
A Response to Paul Graham's “How to Make Wealth” (2012) - jimsojim
http://czep.net/12/response-to-paul-graham.html
======
euwhr132
Meh. There might be logical errors in Graham's essay, but this just looks like
an angry and forceful attempt to rebut his ideas because the author doesn't
agree with ideas of free market economics etc.

And secondly, I know this isn't the main point but, these "introversion
explanations" are annoying and likely part of the reason the industry has
problems with diversity.

Looks to me like a lot of the people in the industry want to constantly
propagate the idea that "the programmer" or "we the programmers" are utopian
introvert nerds to anyone who would listen.

Got me avoiding talking about what I do so I can have normal conversations
about sports and politics with people working outside tech.

~~~
specialist
Fascinating. I've been hearing a lot about "free market economies". Can you
provide any examples? I'd like to learn more.

~~~
rukittenme
Are you looking for books or examples of societies with free markets?

I'm not an expert but I believe you can research Austrian Economics, laissez-
faire, and Milton Friendman. The deepest I went with the subject was "Basic
Economics" by Thomas Sowell. I thought it was a good book and had compelling
arguments. Its also very easy to read and American-centric so you have a lot
of relatable examples.

------
mwytock
Wow this guy really needs to take it down a few notches. Yes, PG's articles
present a magical fantasy world dominated by the masterful hacker and
visionary entrepreneur. They are inspiring and fun to read. And they may have
some truth to them.

Attacking these essays as an oversimplification while presenting a caricature
of the introvert and disconnected programmer is borderline ridiculous.

~~~
czep
> this guy really needs to take it down a few notches

Author here. Man, if I took it down a few notches, I'd bury myself under my
own hubris! I'm nobody, certainly not worth PG's time or perhaps yours, I'm
trying to speak truth to power and won't apologize for stepping on anyone's
hero worship. I absolutely agree with you that Graham's essays are inspiring
and fun to read. I think I made that clear as well. The frustration which
drove this essay was his casual observation that the best programmers are
libertarians. I don't think that's true and have data to support it. I'm also
frustrated to see a powerful man perpetuate self-serving ideologies without
acknowledging the influences of power and luck.

> borderline ridiculous

Story of my life. But I think my caricature still stands as an illustration of
how the introverted mindset can shut off more nuanced views of social and
political structure and lead one to adopt a personal view that serves those in
power.

~~~
mrmaximus
czep, even though I don't agree with much of what you wrote (in the article),
I do appreciate you taking the time to so thoroughly expound on the ideas.
Paul Graham most likely fell victim to projection of a Libertarian ideal when
he viewed "best programmers" from his perspective.

> I'm also frustrated to see a powerful man perpetuate self-serving ideologies
> without acknowledging the influences of power and luck.

I agree with this above statement maybe or maybe not for the reasons you do.

The "Power Game", or even the lack of willingness or know-how to play it is
the reason a lot of programmers think themselves superior to the sales guys
who peddle the product of their labor.

The "Power Game" is also the same reason the good sales guys feel that despite
being so technically smart, programmers can be damned idiotic fools.

As an introverted "programmer-type" myself, life would be way easier for me if
there was no Power Game. But the Power Game is as human as eating, drinking
and pissing.

Hell, I get irritated daily that I even have to eat, drink or piss. It feels
like a waste of time when I am in the zone with something. Same thing with the
Power Game.

Luck... hugely important. Heck, we've all played RPG's and know to fill up
that skill bucket ASAP.

Maybe what would really be helpful to programmers is something that can stir
inspiration like Paul Graham, but that covers something akin to "The 48 Laws
of Power" for the introverted modern day employees.

------
jstanley
> Graham’s understanding of economics is woefully pedestrian, un-researched
> conjecture. His conceptualization of the economics of exchange relies on a
> stubborn insistence and blind naive trust that the free market is the
> ultimate solution to which his audience must subscribe. It is distressing
> that one could allow arrogance to so cloud his judgment that he would
> embarrass himself by making such claims in an area of study he is clearly
> lacking any authority on which to speak.

The author sounds rather more arrogant than Paul Graham did. And free markets
_are_ the ultimate solution.

EDIT: The more I read, the more ridiculous it gets. The author takes something
that Paul Graham said, throws away all of the context, and attacks it as a
strawman. The article seems more keen on attacking Paul Graham than making any
actual point.

It is also written in a very verbose style that makes it hard to follow
whatever argument might be present.

~~~
czep
The author, arrogant and verbose though he may be, takes issue with Graham's
casual assertion that the best hackers are libertarians, and attempts to
deconstrust the psychology underlying this connection. What's so illustrative
is how Graham inspires his followers to believe the way he does in order to
justify and perpetuate his own wealth. The money quote in my mind is:

> It is amazing how well this piece serves as marketing fodder for Graham’s
> venture capital arm, Y Combinator. His business model relies on convincing
> hordes of eager young hackers to sign over their surplus labor to his
> investors. With logic crafted to appeal directly to the introverted minds of
> recent computer science graduates, he has no shortage of cannon fodder
> lining up on his doorstep willing to eat Ramen and gleefully line the
> coffers of his investor’s portfolios.

~~~
Normal_gaussian
> The author ... [text in support of the author]

You. You wrote the article, posted it on your blog, used your HN account to
submit it here, and it is you that is posting a comment in support of
yourself. Writing in a way that implies you aren't the author is disingenuous.

~~~
czep
I wrote the piece, yes, but I didn't submit it to HN. Get your facts straight.
I'm not interested in self promotion. I'm only commenting here to address some
misleading interpretations of my original intent.

I wrote this 5 years ago, someone else posted it to HN today. It's Sunday
morning so I have some time. Calling me disingenuous is not fair.

My 3rd person reference calling out the parent's use of arrogant and verbose
to refer to me, was firmly tongue in cheek. I do have a sense of humor,
despite my flowery rhetoric and dog-eared thesaurus :)

------
amelius
I think the biggest trap for developers is that they put all their eggs in one
basket. Whereas, of course VCs like Graham wisely spread their money.

Imho, we as a community should put more weight on that aspect, and we should
stimulate also the failures of Silicon Valley to come forward with their
stories to prevent bias. For example, we've heard some stories of people
making truckloads of money on app-stores, but do we really have any bearing on
what the average capable developer makes? If we don't want to end up as
disillusioned gold-diggers, we should really get that kind of data out.

~~~
garry
PG may have become an investor and most newcomers may have forgotten this but
before YC he was himself a hacker who started a company and became successful.

Now years later, after having started a company through YC and then becoming a
YC partner and now seeing this same kind of magic happen over and over again
with hacker founders, I can't help but attest to the fact that his worldview
has proven to be valuable.

The disillusioned worldview justifies lying on the floor. The essay's
worldview prods you to get up.

~~~
amelius
> PG may have become an investor and most newcomers may have forgotten this
> but before YC he was himself a hacker who started a company and became
> successful.

Yes, that is certainly laudable, but he may be suffering from survivor bias.

~~~
jazoom
Doesn't sound like suffering to me

------
leereeves
> In a perfectly libertarian society, the bullies would not only take your
> lunch money, they would murder your family, burn your house, and leave you
> for dead by the side of the road.

What brand of libertarianism is the author talking about here?

That sounds like anarchy, not libertarianism.

~~~
philipov
That sentence is saying that a perfectly libertarian society is an anarchy,
where might (market) makes right.

~~~
bko
> Libertarians share a skepticism of authority and maintain that the power of
> the state has to be limited or eliminated in order to protect individuals
> from the arbitrary exercise of authority. [0]

I think most would agree that "arbitrary exercises of power" would include
murder and arson. The author really does his argument injustice by throwing
around a caricature of a political philosophy.

[0]
[https://en.wikipedia.org/wiki/Libertarianism](https://en.wikipedia.org/wiki/Libertarianism)

~~~
foldr
"Minimal state" varieties of Libertarianism tend to be internally
inconsistent, though. You can't say that taxation is theft and then say, ah
yes, but we do actually need a little bit of taxation to fund the police and
the judiciary.

~~~
bko
Agree there are some inconsistencies regarding taxation and the minimal
services that the government should perform. However, I would note that the
primary tenant of the philosophy is liberty, both economic and personal. This
liberty would include property rights, which includes ones person. Ideally,
there would be a choice of governing associations that one can choose from for
police or judiciary, although I see how this can be impractical in practice.
This already exists in the sense that one is free to move to different
cities/states but due to the expansion of the role the federal government,
this distinction has been made less relevant.

~~~
philipov
The problem with the libertarian platform is that it's based on 150 year old
theory that doesn't incorporate second order effects, so it is unable to deal
conceptually with feedback loops and thermodynamic phenomena such as entropy.
Trust in the market only works when your wealth represents a non-vanishing
proportion of market share; and for everyone else, it represents
disenfranchisement and serfdom. This already exists in the sense that many are
not free to move to different cities/states because they are living paycheck-
to-paycheck, shackled by debt. That's what you get by rolling down the energy
valley of the free market.

The minimal state of the government is directly proportional to the strength
of one's extended wealth network, and wealth reinforces wealth. There are
inconsistencies regarding the minimal services that the government should
perform because Libertarians tune their notions to their own wealth level, and
discount everyone below them. If we wish to create a government that is
representative of all citizens, the minimal state of government is much larger
than has been allowed within the libertarian framework to date.

~~~
alexmingoia
> This already exists in the sense that many are not free to move to different
> cities/states because they are living paycheck-to-paycheck, shackled by
> debt.

Isn't this a strawman? Libertarianism isn't a theory that ensures everyone has
whatever they want. It's a philosophy centered around liberty (in contrast to
freedom). Libertarians are only arguing that anyone should be free to move
where they want and free to obtain the means to do so. Libertarianism has
never argued that liberty means everyone gets a house on the beach.

~~~
philipov
> ...free to obtain the means to do so. Libertarianism has never argued that
> liberty means everyone gets a house on the beach.

This is the strawman. No one is suggesting that everyone gets a house on the
beach.

The problem is that Libertarianism has a naive presentation of coercion
strategies. It ignores economic and generational coercion mechanisms, instead
focusing on violence (and the government's monopoly on it) as the only form of
coercion. This prevents it from achieving the liberty which it promises,
except for those who are already wealthy. By seeking to obfuscate and divert
attention from other coercion strategies, it disproportionately favors those
who wield them to reduce liberty, and so it has a net negative effect on
liberty.

------
squozzer
>Historically, societies with laissez-faire economic policies have been
associated with rigid, hierarchical social structures with negligible social
mobility.

Historically, ALL societies have possessed rigid, hierarchical social
structures with negligible social mobility, and very few of them had anything
close to laissez-faire economic policies.

What made Renaissance / Enlightenment Europe a little better than the rest was
its intense competition along several dimensions (political, economic,
technological) both between and within political entities; such a world made
creative types too valuable to be liquidated or enslaved.

>In a perfectly libertarian society, the bullies would not only take your
lunch money, they would murder your family, burn your house, and leave you for
dead by the side of the road. This is your free society. Enjoy.

And eventually the bullies would run out of prey -- and would have to prey
upon themselves. But it would probably not come to that. Anyone with half a
brain would have stopped contributing to such a flawed society a long time
ago, and maybe even started undermining it, e.g. the USSR.

------
dongslol
_" There are so many problems with Graham’s thinking that it is difficult to
organize a focused response."_

Statements like these are pointless theatrics. The more wrong someone is, the
easier, not harder it is to point out where and how. What's the argument?

You have to wait until section 2 to find one:

 _"...there are actually several critical errors in the above reasoning which
render Graham’s conclusions baseless. The first is the idea that measurement
of things like quality and success can be objective, perfect and fair. These
are not objective facts, they are highly contextual and can be manipulated by
power struggles, charisma, clever marketing, or outright fraud. Value is a
social construct..."_

After about eight paragraphs about how "pedestrian" PG is, his point (finally)
is basically that value is subjective and immeasurable. I don't know how true
this is philosophically, but for all intents and purposes, if it were true, it
would mean that nothing could be better than anything else. [1] It's also a
conflation of ideas. Marketing doesn't create value; it distributes and sells
it. Value as defined in the original essay is the meaty stuff people want: a
home computer, for example, or an affordable spaceship.

 _" Graham identifies that “Many of the employees (e.g. the people in the
mailroom or the personnel department) work at one remove from the actual
making of stuff.” So what exactly do they contribute to the wealth generation
process? Does Graham imply that without these others working at “one remove”,
the programmers could still create the wealth they do? Without the human
resources team to coordinate their medical benefits, would the programmers be
as productive? Without the legal team to fend off frivolous lawsuits brought
by patent trolls [...]?"_ (And so on.)

All Graham is saying is that programmers are directly involved in the creation
of the product itself — its design, engineering, and maintenance. Other people
create the social environment that makes it possible for this product to be
distributed and not be killed, but don't make stuff in the artisanal sense.

I can understand why it would be insulting if someone claimed that anyone who
isn't a maker were somehow useless, but Graham never did.

I'm ten minutes in, and everything I've read is basically a verbose form of
"it's all relative" and "things are more complicated than that." Philosophy
has a standard refutation to this: we deal with complex phenomena by isolating
principles. For example, the abstract idea of value, the distinction between
creation and distribution, and so on. It's the most boring thing in the world
to hear, "the universe is more complex than that idea captures." All
abstractions are reductions.

This sort of argument based on moral outrage and authority about how the real
world works holds back truthseeking discourse.

[1] I also have a hard time understanding how someone who has earnestly tried
to make good things could want this to be true.

~~~
czep
> Marketing doesn't create value; it distributes and sells it.

But that value doesn't exist until marketing "unlocks" it! The example
discussed is marketing finding a new vertical which then expands the
profitability of a product line without any additional work. A portion of the
value didn't exist until marketing sold it to a new market. I don't consider
that conflation of ideas, more of highlighting the nuance that quantifiable
portions of value cannot be ascribed to individual efforts.

The fact that value is subjective and immeasurable doesn't insult anyone who
tries to make good things. I try to make good things too, the value I get from
them is the sense of accomplishment that I've done a good job. But whether my
"good job" translates into a $1bn unicorn is up to luck, not simply my effort.

~~~
dongslol
First, please see my response here:
[https://news.ycombinator.com/item?id=13572547](https://news.ycombinator.com/item?id=13572547)

I think your disagreement with Graham is over a definition of words. You seem
to be saying that creation of value is the indivisible sum of efforts to (a)
decide what to build, (b) build it, and (c) sell it. He assumes a and b can be
isolated out.

In any case though, take any highly successful company. Imagine if all the
marketing people and product/engineering/design people were suddenly
segregated, and forced to work without the other. Who's more worried?

I'm not at all saying marketing people are useless, which seems to be the idea
you take issue with. They provide value. But (I'm sorry) less than the
designers and engineers, and measurably so, from successive thought
experiments like the above. That's why they're paid less.

 _" The fact that value is subjective and immeasurable doesn't insult anyone
who tries to make good things. I try to make good things too, the value I get
from them is the sense of accomplishment that I've done a good job."_

But by your argument, I can steal your sense of accomplishment by saying, who
knows how much of your success was due to you? How much was due to the
marketing team? 10%? 50%? 80%?

 _" But whether my "good job" translates into a $1bn unicorn is up to luck,
not simply my effort."_

On this topic I mostly defer to Hamming's point in _You and Your Research_.
I'd say there's _luck involved_ , not that it's _up to luck._ While it's true
not everyone who can become Bill Gates does, some people outright can't become
Bill Gates, while others can. The point is, this doesn't show that value is
subjective.

[http://www.cs.virginia.edu/~robins/YouAndYourResearch.html](http://www.cs.virginia.edu/~robins/YouAndYourResearch.html)

~~~
davidivadavid
> In any case though, take any highly successful company. Imagine if all the
> marketing people and product/engineering/design people were suddenly
> segregated, and forced to work without the other. Who's more worried?

I tend to avoid engaging in the eternal engineer vs. sales/marketing debate
(nothing ever comes of it), but that sounds like a pretty disingenuous
argument. Whether you remove (a) and (b) or (c) from the equation, you're
still missing an essential part of the business. Engineers with 0 sales
channels make 0 revenue. Marketers/Salespeople with no product make 0 revenue.
Who should be more worried?

If you're saying "Well, engineers could always try selling stuff themselves,
while marketers couldn't code" you're adding, I believe, unwarranted
assumptions. The reason people are paid more or less has more to do with
supply/demand. Also note that salespeople at Oracle often make more money than
their engineers.

~~~
passiveincomelg
Of course "marketers" could code (it's not that hard) and of course coders
could sell (lose the self defeating "introvert" bullshit). If one or two
people do everything that's required to "provide value", what do you have? A
startup.

------
fsloth
Whoa, out of of context. Paul made a point about _an idea_. Economics is not
science. Paul tried to convey the _feel_ of a startup and the ideas which
might drive it.

It's a touchy feely piece (not any worse as such). One of the important things
to feed ones intuition is to convay how a thing should _feel_.

This was food for intuition, not a detailed analysis. That's how I read it,
anyhow.

I approach any non-peer reviewed work as prose and poetry. Some other people
mighr be more stringent.

------
irln
It would seem the biggest impediment to the "fairness" and successful
implementation of a free market is the ability of the participants to have
access to perfect information.

------
anondon
> 1\. Introversion

There is an implicit assumption in his definition of an introvert that is
introvert == cut off from society. This is just plain wrong. An introvert is a
a shy, reticent person and this does not imply that he is cut off from society
or does not understand social interactions. I would argue that it's the exact
opposite. Introverts understand social relationships and the "real world"
very, very well. They just don't actively take part in social interactions
much.

> The first is the idea that measurement of things like quality and success
> can be objective, perfect and fair. These are not objective facts, they are
> highly contextual and can be manipulated by power struggles, charisma,
> clever marketing, or outright fraud.

The article is concerned with startups with a very small team working on it.
Measurement is easier than in large teams of people. I don't see OP disputing
this directly. The question of power struggles, charisma etc does not arise in
startups with a small team.

> A second critical assumption being posited in Graham’s essay is that one
> person’s direct contribution can be disentangled from that of others.

No, it's easier to have a better idea of what people in a small team
contribute than in a large team.

> Although he never says this payoff is guaranteed, he doesn’t deny it either

First valid criticism.

> Here is the crux of Graham’s assumption that programmers are the real engine
> of the value chain. He ignores the fact that without the infrastructure and
> ancillary components of the business, it isn’t so easy to simply translate
> that new piece of software into pure profit.

That's exactly what small startups do, where the founders manage everything
from code to sales to legal work (in the initial stages of a startup).

> Graham so desperately wants to justify his own wealth as the righteous
> product of his own personal labor without acknowledging the effects of
> either luck or power

Uncalled for personal attack, but yes, luck plays a major role.

> “Smallness = Measurement”. Here, he uses the analogy of the “ten best
> rowers” who, if you take them out of a large system and put them together
> with a shared goal, will necessarily be superior.

In comparison to large teams, measurement is easier in small teams. Team
dynamics are still important, whether the team is small or large.

> It is amazing how well this piece serves as marketing fodder for Graham’s
> venture capital arm, Y Combinator.

Looking at it from a cynical perspective, yes. Nothing stops people from
questioning or rejecting (or dismissing) his work publicly as lots of people
on HN and twitter do.

> Libertarianism != Meritocracy

This section has some valid criticisms of libertarianism and PG's implicit
bias towards it.

