
Paul Graham is wrong about inequality - craneca0
http://www.vox.com/2016/1/6/10722302/paul-graham-inequality
======
Retric
"I know the rich aren't all getting richer simply from some sinister new
system for transferring wealth to them from everyone else,"

401(k)'s are a great example of shifting wealth to the wealthy. SS was used to
fund general government spending, but nobody got directly rich from it. With
401(k)'s the financial sector can skim a vast pool of money from the middle
class with a huge range of hidden fees. Toss in a 10% fee for pulling money
out in an emergency and it's surprisingly bad for younger workers vs simply
investing money and paying the trivial cap gains taxes.

On top of that it inserted 100's of billions of dumb money into the market
which creates tones of opportunity's to make money using HFT etc.

~~~
_nb
Can you elaborate on the 401k point? Do you think they're a problem because
generally people cant make good investment decisions, or that there are
structural problems with the vehicle itself that make it a bad choice for any
worker?

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shockzzz
I feel like everyone is inadvertently proving PG right (even though I think
he's kinda wrong). His whole point is that "inequality" is too vague and broad
of a term, and that we should speak specifically to things like poverty and
tax evasion.

~~~
SideburnsOfDoom
Yes, but I feel that the "startup inequality" that PG wants to talk about is
the outlier. The "Wall street inequality", what PG calls "those specific
abuses", is 90% of the real story of today, and so you might as well call that
"regular inequality" or leave off the prefix entirely.

i.e.

> Some of that is certainly Silicon Valley executives. But it's the financial
> professionals that this conversation is really about. ... The inequality
> debate is driven by the belief that those kinds of abuses are disparate and
> widespread.

~~~
shockzzz
100% with you there. Amongst people who know what they're talking about, this
is completely accurate.

But I don't think most people understand "Occupy Wall Street" as being
distinguishable from the Google protests, as Ezra suggests. Most people aren't
highly specific about the difference between Uber's valuation and Subprime
Mortgage Lending (including the media).

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xiaoma
It's hard to tell if Ezra is willfully misinterpreting the essay or just
didn't get it. Most concerning are:

1) In the entire long-winded complaint, there isn't even a mention of the
primary thrust of PG's essay—while some income inequality is caused by rent-
seeking and bad behavior, some is also caused by productivity inequality.
Productivity is more unevenly distributed than ever, and the trend will likely
become more extreme as technology advances.

2) Intentionally confusing the definitions of "start-up" and "small business".
Despite having acknowledged the that the meaning of the term was an issue, he
still plowed forward and sited "start-up" statistics that were counting all
businesses, primarily small businesses.

~~~
cromwellian
It's precisely because of the latter issue of productivity that the overall
tone/thrust of PG's essay is wrong. If productivity increases are inevitable
and will put most humans out of work, or devalue their labor, then returns to
capital will increase even more, making the entire system unstable, and
practically begging for redistribution.

We can't have a society for very long where a few unicorn software and robot
companies run everything with AI and bots, and most people displaced. It's not
good for everyone, not even the hyper rich owners of those unicorns.

There's a certain amount of wealth and income where the marginal utility of
more comes with a global detriment to everyone, even you.

~~~
xiaoma
Nothing in this comment shows anything in the essay that was "wrong".

Since market demand is created by people wanting things, it's overwhelmingly
unlikely that productivity increases "will put most humans out of work". If
they keep doing the _same_ labor, then yes it will be devalued, just as
chopping down trees or sewing is valued less in first world economies in 2015
than it was in 1815.

In your hypothetical example where software and robot companies run everything
with AI there would be richer people than ever before, but poverty would also
be nearly eliminated. Is that worse than a poorer but more equal world? If so,
how?

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sail
First: _" Sweden, for instance, has a higher startup rate than America, and
less income inequality — as do a number of other countries."_

To the extend it can be measured, the metric that matters isn't the number of
startups ("employer enterprise birth rate" in the Sweden link). It's the net
value generated by them.

Second: _" Would anyone choose the second world?"_

Yes, startup founders would. Because they can fix poverty with the value their
startup generated.

~~~
josephmx
"Yes, startup founders would. Because they can fix poverty with the value
their startup generated."

Is there a lack of poverty in SF?

