is against economic inequality per se. He is simply sure (perhaps falsely) of its causes, and believes that if those causes are the majority drivers, then the benefits outweigh the cost. If he were to be proven wrong about the breakdown of these causes... his opinion might shift.
dools 11y ago
Economic inequality is bad per se. Here's a good paper on the effects on economic stability of income inequality: https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2012/05/Instability%20Implications%20of%20Inequality.pdf https://www.policyalternatives.ca/sites/default/files/upload... Income redistribution is a valid goal of taxation -- not because the government needs to tax the rich to fund the poor (the government can fund whatever it wants since it issues the currency) but because tax policy can reduce the types of extreme inequality that cause instability. When people become wildly rich, they often misattribute that success to their own hard work, ignoring the social conditions that made their success possible, and the role that "good fortune" plays in all such success stories. This talk by Michael Lewis is an excellent summary of why this "meritocratic mindset" is dangerous: https://www.youtube.com/watch?v=CiQ_T5C3hIM https://www.youtube.com/watch?v=CiQ_T5C3hIM So yes, we should definitely address income inequality directly through tax policy. We should also address the root causes of poverty, which are primarily lack of government will to pursue full employment since the Friedman/monetarist view of macro economics won out over the Keynsian economic theories during the supply side inflation caused by the oil shocks in the 1970s.
namenotrequired 11y ago
> But economic inequality per se is not bad. It has multiple causes. Many are bad, but some are good. It also has multiple consequences. Some are good, but some are bad. Something doesn't become good or bad by its causes, but by its consequences.
x5n1 11y ago
Power corrupts. Absolute power corrupts absolutely. Money is power. It's a very complicated issue. The Capitalist class does deliverer Capitalist development. But at the same time it immediately captures most of the value that it delivers leaving a system of servitude called employment... and systems which are homogenous but yet are functional in the form that is found acceptable to its logic of production and consumption through efficiency. On the other hand the Capitalist class because it has money and therefore power, at times acts in corrupt ways destroying the environment, taking away people's rights, making things unnecessarily hard. Given its fight with Communism, it was not as if it played it cool, sitting back and watching and saying, maybe Communism can do certain things better. Instead it immediately went to war demonizing and fighting it as much as it could. It seems as if the Capitalist class can only be subdued when it feels that its own game is over. And it seems like we have to let it do just that. People are greedy and have many social problems. This was one way of ordering them. There are a million other ways of ordering them. Whose time will soon come. Just sit back and watch the show. Paul is fan screaming for the home team, when the game is over and they've won. But soon there will be no more games. Their time has come and gone.
jgalt212 11y ago
PG is still out of touch. His cited example about a plan to move forward: > For example, instead of attacking economic inequality, we should attack poverty The problem in America, and the world, is not poverty. In fact, by some metrics poverty rates have never been lower[1] and by others it's near all time lows. The problem is the oligarchs avoiding taxes, while everyone else (even plain old millionaires shoulder the burden for them). PG reaps obscene levels of benefits from the carried interested tax loophole, so he avoids citing a plan to attack this specifically other than saying tax loopholes in general are bad. Shame on you PG. [1] http://money.cnn.com/2015/10/05/news/economy/poverty-world-bank/ http://money.cnn.com/2015/10/05/news/economy/poverty-world-b...
belleandsebasti 11y ago
I agree with this article on its descriptions but not its conclusions. In particular, the conclusion that we should not attack economic inequality directly. Attacking economic inequality directly might be a good thing to do in many cases. It may be operationally easier and more efficient to have certain restrictions that prevent economic inequality. It can be thought of as a fail-safe when the more direct policy solutions are failing, e.g. legislation that attacks poverty. For instance, having a maximum wage is executionally simple legislation compared to the legislation required to improve education, healthcare, transportation, etc. Not saying we shouldn't have the more complicated legislation, just that it will take more time and is more complicated and prone to failure. Additionally, not saying maximum wage is a good idea, just using it as an example. I see what PG is saying, and I think he would agree with my points here, and I agree with the spirit of what he is saying. He's just not that great expressing himself through writing. He tends to make overly strong statements without nuance and write against hypothetical absolute simplistic counterarguments that don't really exist.
analog31 11y ago
Obviously, nothing with multiple disparate causes and effects is bad per se. But inequality does have at least one negative effect, which is that it distracts the attention of institutions (government, press, academia) towards serving and protecting the interests of the wealthy. In my view the rhetoric of "attacking" inequality is overblown, even if I'm guilty of having used it myself. Instead, let's just say that some form of redistribution -- to use a broad term -- is not an "attack" per se, but simply a practical way to maintain a decent society.
jarjoura 11y ago
If I'm not mistaken, Paul Graham is asking to leave "us poor" startups alone because they need the freedom for founders to get rich, otherwise few would do it. Am I understanding that right? Quoted from his original essay: "And while getting rich is not the only goal of most startup founders, few would do it if one couldn't." [0] I just can't sink my teeth into thinking that's a universal truth. It's true right now because that's the current rules of the game. You build a company and then make a ton of money, otherwise, you failed. Yet, there are 500+ reasons someone or a couple of people go into a company together, but money being the default driver, seems really cynical to me if you think that's needed to keep people starting companies. [0] http://www.paulgraham.com/ineq.html http://www.paulgraham.com/ineq.html
wamatt 11y ago
I think for me a large part missing from the discussion is power inequality. Which, as it happens, nearly always is entwined with wealth and income inequality. The ultra-rich get to have a megaphone for their agendas, ideologies and opinions, with a level of political influence none of us will likely ever come close to seeing.
sethbannon 11y ago
Imagine a factory that's dumping large amounts of arsenic into the public drinking water supply -- a factory that can't operate without doing so. Imagine also that studies show small amounts of arsenic are safe, but large amounts in drinking water can cause serious negative health effects. Seeing these studies, someone comes along and proposes a regulation that limits the amount of arsenic this factory is allowed to dump into the public water supply, to keep it within safe levels. A critic then comes along and says: "The amount of arsenic in the water is not the root problem -- the root problem is that arsenic makes people sick. We should focus on helping people not get sick when exposed to arsenic! That way, we wouldn't have to hurt this job-creating factory." This feels like what PG is arguing for here. In an ideal world, where governmental systems were purely representative and incorruptible, and where markets were efficient and impossible to manipulate, sure, focusing on huge economic inequality wouldn't make sense. But we don't live in this world, just like we don't live in a world where we can easily make people immune to large amounts of arsenic.
- gwright 11y ago
  This analogy doesn't work for me. You are equating different amounts of wealth (generally considered a good thing at any level) with different amounts of poison. You also repeat a concern made by many critics of Graham's essay, the connection between wealth and the ability to influence public policy, access to politicians and so on. Positing that the wealth is the source of the problem and suggesting the limiting the wealth would limit the influence also doesn't hold together for me. I'll repeat I comment I made a few weeks ago: > There is another way to look at this problem though by asking why there is so much money being directed towards elections and politicians? One cause is the increased size and scope of government. When the role of government expands into more aspects of our lives via various taxes, regulations, subsidies, penalties, and so on it creates an incentive to influence the creation of those taxes, regulations, subsidies, and penalties. > A smaller role for government, in particular a reduction in policies that try to pick winners and losers explicitly (e.g. taxes or fees that favor particular companies or industries), could reduce the incentive to influence the creation of "targeted" legislation.
  - 11y ago
pfooti 11y ago
"And unlike high incarceration rates and tax loopholes, startups are on the whole good." - pg. I'm not sure I buy that claim outright. I'm not sure I like asking whether THING is good based on claims about the goodness of CAUSE OF THING. If hugs caused cancer, would that make cancer good? Not certain, but I do believe it would make hugs less common. The problem with an argument like this is that it does nothing but preach to the proverbial choir. Either I buy into pg's worldview about where notional value is derived, or I don't. If a startup founder gets rich creating some new piece of technology, do they deserve the sudden windfall cash that they received? Did the VCs who provided the capital deserve that windfall? Do the workers who actually created a lot of the value in question through their labor get compensated proportionally to the value they built? It's not an easy question to answer in the long run. Regardless of the goodness of income itself generated from VC processes, it continues to be worthwhile to question the economic engines that run off of global income inequality. When it makes economic sense to grow cotton on one continent, ship it to another for manufacture, and ship it to yet another for sale as a T-shirt, there's something fundamentally inequitable about how we pay people for their labor. That isn't to say I've abandoned capitalism for outright marxism. But it is hard to really think about "attacking poverty" in any meaningful way that doesn't address the marked difference in wealth and potential to earn wealth between rich and poor, especially in a globalized, post-(and still)-colonial world. So, sure generating any income in any way will cause income inequality by pg's formulation, whether it's billions from a lucky unicorn IPO or tens from a day's labor at a US minimum wage job, or far, far less making shirts in Bangladesh. The disparity is still something to remark on, especially because that disparity is really one of the major markers of power over one's own future opportunities.
- giardini 11y ago
  > do they deserve the sudden windfall cash that they received? Did the VCs who provided the capital deserve that windfall? Do the workers who actually created a lot of the value in question through their labor get compensated proportionally to the value they built? And does the owner of capital (investor, banker) deserve the profit (s)he gains? As jivardo_nucci said once on this very forum: The simulation studies of Bouchard & Mezard show that, regardless of initial conditions, wealth distribution ends up a Pareto distribution with a small percentage taking almost all of the goods. The take-away of Bouchard & Mezard's studies: the very rich aren't rich because they earned it (i.e., because they are skillful or knowledgeable), they are rich mostly because they are lucky. All my life I've assumed that, when people had a going concern or were rich, that they _earned_ their wealth. But Bouchard & Mezard says they're, for the most part, simply very lucky. If luck, rather than skill, is the source of one's wealth, then has one "earned" that wealth? How can one lay exclusive claim to something given by chance? I would contend that no such claim can be made. In particular, I would contend that income gained through luck is fair game for government acquisition through taxation, and if it is possible to distinguish that portion of wealth due to skill from that due to luck (and such appears possible), then the "lucky" portion is open game for acquisition to be spent or redistributed as decided by the powers-that-be. Wealth Condensation: Why the Rich Get Richer (and the poor poorer): http://iwillknow.jesaurai.net/?p=387 http://iwillknow.jesaurai.net/?p=387 The Mathematics of Inequality: https://www.austms.org.au/Jobs/Library4.html https://www.austms.org.au/Jobs/Library4.html FWIW Bouchard & Mezard are not the only researchers whose models say this: Chance helps the rich get richer, simulation study finds: http://www.world-science.net/othernews/110722_chance.htm* http://www.world-science.net/othernews/110722_chance.htm*
ilostmykeys 11y ago
In its effort to empower the individual, capitalism has failed to scale. It's not a good design. If it was it would scale to empower most of the 7 billion inhabitants of this planet. What it has managed to do is empower a tiny fraction of the population at the expense of the rest of humanity. Those whom it empowered are neither the most intelligent nor the most helpful. They're just skilled opportunists; our genetic inheritance from our reptilian cousins. (Please no jokes about PG being a retile)
- giardini 11y ago
  Unfettered capitalism has problems. Proponents like it's clean, easy models, but capitalism needs restraints. To blindly claim otherwise at this time in history is foolish and shows one is in a state of denial. They're just skilled opportunists; our genetic inheritance from our reptilian cousins. More likely from our primate ancestors, don't you think?
BenoitEssiambre 11y ago
Ok but startups don't get a free pass in this debate. Startups that capture wealth by creating value that wouldn't exist otherwise are, in my opinion, unquestionably good, even if they increase inequality. But don't some of them try to capture wealth by striving to get monopolistic positions using network effects, mergers and acquisitions and such? Didn't Peter Thiel even write a book promoting this? Capturing wealth through a monopoly on things that would otherwise have been created by competitors and that would yield lower margins if it wasn't for the monopolistic features of the specific market, is not that ethically different from theft. A lot of technologies are a small jump from previous building blocks. Bob Kahn and Tim Berners-Lee are responsible for a huge core part of the innovations Facebook and others rely on but it's Zuckerberg who made all the money because he captured a natural monopoly, not because he created more value than Kahn and Berners-Lee. Twitter is a simplistic and obvious product that someone else would have created a long time ago if it hadn't already existed. If it wasn't for network effects, how do we know there wouldn't be another social network providing 10x the value to its users than the current ones? The monopolistic network effects _prevents_ this kind of innovation through competition. I'm not saying people shouldn't get a chance to be well compensated for the risk they take and the effort they put but even in startup world, at a certain level of very high inequality, when inequality reducing free market competition forces don't seem to be materializing for long periods of time, suspicions of an unethical and detrimental ecosystem can reasonably be justified.
giardini 11y ago
>"But economic inequality per se is not bad." Nope, it's not bad until you need to buy something! (BTW is this PG post not some strange form of denial?) PG seems to forget about the infrastructure (bankers, financiers, venture capitalist firms, etc. - the entire financial industry) built around startups, as if the entrepreneur were a Jesus figure responsible for it all and who might somehow be crucified for it all. Psychologists call this a "grandiose delusion". Nonetheless it is glorious hogwash - an entrepreneur w/o the infrastructure is merely yet another nutball to be kicked off the front doorstep of venture capitalists. And as the dotcom boom and bust showed us, no entrepreneur is necessary at all - greed and a placard with a catchy ".com" on a door was often enough to make a fortune! Good news: PG need not be concerned that he will be run to ground ("hunted", in his terms) before his bankers are; there are far more (and far wealthier) bankers, profiteers, and their employees than successful entrepreneurs, certainly enough to keep the masses busy for a decade should the French Revolution visit Silicon Valley! >"The great concentrations of wealth I see around me in Silicon Valley don't seem to be destroying democracy." They are: they work for the NSA, the CIA, the FBI, for hundreds of government agencies, for Google and Facebook. They have blindly destroyed privacy in both in our personal and social behavior. They want more. One need only open one's eyes.

92 points by jordanlee 11y ago

This is a pretty neat response to a debate that has had a lot of strawmen and arguing against statements nobody said. The longer an essay is, the further apart the main arguments are and the easier it is to forget parts of the essays. The ones we remember most saliently, of course, are the controversial claims that trigger an emotional response, not the paragraphs of simple history fact-stating that builds up to the conclusion. As a result, responses to the essay tend to strip out the context of claims and argue against them in a vacuum.

joelrunyon 11y ago

Original discussion here => https://news.ycombinator.com/item?id=10839314 https://news.ycombinator.com/item?id=10839314

spikels 11y ago

Paul Graham TLDRs Paul Graham because people can't resist misinterpreting him. Doubt it will help...

deleted 11y ago

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ThomPete 11y ago

I am kind of surprised that PG insist on confusing extreme economic inequality (which is the one most people are talking about when they say it's bad) with normal economic inequality (which most people are totally fine with.) Edited to clear up confusion

chubot 11y ago
This comment doesn't make any sense without defining "extreme" vs "normal" income equality. That is far from obvious. Do you think that technology alone can't produce extreme income inequality? Why?
- chongli 11y ago
  This comment doesn't make any sense without defining "extreme" vs "normal" income equality. The argument is over economic inequality which I believe most take to mean wealth inequality, not income inequality. Do you think that technology alone can't produce extreme income inequality? Why? Of course not. You need people using the technology as well. Extreme inequality results from the simple fact (as exhaustively supported by Piketty) that r > g. Capital, by definition, is technology.
  - mdcox 11y ago
    For any other casual viewers unfamiliar with but interested in economics, the 'r' refers to return on capital and 'g' refers to the growth rate of the economy. This section of the wikipedia article on his book seems to give a quick and decent high level overview that puts this (and a few other comments) into perspective: https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century#Contents https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
    - viraptor 11y ago
      The whole book is great. It may be ~700 pages, but it's more of a story than a heavy economy book. If anyone is interested enough to comment on this issue, this book is definitely something you'd be interested to read.
- viraptor 11y ago
  Income (in)equality doesn't depend on the kind of work the company does. One of the basic trends you can find in Picketty's "Capital ..." is that instead of investing 1/3 of company income into workers ("reasonable" split), the owner/worker salary gap grows more than ever - and that's the extreme inequality. What the company does is irrelevant in a more general overview.
- nickpsecurity 11y ago
  Market forces and legislation. Simple caps would defeat all attempts to do that. Realistically, the design of a system dictates how it will behave in many scenarios. Our system's properties lead to accumulation and concentration of extreme wealth. Even Citigroup's leaked docs describe it as a "plutonomy:" a system designed to shift most wealth to already rich. I like how they mentioned that voters were the greatest threat with the defense being to promote the illusion that everyone can get ahead. Combine stuff like that with executives making 300x the average (not worst) employee to see system is clearly rigged against the many for a very few. Not even top 1%: a fraction of a percent.

deleted 11y ago

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nickbauman 11y ago

Economic Inequality Simulation: The Simplified version http://nbviewer.ipython.org/url/norvig.com/ipython/Economics.ipynb http://nbviewer.ipython.org/url/norvig.com/ipython/Economics... "Many have preconceptions about how economies work that will be challenged by the results shown here"

rudi-c 11y ago
This is cool. One pet project that I want to do (one day...) is to generate what a wealth distribution graph based on answers to a questionnaire such as: - How much more should a 50 year old earn more than a 20 year old on average ideally? - How much should the lifetime earning of someone holding a PhD be over someone with only a high school degree - there should be at least some premium for going through extra years of school right? - What's a reasonable amount of inequality due to people choosing a career in which they will be happier, at some cost to the paycheck? - Should people be allowed to work more (e.g. 50h/week) if they wish? This will increase inequality. - etc A lot of those questions would be very difficult to model, but I bet the graph would look a lot more inequal at the end than most people envision their "ideal" graph to look like (which is shown in this classic video on wealth distribution: https://www.youtube.com/watch?v=QPKKQnijnsM https://www.youtube.com/watch?v=QPKKQnijnsM)

balsam 11y ago

Only the last paragraph is original, but it is probably also wrong. So PG is saying that the major cause of inequality is technological advancement. But for example see that economic inequality decreased after WWII, but is it really that farfetched to imagine that technological power did not decrease during the war years? (E.g. Manhattan Project.) It is also not hard to imagine that wars would distribute technology more evenly.

tempestn 11y ago
There are multiple factors that affect inequality, so a short term decrease in inequality can certainly still occur while technology continues to advance. In his other recent essay[1], pg goes into more detail on why inequality decreased in the postwar years, despite advances in technology. [1]: http://www.paulgraham.com/re.html http://www.paulgraham.com/re.html

awakeasleep 11y ago

>But economic inequality per se is not bad. It has multiple causes. Many are bad, but some are good. This shows the confusion of the original essay, and this response. There is the thesis, "economic equality is not bad", and then the support for the thesis, "some drivers of inequality are bad, some are good" that doesn't actually support it. Saying that some things that concentrate wealth are not bad overall does nothing to shed light on whether vast disparities of wealth between classes of people is beneficial for a society.

rntz 11y ago
It's wonderful when simplifying an argument exposes its problems more clearly. I now wish more writers would do this. Omit needless words, indeed!

nostromo 11y ago

Most people I know that are concerned about economic inequality aren't super bothered by self-made billionaires (Jobs, Zuck, and Gates to a lesser degree.) Mostly they are concerned about dynastic wealth (Waltons, Kochs) particularly when it's economic power intertwined with political power (Kennedys, Bushes, Clintons, Romneys). Outside of San Francisco, where many people feel real downward economic pressure from tech, most of the US seems pretty happy with the self-made uber rich. In fact, I think people are downright fond of these people. The real discomfort comes when those oligarchs look to preserve dynastic wealth and power for generation after generation using trusts and other tax avoidance strategies.

cconroy 11y ago
You are obviously biased. Im sure those tech gods affect politics as much as the Kochs -- but it is the kind of political choices that you are ok with. Therefore, they are the good guys and the Kochs are the bad guys. Not so sure things are that simple. E.g. Bill Gates and patents. Haha, I cannot believe I defended the Kochs.
- toomuchtodo 11y ago
  You and parent both make excellent points.
- humanrebar 11y ago
  The name Koch is all over NYC arts philanthropy, but don't tell anyone.
obrero 11y ago
Income inequality, unemployment etc. are necessities for that dynastic wealth as well. If you're not going to make money by working and creating wealth, you have to make it as a rentier, expropriating wealth created during surplus labor time of those who do work. It causes a struggle for where the money goes - the worker who created the wealth by their labor, or to the heir in the profit of that expropriated labor time. Poverty and unemployment are backbones of pushing that wealth towards the heir and away from the worker creating the wealth. That's why his note on ending poverty etc. is so phony. Heirs aren't trying to lower unemployment or end poverty, they work hard to create it. It's not a secret. It's said openly in Businessweek - http://www.businessweek.com/1999/99_44/b3653163.htm http://www.businessweek.com/1999/99_44/b3653163.htm . The problem as they see it is when unemployment gets too low. It puts a crimp on their parasitism on those of us who work and create wealth.

gajomi 11y ago

I agree with the basic claim of this response: economic inequality itself it not a problem. I don't really think I would care too much about an extravagant billionare class if the lower classes had 100K household incomes in a robust democracy where the proletariat would have have fair representation. The problem of poverty, generalized, is a problem of access to essential resources. What counts as "essential" of course might be debatable, but the metric for improvement should be about reducing the fraction of the population that doesn't have access to essential resources. However... >We will not do a good job of fixing the bad causes of economic inequality unless we attack them directly. I would replace "will not" with "may not". If the "good" and "bad" forces at work are sufficiently correlated in their ultimate causes then a blunt metric of reducing overall inequality might turn out to be a nice strategy. EDIT: In particular if per capita income is known then the total variance and behavior in the tail may place strong constraints on the fraction of the population below a threshold.

hackuser 11y ago

> economic inequality per se is not bad. A lot of research shows that high society-wide economic inequality causes many bad effects, economically, politically and socially. I believe that is the basis of many concerns. According to that research, high inequality is per se bad (I don't know enough to define "high", but many others have). > [inequality due to startup founder success is good] Generally I agree, but: 1) The question isn't whether all inequality is bad but whether current levels are bad. Nobody argues for perfect equality. 2) It overlooks the problem that many are denied the opportunity of such success because of their race, gender, social networks, or economic class,[1] which deny them access to the important resources such as education, financing, contacts, or jobs. That's bad for the people who otherwise would succeed; it's bad for our society socially and politically to have people who are and feel excluded; and it's very bad for our economy to not utilize the >70% [2] of human resources that aren't middle-class or wealthier white males. ---- [1] AFAIK, plenty of research shows that education depends significatly on the economic class of your family [2] Around 33% of the U.S. population is white male and some of them are poor; therefore 70% seems a safe estimate.

jamiequint 11y ago
You still misunderstood the point of the essay, even when simplified. > denied the opportunity of such success because of their race, gender, social networks, or economic class ... which deny them access to the important resources such as education, financing, contacts, or jobs. This is not "economic inequality", reducing "economic inequality" might reduce this or it might not. Its a proximate cause, whereas we should be focusing on ultimate causes. You even list them here: access to education, access to financing, contacts, jobs. Focus on "economic inequality" is less likely to fix these problems than focus on fixing these problems is (likely even more detailed versions of them).
zachlatta 11y ago
Isn't he saying that the problem is that economic inequality is seen as the cause, not the effect? I think that's in line with all of the points you brought up.
- 11y ago

egusa 11y ago

great article. i know it was written to clarify earlier misinterpretations, but i really found i took away more from this one than from the prior article. it reminds me of the mark twain quote "If I had more time, I would have written you a shorter letter.”

spydum 11y ago

'I didn't have time to write a short letter, so I wrote a long one instead.' -- Mark Twain

pervycreeper 11y ago

Really the correctness of this argument hinges on what definition of inequality one uses. A single factor like standard deviation, for example, tells one much too little. Outliers have a disproportionate effect on this. On the other hand, the gap between what might be called "poor", and "middle-class" affects almost everybody, and the power imbalance that results from this difference leads to many negative effects for those who can't keep up. In summary: the disproportionate influence of the super-rich, and the relative condition of the lower classes are separate issues that are both sloppily discussed using the term "income inequality".

tedmiston 11y ago

I wish we had a cliff notes version for every PG essay. It's a nice way to make good ideas and arguments more approachable when you have just a few minutes to read.

Alex3917 11y ago

> economic inequality per se is not bad So let's grant that economic inequality is good in some cases. Even if this is the case, reducing economic inequality may be the most efficient way to solve a wide variety of societal issues. E.g. how many societies are there with high inequality where the poor aren't discriminated against or pushed around by those with money? Sure, in theory inequality isn't the same as: - Regulatory capture - The political system being owned by the super wealthy - Endless war - Environmental atrocities - The dismantling of public infrastructure - The completely dysfunctional healthcare system - The privatization of public resources But 'not the same as' doesn't mean unrelated, since inequality is what enables these things to occur. E.g. the rich can bribe politicians to pass laws that make them richer by allowing them to poison low-income minorities or whatever. And while reducing inequality may not be the perfect solution for the reasons stated, it's not clear that a better solution exists. (Sort of like how democracy is the worst form of government, except for all others that have been tried or whatever.) Even if economic inequality is intrinsically good, which I think it is, it doesn't follow that reducing inequality is bad.

jamiequint 11y ago
Its almost certainly true that well-implemented policies of reducing income inequality would fix some of these problems, but that completely ignores negative side effects. The negative side effects are what makes that type of high level policy making bad.
- Alex3917 11y ago
  > that completely ignores negative side effects What I'm saying is that if you take all the possible wealth distribution curves, the efficient frontier probably won't be at the extremes. That's not ignoring the negative side effects, rather it's cost-benefit analysis.

vasilipupkin 11y ago

economic inequality is a mathematical fact referring to the idea that growth in outcomes in the US has diverged over the years between various income brackets. see this https://www.cbo.gov/publication/42729 https://www.cbo.gov/publication/42729 when people say that inequality is bad, what they are talking about is that it is bad that, even though average incomes grew a lot, incomes for the lower brackets grew a lot less than incomes for the higher brackets. As you can see from my link, even taking out successful startup founders ( by not looking at 1%) shows the same trend. It is a separate discussion whether or not startups increase income inequality ( just because startup founders get rich, it doesn't mean overall inequality has to increase because their products could raise average incomes in other brackets by raising productivity, for example ). But, focusing on startups is just not terribly relevant for the inequality debate, again, as demonstrated by the fact, that there is a lot of inequality in the 60%th percentile vs 20th percentile, which has nothing to do with startups

vasilipupkin 11y ago
I am curious which specific point downvoters think here is incorrect. I am backing up what I am saying with data Edit: to those downvoting, here is some more data http://www.motherjones.com/mojo/2011/10/one-percent-income-inequality-OWS http://www.motherjones.com/mojo/2011/10/one-percent-income-i... does it look like income growth of the 1% has much to do with startups from this data ?

midnitewarrior 11y ago

This is a disappointing article. Economic inequality created by startups is ~0.0001% of the problem.

vasilipupkin 11y ago
exactly the point I tried to make with very specific data above and got downvoted :)

balsam 11y ago

A better last paragraph which would make sense is: if technology distribution lags behind technology advancement, economic inequality would increase. But that seems like a tautology.

geofft 11y ago

Why do startups necessarily increase economic inequality? I agree that they do now, but is it impossible to have the good of startups without also increasing economic inequality? Out of the usual reasons people encourage you to either found or work for a startup, "get rich" is not the primary motivator, and "get richer than other people" certainly isn't. (To claim that "get rich" implies "get richer than other people" is to invoke the pie fallacy, which Paul Graham debunked recently.) "Change the world," "have more freedom / creative control than a traditional job", etc. are, and those don't seem to require economic inequality. For instance, Paul Graham writes in http://paulgraham.com/mit.html http://paulgraham.com/mit.html : "For nearly everyone, the opinion of one's peers is the most powerful motivator of all—more powerful even than the nominal goal of most startup founders, getting rich. [...] Even if you start a startup explicitly to get rich, the money you might get seems pretty theoretical most of the time. What drives you day to day is not wanting to look bad." If you want to imagine startups not causing economic inequality, one approach is a radical restructuring of society, probably involving heavy taxes, as I suggested in a comment previously. But another simple one is to have more people do startups, and to explicitly invest primarily in people and communities that don't have other easy routes of getting rich.

jamiequint 11y ago
Is it impossible to have the good of startups without also increasing economic inequality? Yes. This is discussed in detail in the original essay and in The Refragmentation essay here: http://paulgraham.com/re.html http://paulgraham.com/re.html
- vasilipupkin 11y ago
  I don't think that is correct. For example, a startup could make its founder a billion dollars, but if hundreds of millions of people are able to raise their incomes because they became more productive as a result of using that startup's product, then overall inequality would decrease. Does Coursera lower or increase inequality? I would argue it lowers it in the long run.
- geofft 11y ago

LordHumungous 11y ago

>startups are on the whole good Are they? Seems to me that question is far from settled.

deleted 11y ago

[deleted]

rntz 11y ago

> And in the unlikely event I left no holes, some will say I'm backpedalling or doing "damage control." There's nothing particularly wrong with doing damage control if you think people have misunderstood or misrepresented you. And PG is doing damage control here. Why else post such a "simplified version"?

jondubois 11y ago

Economic inequality is bad because it has a profound negative effect on most people's self-esteem and ability to enjoy life. With high inequality, money becomes more valuable and people start to think of everything in terms of money. Even romantic relationships become money-oriented. It's not uncommon for marriages to break up because of financial reasons. Wealth inequality causes more human suffering than moderate poverty. People who lived in communist Russia will often tell you that people were happier under communism, even though they didn't have much - Often, they had to farm vegetables from their own gardens to supplement their diets. But they were happy because they knew that they had the same as everyone else. Also, people had no ulterior motives to do anything - When people liked you, they liked you because of who you were. When people did something nice, they did it because of purely altruistic reasons. In capitalist society, money underlies the behaviour of everything done by everyone. You can never know if a person is good or bad because you never know their true intentions. I think the media coverage of wealthy people is itself a bigger problem than inequality itself. The media motivates people to work harder and acquire more wealth. Without media, only innately passionate people would launch startups. Today, most people who start a company do it because they want financial rewards. It is human nature to want equality. It reminds me of a Russian joke about a man who finds a genie in a bottle. The genie tells the man that he can get anything he wishes but that his neighbour will get twice as much of whatever he gets. The man pauses to think for a moment and then says: "Take out one of my eyes."

the_cat_kittles 11y ago
this is essentially how i feel as well- do you know of any good longer form essays on this?
melted 11y ago
Much of that "people were happy under communism" BS is just that: BS. As anyone past the age of about 30 would tell you, you tend to forget the shitty stuff a lot faster than the good stuff. As a result we often hold these romanticized notions of how things used to be. Yet if you actually go ahead and look at some videos from 20-30 years ago from those parts of the world, you see North Korea. No one seriously wants to go back to that, except for US "progressives" who believe rich people should not exist.

HSO 11y ago

> But economic inequality per se is not bad. Both essays feel like they are built on a strawman argument. Nobody serious said inequality was bad or good, not even Piketty. The discussion is about degrees, and PG adds nothing to it by arguing categorically. That we are talking degrees of inequality is also the reason why economists argue with statistics and do not differentiate much between specific causes or mechanisms on the micro level. Sorry to burst that bubble but PG is not a "creator of inequality" on the level that is interesting. Shifting a few hundred people around means nothing given that we are talking about income and wealth distributions over millions of households in the US alone (and increasing inequality is a global phenomenon). Clearly, tax policy, financial (de)regulation, labor market policies, even the fall of the Soviet Union, etc. are more relevant than petty arguments over whether this startup or that high freq trader made a few mega- or even gigabucks in a nice or not so nice way. On a sidenote, the relative impacts of the trader vs the startupper on aggregate welfare is not as clearcut as intimated by PG at all, once you take second- and higher-order effects into account. Furthermore, creating wealth for some individuals may also decrease overall inequality; it depends on the starting and end positions of said individuals in the wealth distribution and the other ongoing processes in the economy. Lastly, economic systems have a lot of feedback mechanisms, both positive (ie destabilizing) and negative (stabilizing). We should at least consider the possibility that past a certain degree of inequality, wealth becomes self-perpetuating. This is especially pertinent for US Americans, given the degenerate nature of their "democracy".

dools 11y ago
Nobody serious said inequality was bad or good Lots of very serious people say that inequality is bad: http://digitalcommons.bard.edu/hm_archive/333/ http://digitalcommons.bard.edu/hm_archive/333/ https://www.youtube.com/watch?v=cZ7LzE3u7Bw&mid=5328 https://www.youtube.com/watch?v=cZ7LzE3u7Bw&mid=5328 http://www.economonitor.com/lrwray/2013/07/09/how-big-is-big-enough-would-the-basic-income-guarantee-satisfy-the-unemployed/ http://www.economonitor.com/lrwray/2013/07/09/how-big-is-big... http://bilbo.economicoutlook.net/blog/?p=11245 http://bilbo.economicoutlook.net/blog/?p=11245 http://moslereconomics.com/2009/09/30/inequality-nothing-to-worry-about-according-to-summers-geithner/ http://moslereconomics.com/2009/09/30/inequality-nothing-to-...

Mikeb85 11y ago

The reason that economic inequality has become such a talking point is that economic inequality has far reaching ramifications for our society. Many see a return to higher levels of inequality as a reason for slower growth and social problems. The reason why inequality is the problem and not simply poverty is because when the 'target' is poverty, all we do is basically put a band-aid on the problem. We look at the poor with pity, segregate them, throw a minimal amount of money at them, maybe a social program or two, and forget about them. However when you study inequality as a whole, you begin to see a bigger picture - one where the erosion of the middle class, the widening gap between those with capital and those without, and how that relates to poverty levels, economic growth, living conditions across society, etc... As PG and others have said, back in the day you could be a factory worker, or any sort of blue-collar labourer and afford to have a stay at home wife, 4 children, a house and a car. Now that lifestyle is a luxury only the rich can afford. What's the difference? We know it's inequality, yet for some reason people make up all sorts of excuses and reasons for why this inequality is somehow 'better'. Anyhow, economics is hard enough without trying to come up with overly simple explanations like "inequality is good because start-ups". There are start-ups in socialist countries (France, Sweden, Finland, Denmark, etc...), in less socialist ones (US, Canada), even in countries that barely have functional governments. Not to mention, all the research that shows a safety net actually contributes to entrepreneurship (in the US, that means upper-class family).

s_tec 11y ago
It seems like you are actually agreeing with Paul Graham. You see the concentration of political power and the resulting erosion of the middle class, and you want to fix them. Great! Those are the kind of "bad" sources of inequality the original article is talking about. Paul doesn't want to ignore these problems, he just wants to call them what they are. The only problem I see is that we don't have a good term to cover all these related concepts. Alternatives like "creeping feudalism" don't have the same ring as "inequality", even if they may be more accurate.
- Mikeb85 11y ago
  I agree with some of what he says. His second (? the one before this) post was pretty decent. I disagree with what he thinks are the causes of both poverty and extreme wealth. An apt proverb is that the plural of "anecdote" is not "data". Generally speaking, people do not 'become rich' through entrepreneurship, nor do they 'become poor' because they were incarcerated. We can see through actual data, that being poor makes one more likely to commit crimes, and being rich (or at least in the top whatever % of the population) makes one more likely to become an entrepreneur. PG's goal is desirable, but that doesn't make his analysis any more correct.

balsam 11y ago

But it is the relative balance of technological advancement versus technology/knowledge distribution that matters here. Technology distribution would decrease inequality and not necessarily at the expense of technology advance either.

sly_foxx 11y ago

How about fixing dating/sexual inequality? You know, one guy sleeping with 15 girls is not fair to all the losers/ugly_guys like me who can't get a date. We have to redistribute partners and make sure that even the unattractive guys can get a date. We'll have to kidnap women who are into attractive/successful guys and then take them to losers like me. You think this is rape? It's not, just like taxes on goods are not theft, because the only reason attractive people can get partners is because a lot of unattractive people like me contribute by building roads, bridges, apps, infrastructure, schools, which enables attractive people to arrange dates and then use roads to get there. We are also in the friend zone all the time, while the attractive guys are getting deep inside our female friend. They have to give something back. I am proposing a 'sexual tax'. ALSO, since pretty people inherited good genes and didn't work for it, I also propose taxing physical beauty by making pretty people look uglier by 30-40%(call it 'inheritance sexual tax'). That way, already ugly people will look great in comparison.

deleted 11y ago
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nso95 11y ago

People want higher taxes in the rich. They also want better access to healthcare, education, and higher wages. This is what the people complaining about economic inequality want.

hcayless 11y ago

I don't buy the assertion that startups increase economic inequality. I mean, I suppose some of them might, but a few people getting rich by producing something of value doesn't equate to an increase in general poverty. A startup might even improve economic inequality. Depends what it does. The whole argument seems to boil down to a fear that improving the general welfare might involve slamming the brakes on innovation, but I don't see anyone making the argument that we should do that. If anything, poverty, and its associated problems, is itself a huge brake on innovation. How can you innovate if you're worried about feeding your family tomorrow? Wouldn't people be more likely to take risks like startups if they were less worried about the downsides, like losing their health insurance? Wouldn't there be more innovation if people didn't have to worry about starving because of going without a steady income for a couple of years?

romaster 11y ago
I'm a little bit surprised that the closing remark of his blog post was "even if you remove all the bad causes, the good causes far outweigh the bad and will cause inequality to further increase." I guess if one so brazenly believes that to be true, then it must naturally follow that PG would support further inequality. So it is not that he is against economic inequality per se. He is simply sure (perhaps falsely) of its causes, and believes that if those causes are the majority drivers, then the benefits outweigh the cost. If he were to be proven wrong about the breakdown of these causes... his opinion might shift.

dools 11y ago

Economic inequality is bad per se. Here's a good paper on the effects on economic stability of income inequality: https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2012/05/Instability%20Implications%20of%20Inequality.pdf https://www.policyalternatives.ca/sites/default/files/upload... Income redistribution is a valid goal of taxation -- not because the government needs to tax the rich to fund the poor (the government can fund whatever it wants since it issues the currency) but because tax policy can reduce the types of extreme inequality that cause instability. When people become wildly rich, they often misattribute that success to their own hard work, ignoring the social conditions that made their success possible, and the role that "good fortune" plays in all such success stories. This talk by Michael Lewis is an excellent summary of why this "meritocratic mindset" is dangerous: https://www.youtube.com/watch?v=CiQ_T5C3hIM https://www.youtube.com/watch?v=CiQ_T5C3hIM So yes, we should definitely address income inequality directly through tax policy. We should also address the root causes of poverty, which are primarily lack of government will to pursue full employment since the Friedman/monetarist view of macro economics won out over the Keynsian economic theories during the supply side inflation caused by the oil shocks in the 1970s.

namenotrequired 11y ago

> But economic inequality per se is not bad. It has multiple causes. Many are bad, but some are good. It also has multiple consequences. Some are good, but some are bad. Something doesn't become good or bad by its causes, but by its consequences.

x5n1 11y ago

Power corrupts. Absolute power corrupts absolutely. Money is power. It's a very complicated issue. The Capitalist class does deliverer Capitalist development. But at the same time it immediately captures most of the value that it delivers leaving a system of servitude called employment... and systems which are homogenous but yet are functional in the form that is found acceptable to its logic of production and consumption through efficiency. On the other hand the Capitalist class because it has money and therefore power, at times acts in corrupt ways destroying the environment, taking away people's rights, making things unnecessarily hard. Given its fight with Communism, it was not as if it played it cool, sitting back and watching and saying, maybe Communism can do certain things better. Instead it immediately went to war demonizing and fighting it as much as it could. It seems as if the Capitalist class can only be subdued when it feels that its own game is over. And it seems like we have to let it do just that. People are greedy and have many social problems. This was one way of ordering them. There are a million other ways of ordering them. Whose time will soon come. Just sit back and watch the show. Paul is fan screaming for the home team, when the game is over and they've won. But soon there will be no more games. Their time has come and gone.

jgalt212 11y ago

PG is still out of touch. His cited example about a plan to move forward: > For example, instead of attacking economic inequality, we should attack poverty The problem in America, and the world, is not poverty. In fact, by some metrics poverty rates have never been lower[1] and by others it's near all time lows. The problem is the oligarchs avoiding taxes, while everyone else (even plain old millionaires shoulder the burden for them). PG reaps obscene levels of benefits from the carried interested tax loophole, so he avoids citing a plan to attack this specifically other than saying tax loopholes in general are bad. Shame on you PG. [1] http://money.cnn.com/2015/10/05/news/economy/poverty-world-bank/ http://money.cnn.com/2015/10/05/news/economy/poverty-world-b...

belleandsebasti 11y ago

I agree with this article on its descriptions but not its conclusions. In particular, the conclusion that we should not attack economic inequality directly. Attacking economic inequality directly might be a good thing to do in many cases. It may be operationally easier and more efficient to have certain restrictions that prevent economic inequality. It can be thought of as a fail-safe when the more direct policy solutions are failing, e.g. legislation that attacks poverty. For instance, having a maximum wage is executionally simple legislation compared to the legislation required to improve education, healthcare, transportation, etc. Not saying we shouldn't have the more complicated legislation, just that it will take more time and is more complicated and prone to failure. Additionally, not saying maximum wage is a good idea, just using it as an example. I see what PG is saying, and I think he would agree with my points here, and I agree with the spirit of what he is saying. He's just not that great expressing himself through writing. He tends to make overly strong statements without nuance and write against hypothetical absolute simplistic counterarguments that don't really exist.

analog31 11y ago

Obviously, nothing with multiple disparate causes and effects is bad per se. But inequality does have at least one negative effect, which is that it distracts the attention of institutions (government, press, academia) towards serving and protecting the interests of the wealthy. In my view the rhetoric of "attacking" inequality is overblown, even if I'm guilty of having used it myself. Instead, let's just say that some form of redistribution -- to use a broad term -- is not an "attack" per se, but simply a practical way to maintain a decent society.

jarjoura 11y ago

If I'm not mistaken, Paul Graham is asking to leave "us poor" startups alone because they need the freedom for founders to get rich, otherwise few would do it. Am I understanding that right? Quoted from his original essay: "And while getting rich is not the only goal of most startup founders, few would do it if one couldn't." [0] I just can't sink my teeth into thinking that's a universal truth. It's true right now because that's the current rules of the game. You build a company and then make a ton of money, otherwise, you failed. Yet, there are 500+ reasons someone or a couple of people go into a company together, but money being the default driver, seems really cynical to me if you think that's needed to keep people starting companies. [0] http://www.paulgraham.com/ineq.html http://www.paulgraham.com/ineq.html

wamatt 11y ago

I think for me a large part missing from the discussion is power inequality. Which, as it happens, nearly always is entwined with wealth and income inequality. The ultra-rich get to have a megaphone for their agendas, ideologies and opinions, with a level of political influence none of us will likely ever come close to seeing.

sethbannon 11y ago

Imagine a factory that's dumping large amounts of arsenic into the public drinking water supply -- a factory that can't operate without doing so. Imagine also that studies show small amounts of arsenic are safe, but large amounts in drinking water can cause serious negative health effects. Seeing these studies, someone comes along and proposes a regulation that limits the amount of arsenic this factory is allowed to dump into the public water supply, to keep it within safe levels. A critic then comes along and says: "The amount of arsenic in the water is not the root problem -- the root problem is that arsenic makes people sick. We should focus on helping people not get sick when exposed to arsenic! That way, we wouldn't have to hurt this job-creating factory." This feels like what PG is arguing for here. In an ideal world, where governmental systems were purely representative and incorruptible, and where markets were efficient and impossible to manipulate, sure, focusing on huge economic inequality wouldn't make sense. But we don't live in this world, just like we don't live in a world where we can easily make people immune to large amounts of arsenic.

gwright 11y ago
This analogy doesn't work for me. You are equating different amounts of wealth (generally considered a good thing at any level) with different amounts of poison. You also repeat a concern made by many critics of Graham's essay, the connection between wealth and the ability to influence public policy, access to politicians and so on. Positing that the wealth is the source of the problem and suggesting the limiting the wealth would limit the influence also doesn't hold together for me. I'll repeat I comment I made a few weeks ago: > There is another way to look at this problem though by asking why there is so much money being directed towards elections and politicians? One cause is the increased size and scope of government. When the role of government expands into more aspects of our lives via various taxes, regulations, subsidies, penalties, and so on it creates an incentive to influence the creation of those taxes, regulations, subsidies, and penalties. > A smaller role for government, in particular a reduction in policies that try to pick winners and losers explicitly (e.g. taxes or fees that favor particular companies or industries), could reduce the incentive to influence the creation of "targeted" legislation.
- 11y ago

pfooti 11y ago

"And unlike high incarceration rates and tax loopholes, startups are on the whole good." - pg. I'm not sure I buy that claim outright. I'm not sure I like asking whether THING is good based on claims about the goodness of CAUSE OF THING. If hugs caused cancer, would that make cancer good? Not certain, but I do believe it would make hugs less common. The problem with an argument like this is that it does nothing but preach to the proverbial choir. Either I buy into pg's worldview about where notional value is derived, or I don't. If a startup founder gets rich creating some new piece of technology, do they deserve the sudden windfall cash that they received? Did the VCs who provided the capital deserve that windfall? Do the workers who actually created a lot of the value in question through their labor get compensated proportionally to the value they built? It's not an easy question to answer in the long run. Regardless of the goodness of income itself generated from VC processes, it continues to be worthwhile to question the economic engines that run off of global income inequality. When it makes economic sense to grow cotton on one continent, ship it to another for manufacture, and ship it to yet another for sale as a T-shirt, there's something fundamentally inequitable about how we pay people for their labor. That isn't to say I've abandoned capitalism for outright marxism. But it is hard to really think about "attacking poverty" in any meaningful way that doesn't address the marked difference in wealth and potential to earn wealth between rich and poor, especially in a globalized, post-(and still)-colonial world. So, sure generating any income in any way will cause income inequality by pg's formulation, whether it's billions from a lucky unicorn IPO or tens from a day's labor at a US minimum wage job, or far, far less making shirts in Bangladesh. The disparity is still something to remark on, especially because that disparity is really one of the major markers of power over one's own future opportunities.

giardini 11y ago
> do they deserve the sudden windfall cash that they received? Did the VCs who provided the capital deserve that windfall? Do the workers who actually created a lot of the value in question through their labor get compensated proportionally to the value they built? And does the owner of capital (investor, banker) deserve the profit (s)he gains? As jivardo_nucci said once on this very forum: The simulation studies of Bouchard & Mezard show that, regardless of initial conditions, wealth distribution ends up a Pareto distribution with a small percentage taking almost all of the goods. The take-away of Bouchard & Mezard's studies: the very rich aren't rich because they earned it (i.e., because they are skillful or knowledgeable), they are rich mostly because they are lucky. All my life I've assumed that, when people had a going concern or were rich, that they _earned_ their wealth. But Bouchard & Mezard says they're, for the most part, simply very lucky. If luck, rather than skill, is the source of one's wealth, then has one "earned" that wealth? How can one lay exclusive claim to something given by chance? I would contend that no such claim can be made. In particular, I would contend that income gained through luck is fair game for government acquisition through taxation, and if it is possible to distinguish that portion of wealth due to skill from that due to luck (and such appears possible), then the "lucky" portion is open game for acquisition to be spent or redistributed as decided by the powers-that-be. Wealth Condensation: Why the Rich Get Richer (and the poor poorer): http://iwillknow.jesaurai.net/?p=387 http://iwillknow.jesaurai.net/?p=387 The Mathematics of Inequality: https://www.austms.org.au/Jobs/Library4.html https://www.austms.org.au/Jobs/Library4.html FWIW Bouchard & Mezard are not the only researchers whose models say this: Chance helps the rich get richer, simulation study finds: http://www.world-science.net/othernews/110722_chance.htm* http://www.world-science.net/othernews/110722_chance.htm*

ilostmykeys 11y ago

In its effort to empower the individual, capitalism has failed to scale. It's not a good design. If it was it would scale to empower most of the 7 billion inhabitants of this planet. What it has managed to do is empower a tiny fraction of the population at the expense of the rest of humanity. Those whom it empowered are neither the most intelligent nor the most helpful. They're just skilled opportunists; our genetic inheritance from our reptilian cousins. (Please no jokes about PG being a retile)

giardini 11y ago
Unfettered capitalism has problems. Proponents like it's clean, easy models, but capitalism needs restraints. To blindly claim otherwise at this time in history is foolish and shows one is in a state of denial. They're just skilled opportunists; our genetic inheritance from our reptilian cousins. More likely from our primate ancestors, don't you think?

BenoitEssiambre 11y ago

Ok but startups don't get a free pass in this debate. Startups that capture wealth by creating value that wouldn't exist otherwise are, in my opinion, unquestionably good, even if they increase inequality. But don't some of them try to capture wealth by striving to get monopolistic positions using network effects, mergers and acquisitions and such? Didn't Peter Thiel even write a book promoting this? Capturing wealth through a monopoly on things that would otherwise have been created by competitors and that would yield lower margins if it wasn't for the monopolistic features of the specific market, is not that ethically different from theft. A lot of technologies are a small jump from previous building blocks. Bob Kahn and Tim Berners-Lee are responsible for a huge core part of the innovations Facebook and others rely on but it's Zuckerberg who made all the money because he captured a natural monopoly, not because he created more value than Kahn and Berners-Lee. Twitter is a simplistic and obvious product that someone else would have created a long time ago if it hadn't already existed. If it wasn't for network effects, how do we know there wouldn't be another social network providing 10x the value to its users than the current ones? The monopolistic network effects _prevents_ this kind of innovation through competition. I'm not saying people shouldn't get a chance to be well compensated for the risk they take and the effort they put but even in startup world, at a certain level of very high inequality, when inequality reducing free market competition forces don't seem to be materializing for long periods of time, suspicions of an unethical and detrimental ecosystem can reasonably be justified.

giardini 11y ago

>"But economic inequality per se is not bad." Nope, it's not bad until you need to buy something! (BTW is this PG post not some strange form of denial?) PG seems to forget about the infrastructure (bankers, financiers, venture capitalist firms, etc. - the entire financial industry) built around startups, as if the entrepreneur were a Jesus figure responsible for it all and who might somehow be crucified for it all. Psychologists call this a "grandiose delusion". Nonetheless it is glorious hogwash - an entrepreneur w/o the infrastructure is merely yet another nutball to be kicked off the front doorstep of venture capitalists. And as the dotcom boom and bust showed us, no entrepreneur is necessary at all - greed and a placard with a catchy ".com" on a door was often enough to make a fortune! Good news: PG need not be concerned that he will be run to ground ("hunted", in his terms) before his bankers are; there are far more (and far wealthier) bankers, profiteers, and their employees than successful entrepreneurs, certainly enough to keep the masses busy for a decade should the French Revolution visit Silicon Valley! >"The great concentrations of wealth I see around me in Silicon Valley don't seem to be destroying democracy." They are: they work for the NSA, the CIA, the FBI, for hundreds of government agencies, for Google and Facebook. They have blindly destroyed privacy in both in our personal and social behavior. They want more. One need only open one's eyes.