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I think Paul is fundamentally not understanding the argument behind “billionaires exploit workers.” It isn’t that billionaires are fundamentally bad people or t

I think Paul is fundamentally not understanding the argument behind “billionaires exploit workers.” It isn’t that billionaires are fundamentally bad people or that they’ve accumulated their wealth through misdeeds. But what it is is that it’s basically impossible to accumulate that amount of wealth through work. Instead, you have to be able to capture the difference between the value of someone else’s work and what you pay them to do it. And you have to do that at scale. So Jeff Bezos has figured out how to pay people $X and make $X $Y off their labor, pocket a significant portion of that $Y and do it for the hundreds of thousands of people that work for Amazon. Nowhere in this argument is anyone saying that this practice should not be allowed or that he’s done something wrong. But what people are saying is that the narrative that billionaires built their wealth themselves is false and that they should be taxed heavily in recognition of the fact that they built their wealth off of the work of others. The billionaires Paul identifies and helps create are no different, other than the possible exception that they rely on market’s expectation of future exploitation of workers’ value rather than having actually done it already. Paul would never fund a founder who wanted to divide all profits among employees. Therefore, based on that single fact alone, he is identifying future billionaires based on their willingness to exploit their workers...to pay them less than the value of their work.

abhinav22 6y ago
Great post! Agree 100%
UK-Al05 6y ago
This is basically the labour theory of value and ignores the value of capital and organisation. Some guy delivering stuff in a garage is not going to be nowhere near as productive as an Amazon worker. The crucial bit that people miss is that it is capital, goodwill and organisation allows employees to generate so much money in the first place. Basically the sum is greater than its parts. If you want to know where profit comes from(assuming a well functioning market) in a modern economics point of view, look into Subjective theory of value and marginal economics.
- postingpals 6y ago
  99% of people who invoke the labour theory of value misunderstand it. Welcome to the 99%.
  - UK-Al05 6y ago
    Oh I understand it(well sort of because even Communists can't agree), I've read all theory about Labour theory of value. Marx never defined the terms about value rigorously, so it can be whatever people want it to be. I know all about socially necessary value, etc and all hacks people have applied to it over the years. There are tons of interpretations about it. It still has zero predictive ability in the real world. Subjective preferences explains where profit comes from with much greater predictive ability. And models real world phenomenon we see.
  - tossmeout 6y ago
    Comments like this are useless, bc you're declaring someone is wrong without any explanation of (a) why they're wrong, and (b) what's actually correct. The result is that I have no reason to believe you, or to even understand your point. Because you've essentially made no point.
  - dang 6y ago
    Please don't post snarky dismissals to HN. If you know more than others, the best way to respond is to share some of what you know, so the rest of us can learn. If you don't want to do that or don't have time, that's fine, but in that case please don't post. Letting the internet be wrong about everything is the primary survival skill we all have to work on anyhow. https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sort=byDate&type=comment&query=share%20know%20learn%20by:dang https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor... https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
    - deleted 6y ago
      [deleted]
    - postingpals 6y ago
rahimnathwani 6y ago
"you have to be able to capture the difference between the value of someone else’s work and what you pay them to do it" This implicitly assumes that "the value of someone else's work" is independent of the context in which that work is done. The reason Jeff can pay someone less than the value (to Jeff) of that person's work is that, somewhere other than Amazon, that person's work would be less valuable. The reason is Jeff must pay someone less than the value they bring is because that's the only way for a business to make a profit. If you pay me $100, and I add exactly $100 of value to your business, then you're no better off than if you hadn't hired me at all.
- curun1r 6y ago
  > This implicitly assumes that "the value of someone else's work" is independent of the context in which that work is done. Not really, since no one is arguing that this worker-capital relationship should change. That the synergy exists is a good thing. But the tax burden of the two groups is what’s at issue. On the one side, you have the “they built it, they should keep it” folks. On the other side are those that believe they built it on a foundation of societal investments and the work of others and should pay most of it back in taxes. No one is arguing that they didn’t built something of value. > If you pay me $100, and I add exactly $100 of value to your business, then you're no better off than if you hadn't hired me at all Ahh the refrain of the myopic capitalist. In your hypothetical situation, we’re all better off because I’ve gainfully employed someone, added purchasing power to the overall economy and added value to the world since, presumably, the customers who paid me $100 received something they value above $100. To whatever small degree, putting $100 in the hands of my employee who will then spend it also creates more purchasing power for my own customers as that money circulates through the economy. This is one of the problems with such an individualistic view of capitalism...it utterly disregards benefits that are not directly seen by the individual. We don’t have to become socialist or communist to start to provide greater emphasis on the contribution of workers and society as a whole. We can keep the market forces that allow for efficient allocation of capital while putting policies in place that provide for those who aren’t at the top of hierarchies and whose contributions are less unique. This isn’t about preventing businesses like Amazon from existing, it’s about ensuring that the people who work for Amazon can live a comfortable and dignified life and that Jeff Bezos should only be fabulously wealthy instead of obscenely wealthy.
winston_smith 6y ago
> you have to be able to capture the difference between the value of someone else’s work and what you pay them to do it This is the textbook definition for how wealth is created, and it's exactly what's supposed to happen in every transaction in the marketplace. You buy an apple for $1 and it brings you $1.10 in value. You have captured the difference between its value to you and its value to the seller, and the ten cents is wealth that didn't exist before. This also works for the seller, who sold her apple for $1 even though it only cost her $0.95. She captures five cents of the wealth created by the transaction. Wealth is created because things have contextual value. It's the same when we exchange our labor for money. They wanted our labor more than the money. We wanted the money more than the time. Win/win for both of us.
- mactrey 6y ago
  This ignores any effects of market power. Amazon is not bargaining with its workers in the way that you are bargaining with Alice for her apple - a lot of these workers have very few other options to sell their labor. And sitting at home and not working is a false choice in today's America. That inequality in pricing power helps maintain the gap between wages and marginal revenue production of labor - and as OP says, that gap at scale is what makes a billionaire.
  - winston_smith 6y ago
    OP's argument was that capturing value itself is bad. But I suspect you don't check to see if your apple sellers have plenty of other potential buyers before buying apples. If nobody else is buying, then the seller lowers the price until the market clears, and you get a bargain. Lucky you.
    - mactrey 6y ago
      That's true, I generally don't care about the welfare of apple sellers, and I'll take a deal when I see one. But, and I hate to stretch this analogy to its breaking point, it's more like the overwhelming majority of Americans are apple sellers (read: wage laborers) and they have no way to achieve basic human rights like food, shelter, and baseline medical care without selling their apples. And they can only sell to one buyer at a time as part of an apple contract (employment contract) and if that buyer decides to stop buying from them ("restructuring"), which the buyer may do at any time (right-to-work laws), our apple seller has to go looking for another buyer (job search) which can take months all while their savings dwindle... So you can see why some people might think this is not the optimal way to structure a society. Or to just put the analogy in its coffin, they might see this situation as more complicated than just a few apple-buyers getting a bargain.
Aunche 6y ago
Bezo's wealth comes from his shares, which he had since the beginning. 20 years ago, anyone who worked at Amazon could have used a small fraction of their wages to buy Amazon shares. If they had, they'd be millionaires. However, that's a risk that only already rich people are willing to take.
- akg_67 6y ago
  Tell that to Amazon warehouse worker making $10-20 an hour that instead of putting food on the table, roof on the head of his family, he should have bought Amazon shares. Bezo is epitome of what’s wrong with America and American “capitalist” system.
  - Aunche 6y ago
    New Amazon workers aren't the ones who made it a trillion-dollar company. The older ones were. By your standards, the only way Amazon could compensate them fairly is to pay workers in Amazon shares and force them to hold it.
    - webmaven 6y ago
      > New Amazon workers aren't the ones who made it a trillion-dollar company. The older ones were. By your standards, the only way Amazon could compensate them fairly is to pay workers in Amazon shares and force them to hold it. Something like mandatory equity contributions to the company pension fund would probably work.
  - robswc 6y ago
    How? $10-20 an hour is better than minimum wage and a few years ago I worked a labor job that "only" paid $12.00/hr. Is Jeff Bezo's personal net worth the causation behind someone not being able to support a family? What about Zuckerberg, what is the average salary of a FB employee? If its above a certain amount is that a "moral" billionaire? I would argue that pursuit of profits can lead to bad things for employees... but I never understood going after billionaires when their wealth is almost exclusively because they created a company worth billions. If that were the case, everyone making minimum wage should have seen their salaries skyrocket when these billionaires lost great %'s of their wealth over the last year. I personally see rent/CoL being the problem. I don't know of solutions but I do feel going after billionaires is just a waste of energy. I'm a bit bias as my work has some crossover with "wealth and finance" (trading stocks) but all too often these ideas about "taxing rich people" just blow up and leave everyone worse off. https://en.wikipedia.org/wiki/Swedish_financial_transaction_tax https://en.wikipedia.org/wiki/Swedish_financial_transaction_... TL;DR, they tax each trade on the market. It makes a fraction of what it was projected to make and never comes close to making more than they did before by just taxing the capital gains (profit from trading). Its an idea I've seen showing up more and more.
cactus2093 6y ago
You left out a key part in this simplified formula - you pay $X and make $Y from the work, and you do this for N people. If you leave X and Y the same and scale N down to like 50 or 100 employees, you have a good old hard working American business that's creating solid working class jobs. When you scale N up to an almost inconceivably large number (Amazon has over a million employees) you get an owner with an inconceivably large fortune. The problem with just taxing it all away to prevent him from being a billionaire is the money is tied to control of the company, so it's equivalent to saying nobody can build a business bigger than some arbitrary limit. Which is equivalent to saying nobody can build a business with more than a certain arbitrary number of employees. Where would any of us work if that were the case? It's not at all a given that you would get millions of new small and medium businesses that would completely make up for that gap you'd have from lopping off every big company at a couple billion dollar market cap. The world is just not zero-sum like that as much as progressives might (either deceptively, or obliviously) pretend that it is. > Paul would never fund a founder who wanted to divide all profits among employees While YC might not recommend a founder take literally 0% equity, they are hugely supportive of founders giving more equity to employees and keeping less for themselves and have done a lot to move the industry in that direction https://blog.samaltman.com/employee-equity https://blog.samaltman.com/employee-equity
- naravara 6y ago
  > The problem with just taxing it all away to prevent him from being a billionaire is the money is tied to control of the company, so it's equivalent to saying nobody can build a business bigger than some arbitrary limit. Limits are hardly arbitrary. If you control a large enough chunk of economic output that your decisions have distortionary effects on other markets and people it’s not an “arbitrary” standard that this should be disallowed. I assume everyone on HN would be pretty pro something like net neutrality to constrain gatekeepers from carving a slice out of all business done on the internet for themselves on these grounds. But, for some reason, people seem to have trouble connecting how the same logic applies to distortionary control over the media or something like urban transit.
  - chii 6y ago
monknomo 6y ago
I've heard it phrased that no one every sees a Ferrari drive by and wonders how many dishes they had to wash to get the cool car.
justinboogaard 6y ago
Bezos is not a billionaire because he pays people less money than what he is able to capture from their work. He is a billionaire because he owns a lot of shares in Amazon, and Amazon is a trillion dollar company. There are examples where a group of people came together and decided to share in the profit or loss of a venture, and worked on it as employees (REI is a popular US outdoor equipment company that was started this way). Amazon seems to have chosen a path where instead of asking individual employees to take a loss or break even for 20 years, they paid their employees while the company absorbed those losses and scaled. The "billionaire" bit here seems arbitrary. Bezos is a billionaire because he owns a lot of shares because he didn't have a lot of cofounders. If he had started Amazon with 20 different cofounders then he (probably) wouldn't be a billionaire. Either way, the concept of exploiting labor for profit doesn't impact his billionaire status. I'd be open to having a separate discussion around what it means to "exploit" labor, but on this topic I think moving the conversation from the concept of billionaire founders to how the system oppresses those that fall below a certain income would be more productive. I don't know why Paul funds or doesn't fund certain founders, but if I were Paul I would be funding those founders that I believe can start companies that will eventually have stock collectively worth a lot of money. From the stories I've read - most of the founders that Paul funded DO plan on splitting their profits amongst all their employees - purely by virtue of when he invests in a company, the founders usually were the only employees. If I was Paul my dream would be that a company started by a small group of initial founders would be able to get big without having to "exploit" (or hire) any people at all.
pdonis 6y ago
> Paul would never fund a founder who wanted to divide all profits among employees. Why not? He explains what YC is looking for in a founder, and I don't see "what will the founders do with the profits" mentioned at all.
pdonis 6y ago
> it’s basically impossible to accumulate that amount of wealth through work Not at all. I have no doubt that Jeff Bezos, for example, works very hard. The difference is not whether or not a person works, but what they work on. Another poster upthread (mightybyte) suggested viewing this in terms of leverage: how much is the impact of your work magnified? I think this is a very fruitful way of looking at it; see my post upthread in response.
Meditato 6y ago
Also, his idea that "making something people want" precludes exploitation is naive at best. It's easier to make something that the masses want by exploiting people along the way. As a former bay area startup engineer, I saw this all the time...including in two different YC companies.
WalterBright 6y ago
The Beatles did not exploit the labor of people pressing their records to become wealthy. Those same people pressed records for other artists who did not make it big, or even fell flat. Their labor input was exactly the same. The difference was in the songs the Beatles created. The Beatles created those songs, not the laborers who pressed the records. Or take Stevie Nicks, who google reports is worth $100m. Are the stage hands who set things up for a concert creating that wealth for her? Nope. Those stage hands could do exactly the same for my unrecognized musical talent, I could pay them the same, and would lose gigantic amounts of money. Is Stevie exploiting those stage hands? If she is, then wouldn't those stage hands doing the exact same work for me be exploiting me for my foolish money? Bottom line is people are entitled to what they can negotiate for. They don't give it back if their employer loses money, so why would they be entitled to what their employer made?
- Frondo 6y ago
  So let the beatles pocket their billion, and we'll collect most it back at the end of the tax year. How's that?
  - nickpp 6y ago
    Thievery.
    - Frondo 6y ago
      Taxation isn't thievery.
      - WalterBright 6y ago
        That depends on why the tax is applied.
  - webmaven 6y ago
    > So let the beatles pocket their billion, and we'll collect most it back at the end of the tax year. How's that? Sounds about right. Meanwhile the owners of the capital are free to make money off the float (and pay capital gains rates on those profits).
kortilla 6y ago
> But what people are saying is that the narrative that billionaires built their wealth themselves is false But it’s not. I can put shit into boxes in my yard and put them on a truck but that doesn’t mean I’m providing the same value as the Amazon worker. Labor has no value on its own. You have to do work that is useful for someone to generate value and identifying the useful work (i.e. connecting the participants) is a big part of that value.
ericd 6y ago
The expected monetary value of the average software engineer’s work working at Google is much higher than that of the same engineer working at a small company, launching the same product. The difference is the leverage provided by the structure that is Google - the audience, brand, machinery, etc. The software is important, but so is the massive built-in audience. It is the company’s structure accounts for the majority of the value created by that engineer’s work. So, how is it exploitation to give them less than the total profit created?
- webmaven 6y ago
  > It is the company’s structure accounts for the majority of the value created by that engineer’s work. Except that billionaire founders also persist in flattering themselves that their company "only hires the best". If that were true, FAANG salaries for ICs ought to be even higher than they are, and competition between them for employees would be cutthroat rather than collegial. As it is, they are competing for employees as a group with the rest of the industry, more so than with each other, so the truth is a mixture: individual employees matter more than their compensation actually reflects, and the company the employee is embedded in matters a great deal too (enough so that we only ever see a randomly occurring concentration of high quality employees producing innovative products and services when that group is more-or-less the whole org: a startup. Inside a larger org, such groups only flourish deliberately).
notSupplied 6y ago
Say an engineer is working on Google’s ad platform. In an alternate universe, he is working at Bing, producing code of identical quality. The economic outcome of this identical unit of labor output is dramatically different. That difference is attributed to the company, not the laborer. Now whether that is because of “monopolistic forces” or because the company is truly “better managed” is up for debate. So just because your labor is worth $X to your employer doesn’t mean all of it can be attributed to you. It would be inaccurate to believe that they owe you exactly $X, and anything less would be exploitation.
derangedHorse 6y ago
“But what people are saying is that the narrative that billionaires built their wealth themselves is false and that they should be taxed heavily in recognition of the fact that they built their wealth off of the work of others.” So are you saying that there should be a higher tax for a person who profits off the labor of someone else? Surely the person who constructed the system (that gave opportunity to the other individual they’re profiting off of) added some benefit to the other individual as well, otherwise wouldn’t the other individual work for himself or elsewhere? Or is the argument that there is always a moral cap on how much profit a person can make off someone else?

abhinav22 6y ago

Great post! Agree 100%

UK-Al05 6y ago

This is basically the labour theory of value and ignores the value of capital and organisation. Some guy delivering stuff in a garage is not going to be nowhere near as productive as an Amazon worker. The crucial bit that people miss is that it is capital, goodwill and organisation allows employees to generate so much money in the first place. Basically the sum is greater than its parts. If you want to know where profit comes from(assuming a well functioning market) in a modern economics point of view, look into Subjective theory of value and marginal economics.

postingpals 6y ago
99% of people who invoke the labour theory of value misunderstand it. Welcome to the 99%.
- UK-Al05 6y ago
  Oh I understand it(well sort of because even Communists can't agree), I've read all theory about Labour theory of value. Marx never defined the terms about value rigorously, so it can be whatever people want it to be. I know all about socially necessary value, etc and all hacks people have applied to it over the years. There are tons of interpretations about it. It still has zero predictive ability in the real world. Subjective preferences explains where profit comes from with much greater predictive ability. And models real world phenomenon we see.
- tossmeout 6y ago
  Comments like this are useless, bc you're declaring someone is wrong without any explanation of (a) why they're wrong, and (b) what's actually correct. The result is that I have no reason to believe you, or to even understand your point. Because you've essentially made no point.
- dang 6y ago
  Please don't post snarky dismissals to HN. If you know more than others, the best way to respond is to share some of what you know, so the rest of us can learn. If you don't want to do that or don't have time, that's fine, but in that case please don't post. Letting the internet be wrong about everything is the primary survival skill we all have to work on anyhow. https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sort=byDate&type=comment&query=share%20know%20learn%20by:dang https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor... https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - deleted 6y ago
    [deleted]
  - postingpals 6y ago

rahimnathwani 6y ago

"you have to be able to capture the difference between the value of someone else’s work and what you pay them to do it" This implicitly assumes that "the value of someone else's work" is independent of the context in which that work is done. The reason Jeff can pay someone less than the value (to Jeff) of that person's work is that, somewhere other than Amazon, that person's work would be less valuable. The reason is Jeff must pay someone less than the value they bring is because that's the only way for a business to make a profit. If you pay me $100, and I add exactly $100 of value to your business, then you're no better off than if you hadn't hired me at all.

curun1r 6y ago
> This implicitly assumes that "the value of someone else's work" is independent of the context in which that work is done. Not really, since no one is arguing that this worker-capital relationship should change. That the synergy exists is a good thing. But the tax burden of the two groups is what’s at issue. On the one side, you have the “they built it, they should keep it” folks. On the other side are those that believe they built it on a foundation of societal investments and the work of others and should pay most of it back in taxes. No one is arguing that they didn’t built something of value. > If you pay me $100, and I add exactly $100 of value to your business, then you're no better off than if you hadn't hired me at all Ahh the refrain of the myopic capitalist. In your hypothetical situation, we’re all better off because I’ve gainfully employed someone, added purchasing power to the overall economy and added value to the world since, presumably, the customers who paid me $100 received something they value above $100. To whatever small degree, putting $100 in the hands of my employee who will then spend it also creates more purchasing power for my own customers as that money circulates through the economy. This is one of the problems with such an individualistic view of capitalism...it utterly disregards benefits that are not directly seen by the individual. We don’t have to become socialist or communist to start to provide greater emphasis on the contribution of workers and society as a whole. We can keep the market forces that allow for efficient allocation of capital while putting policies in place that provide for those who aren’t at the top of hierarchies and whose contributions are less unique. This isn’t about preventing businesses like Amazon from existing, it’s about ensuring that the people who work for Amazon can live a comfortable and dignified life and that Jeff Bezos should only be fabulously wealthy instead of obscenely wealthy.

winston_smith 6y ago

> you have to be able to capture the difference between the value of someone else’s work and what you pay them to do it This is the textbook definition for how wealth is created, and it's exactly what's supposed to happen in every transaction in the marketplace. You buy an apple for $1 and it brings you $1.10 in value. You have captured the difference between its value to you and its value to the seller, and the ten cents is wealth that didn't exist before. This also works for the seller, who sold her apple for $1 even though it only cost her $0.95. She captures five cents of the wealth created by the transaction. Wealth is created because things have contextual value. It's the same when we exchange our labor for money. They wanted our labor more than the money. We wanted the money more than the time. Win/win for both of us.

mactrey 6y ago
This ignores any effects of market power. Amazon is not bargaining with its workers in the way that you are bargaining with Alice for her apple - a lot of these workers have very few other options to sell their labor. And sitting at home and not working is a false choice in today's America. That inequality in pricing power helps maintain the gap between wages and marginal revenue production of labor - and as OP says, that gap at scale is what makes a billionaire.
- winston_smith 6y ago
  OP's argument was that capturing value itself is bad. But I suspect you don't check to see if your apple sellers have plenty of other potential buyers before buying apples. If nobody else is buying, then the seller lowers the price until the market clears, and you get a bargain. Lucky you.
  - mactrey 6y ago
    That's true, I generally don't care about the welfare of apple sellers, and I'll take a deal when I see one. But, and I hate to stretch this analogy to its breaking point, it's more like the overwhelming majority of Americans are apple sellers (read: wage laborers) and they have no way to achieve basic human rights like food, shelter, and baseline medical care without selling their apples. And they can only sell to one buyer at a time as part of an apple contract (employment contract) and if that buyer decides to stop buying from them ("restructuring"), which the buyer may do at any time (right-to-work laws), our apple seller has to go looking for another buyer (job search) which can take months all while their savings dwindle... So you can see why some people might think this is not the optimal way to structure a society. Or to just put the analogy in its coffin, they might see this situation as more complicated than just a few apple-buyers getting a bargain.

Aunche 6y ago

Bezo's wealth comes from his shares, which he had since the beginning. 20 years ago, anyone who worked at Amazon could have used a small fraction of their wages to buy Amazon shares. If they had, they'd be millionaires. However, that's a risk that only already rich people are willing to take.

akg_67 6y ago
Tell that to Amazon warehouse worker making $10-20 an hour that instead of putting food on the table, roof on the head of his family, he should have bought Amazon shares. Bezo is epitome of what’s wrong with America and American “capitalist” system.
- Aunche 6y ago
  New Amazon workers aren't the ones who made it a trillion-dollar company. The older ones were. By your standards, the only way Amazon could compensate them fairly is to pay workers in Amazon shares and force them to hold it.
  - webmaven 6y ago
    > New Amazon workers aren't the ones who made it a trillion-dollar company. The older ones were. By your standards, the only way Amazon could compensate them fairly is to pay workers in Amazon shares and force them to hold it. Something like mandatory equity contributions to the company pension fund would probably work.
- robswc 6y ago
  How? $10-20 an hour is better than minimum wage and a few years ago I worked a labor job that "only" paid $12.00/hr. Is Jeff Bezo's personal net worth the causation behind someone not being able to support a family? What about Zuckerberg, what is the average salary of a FB employee? If its above a certain amount is that a "moral" billionaire? I would argue that pursuit of profits can lead to bad things for employees... but I never understood going after billionaires when their wealth is almost exclusively because they created a company worth billions. If that were the case, everyone making minimum wage should have seen their salaries skyrocket when these billionaires lost great %'s of their wealth over the last year. I personally see rent/CoL being the problem. I don't know of solutions but I do feel going after billionaires is just a waste of energy. I'm a bit bias as my work has some crossover with "wealth and finance" (trading stocks) but all too often these ideas about "taxing rich people" just blow up and leave everyone worse off. https://en.wikipedia.org/wiki/Swedish_financial_transaction_tax https://en.wikipedia.org/wiki/Swedish_financial_transaction_... TL;DR, they tax each trade on the market. It makes a fraction of what it was projected to make and never comes close to making more than they did before by just taxing the capital gains (profit from trading). Its an idea I've seen showing up more and more.

cactus2093 6y ago

You left out a key part in this simplified formula - you pay $X and make $Y from the work, and you do this for N people. If you leave X and Y the same and scale N down to like 50 or 100 employees, you have a good old hard working American business that's creating solid working class jobs. When you scale N up to an almost inconceivably large number (Amazon has over a million employees) you get an owner with an inconceivably large fortune. The problem with just taxing it all away to prevent him from being a billionaire is the money is tied to control of the company, so it's equivalent to saying nobody can build a business bigger than some arbitrary limit. Which is equivalent to saying nobody can build a business with more than a certain arbitrary number of employees. Where would any of us work if that were the case? It's not at all a given that you would get millions of new small and medium businesses that would completely make up for that gap you'd have from lopping off every big company at a couple billion dollar market cap. The world is just not zero-sum like that as much as progressives might (either deceptively, or obliviously) pretend that it is. > Paul would never fund a founder who wanted to divide all profits among employees While YC might not recommend a founder take literally 0% equity, they are hugely supportive of founders giving more equity to employees and keeping less for themselves and have done a lot to move the industry in that direction https://blog.samaltman.com/employee-equity https://blog.samaltman.com/employee-equity

naravara 6y ago
> The problem with just taxing it all away to prevent him from being a billionaire is the money is tied to control of the company, so it's equivalent to saying nobody can build a business bigger than some arbitrary limit. Limits are hardly arbitrary. If you control a large enough chunk of economic output that your decisions have distortionary effects on other markets and people it’s not an “arbitrary” standard that this should be disallowed. I assume everyone on HN would be pretty pro something like net neutrality to constrain gatekeepers from carving a slice out of all business done on the internet for themselves on these grounds. But, for some reason, people seem to have trouble connecting how the same logic applies to distortionary control over the media or something like urban transit.
- chii 6y ago

monknomo 6y ago

I've heard it phrased that no one every sees a Ferrari drive by and wonders how many dishes they had to wash to get the cool car.

justinboogaard 6y ago

Bezos is not a billionaire because he pays people less money than what he is able to capture from their work. He is a billionaire because he owns a lot of shares in Amazon, and Amazon is a trillion dollar company. There are examples where a group of people came together and decided to share in the profit or loss of a venture, and worked on it as employees (REI is a popular US outdoor equipment company that was started this way). Amazon seems to have chosen a path where instead of asking individual employees to take a loss or break even for 20 years, they paid their employees while the company absorbed those losses and scaled. The "billionaire" bit here seems arbitrary. Bezos is a billionaire because he owns a lot of shares because he didn't have a lot of cofounders. If he had started Amazon with 20 different cofounders then he (probably) wouldn't be a billionaire. Either way, the concept of exploiting labor for profit doesn't impact his billionaire status. I'd be open to having a separate discussion around what it means to "exploit" labor, but on this topic I think moving the conversation from the concept of billionaire founders to how the system oppresses those that fall below a certain income would be more productive. I don't know why Paul funds or doesn't fund certain founders, but if I were Paul I would be funding those founders that I believe can start companies that will eventually have stock collectively worth a lot of money. From the stories I've read - most of the founders that Paul funded DO plan on splitting their profits amongst all their employees - purely by virtue of when he invests in a company, the founders usually were the only employees. If I was Paul my dream would be that a company started by a small group of initial founders would be able to get big without having to "exploit" (or hire) any people at all.

pdonis 6y ago

> Paul would never fund a founder who wanted to divide all profits among employees. Why not? He explains what YC is looking for in a founder, and I don't see "what will the founders do with the profits" mentioned at all.

pdonis 6y ago

> it’s basically impossible to accumulate that amount of wealth through work Not at all. I have no doubt that Jeff Bezos, for example, works very hard. The difference is not whether or not a person works, but what they work on. Another poster upthread (mightybyte) suggested viewing this in terms of leverage: how much is the impact of your work magnified? I think this is a very fruitful way of looking at it; see my post upthread in response.

Meditato 6y ago

Also, his idea that "making something people want" precludes exploitation is naive at best. It's easier to make something that the masses want by exploiting people along the way. As a former bay area startup engineer, I saw this all the time...including in two different YC companies.

WalterBright 6y ago

The Beatles did not exploit the labor of people pressing their records to become wealthy. Those same people pressed records for other artists who did not make it big, or even fell flat. Their labor input was exactly the same. The difference was in the songs the Beatles created. The Beatles created those songs, not the laborers who pressed the records. Or take Stevie Nicks, who google reports is worth $100m. Are the stage hands who set things up for a concert creating that wealth for her? Nope. Those stage hands could do exactly the same for my unrecognized musical talent, I could pay them the same, and would lose gigantic amounts of money. Is Stevie exploiting those stage hands? If she is, then wouldn't those stage hands doing the exact same work for me be exploiting me for my foolish money? Bottom line is people are entitled to what they can negotiate for. They don't give it back if their employer loses money, so why would they be entitled to what their employer made?

Frondo 6y ago
So let the beatles pocket their billion, and we'll collect most it back at the end of the tax year. How's that?
- nickpp 6y ago
  Thievery.
  - Frondo 6y ago
    Taxation isn't thievery.
    - WalterBright 6y ago
      That depends on why the tax is applied.
- webmaven 6y ago
  > So let the beatles pocket their billion, and we'll collect most it back at the end of the tax year. How's that? Sounds about right. Meanwhile the owners of the capital are free to make money off the float (and pay capital gains rates on those profits).

kortilla 6y ago

> But what people are saying is that the narrative that billionaires built their wealth themselves is false But it’s not. I can put shit into boxes in my yard and put them on a truck but that doesn’t mean I’m providing the same value as the Amazon worker. Labor has no value on its own. You have to do work that is useful for someone to generate value and identifying the useful work (i.e. connecting the participants) is a big part of that value.

ericd 6y ago

The expected monetary value of the average software engineer’s work working at Google is much higher than that of the same engineer working at a small company, launching the same product. The difference is the leverage provided by the structure that is Google - the audience, brand, machinery, etc. The software is important, but so is the massive built-in audience. It is the company’s structure accounts for the majority of the value created by that engineer’s work. So, how is it exploitation to give them less than the total profit created?

webmaven 6y ago
> It is the company’s structure accounts for the majority of the value created by that engineer’s work. Except that billionaire founders also persist in flattering themselves that their company "only hires the best". If that were true, FAANG salaries for ICs ought to be even higher than they are, and competition between them for employees would be cutthroat rather than collegial. As it is, they are competing for employees as a group with the rest of the industry, more so than with each other, so the truth is a mixture: individual employees matter more than their compensation actually reflects, and the company the employee is embedded in matters a great deal too (enough so that we only ever see a randomly occurring concentration of high quality employees producing innovative products and services when that group is more-or-less the whole org: a startup. Inside a larger org, such groups only flourish deliberately).

notSupplied 6y ago

Say an engineer is working on Google’s ad platform. In an alternate universe, he is working at Bing, producing code of identical quality. The economic outcome of this identical unit of labor output is dramatically different. That difference is attributed to the company, not the laborer. Now whether that is because of “monopolistic forces” or because the company is truly “better managed” is up for debate. So just because your labor is worth $X to your employer doesn’t mean all of it can be attributed to you. It would be inaccurate to believe that they owe you exactly $X, and anything less would be exploitation.

derangedHorse 6y ago

“But what people are saying is that the narrative that billionaires built their wealth themselves is false and that they should be taxed heavily in recognition of the fact that they built their wealth off of the work of others.” So are you saying that there should be a higher tax for a person who profits off the labor of someone else? Surely the person who constructed the system (that gave opportunity to the other individual they’re profiting off of) added some benefit to the other individual as well, otherwise wouldn’t the other individual work for himself or elsewhere? Or is the argument that there is always a moral cap on how much profit a person can make off someone else?