
My simplified response to Paul Graham's simplified essay - lisper
http://blog.rongarret.info/2016/01/my-simplified-response-to-paul-grahams.html
======
tomp
PG's simplified essay seems like attack on a strawman; he's mainly arguing
that inequality is good, but then mostly everybody agrees with that.

The issue people see (and PG conveniently ignores) is _increasing_ inequality
- not _locally_ increasing (i.e. an enterpreneur becoming rich because of a
successful business idea), but _globally_ increasing inequality, which happens
because of rent-seeking, tax avoidance, buying political influence,
monopolistic behaviour, corruption, nepotism, inheritance...

Personally, I'm mostly concerned about the last one - inheritance. I don't
have a problem with resourceful people being rich. But I see a danger of the
wealth being concentrated over generations unless we introduce proper (non-
avoidable) inheritance taxes.

~~~
zepto
Inheritance taxes on their own will do nothing to change the situation because
then you'll simply concentrate all the wealth in corporate structures that
transcend the death of their owners.

Even if you make it impossible to 'pass down' these structures as property,
you will have de-facto inheritance through nepotism and clan structures.

~~~
adevine
This doesn't make sense to me. At the end of the day, all stock must be owned
by actual people, even if it is through a network of other corporate entities
and trusts.

A corporation may transcend the death of its owners, but if I own 50% of a
corporation, and I gift my shares to an heir (or even let them purchase it at
a discount), the government will still take their cut.

~~~
zepto
Sure - let's assume for a moment that inheritance tax does work to distribute
ownership. That simply removes 'ownership' as the instrument for control,
positions within the corporate structure would then become the 'title' to the
assets, and these would be passed down through nepotism and clan structures as
I mentioned.

~~~
adevine
While I'm not a lawyer, it doesn't really work this way, at least in the US.
The law defines "ownership" pretty clearly based on who has real control over
an asset. You can't really pretend someone else is the owner if you have the
real control over the disposition of an asset.

~~~
zepto
Who says the titles wouldn't provide real control?

Do Larry And Sergei legally own all of Alphabet given that they have full
control?

------
jernfrost
Great reply, although I disagree with the typical simplified assertions that
the Soviet System didn't work. Without doubt the system had major flaws. But
it is perhaps much more shocking that the system worked as well as it did
given so many obvious problems with it. Taking a primitive peasant society and
turning it into a space traveling civilisation was quite astonishing. One has
to also keep in mind that for decades the Soviet Union had very impressive GDP
growth.

The problem with discussing any of this is that the anti-socialism and
communism feelings run so deep that people can't have a neutral discussion of
the merits and flaws of socialism and communism. Anything positive can so
easily be dismissed by the utter tyranny and inhumanity practiced by Stalin.

By the irony of this is that Stalin does reflect the nature of socialism
nearly as much as people believe. Both China and Russia were terrible and
totalitarian societies long before socialism and communism.

Still both the Soviet Union and China have turned into far more humane
societies during socialism than they were at any earlier times.

~~~
grecy
To extend on this with an anecdote; A buddy of mine lived and worked in Cuba
for many years, and has very positive things to say about life there. He lives
in Canada, and enjoys life in Cuba as much as he does in Canada, which I think
says a lot.

Every single person has healthcare, food and shelter. Every single person has
a job, and their kids go to a good school. Because everyone is paid the same,
work is not the focus of life, social interactions are (which echos my
experience during 2 years in Latin America) There is no point working harder
or longer, it doesn't get you anything, so you go home to your family.

When you see a friend or distant acquaintance on the street, you stop and talk
for 20 minutes. You prioritize family and spending time with them, rather than
prioritizing work.

Obviously it's not perfect, but it's very far from the disaster it's made out
to be.

~~~
ggreer
Your buddy is whitewashing to an absurd extent. The Cuban government regularly
engages in censorship[1], religious persecution, stifling of free speech,
indoctrination of children, and imprisonment of political dissidents.[2] It's
getting better, but it's still _really_ bad.

1\.
[https://en.wikipedia.org/wiki/Censorship_in_Cuba](https://en.wikipedia.org/wiki/Censorship_in_Cuba)

2\.
[https://en.wikipedia.org/wiki/Human_rights_in_Cuba#Contempor...](https://en.wikipedia.org/wiki/Human_rights_in_Cuba#Contemporary_Cuba)

~~~
abandonliberty
It's quite possible to go there and only see the whitewashing. I'm always
curious where the reality is for a country that has so many wealthy and
powerful enemies. Given all the evidence we have of agencies managing public
opinion through money or speech, I'm always a bit skeptical.

One of the key critics of Cuba in our links was Reporters Without Borders. I'm
actually quite surprised to find the following still visible on their own
page:

"An article by John Cherian in the Indian magazine Frontline alleged that RWB
"is reputed to have strong links with Western intelligence agencies" and "Cuba
has accused Robert Meynard [sic] the head of the group, of having CIA
links".[79]

RWB has denied that its campaigning on Cuba are related to payments it has
received from anti-Castro organisations.[80] In 2004, it received $50,000 from
the Miami-based exile group, the Center for a Free Cuba, which was personally
signed by the US State Department's Special Envoy to the Western Hemisphere,
Otto Reich.[75] RWB has also received extensive funding from other
institutions long critical of Fidel Castro's government, including the
International Republican Institute.[81]

Journalist Salim Lamrani has accused Reporters Without Borders with making
unsupported and contradictory statements regarding Internet connectivity in
Cuba.[82]"

[https://en.wikipedia.org/wiki/Reporters_Without_Borders#Cuba](https://en.wikipedia.org/wiki/Reporters_Without_Borders#Cuba)

------
retube
> Today, the top 1% control fully half of the planet's wealth

This is a meaningless statistic given negative wealth is possible (indeed
common). By this simple measure a recent MBA graduate of Harvard with 200k
debt and no assets is poorer than a Mumbai slum dweller with 2 rupees in his
pocket.

I would argue that's not a fair reflection of the actual comparative wealth of
the two individuals.

A potentially better measure of wealth would be say energy consumption which
is highly correlated with living standards.

Of course the other point is that whilst inequality may be increasing, if
measured in absolute cash terms, is that a bad thing if the living standards
of the poor are being universally raised? A billion people in India and China
have entered the middle class in the last 20 years.

It's ironic that the perceived decrease in wealth of the middle class in the
US is exactly because on a global scale inequality, at least amongst the
middle 80% is decreasing: an increasing percentage of wealth created is being
distributed east-wards rather than remaining concentrated in the historically
dominant economic powers of North America and Europe.

~~~
ksowocki
> This is a meaningless statistic

It's only meaningless if you cherry-pick your examples and draw your opinions
from those examples. For 99 percent of the population, wealth is a fair
reflection of the actual comparative wealth of individuals.

~~~
retube
It's hardly cherry picking. I don't know exactly the percentage, but let's say
50% of the US population is net in debt. So all these people are poorer than
the millions in developing nations without a penny to their name? As above, I
would argue no, they are not. Hence this statistic doesn't mean much.

~~~
snowwrestler
The point of the statistic is not living standards, which you are focusing on.
The point is who _controls_ the wealth. A person with a negative net worth is
not wealthy. The person who holds the note for their debt, is. A loan is an
_asset_ on the loaner's books, and yes, it will be included in the calculation
of relative levels of wealth.

------
zepto
The only thing I'd disagree with is the statement 'we're nowhere near there'
with regard to oligarchy and societal collapse. I think we're quite close. We
have an entire generation where a tiny proportion have great prospects and the
rest have steadily diminishing prospects and increasing stress, and we have
educated people who grew up in the west going to join an expressly suicidal
terrorist organization. We have a significant proportion of the population
willing to vote for a demagogue whose positions are clearly nonsensical
because he represents their (legitimate) anger at their lack of prospects the
status quo affords them.

The descent from here isn't going to be linear.

~~~
drzaiusapelord
>I think we're quite close.

USA: 5% unemployment, GDP per capita of $55,000, 78.74 years life expectancy,
Human Development Index: 8, etc.

EU: 9% unemployment, GDP per capita $38,000, 78.82 years life expectancy,
Human Development Index: 6 average, etc.

Yeah, we're not "close."

Meanwhile countries like the BRIC nations, especially authoritarian
autocracies like China or Russia, with terrible inequality and 100x the
problems the West has strangely get a free pass from these discussions. HN
your bias is showing.

~~~
astazangasta
This wealth is based on social cohesion, which can fall apart in a generation
or two. Genghis conquered half of Asia and built an empire of great wealth and
high culture, but lack of cohesion tore it apart not long after.

~~~
drzaiusapelord
>Genghis conquered half of Asia

Are we really comparing this to a country that's nearly 240 years old and is a
global superpower that has weathered everything from civil war, a major
depression, defeating communism, a moon landing, inventing the internet and
all the technologies you're using right now, the largest economy by GDP, the
most powerful military in history, etc?

This is like saying the The Who or The Stones should have broken up by 1970
because the Dave Clark Five did. I think youre purposely selling short the USA
and citing election hysteria that happens every four years is far from
convincing. If anything this kind of discourse is healthy and good in a
democracy.

~~~
zepto
Yes - why not? Are you saying that civil war and defeating communism means
that the US is immune to internal problems? There are many previous examples
of societies that survived a civil war and defeated similar sized opponents,
but later collapsed. Why not this one?

------
vezzy-fnord
_Paul Graham, like nearly everyone in today 's politics, fails to appreciate
the near-universal validity, at least when it comes to social and economic
policy, of Ron's First Law: All extreme positions are wrong._

I realize this is tongue-in-cheek, but never forget:
[https://en.wikipedia.org/wiki/Argument_to_moderation](https://en.wikipedia.org/wiki/Argument_to_moderation)

One could say that the modern world is largely a result of continuous middle-
ground reforms that have built up into in an unfathomable and pathological
state. Some radicalism might indeed be in order.

~~~
ZenoArrow
> "I realize this is tongue-in-cheek, but never forget:
> [https://en.wikipedia.org/wiki/Argument_to_moderation](https://en.wikipedia.org/wiki/Argument_to_moderation)
> "

"Vladimir Bukovsky points out that the middle ground between the Big Lie of
Soviet propaganda and the truth is a lie, and one should not be looking for a
middle ground between disinformation and information.[2] According to him,
people from the Western pluralistic civilization are more prone to this
fallacy because they are used to resolving problems by making compromises and
accepting alternative interpretations, unlike Russians who are looking for the
absolute truth."

Seeking absolute truth is a fool's errand. To use a physical analogy, truth is
not a single point, it's a range. If you seek absolute truth you'll blind
yourself to the range of possibilities.

~~~
HSO
> _truth is not a single point, it 's a range_

Uh, that really depends on the domain. I agree that _politics_ is the art of
compromise but that does not mean there are no facts and logic.

~~~
ZenoArrow
Tell me a fact.

~~~
HSO
ZenoArrow just asked me to tell him or her a fact.

~~~
ZenoArrow
That's one possible truth. Another possible truth is that someone else asked
you that question using ZenoArrow's account.

~~~
HSO
Ok, now you're just being silly. I will not waste more time on this thread.

~~~
ZenoArrow
Another option: I could be a bot.

Truth involves an element of interpretation. Truth depends on your frame of
reference. You believe I'm wasting your time, but I may not be, it's up to you
to choose.

------
dgregd
PG:"We will not do a good job of fixing the bad causes of economic inequality
unless we attack them directly.

But if we fix all the bad causes of economic inequality, we will still have
increasing levels of it, due to the increasing power of technology"

I still don't get what PG is trying to say.

For example few years ago Google and Apple bosses made secret agreement to not
hire employees of the competing company. The goal was to transfer wealth from
engineers to shareholders and bosses. There are a lot of other examples.
That's why the essay had so much negative comments. PG should clearly condemn
these practices.

PG:"we will still have increasing levels of it, due to the increasing power of
technology"

That is just narrow VC point of view. Think about what cheap printing
technology did for our civilization. There are countless of other examples.
Today UK monarchy can only dream about the power they had.

I had a dream that the technology (Internet, DVCS ...) will make legislation
process more transparent. Tax loophole? Just file a bug, propose a fix, vote
for the fix. Think about what Stack Overflow and Github did for software
development. Something similar can be done for the law.

~~~
nimblegorilla
It seems PG is thinking backwards on this. Instead of fixing the bad _causes_
of inequality we should try to fix the bad _consequences_ of inequality.

------
cryoshon
I would leave my simplified response at: income inequality prevents creation
of startups and is generally bad for society.

We don't want more income inequality at the end of the day. Our wildest dream
is not to have a world in which everyone passes by but some are opulent, but
rather a world in which everyone is opulent-- no inequality. In lieu of this
greater dream, merely reducing inequality is a good start... the motions about
being able to reduce poverty without changing economic inequality are
laughably out of touch, still.

------
rcavezza
<<We tried it. It didn't work. No reasonable person disputes this.

Karl Marx would argue that his ideas might have worked if someone else
implemented them.

~~~
skeolawn
Maybe he would, but all the experiments so far have failed for pretty much the
same reasons and at enormous human cost.

Meanwhile capitalism in whatever form it's tried has proven itself to be an
incredible engine of poverty reduction and human/social progress. There's
always been tension between capitalism and democracy and we may be at a point
where some of the cracks are showing.

~~~
xbejdjched
It's worth keeping in mind that we do live in the propaganda bubble of the
Soviet Union's arch nemesis.

For their KGB, we had our J. Edgar Hoover. For their political purges, we had
our House Committee on Unamerican Activities. For their later economic
struggles, we had our great depression.

~~~
cmdkeen
We never had several deliberately inflicted famines killing millions of
people. In every single example you listed Communist countries were
demonstrably worse. Humanity is capable of some pretty awful things under any
system of government - Communism, or perhaps the way it comes about, has
consistently demonstrated that itself better at enabling our worst impulses
compared to democratic capitalism.

That people, included in the UK elected representatives, make a case for the
Soviet Union and Communist China having done more good than bad is a a
terrible failure of history.

~~~
xbejdjched
But you're missing the point of what I'm saying:

I suggest taking the notion that communism is always bad with a grain of salt,
given that our nation has been propagandized to despise communism much as the
Soviets were propagandized to hate capitalism.

The Soviet Union went from a third world country of farmer peasants to
becoming the world's first spacefaring civilization in only 40 years.
Considering where they started, I believe that is quite impressive.

During the cold war, each side's media focused exclusively on the other's
shortcomings, turning molehills into mountains, so to speak. To not
acknowledge the reality distortion field around reporting of the era is an
assault against the historical record.

~~~
cmdkeen
The USSR becoming the world's first space faring nation is to a large extent
the result of the Second World War and the knowledge gained from German
scientists - because Stalin purged the nascent Soviet programme during the Red
Terror.

Was the breaking of the kulaks - causing the Holodomor which killed an
estimated 2.5m-7m Ukranians let alone deaths across the rest of the USSR - a
necessary step in the industrialisation of Russia?

Capitalism industrialised - and indeed created industrialisation, with some
pretty nasty consequences which led to unionisation and the growth of the
middle classes. However none of those nasty consequences were anything close
to what Communist regimes have brought us - that isn't bias, historical
propaganda, it is just fact on whatever measure you choose to adopt.

------
FreedomToCreate
PGs argument does not take into account the majority that make it possible for
the few to create things, but instead of being bolstered by those few, are
instead being left behind. Its sad to say, but his current social position is
definitely influencing his thought process.

I turned down a job in Silicon valley. Even a 100K job doesn't mean anything
when most of it goes to rent and my free time is spent sitting in a car or on
a train commuting. I can imagine the stress the rent hikes are having on
everyone else.

------
joshhart
There's one thing PG seems to implicitly which is that the movement from small
company to large, dominating company in a vertical is a good thing.

Ultimately startups seem to be producing winner-take-all companies. I do not
believe this is a healthy thing for the economy or even rights of the consumer
in the long run. There are a lot of services where if you do not like their
terms, there may not be a great practical alternative.

I don't want to see much changed, but I do feel the government should be
encouraging competition much more than it is today. I do not think Facebook
should have been allowed to buy Instagram, and I think WhatsApp should have
been fined an enormous amount for blocking the words "Telegram" to stall their
competitor. We put in the Sherman Antitrust laws to reign in behavior in the
Gilded age and we should have a modern equivalent to encourage not one Google
but 10 Googles in a market.

I'm clearly asking for too much, but after all the recent Airline
consolidation several studies have proven that prices are now higher in
certain markets as a result of lost competition. Capitalism doesn't magically
prevent monopoly or oligopoly - it is up to us to put the right checks and
balances in place.

~~~
bad_user
There are natural monopolies and there are government granted monopolies and
personally I believe the later are doing more harm than the former.
Historically technology has made natural monopolies obsolete, but technology
cannot bypass the law. Because when that happens, new trade agreements can be
made and the law can simply be changed.

If getting rid of monopolies is the goal, we could get rid of patents and
copyrights, government granted monopolies which are about creating artificial
scarcity.

------
guelo
Globalization/free trade has caused wage stagnation in developed countries by
allowing capital to more easily move jobs to the developing world. This system
has created way bigger profits for capital, increased wages for millions in
the developing world, and more wealth overall.

All this has been enabled by the great triumph of "free trade" treaties that
are the first way that humans have figured out how to create enforceable laws
across countries. For example, the US recently repealed meat labeling laws due
to a WTO ruling. This mechanism has allowed capital to bypass democratic
forces that tend towards protectionism.

But the free trade treaties arere heavily rigged towards manufacturer's
interests with intellectual property industries now trying to influence them
more. If labor had a seat at the negotiation table for creating cross-country
enforceable rules the outcome for workers could be better. Some ideas I can
imagine off the top of my head,

\- free movement of labor, not just capital

\- environmental rules that prevent capital from shopping for the jurisdiction
where they can pollute the most

\- prohibitions on child labor, slave labor, trafficking, etc

\- all countries provide free education through teenage years

\- global tax shelter rules to prevent capital from hiding its profits

------
webXL
_Today, the top 1% control fully half of the planet 's wealth. That is awfully
close to the second extreme._

I can't stand this malthusian, historically myopic, zero-sum thinking.

Using that same distribution, if I started a business, hired 99 others using
half of the equity, then we sold it and I ended up with $500 million, should
this inequality be a concern? No. the concern should be whether or not there's
real suffering taking place with how that other $500 million is allocated, and
the purchasing power it has relative to the past.

If you show me an economy that I can easily increase my real wealth by 5% per
year, I don't really care what the guys on top are doing. What toys they are
buying. I do care about them buying power, and they can only do that with a
weak/corrupt political system. As PG reiterated: attack the causes, not the
symptoms.

------
ikeboy
[http://www.vox.com/2015/1/22/7871947/oxfam-wealth-
statistic](http://www.vox.com/2015/1/22/7871947/oxfam-wealth-statistic)
[http://fusion.net/story/44648/why-its-silly-to-add-up-
wealth...](http://fusion.net/story/44648/why-its-silly-to-add-up-wealth/)
[http://blogs.reuters.com/felix-salmon/2014/04/04/stop-
adding...](http://blogs.reuters.com/felix-salmon/2014/04/04/stop-adding-up-
the-wealth-of-the-poor/)

Can we just stop repeating that line?

------
Sealy
> In the long run this leads to oligarchy and possibly even economic and
> societal collapse. We are nowhere near there

I totally agree with your point. I disagree with your opinion that we are
nowhere near there... Just look at what the oligopoly practices of 'big banks'
that were 'too big to fail' did to the global economy. They ALL used their
money to influence the regulatory rules and the governments that governed
them. Goldman Sachs was the worse at this, they were shameless in putting
their ex employees into key White House positions.

They built a gated community around themselves to protect their giant profits
and when it all went south, the TAX PAYERS, US, WE PAID FOR THAT.

------
stillsut
If I could summarize PG's thesis (and his critics misunderstanding) in one
sentence here it is:

    
    
        Beware any promises to cure social ills that make an appeal to economic inequality, just as you'd be cautious of a surgeon trying to cure you by releasing evil spirits.
    

I don't know why it's taking 100+ comments to get to the bottom of this 1% of
the rich "have more wealth" than the Bottom 30%. It's simple: it's a
misleading statistic and there's no defending it, or anyone who uses it to
make their case.

The reason why it's misleading points to the inevitable problems of using
summary statistics of wealth inequality to evaluate economic performance.

------
Apocryphon
PG's simplified essay and a lot of its proponents seem like people, in the
middle of a drought, start warning about the potential for flooding.

Yes, inequality is inevitable. Yes, the poor you will always have with you.
Yes, central planning has been tried and found wanting. But that doesn't mean
that the state of things is good, nor does it mean we need further
deregulation, less taxes on the wealthy, and so forth. It's really weird to
see threads where people argue against that the very existence of progressive
taxation is some sort of statist plot.

We need less philosophizing, and more evaluation of the current state of
affairs and discuss what pragmatic steps need to be taken to alleviate the
situation.

------
lackbeard
This, and Ron's original version, and most of the "my response to Paul
Graham's essay" esssays I've seen aren't actually responses to Paul Graham's
essay.

Here's what I see happened: pg said, "Income inequality is a consequence of
freedom and technology. If you want to reduce income inequality, be careful
you don't wind up just making everyone less free and more poor."

And then a lot of people said: "Paul, you asshole! Rich people can buy
political power!" which is totally unrelated, and pg agrees is a bad thing...

------
billions
Innovation is the primary driver for improved quality of life. The kings of
1900 did not fly across the globe in hours, have access to the variety of
foods of our lower class, and connect with loved ones in seconds. Basics such
as a bed or filtered water came from innovation. Taxing or otherwise slowing
innovation will put brakes on quality of life improvements for everyone. When
have top-down mandates ever been as efficient at fixing problems as an
individual grinding away at a cause they care dearly about?

~~~
ubercow13
Did you read the article?

------
jhh
What is the top 1 percent's share of the world's consumption? Wouldn't this be
a more useful metric than looking at wealth or income distribution?

Consider the following scenario: In a (conventional) socialist society the
state controls an overwhelming majority of wealth. However, this would be
justified by a (hypothetical) proponent of socialism by referring to
consumption products being provided by this capital. Therefore, it seems the
same measure should be taken with regards to market economies.

------
akmiller
One step in solving it is adding more marginal tax rates. It's silly that they
stop at 400k and 39%. I'd also introduce progressive taxing on capital gains
as that's a primary way the wealthiest individuals get around income tax. The
estate tax should also be progressive. These ideas aren't popular and would
never get passed since the government is ruled by the wealthiest Americans but
they would indeed be steps in the right direction.

------
minimuffins
None of you are thinking about class.

To you, this is a technical problem with a technical solution. Just a math
problem. “How do we align incentives?” “How do we set the tax rate to maximize
productivity and growth?” etc. As though simply increasing the number of
startups and corporate wealth in the world will eventually eliminate scarcity
and poverty. No big changes necessary, just keep up the good work and the
great Polynomial Curve of Technology will propel us to the end of history.

Some of you are more proactive. We should “attack poverty.” Like it’s a
disease, and we can “science the shit out of it” and find a cure. But poverty,
and disequal distribution generally are not diseases - unpleasant but
inexorable byproducts of our evolution - they are inextricable from our
political economy. Why? Because we have a society that is stratified by class!
Our capitalist economy does solve the problem of distributing resources to
everybody (though not equally or fairly, and not without wrecking the planet),
and of creating new resources, new products, driving progress, but it also
serves the crucial purpose of maintaining class power.

Given the massive forward surge in productivity over the last 50 years, why do
most of us now work more and earn less? Surely this isn’t the only way it
could be. Even Keynes, the liberal economist thought we’d be working 15 hour
weeks by now. So why don’t we?

It’s because we’re in the working class, and the working class serves the
ruling class. It’s not in their interest for us to work 15 hour weeks, and
they’re in charge, so we don’t. That’s really all. Until working people have
some democratic control over the economy, we’ll always work more and earn
less, and wealth will accumulate at the top, because that’s what this system
is designed to do. And it works.

Our world is not billions of people on equal footing, freely exchanging goods
and labor. It’s not woodworking artisans crafting chairs and selling them to
each other. It’s owners and workers. Sure you can start a startup. Make a
great app that coordinates precarious workers to take out SF yuppies’ garbage
for them (yep, that’s a real one!), and transition from worker to owner.
Great. You made it. That’s certainly not the norm though, and it certainly
won’t eradicate poverty or scarcity. An on a human scale, it’s hardly
progress. We used to have a space program, remember? We can do better than
capitalism. Anyway we better, or we’re screwed.

------
GavinB
Site appears to be down. Google cache version:
[http://webcache.googleusercontent.com/search?q=cache:NoON38K...](http://webcache.googleusercontent.com/search?q=cache:NoON38KY7psJ:blog.rongarret.info/2016/01/my-
simplified-response-to-paul-grahams.html+&cd=1&hl=en&ct=clnk&gl=us)

------
dccoolgai
Capitalism is the _best_ system for distributing wealth and governing trade -
and simultaneously one of (though perhaps not the) _worst_ forms of
government. Societies that lose the ability to maintain that distinction -
from either side - are inexorably doomed. We have regressed to a point where
our grasp of that dichotomy seems tenuous at best.

------
ThomPete
It is also important to realize that startups might produce jobs but they are
mostly capital intensive companies NOT labour intensive. This is especially
true with technology companies who are notoriously hiring relatively few
compared to the capital they spend.

This trend will continue as technology removes more and more functions.

------
marcusgarvey
>In the long run this leads to oligarchy and possibly even economic and
societal collapse. We are nowhere near there [...]

False. We are there. [http://www.bbc.com/news/blogs-
echochambers-27074746](http://www.bbc.com/news/blogs-echochambers-27074746)

------
natrius
You've reframed the problem to wealth influencing politics, which still isn't
something that needs to be fixed by taking money away from people.
Redistribution is a decent solution to resource problems, but this isn't that
kind of problem.

Ending money in politics is hard to do using the levers of democracy since
those levers have already been purchased, so I understand the desire to end
extreme wealth instead. There is another solution, though. We can end the
influence of wealth on our politics without needing the government to do it
for us.

Instead of trying to get the government to stop excess political spending, we
should eliminate the incentive to accept excess political spending. People
accept money to influence our democracy because they can use that money to get
whatever they want from almost anyone, including you. You can't opt out
because economic power is invisible. But we can make it visible, and give
every individual the freedom to reject economic power that they feel is
misused.

This is merit capitalism.
[http://meritcapitalism.com/](http://meritcapitalism.com/)

~~~
edc117
This is a very interesting mixture of two ideas I hadn't really considered
before. Has this been discussed or brought up here previously? Is the only
real obstacle to this adoption? It seems like an extreme transparency, but the
lack of a central authority while maintaining reliability is very compelling.

~~~
natrius
I bring it up in comments here any time it's relevant, but it hasn't had its
own discussion. Adoption is the only obstacle, but tools and infrastructure
are obstacles to adoption. There's lots of software to write before it's easy
for people to install a mobile wallet app that banishes oligarchical
influences from their personal economy.

A bug/feature that needs to be addressed is that this mechanism can be used to
enforce any rule enough people decide to pursue. We've discovered a lot of the
ways our form of governance can go wrong over the past few hundred years, and
we've even fixed some of them. We have to do the same thing for merit
capitalism and limit its use until we know how to use it without causing
catastrophes. Luckily, we can use merit capitalism to limit the use of merit
capitalism: if someone breaks the "constitution" of acceptable uses, they can
be sanctioned. We can slowly evolve the constitution as we learn more.

------
mattmaroon
I think that large income inequality has been harmful in the past because of
scarcity. If a small number of people had a lot more money than the masses, it
meant the masses were starving.

Technology has the ability to potentially change this. It hasn't yet; it's
mostly just given us the ability to play Candy Crush and look at what our
friends ate for dinner while waiting in line at the store. But it will. And
it's a mistake to assume that because income inequality in a world defined by
scarcity causes social ills, it will necessarily do so in a post-scarcity
society.

Unfortunately using political influence for rent-seeking is a huge problem. I
would like to believe, at least in our humble little democracy, that the
masses are slowly awakening to this. At some point billionaires won't be able
to use social-issue boogeymen like abortion and gay rights to convince poor
people to vote against their own economic self-interest. I hope.

I think that's implicit in the argument PG is making. Income inequality has
always been bad in the past, but the future is not the past. There are
variables that may change that.

~~~
AnimalMuppet
But human nature is not as variable as human circumstances. Jealousy and envy
can be just as strong even if you aren't starving.

------
mcguire
" _But if we fix all the bad causes of economic inequality, we will still have
increasing levels of it, due to the increasing power of technology._ "

This is the sentiment of the man who is certain he will be at the top of the
heap when the dust settles.

------
stcredzero
_Ron 's First Law: All extreme positions are wrong. :-)_

Re: His last line about extreme positions -- Any position with "all" in it is
extreme.

Extreme positions aren't wrong. It's just that they're most often appropriate
only in extreme positions.

~~~
cushychicken
>Re: His last line about extreme positions -- Any position with "all" in it is
extreme.

Therein lies the joke.

------
eugenejen
The only thing I don't like people to repeat about 1% owns 50% wealth is
because that's just a mathematical truth from Pareto principle.

If 20% populations owns 80% resources. Just recursively applying Pareto
principle. You see 0.8% populations owns 51.2% resources.

So we are in fact now efficiently using resources around the world to support
7 billions populations.

Of course this ignores our biological tendency of protecting our offspring. So
we try to pass down what we have to our children by non productivity related
measures (such as lenient estate tax, immigration restrictions). That's the
real reasons for the 99% population feels 'unfair'.

If we are really fair, we should open first world border to all poor people
around the world, right? But we don't. Same as people of wealth want to pass
down their wealth to their children as much as possible. Or even try to
starting a dynasty.

~~~
ogrisel
The Pareto distribution has a parameter (alpha in the mathematical formulation
used on Wikipedia). If the value of that parameter evolves over time that
might demonstrate an evolution of economic inequality.

But indeed access to credit and amount of debt makes it hard to interpret the
results on wealth. Income distribution might be easier to interpret.

------
JohnLeTigre
The gist of the original essay is that it is kind of stupid to treat a symptom
as a cause. Instead, we should address the problems that promote inequalities.
The reply doesn't counter-argue this statement.

------
malmsteen
More simplified summary of the debate :

PG: "Startups create economic inequality. But it looks like they drive the
economy and create value. I'll defend Startups so let's say that economic
inequality is not a core problem"

Crowd 1: \- "OMG ECONOMIC INEQUALITY IS BAD !" \- "OMG you defend
concentration of power in rich people !" \- "OMG your pinterest wall is more
important that educating you children, that's what you call value ?!" \- "OMG
!"

Crowd 2: \- "Startups don't create that much economic inequality anyway" \-
"They don't actually drive the economy either" \- "We're not sure they create
value" \- "Everyone know economic inequality is fine, we should adress
poverty"

Elon Musk: \- When do we go to Mars guys ??!!!!????

~~~
lackbeard
Yes. It's bizarre to see everyone responding to something that wasn't actually
said.

------
serge2k
> We tried it. It didn't work. No reasonable person disputes this.

I'd dispute that it was really tried, but I still don't think it would ever
really work.

~~~
minimuffins
The "we already tried that" argument throws all the non state-capitalist ideas
down the toilet with Soviet central planning though (it does belong there, of
course, but so does American capitalism).

There's a pretty wide range of ideas between anarchism and social-democratic
capitalism that aren't included in the false binary of US/USSR models.

------
PaulHoule
It is like that Laffer curve. If your tax rate is too high, you get less
revenue because of the negative effects.

It is not just that "taxes kill the economy", but also that when the tax
system is corrupt and inefficient people don't pay the tax. For instance the
situation is crazy in Italy where officially 30% of the population is
unemployed but actually most of them are working "off the books".

This is to not to say Laffer was right or wrong that tax rates were too high
circa 1980, but there is truism that taxation has good and bad effects.

In a "perfect equality" scenario there is not incentive to raise your game,
but the same is true in "perfect inequality."

We did the experiment in Ithaca where local activist Paul Glover started
"Ithaca Hours", a local currency. The system is still there, but it has mostly
failed because a few businesses that accepted Hours could not spend the ones
they got, so they have accumulated in a small number of places and do not
circulate.

Also I see people in situations where inequality causes them to "not try". For
instance I know people with student debt or who owe a lot of child support who
perceive that if they make another dollar it will just get taken away, so
there is no point in busting your ass or taking things seriously. I funded a
business run by one of them, by a guy who knew his market so well and had many
of the skills of an excellent salesmen, and it ended it tears.

I know some people, both black and white, who really have been the victims of
poverty, discrimination, and such and feel they "can't win." You can point to
examples such as Barack Obama and Ben Carson who overcome both real and
perceived discrimination to succeed brilliantly, but most don't.

Once when I was teaching I had a black student who was intelligent and very
much liked by myself and the other teachers and we all wanted him to succeed
and we were all proud that he got a respectable grade in the end in one of the
most difficult classes at our school but had his own challenges and one day
came around and told us we were treating him differently from other students
and he was right, yet it was not at all that we did not want him to succeed
but that we didn't entirely understand what to do to help him.

------
ggreer
> Today, the top 1% control fully half of the planet's wealth.

I've seen that statement debated, so I was curious if it was actually true. I
had to follow quite a few links before I hit bedrock. Garret links to an NPR
piece[1], which links to an Oxfam "study"[2], which references a Credit Suisse
report[3], which is 64 pages long and covers _way_ more than global wealth
inequality. I finally found the relevant bit on page 10, in a section named,
"Distribution of wealth across individuals":

> Our estimates for mid-2013 indicate that once debts have been subtracted, an
> adult requires just USD 4,000 in assets to be in the wealthiest half of
> world citizens. However, a person needs at least USD 75,000 to be a member
> of the top 10% of global wealth holders, and USD 753,000 to belong to the
> top 1%. Taken together, the bottom half of the global population own less
> than 1% of total wealth. In sharp contrast, the richest 10% hold 86% of the
> world’s wealth, and the top 1% alone account for 46% of global assets.

Finally! Can the author please link to _that_ instead? It would have saved me
so much time. So the statement is mostly true, except note that debt is
counted. That means a significant fraction of people have negative net worth.
Those trading against future earnings (using student loans, car loans,
mortgages, etc) will be at the bottom of the wealth distribution.

Remember, this is world wealth inequality, not US wealth inequality. What does
US wealth look like? According to page 46 of the Credit Suisse report, 40% of
US adults are in the top decile of wealth distribution. Heck, 7.5% of US
adults are in the top 1% of wealth owners worldwide. There's a graph of US
wealth distribution compared to the world.[4] It shows the US as a much more
balanced place.

More than anything else, "The top 1% control half the world's wealth." is a
statement about the inequality of nations, not people. Unless one is
advocating wealth taxes to finance foreign aid, it's disingenuous to further a
domestic agenda by citing the impoverished masses in developing countries.

I think if Garret took the time to be more rigorous, he could build a very
good critical companion to PG's essay. But in its current state, it's not
something I can really engage with.

1\. [http://www.npr.org/sections/thetwo-
way/2014/01/20/264241052/...](http://www.npr.org/sections/thetwo-
way/2014/01/20/264241052/oxfam-worlds-richest-1-percent-control-half-of-
global-wealth)

2\. It's just a short overview of others' research:
[https://www.oxfam.org/sites/www.oxfam.org/files/bp-
working-f...](https://www.oxfam.org/sites/www.oxfam.org/files/bp-working-for-
few-political-capture-economic-inequality-200114-summ-en.pdf)

3\. [https://publications.credit-
suisse.com/tasks/render/file/?fi...](https://publications.credit-
suisse.com/tasks/render/file/?fileID=BCDB1364-A105-0560-1332EC9100FF5C83)

4\.
[http://geoff.greer.fm/photos/screenshots/Screen%20Shot%20201...](http://geoff.greer.fm/photos/screenshots/Screen%20Shot%202016-01-05%20at%2009.14.40.png)

------
astazangasta
The preface to all further discussion: wealth is power, and nothing else. In
our highly capitalist society, monetary wealth is perhaps the only useful form
of power, from which all other power (violence, social influence) ultimately
flows.

The Soviet Union attempted to produce equality of income, but not power: power
was highly centralized. The equality I want is one that is diffusive.

~~~
AnimalMuppet
> The preface to all further discussion: wealth is power, and nothing else.

Okay, you made a dogmatic statement. That proves nothing, except that you are
capable of making dogmatic statements.

Wealth is the promise (perhaps false) of satisfaction, it is (perhaps false)
identity, it is security, and it is the freedom not to have to work. I suppose
you can say that all those are forms of power, but... If you define everything
to be power, then yes, wealth is power, but that tells us nothing interesting
except what your definition was.

> In our highly capitalist society, monetary wealth is perhaps the only useful
> form of power, from which all other power (violence, social influence)
> ultimately flows.

Democracy is another form of power. It is influenced by money, but not
totally. That is, the little people can in fact vote against the money, and
will do so if the money pushes too far. Campaign ads won't be enough if the
little people get fed up enough.

Social influence largely flows from money, I'll give you that. Violence? Money
gives you a greater ability to use violence and still escape the law, but you
can't go very far no matter how much money you have.

~~~
astazangasta
>Wealth is the promise (perhaps false) of satisfaction

I think, perhaps, you are speaking of the kind of wealth accumulated by middle
class families. I'm speaking of the billions accumulated by Jeff Bezos, which
allows him to purchase the Washington Post (etc). You might call this
"satisfaction", but at this scale it's raw power - the ability to command
resources and bend them to your purpose.

>Democracy is another form of power. It is influenced by money, but not
totally.

Democracy is quite strongly influenced by money. I'm sure you've seen this
study:
[http://scholar.princeton.edu/sites/default/files/mgilens/fil...](http://scholar.princeton.edu/sites/default/files/mgilens/files/gilens_and_page_2014_-testing_theories_of_american_politics.doc.pdf)
which purports to demonstrate that American democracy responds exactly to the
interests of economic elites and not to popular will. Popular will is much
weaker than the influence of money. There is an entire (unelected) arm of
government that is devoted to lobbying and writing legislation on behalf of
monied interests; half of Congress leaves and joins this arm when their term
is up.

I'm not saying these things are inevitable, that monetary wealth cannot be
constrained by democratic power, etc., just that this is not how things
currently stand.

------
EGreg
This is pretty silly. Also, Paul Graham's premise, I'm sorry to say, is
sensationalized (by invoking concepts like "inequality" and "startups") but
wrong. The premise is, basically, "inequality has bad CAUSES, but startups and
technology are never one of them." Only at the end does he hint at what I
believe to be the more accurate analysis: AUTOMATION and OUTSOURCING lowers
demand for expensive human labor, therefore reducing one of the main ways that
money trickles down to the middle and lower class. The better and more
widespread the technology, the more I can 1) Outsource jobs to regions with a
lower cost of living, leading to two losses of trickle-down: 1a) local workers
don't get the job, and the money goes to someone in another country 1b) either
way my company writes the expenses off its taxable income, but my country
doesn't get the tax $$ from the worker's income to spend on social programs,
safety nets etc. This by itself is fine, unless you're a nationalist, because
it helps reduce poverty where people are poorer, which is outside your
country. However, technology also enables: 2) AUTOMATION, which means I now
reduce the amount of HUMAN workers, and once again it has two aspects: 2a)
Now, the demand for human labor drops, and since the supply of workers remains
the same, their average wages drop. 2b) The worst one: monopolies with server
farms, contracts of adhesion, and all the power. Like Amazon, Google, Apple,
Microsoft, Facebook, Uber, etc. extracting rents from users and providers,
until open source disrupts them. By commoditizing the providers and workers,
they get squeezed. See Amazon's dealings with wage slaves, and its tactics
with publishers (middlemen which it eliminates). But those same workers are
also supposed to be spending money back into the economy on things they need.
It takes time to invent new industries and educate everyone, there is no
guarantee that will happen forever, and there is no guarantee that demand
shocks for labor won't be severe. So, there should probably be unconditional
basic income, negative tax or some other scheme for people to KEEP BEING ABLE
TO AFFORD THE BASICS even if they face no prospects of making money, which a
growing unemployed class will. On the bright side, automation will help wean
countries from their dependence on an ever-growing population to fund social
security schemes. Endless population growth is unsustainable, and countries
are currently worried about birth rates mainly because of that. So in a global
sense, the solution is: tax the gains from automation, redistribute the
proceeds, use condoms.

~~~
vixen99
Europe as a whole has a <non-replacement> fertility rate of 1.5. In other
words: it is dying. Total fertility rate for the US is just below replacement
value at 2.09 and the total fertility rate for the world is 2.59, down from
2.8 in 2002 and 5.0 in 1965. Any weaning that goes on will certainly have to
be off welfare schemes because they are going to collapse.

------
CrowFly
When I read Graham's original essay I laughed. In my mind, he's a force for
greater wealth _equality_. After all, he takes money from rich investors and
puts it into startup companies, the majority of which do not produce great
wealth.

------
joefarish
I don't understand the obsession with wealth inequality, the focus should be
on eliminating poverty not eliminating the number of billionaires.

------
soheil
I read pg more as describing a phenomenon than trying to justify its
existence. I'm not sure why so many people are so hostile to a simple
explanation of what is.

------
jazzyk
Most people agree that inequality is not a bad thing in itself. But we have
two problems with inequality right now:

1\. The sheer amplitude of it.

Having people whose net worth is equal to the GDP of a small country poses
interesting questions (separate topic). This is caused by the winner-takes-it-
all nature of globalized economy. Example: Ads featuring Gisele Bundchen sell
to potentially billions of women all over the world, and she gets a cut. A
generous one, because the market is global, not local as it was 30 years ago.

2\. The fairness.

Again, nobody has a problem with Steve Jobs making a lot money, because he
produced. But there are people out there who got rich, just because of
connections, etc. Al Gore has sat on (among many others) Apple's board of
directors. Which part of iPad did he design?

Even if you ARE qualified, there almost always is the luck factor. There are
many other genetically blessed young women who look at least as good as Gisele
Bundchen, but who, for whatever reason, never became the "it" girls. The are
not starving (though they look like they do), but they are not raking in
millions either. The same applies to more serious industries as well.

------
yeukhon
Perhaps I am an ignorant. A little background about me:

* I live in NYC

* I live with my parents, still very young as a recent grad

* I don't make tons of money, but with overtime I probably make 80K? I don't really count my money these days.

* I do spend money on monthly gym membership (I should suspend that to save $100 since I am too busy haven't been there for a few months), netflix and couple other stuff.

* I give my parents allowance (almost half of my paycheck) to help with mortgage and stuff

* I am single all the way (that seems to be a pretty saving...)

* only been working full time for one year

And yet, I am still able to afford nice meal if I wanted to, go to nice places
if I wanted to. Of course my wallet will bleed and cry if I were to spend too
much, but on a daily basis I have a comfortable life, so I don't really feel
an economic hardship, I don't make millions and the wealth is still controlled
by that 1%.

It doesn't bother me, until, if I were to have kids to raise, and a mortgage
entirely on me.

I think the attitude toward economic inequality needs a context. If you want
to go on a cruise 365 days of course we can't afford that. Going to Italy and
France once a year? That's gonna bleed for most of us. But in case of
affording a good meal? Little but not too much. Then for those who makes
significantly less than I make, they will feel the pain the most and I don't
see a way out of it.

~~~
burkaman
I'm in a similar situation to you, but:

* One year out of college, you're in the top 30% of the US: [http://www.nytimes.com/interactive/2012/01/15/business/one-p...](http://www.nytimes.com/interactive/2012/01/15/business/one-percent-map.html)

* You didn't mention loans, so I'm assuming you were able to graduate college mostly or completely debt-free

Just these two points mean you're doing better than most people in the US, and
much better than most people in the world. You never have to worry about about
food or shelter, you have plenty of disposable income, you can support your
family.

Your comment seems to be phrased as "I'm as average guy, and I can be happy
with what I have", but you're not average. 80K is "tons of money" for most
Americans your age, most people aren't so comfortable that they never have to
worry about money, most people can't throw away $100 a month without noticing.

So you're right, discussion about inequality does need a context, but your
context is that you're well into the top half of society.

