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He didn't say we need inequality, he said that some inequality was an inevitable byproduct of a robust startup ecosystem and technological progress. In other wo

• maxxxxx 11y ago
  The question is how much inequality. Some is probably good. I definitely think we don't need more. The rewards for startup investors and founders are already plenty.
  • joelrunyon 11y ago
    Question, if at the base, poverty was eliminated, would it matter if there was more inequality?
    • oldmanjay 11y ago
      Yes, and for the same reason it matters now. Envy is a part of human nature and is not going away.
      • Retric 11y ago
        Political power is about more than Envy. The US has some terrible policy due to who is in power vs. what's good for most Americans.
      • maxxxxx 11y ago
        It's not about envy. It's about not getting one's fair share. It's hard to explain why corporate earnings soar, executive compensation rises but average salaries stagnate. It's basic fairness.
        • oldmanjay 11y ago
          Saying "it's not about envy" doesn't actually demonstrate that it isn't. There certainly isn't anything besides envy hiding behind the notion of a "fair share" of someone else's property. Just own it. There is nothing wrong with being envious despite attempts to shame people for it. And bear in mind that no problems are ever solved if you refuse to acknowledge what they really are.
          • maxxxxx 11y ago
            Envy has a very negative connotation. You use the phrase "fair share of someone else's property". I am not talking about getting a share from someone else's property. I am talking about the elite deciding they should get a larger share of the gains the economy produces. When people in a company complain that their CEO makes more and more money while their salaries are cut it's not envy but it's a basic question of fairness. Nobody wants to take away from the CEO. They just want to have a fair share of the earnings of the company.
      • amag 11y ago
        Yes, envy is part of human nature but not everyone is envious by nature.
    • jnbiche 11y ago
      Yes, because I don't want to live in an oligarchy. Do you? That's not a rhetorical question, by the way. If only there were some of law that prevented the ultra-rich from buying the political process... The sad fact is, even when there is a law (like we had before in the US), extreme wealth usually finds a way to eliminate it. And then it's off to the races as a feedback loop is entered. In principle, capitalism is a fairly effective instrument for reducing inequality until the political process is corrupted, and then the advantages of capitalism no longer benefit non-wealthy people due to regulatory capture, socialized risk, etc.
      • mc32 11y ago
        It depends on the person, some people prefer relative wealth, other people prefer wealth in absolute terms. That is, some people would prefer to be one of the wealthiest persons in a poor country over having double that money in absolute terms, but being relatively poorer to their peers in a rich country. So it depends on the person.
      • joelrunyon 11y ago
        So, your main complaint is money in politics. This is exactly what PG was talking about. You're talking about corruption - not inequality.
        • jnbiche 11y ago
          No, my main complaint is that extreme wealth inevitably leads to political corruption and oligarchy. Among the wealthy, there are always some who aren't satisfied with wealth. They want political power, and to crush everyone else underfoot until they are in rags (some people think like this, seriously). If people like that can't get political power honestly, then they'll find a way to buy it, and reap the benefits of their political power in government concessions paid by the taxpayers. Then they and their ilk will buy more political power. And then the systems enters a feedback loop, which is where we are now in the US. Edit: I should add that I don't think that extreme wealth is the natural conclusion of capitalism. In a limited government system, combined with the natural dispersion of wealth that comes from passing money down generations, I think that competition serves to keep the top 0.01% within a reasonable multiplier of the average. Unfortunately, big government combined with big business is the worst of all possible worlds, and serves to increase and perpetuate inequality (a deeply-held belief I find difficult to properly convey to my Democrat friends).
    • maxxxxx 11y ago
      I think it still matters. We have already reached a state where the top x% live in a totally different world than the rest of the population. If their worlds diverge even more it will be pretty hard to find any kind of political consensus.
      • joelrunyon 11y ago
        > If their worlds diverge even more it will be pretty hard to find any kind of political consensus. In an actual democracy (without fraud / corruption), this should be your least concern since "the rest of the population" would be the ones deciding (voting)
        • Avshalom 11y ago
          We live in what is relatively speaking a capitalist market economy, which means when it comes to businesses people with more money get more votes.
          • joelrunyon 11y ago
            So, your main issue is money in politics.
            • Avshalom 11y ago
              No my issue is that some people have way more money to put in politics than others. ETA: money and politics are not separable. Double edit: oh god damnit no I wasn't even talking about politics was I. Inequality allows the people on top to distort markets.
    • contactmatts 11y ago
      Addressing the "elimination of poverty" statement: Isn't poverty a relative construct? Unless full-communism is implemented, there will always be those that have less than others. For example, poor people living in the US have a much different life-style than the poor in a 3rd world country.
      • joelrunyon 11y ago
        Yes, but they're unequal in their "less"-ness. Having less in the US means you have a hard time paying your bills, etc. Having less in a third world country means you're dying because you're literally crapping your insides out because there's no drinkable water. Eliminating poverty (especially extreme) poverty seems worthwhile . Making sure everyone has the same amount of stuff doesn't seem quite as important
        • mordocai 11y ago
          The only problem I have with your comment is that there are quite a few people who starve or nearly starve in the US. Dismissing all poverty in the US as just a hard time paying bills is incorrect. Yes, there are a lot of programs to provide help in the US but many of them are far enough away that you'd need a car and if you don't have a car you are out of luck.
          • joelrunyon 11y ago
            Is there a database of statistics on starvation in the US? Genuinely curious.
            • hluska 11y ago
              Feedingamerica.org would be a good place to start. The site is about the difference between poverty and food insecurity. If any place could put to a comprehensive database on outright starvation, that would be it. I'd argue though that in North America, outright starvation isn't as much of a problem as just having difficulty accessing healthy food. The last stats that I read argue that about 15 million kids in the US experience hunger. They may not be starving, but they will have more trouble learning without adequate adequate nutrition.
    • 6d0debc071 11y ago
      Yes, because some people's utility functions are strongly inimical to other's likely happiness. It will be feudalism all over again, with vastly higher stakes. If you have a bunch of the super-rich, and everyone else just at some happy medium, then you'll eventually output a mad god-king - in charge of some ridiculous multiple of the power that the majority of the planet can bring to bear - whose favourite sports are gassing countries where people's skin is the wrong colour and fucking the peasants to death on a Thursday.
• eigenvector 11y ago
  Did you read the article? It addresses that assertion by indicating that research shows only a small fraction of inequality is actually caused by innovation. It turns out Graham's intuitive assumptions about what causes inequality don't agree with the data. The overwhelming majority is caused by rent-seeking behaviours - the "bad" causes of inequality Graham dismisses as small relative to startups. Here's a relevant section: "When the math cleared from their analyses, the economists estimated that 14 percent of the increase in the share of income going to the top 1 percent of Americans between 1975 and 2012 "may be explained by an increase in innovation." The economists say those increases are temporary, they generate economic growth and they're associated with stronger upward mobility. Those are all good things. Point, Graham. If you take that as a proxy for the Silicon Valley effect, though, you're left with a problem: 86 percent of the recent inequality increase can't be explained by innovation. You're also stuck with the fact that startup formation for tech companies has been falling for more than a decade even as inequality has been widening, and not rising, as Graham implies. Total venture capital funding remains well below late-1990s levels, even before you adjust for inflation, according to data from the National Venture Capital Association. In light of all that, it's difficult to conclude that startups are mostly driving the income gap." Furthermore: "Other recent studies also suggest high levels of rent-seeking are driving inequality. Brian Bell and John Van Reenan, a pair of economists in Britain (which resembles the United States in many ways when it comes to inequality), reported in 2014 that increased bonuses for bankers accounted for two-thirds of the growth of top 1 percent incomes in Britain after 1999. There are all sorts of reasons to believe that premium financial sector pay is almost entirely rent-seeking; the British paper would suggest that at least two-thirds of inequality could be linked back to "bad" sources, in other words."
  • michaelkeenan 11y ago
    I didn't remember PG writing anything about startups mostly driving the income gap, and I just searched the essay and didn't find it. Here's what PG wrote about the proportions of each group causing income inequality: "But while there are a lot of people who get rich through rent-seeking of various forms, and a lot who get rich by playing games that though not crooked are zero-sum, there are also a significant number who get rich by creating wealth." It's unclear what the WaPo writer is responding to when he says "it's difficult to conclude that startups are mostly driving the income gap." The writer also has this odd paragraph: "If there is middle ground between Graham and this body of research, it's the idea that policymakers shouldn't go after inequality with blunt instruments, like big tax hikes just for the sake of soaking the rich. Perhaps, instead, they should target rent-seeking, which economists agree is bad for everyone who isn't a rent seeker." This doesn't look like a middle ground; rather, it's what PG suggests: "if there are people getting rich by tricking consumers or lobbying the government for anti-competitive regulations or tax loopholes, then let's stop them. Not because it's causing economic inequality, but because it's stealing." And: "startups aren't the problem, [the problem is] corrupt practices in finance, healthcare, and so on." (But it's a long essay; please let me know if I've missed parts that support a different interpretation.)
• deleted 11y ago
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• noobermin 11y ago
  The third paragraph: >Paul Graham, a venture capitalist and one of the founders of the startup incubator Y Combinator, would have you believe this rising inequality is a good thing. Or, at very worst, the inevitable consequence of a good thing. Times like this makes me think that different parties write the article titles than those who write the articles.
  • OopsCriticality 11y ago
    I was under the impression that was exactly the case, sometimes guided by A/B testing.
  • dang 11y ago
    It's well-known that authors don't get to write the titles of articles like this.