3 ms·

I find an interesting parallel with hill-climbing and local optima. In your example, the reason everyone isn't a millionaire is mostly to do with the fact that

by orclev 9y ago

I find an interesting parallel with hill-climbing and local optima. In your example, the reason everyone isn't a millionaire is mostly to do with the fact that that's a very noisy problem space, there are far far too many random variables at play, not to mention there's a finite supply of money, it's literally impossible for everyone to be a millionaire (well, you could inflate the currency to the point where a million dollars is nearly worthless, but that's just playing semantic games). To me, one of the big takeaways here is that it's important not to be so hyper-focused on the local problem space that you overlook potentially better solutions and end up at a local optimum to your overall detriment. As for the rest of the article, it's mostly hand-wavy garbage.

nostrademons 9y ago
> not to mention there's a finite supply of money, it's literally impossible for everyone to be a millionaire (well, you could inflate the currency to the point where a million dollars is nearly worthless, but that's just playing semantic games). Most people who are millionaires don't get there by holding a million dollars in currency, they get there by holding assets worth a million dollars. This is not zero sum - assets can be created (and destroyed), and their value is assigned only at the time of transaction. The total value of all assets in the U.S. is significantly larger (by orders of magnitude) than the total amount of U.S. dollars available.
- orclev 9y ago
  It isn't a question of actual dollars in circulation, you can always print more after all, it's a question of total economic value. All goods in circulation in the U.S. have a finite value, and it definitely is a zero sum game. You can add more goods and therefore value, but that can only happen at a certain rate (this would be tied into population growth, employment rate, and profit margins among other things). There are also close ties with median income as the value of goods tends to be tied directly to wealth distribution. Ultimately at any given time there is a finite amount of "wealth" to go around, if one person gets a bigger slice, then that means someone else has to take a smaller slice. People don't want to be millionaires because they have some unhealthy attraction to U.S. currency, they want to be millionaires because of the goods and services that they can trade that money for (or in many cases because they can use it for rent seeking to generate unearned income). The actual amount of currency in question is irrelevant, it's a question of access to those goods and services, and those goods and services are finite, therefore wealth is finite.
  - chrisweekly 9y ago
    pg (and many, many other entrepreneurs and investors) disagree vehemently, positing that startups are about wealth _creation_. if wealth isn't created, how has humanity's global standard of living so radically improved?
    - PhilWright 9y ago
      Some startups will create extra wealth, some will destroy wealth some will redistribute it. Imagine I create a new shoe factory right next door to an existing shoe factory. After 10 years we find... 1) I failed, I lost all the investors money and had to close down. I destroyed the investors wealth. 2) I win, the next door factory has closed down and now I have all of their business. But I have exactly the same costs, sales, staff and so forth. So the profits come to me from now on instead of the neighbor. I have supplanted them, but consumers and the economy as a whole is no better off. Wealth is transferred to me as ongoing profits that would otherwise have gone next door. 3) I win, the next door factory has closed down and now I have all of their business. I produce the same output as they did but with less staff and lower costs. So consumers benefit from lower prices, the money they saved can be spent on other things, creating demand elsewhere. Wealth is transferred to me as ongoing profits that would otherwise have gone next door. Everyone wins except I employ less people than the neighbor so there is less employment. But the extra demand for other goods because of my lower prices means they get employment at other businesses! Number 3 is why the UK, which used to employ 90% of people in agriculture before the industrial revolution, does not have 90% unemployment today, the people released from agriculture because of better productivity are freed to work in other sectors instead.
      - TheSpiceIsLife 9y ago
        In the scenario where a startup destroys wealth, what they're really doing is redistributing it. It's not like they take the investors money, cash the cheques, then burn the cash. Isn't there also at least a fourth and firth scenario, one where the new shoe factory wins but has larger costs than the old one (better marketing but worse cost control), and another scenario where both shoe factories thrive? What about one where they merge, or a holding company buys both and operates them both to produce different lines.

by orclev 9y ago

nostrademons 9y ago

> not to mention there's a finite supply of money, it's literally impossible for everyone to be a millionaire (well, you could inflate the currency to the point where a million dollars is nearly worthless, but that's just playing semantic games). Most people who are millionaires don't get there by holding a million dollars in currency, they get there by holding assets worth a million dollars. This is not zero sum - assets can be created (and destroyed), and their value is assigned only at the time of transaction. The total value of all assets in the U.S. is significantly larger (by orders of magnitude) than the total amount of U.S. dollars available.

orclev 9y ago
It isn't a question of actual dollars in circulation, you can always print more after all, it's a question of total economic value. All goods in circulation in the U.S. have a finite value, and it definitely is a zero sum game. You can add more goods and therefore value, but that can only happen at a certain rate (this would be tied into population growth, employment rate, and profit margins among other things). There are also close ties with median income as the value of goods tends to be tied directly to wealth distribution. Ultimately at any given time there is a finite amount of "wealth" to go around, if one person gets a bigger slice, then that means someone else has to take a smaller slice. People don't want to be millionaires because they have some unhealthy attraction to U.S. currency, they want to be millionaires because of the goods and services that they can trade that money for (or in many cases because they can use it for rent seeking to generate unearned income). The actual amount of currency in question is irrelevant, it's a question of access to those goods and services, and those goods and services are finite, therefore wealth is finite.
- chrisweekly 9y ago
  pg (and many, many other entrepreneurs and investors) disagree vehemently, positing that startups are about wealth _creation_. if wealth isn't created, how has humanity's global standard of living so radically improved?
  - PhilWright 9y ago
    Some startups will create extra wealth, some will destroy wealth some will redistribute it. Imagine I create a new shoe factory right next door to an existing shoe factory. After 10 years we find... 1) I failed, I lost all the investors money and had to close down. I destroyed the investors wealth. 2) I win, the next door factory has closed down and now I have all of their business. But I have exactly the same costs, sales, staff and so forth. So the profits come to me from now on instead of the neighbor. I have supplanted them, but consumers and the economy as a whole is no better off. Wealth is transferred to me as ongoing profits that would otherwise have gone next door. 3) I win, the next door factory has closed down and now I have all of their business. I produce the same output as they did but with less staff and lower costs. So consumers benefit from lower prices, the money they saved can be spent on other things, creating demand elsewhere. Wealth is transferred to me as ongoing profits that would otherwise have gone next door. Everyone wins except I employ less people than the neighbor so there is less employment. But the extra demand for other goods because of my lower prices means they get employment at other businesses! Number 3 is why the UK, which used to employ 90% of people in agriculture before the industrial revolution, does not have 90% unemployment today, the people released from agriculture because of better productivity are freed to work in other sectors instead.
    - TheSpiceIsLife 9y ago
      In the scenario where a startup destroys wealth, what they're really doing is redistributing it. It's not like they take the investors money, cash the cheques, then burn the cash. Isn't there also at least a fourth and firth scenario, one where the new shoe factory wins but has larger costs than the old one (better marketing but worse cost control), and another scenario where both shoe factories thrive? What about one where they merge, or a holding company buys both and operates them both to produce different lines.