3 ms·

Why Startups cause Economic Inequality - and Why that's Good

7 points by lupin_sansei 19y ago

cglee 19y ago
I was wondering when these super conservative groups, such as the Heritage Foundation, would start using the "inequality is good" argument. There's a lot to like about an utopian society based solely on meritocracy. But the truth is there are large numbers of people who cannot compete on equal footing due to circumstances that are/were out of their control. It's like taking a Chinese class with a bunch of Chinese students and you're the only one who doesn't know the difference between Mandarin and Cantonese. Using the Google founders as the example of "inequality being good" is ridiculous. Most people don't have a problem with rewarding innovative work; people have problems with not providing a baseline for those who can't. In a pure pay for performance society, those who can't perform, won't get paid. Is this fair? On the surface, well yes, maybe. But what if the REASON for their non-performance is based on systematic oppression and lingering effects thereof? Is a pure pay for performance system still fair? What about the handicapped, depressed, and otherwise ill affected? The pay for performance (or inequality is good) argument is fine when no one gets hurt, when the low performers, say, will get a 1% instead of 10% bonus. But when we're talking about the lower levels of society, where people can literally go homeless or die of untreated disease, then it's not so easy to come up with these fantasy theories.
- pg 19y ago
  You're inventing straw men. The writer isn't advocating that people only get whatever wealth they produce. That would mean leaving the severely ill to starve.
- lupin_sansei 19y ago
  "It's like taking a Chinese class with a bunch of Chinese students and you're the only one who doesn't know the difference between Mandarin and Cantonese." But the answer to that isn't to give you all the same grade regardless of how good your Chinese is, is it. The best thing to do is to grade you accordingly, and for you to find some other class to study.
  - cglee 19y ago
    To carry the analogy further, it'll be if we're only rewarding on mastery of Chinese. For those who are not on equal footing, what other "class" can they take? "Good inequality", that is, inequality resulting from differing levels of productivity, is only relevant when everyone starts at roughly the same level. When current inequalities already exist, isolating the productivity variable is very difficult without a social and historical context.
    - lupin_sansei 19y ago
      "To carry the analogy further, it'll be if we're only rewarding on mastery of Chinese. For those who are not on equal footing, what other "class" can they take?" Whatever class they like (Math, science, etc.). Preferably one they are better at than Chinese. ""Good inequality", that is, inequality resulting from differing levels of productivity, is only relevant when everyone starts at roughly the same level." So you're saying that since people are born with differing abilities then they should all get paid the same? You understand that one of the chief ways to motivate people to be more productive is to pay them for it. Who would be willing to work start up hours if you only got paid the same as someone who worked 40 hours a week?
      - cglee 19y ago
        That's not what I'm saying.
cglee 19y ago
You're right. I extrapolated to where I sense the Heritage Foundation was hinting at. Word for word, if it came from an apolitical source, there would be nothing to argue against.
- lupin_sansei 19y ago
  The merit of an argument is independent of its source: http://en.wikipedia.org/wiki/Ad_hominem http://en.wikipedia.org/wiki/Ad_hominem
  - cglee 19y ago
    Maybe if you're a computer or participating in high school debate. The source matters a lot, because it indicates intent.
    - cglee 19y ago
      Ok, I committed another fallacy in the first sentence. Ignore that and just read the second.
      - jey 19y ago
        No, the second sentence is wrong too.
- brlewis 19y ago
  Then don't argue against it. Say, "This article is true in and of itself, but I think the heritage foundation is presenting it in order to..."
staunch 19y ago
"...who wouldn't want to swap paychecks with them..." I wouldn't want to. They have very low salaries :-)
davidw 19y ago
Like all things, though, some moderation is probably a good idea. Even if this argument makes perfect logical sense, it makes apes unhappy to see other apes getting way more bananas than they are, and if you start to talk politics rather than simply economics, this has practical consequences. Better to balance things out a little bit before things get out of hand and the apes with few bananas vote in someone with truly bad ideas about redistributing wealth. I once saw a not-really-serious idea by a center-left economist that having money is good and just, as the article says, but perhaps what should be taxed are the very visible bananas (fancy cars, "bling") that the better off apes use to flaunt their wealth.
- willarson 19y ago
  Is taxation an appropriate venue for implementing and enforcing cultural norms? Flaunting wealth is a cultural phenomenon, and demarcating it as wrong is an entirely subjective decision. I think following the "we should appease others to keep the masses from taking everything" argument we end up creating a world far too similar to Ayn Rand's Atlas Shrugged. Actually, the entire argument is very much Objectivist. I wonder if there is a connection.
andyanon 19y ago
I agree cglee. im all for capitalism but cannot stand it when privileged conservatives use few remarkable examples of immigrant success to gloss over the inequalities of opportunity that are entrenched in and still plague American society.
- lupin_sansei 19y ago
  What inequalities of opportunity are entrenched in America? I'm not American so I am genuinely interested to know.
  - pg 19y ago
    One of the worst is schools. Public schools in the US are not very good. Rich people tend to go to private ones. Pretty near zero representatives' and senators' kids go to DC public schools, for example. Whether they're liberal or conservative, they seem to draw the line at that. And there seems to be an unwritten rule they won't criticize one another about it. In theory this inequality ends at college, because the best colleges will take you for free if you're poor. But in practice it doesn't, because (a) the good colleges do "legacy admissions" and (b) the private schools are much better at coaching their students to get into good colleges.
    - willarson 19y ago
      I don't even think the inequality ends with college, even theoretically. Colleges use the lack of income as leverage to raise the quality of their students, which means you can only apply to a school substantially worse than you would be capable of reaching if you had greater financial resources (this line gets blurred at the top, because the students getting full ride are above the standard student at the institutions, but there isn't anywhere better they could go anyway). I don't think legacy admissions are a huge problem, colleges are very lenient about admitting any student who can pay their full way, regardless of previous connections (this is more true for private schools where the full yearly tuition + board can be 35-50k). On the other hand, I think your point b is crucial. The quality of private schools, especially after 1st grade and before high school, is not consistently better than public schools (this is anecdotal evidence from personal experience, which I suspect the statistics would contradict, but there are so many confounding factors that the statistics seem of dubious quality). Instead, it is the connections the private schools have, and the quality of their college admission counselors that are fundamental. At my school we were hounded relentlessly to submit college applications (we could be detained at school if we missed completing certain goals by certain days). It was literally harder not to apply to college than it was to apply to college. They proofread all admission essays, and gave personalized advice on where to apply, which institutions we had strong connections, etc. This sort of thing simply doesn't exist at public schools, and its the biggest advantage I experienced from a private high school.
geebee 19y ago
The popularity of this argument depends almost completely on who you choose for your examples. Most people seem to agree when you talk about Sergey Brin and Larry Page? They started a company from nothing, added trememdous value to the world, and pocketed some big bucks for themselves. Rock on, those are the kind of guys who make you feel fine, even positive, about income inequality. Next in line come the CEOs who take over an existing company and help themselves to some of the wealth. Some of these CEOs do such a good job generating growth that most people feel fine about it (Google's still a good example - nobody seems to feel that Eric Schmidt's weath is undeserved). But Grasso's payday (what was it, $160M?) upset a lot of people. And Semel's severance package is truly bewildering to me. And lastly, we do have some of the genuinely worrisome wealth (mabye worse than the 17th century England or Saudi Arabia kind) in the US. This is what PG wrote about when he discussed the intersection of wealth and political power. For example, I heard about the CEO of a large military contractor. He was elected to the second highest office in the land, where he used his influence to start a war and destroy another country's infractructure. Later, he awarded no-bid contracts to his former company - but he refuses to say who he met with and when. We need to distinguish between good inequality and bad inequality, and there's still plenty of the bad kind out there. The key is to fight corruption, not wealth.

7 points by lupin_sansei 19y ago

cglee 19y ago

I was wondering when these super conservative groups, such as the Heritage Foundation, would start using the "inequality is good" argument. There's a lot to like about an utopian society based solely on meritocracy. But the truth is there are large numbers of people who cannot compete on equal footing due to circumstances that are/were out of their control. It's like taking a Chinese class with a bunch of Chinese students and you're the only one who doesn't know the difference between Mandarin and Cantonese. Using the Google founders as the example of "inequality being good" is ridiculous. Most people don't have a problem with rewarding innovative work; people have problems with not providing a baseline for those who can't. In a pure pay for performance society, those who can't perform, won't get paid. Is this fair? On the surface, well yes, maybe. But what if the REASON for their non-performance is based on systematic oppression and lingering effects thereof? Is a pure pay for performance system still fair? What about the handicapped, depressed, and otherwise ill affected? The pay for performance (or inequality is good) argument is fine when no one gets hurt, when the low performers, say, will get a 1% instead of 10% bonus. But when we're talking about the lower levels of society, where people can literally go homeless or die of untreated disease, then it's not so easy to come up with these fantasy theories.

pg 19y ago
You're inventing straw men. The writer isn't advocating that people only get whatever wealth they produce. That would mean leaving the severely ill to starve.
lupin_sansei 19y ago
"It's like taking a Chinese class with a bunch of Chinese students and you're the only one who doesn't know the difference between Mandarin and Cantonese." But the answer to that isn't to give you all the same grade regardless of how good your Chinese is, is it. The best thing to do is to grade you accordingly, and for you to find some other class to study.
- cglee 19y ago
  To carry the analogy further, it'll be if we're only rewarding on mastery of Chinese. For those who are not on equal footing, what other "class" can they take? "Good inequality", that is, inequality resulting from differing levels of productivity, is only relevant when everyone starts at roughly the same level. When current inequalities already exist, isolating the productivity variable is very difficult without a social and historical context.
  - lupin_sansei 19y ago
    "To carry the analogy further, it'll be if we're only rewarding on mastery of Chinese. For those who are not on equal footing, what other "class" can they take?" Whatever class they like (Math, science, etc.). Preferably one they are better at than Chinese. ""Good inequality", that is, inequality resulting from differing levels of productivity, is only relevant when everyone starts at roughly the same level." So you're saying that since people are born with differing abilities then they should all get paid the same? You understand that one of the chief ways to motivate people to be more productive is to pay them for it. Who would be willing to work start up hours if you only got paid the same as someone who worked 40 hours a week?
    - cglee 19y ago
      That's not what I'm saying.

cglee 19y ago

You're right. I extrapolated to where I sense the Heritage Foundation was hinting at. Word for word, if it came from an apolitical source, there would be nothing to argue against.

lupin_sansei 19y ago
The merit of an argument is independent of its source: http://en.wikipedia.org/wiki/Ad_hominem http://en.wikipedia.org/wiki/Ad_hominem
- cglee 19y ago
  Maybe if you're a computer or participating in high school debate. The source matters a lot, because it indicates intent.
  - cglee 19y ago
    Ok, I committed another fallacy in the first sentence. Ignore that and just read the second.
    - jey 19y ago
      No, the second sentence is wrong too.
brlewis 19y ago
Then don't argue against it. Say, "This article is true in and of itself, but I think the heritage foundation is presenting it in order to..."

staunch 19y ago

"...who wouldn't want to swap paychecks with them..." I wouldn't want to. They have very low salaries :-)

davidw 19y ago

Like all things, though, some moderation is probably a good idea. Even if this argument makes perfect logical sense, it makes apes unhappy to see other apes getting way more bananas than they are, and if you start to talk politics rather than simply economics, this has practical consequences. Better to balance things out a little bit before things get out of hand and the apes with few bananas vote in someone with truly bad ideas about redistributing wealth. I once saw a not-really-serious idea by a center-left economist that having money is good and just, as the article says, but perhaps what should be taxed are the very visible bananas (fancy cars, "bling") that the better off apes use to flaunt their wealth.

willarson 19y ago
Is taxation an appropriate venue for implementing and enforcing cultural norms? Flaunting wealth is a cultural phenomenon, and demarcating it as wrong is an entirely subjective decision. I think following the "we should appease others to keep the masses from taking everything" argument we end up creating a world far too similar to Ayn Rand's Atlas Shrugged. Actually, the entire argument is very much Objectivist. I wonder if there is a connection.

andyanon 19y ago

I agree cglee. im all for capitalism but cannot stand it when privileged conservatives use few remarkable examples of immigrant success to gloss over the inequalities of opportunity that are entrenched in and still plague American society.

lupin_sansei 19y ago
What inequalities of opportunity are entrenched in America? I'm not American so I am genuinely interested to know.
- pg 19y ago
  One of the worst is schools. Public schools in the US are not very good. Rich people tend to go to private ones. Pretty near zero representatives' and senators' kids go to DC public schools, for example. Whether they're liberal or conservative, they seem to draw the line at that. And there seems to be an unwritten rule they won't criticize one another about it. In theory this inequality ends at college, because the best colleges will take you for free if you're poor. But in practice it doesn't, because (a) the good colleges do "legacy admissions" and (b) the private schools are much better at coaching their students to get into good colleges.
  - willarson 19y ago
    I don't even think the inequality ends with college, even theoretically. Colleges use the lack of income as leverage to raise the quality of their students, which means you can only apply to a school substantially worse than you would be capable of reaching if you had greater financial resources (this line gets blurred at the top, because the students getting full ride are above the standard student at the institutions, but there isn't anywhere better they could go anyway). I don't think legacy admissions are a huge problem, colleges are very lenient about admitting any student who can pay their full way, regardless of previous connections (this is more true for private schools where the full yearly tuition + board can be 35-50k). On the other hand, I think your point b is crucial. The quality of private schools, especially after 1st grade and before high school, is not consistently better than public schools (this is anecdotal evidence from personal experience, which I suspect the statistics would contradict, but there are so many confounding factors that the statistics seem of dubious quality). Instead, it is the connections the private schools have, and the quality of their college admission counselors that are fundamental. At my school we were hounded relentlessly to submit college applications (we could be detained at school if we missed completing certain goals by certain days). It was literally harder not to apply to college than it was to apply to college. They proofread all admission essays, and gave personalized advice on where to apply, which institutions we had strong connections, etc. This sort of thing simply doesn't exist at public schools, and its the biggest advantage I experienced from a private high school.

geebee 19y ago

The popularity of this argument depends almost completely on who you choose for your examples. Most people seem to agree when you talk about Sergey Brin and Larry Page? They started a company from nothing, added trememdous value to the world, and pocketed some big bucks for themselves. Rock on, those are the kind of guys who make you feel fine, even positive, about income inequality. Next in line come the CEOs who take over an existing company and help themselves to some of the wealth. Some of these CEOs do such a good job generating growth that most people feel fine about it (Google's still a good example - nobody seems to feel that Eric Schmidt's weath is undeserved). But Grasso's payday (what was it, $160M?) upset a lot of people. And Semel's severance package is truly bewildering to me. And lastly, we do have some of the genuinely worrisome wealth (mabye worse than the 17th century England or Saudi Arabia kind) in the US. This is what PG wrote about when he discussed the intersection of wealth and political power. For example, I heard about the CEO of a large military contractor. He was elected to the second highest office in the land, where he used his influence to start a war and destroy another country's infractructure. Later, he awarded no-bid contracts to his former company - but he refuses to say who he met with and when. We need to distinguish between good inequality and bad inequality, and there's still plenty of the bad kind out there. The key is to fight corruption, not wealth.