
A Response to Paul Graham’s Article on Income Inequality - hobs
http://cryoshon.co/2016/01/02/a-response-to-paul-grahams-article-on-income-inequality/
======
jgord
PGs articles aren't wrong - but they are second order, when we need a first
order response to a current evil [ before it leads to bloody revolution ]

If you look at income distribution its a hockey stick - you really have to
slap yourself on the face and realise there is no middle class - what you
thought of as professional-middle-class-contributor is actually college-debt-
burdened-lower-class - no matter how many years they work they will never pay
off their debt, let alone own their own home.

People aren't asking for "income equality" they are asking for some level of
humanity and democracy to be restored to our version of Capitalism, to
strengthen that capitalism.

So, just as "All Lives Matter" is not a good response to the "Black Lives
Matter" movement, its not useful to discuss "income inequality is not
intrinsically a bad thing" when we are in a time when the lower class are
basically slaves and the middle class has been in steady decline - your _only_
chance to have security is to win a lottery [ the Startup or the PowerBall
variety ]

So, what needs to be talked about is rather : how to take money out of
politics, how to get poor people out of the ghetto, how to stop young black
people from being shot by police on a weekly basis, how to bring back a
reasonable level of tax on the super wealthy, and how to stop large companies
from getting subsidies to pollute our environment.

A small amount of Socialism is needed urgently to bring Capitalism back into a
survivable form - if not, I really think we are headed for bloody revolution,
because most of the populace are angry, and its a rational anger because their
survival needs are barely being met, in many cases.

~~~
paulddraper
"lower class are basically slaves"

You're going to compare working graveyards at 7-Eleven to _slavery_?

You should read a little bit about slavery and human trafficking.
[https://en.wikipedia.org/wiki/Slavery](https://en.wikipedia.org/wiki/Slavery)
I suspect most slaves would not agree with you.

~~~
jgord
yes - in order to say something that is true, I need to say something that is
false. You'd be right to call me on it, and I'd have it no other way.

~~~
md224
> in order to say something that is true, I need to say something that is
> false.

What does this mean?

~~~
wfo
Language can be used in a rigorous, technical way with definitions and as
close to accurately as possible. Like in a technical manual or programming
language.

Or it can be used in an expressive way, the way that normal people write and
talk and communicate, where people say things that are technically inaccurate
but express meaning and and allow the listener or reader to understand the
position, emotions, facts, thoughts and experiences of the speaker or writer.

For example, "I'm starving, let's get a bite to eat." Do you say "No you
aren't, that's technically inaccurate, how dare you minimize the concerns of
the starving multitudes across the globe" or do you say "Okay." because you
understand what he means? That first response is how the "that's not real
slavery!" thread of discussion here looks to the rest of us.

I think what he meant by that was he is communicating in the second,
expressive way.

~~~
abalashov
Church.

I wrote a blog post recently that somewhat excoriated the technical community
for a blunt and mechanistic approach to argumentation along these lines:

[http://likewise.am/2015/12/06/nitpicking-is-the-lowest-
form-...](http://likewise.am/2015/12/06/nitpicking-is-the-lowest-form-of-
criticism/)

------
ryandamm
I think it's useful to draw a bright line around the 'value creation' that PG
is referring to, also. It's not just creating chairs, it's aggregating great
wealth by 'disrupting' traditional industries. Those traditional industries
have workers and shareholders who lose out.

What makes successful startups so profitable is they displace a large and
less-efficient system with a small, efficient one. Efficient in terms of human
capital, oftentimes: look how few people AirBNB employs directly, yet have a
market cap larger than Marriott. The returns on capital its investors have
seen is a result of the substitution of capital for labor (in part).

Of course, to the extent that the creation of a marketplace unlocks value, it
can create value de novo, rather than shifting wealth from one sector/company
to another. But with 'smart' startup founders seeking monopoly rents (cf.
Peter Thiel, writing/speaking virtually anywhere), those returns are also
concentrated, and will not trickle down to the larger population.

Furthermore, the wealth inequality cryoshon is writing about is not driven by
startups, it's driven by a general breakdown in the implicit social contract
between capital and labor. As OP notes, Piketty goes into great detail about
the historical causes and likely effects, but the tl;dr (and his book is
_very_ tl) break down to: when returns on capital are higher than overall
economic growth, wealth will tend to aggregate.

As fans of numbers and algorithms, I hope HN readers can appreciate the simple
beauty of that formulation. Piketty's suggested policy response is simple:
high taxes on aggregated wealth. Which, after reading (~80%, honestly) of his
book, I have to agree with.

~~~
roymurdock
> Piketty's suggested policy response is simple: high taxes on aggregated
> wealth.

You need to go one step further and outline where and how the federal
government should put this new tax revenue to work.

How much should we raise taxes? Which brackets? What form of wealth do we tax?
Why taxation rather than issuing bonds?

What percent of gov revenue should we allocate to the DoD? How much to Social
Security and Medicare? How much to public schools? Do we continue to subsidize
higher education? Will this leave us weak to the threat of foreign attack?
Will we have enough left to pay for the increasing number of elderly and
obese?

A bad government with no plan, no cohesion, and no foresight will destroy
value as the increased tax pool is simply drained out by cronyism,
bureaucracy, lobbying, and dead-end projects. The money might be better left
to a benevolent dictator, or to the private sector in the hopes of it
"trickling down".

It's easy to say "raise taxes". It's hard to say where the new revenue should
be invested, by whom, and how.

~~~
ubernostrum
_It 's easy to say "raise taxes". It's hard to say where the new revenue
should be invested, by whom, and how._

It's also easy, when someone proposes solving one problem, to say "well,
you're not allowed to solve that one until you've solved every other problem
in the world first". It's hard to say "OK, you seem to be prioritizing this
problem, let's both make our arguments and because we live in a democracy
whoever sways the most people to their side will win".

~~~
roymurdock
I'm not saying OP should not be allowed to think about or solve this problem -
rather, I am _pushing_ him to think harder and deeper about his solution and
its possible consequences.

It's easy to provide a possible step 1 of the solution to a complex problem.
Brilliance and wisdom lies in explaining why your proposed step 1 is the best
way to get to steps 2,3, and 4.

~~~
ryandamm
Don't push _me_. Read Piketty; the explicit goal (and solutions) are aimed at
leveling wealth inequality.

Yes, good governance is better than bad governance. But problems of inequality
-- and reduced social mobility, and the role of human labor vs capital -- are
real, and require real solutions.

That said, Piketty's proposed solutions aren't currently practical. Did you
see the recent estimate that 8% of global wealth is parked in tax havens?

[http://www.nybooks.com/articles/2016/01/14/parking-the-
big-m...](http://www.nybooks.com/articles/2016/01/14/parking-the-big-money/)

Yes, the problem is large, and does involve good governance. I was only
sharing one proposed solution. The sad fact is, the best solution looks
intractable. I'm open to suggestions.

------
gremlinsinc
THANKYOU for this, Paul Graham is a genius in many things, but you really hit
the nail on the head with this article. -- AS a self-trained developer trying
to get my first job and never earning over 40k (yet) between myself AND my
wife's income -- it's hard to move up, when you feel so much pressure to stay
where you are if not move down. I learned coding to start my own startup, it's
the only way I'd ever be able to afford a prototype..

But I think Bernie said it best: "NOBODY working 40 hours per week should be
living in poverty" \-- there is no reason for this, in fact it makes that
person a slave to whoever is paying them sub-par wages, they have to work
whether they want to or not, it's not a choice, it's enslavement, they stop
and they lose their apartment, and food. If the lowest 40 hour/weekers earned
enough to put money away, and not worry about living paycheck to paycheck,
then it wouldn't be such a problem. Also the fact is -- the poor spend the
most money per dollar - meaning the more money the have to spend, the more
money goes directly back into the local economies.

This along with increased tech advances that wipe away the need for some
employees and 40% of the workforce(estimated) by 2040, a guaranteed basic
income isn't just a good idea - it is crucial to our economy, and if it
doesn't happen there WILL come a day when American's demand it, and pick up a
gun to fight for it, I'm not sure when or what the tipping point will be, but
it's coming someday.

~~~
jbhatab
I agree with a lot of what you are saying, but you haven't made over 40k
between both you and your wifes income? That seems extremely unlikely with any
coding skills. I don't know any juniors that are making less than 50k from php
to javascript.

~~~
laarc
It's true. My first role was to work an unpaid intern for a year. Then my
first salary was $20k, followed by $35k only after working there for a couple
years. It was going to be $30k but I was able to negotiate.

I think pg is correct, however.

~~~
Estragon
Know any juniors without college degrees in relevant fields?

~~~
laarc
In my experience, they're usually more talented than their counterparts who
have degrees. That seems to become less true with time, though.

------
PaulHoule
An HFT isn't entirely useless.

You might want to sell 66 shares of Apple stock and somebody else wants to buy
145 and for you both to get a timely fill, there has to be some kind of
middleman.

If you think HFTs are bad, just take a look at floor traders -- the kind of
people who will front run you if they see you coming and they know what you
want, or will take a bathroom break if they don't want to trade with you.

Reg NMS, which set the stage for HFT passed because of a scandal involving the
members of the New York Stock Exchange which is as good of a group of rent
seekers as you'll find anywhere. Plenty of hanky-panky goes on with HFT, but
it is a less corrupt system than what it replaces.

~~~
catwell
This. For more details, read "Flash Boys: Not So Fast" by Peter Kovac
([http://www.amazon.fr/Flash-Boys-Insiders-Perspective-High-
Fr...](http://www.amazon.fr/Flash-Boys-Insiders-Perspective-High-Frequency-
ebook/dp/B00P0QI2M2)).

Alternatively, Chris Stucchio's blog posts (starting with
[https://www.chrisstucchio.com/blog/2012/hft_apology.html](https://www.chrisstucchio.com/blog/2012/hft_apology.html)
and
[https://www.chrisstucchio.com/blog/2012/hft_apology2.html](https://www.chrisstucchio.com/blog/2012/hft_apology2.html))
work.

We have been told so much that HFT were the bad guys by the media that we
ended up believing it, but it is more of a scapegoat for the rest of the
financial world.

~~~
PaulHoule
The people I know who really hate HFT are hedgies because they'd like to make
big trades for free.

------
cryoshon
I hope I didn't go too overboard by dissecting PG's essay like this, but I
felt it was necessary to correct many of the items that I read.

It may seem spurious now, but economic inequality is relevant for the tech
industry, too. The massively increased productivity that information
technology provides is very infrequently distributed proportionally to the
people who actually forged it-- exactly the same condition as most workers in
the US, currently. The principal difference in terms of economics is that the
absolute wages of software engineers are currently higher than the median
wages, meaning that they don't feel the pressure of not having quite enough--
given enough time, this will change unless we make a decision to alter our
course.

The accumulation of economic gains from massively increased productivity will
trend toward stagnation at the uppermost levels-- the founders and owners. Our
society is currently engineered for this to be the case, and we have much work
to do if we want a more equitable society.

If we accept economic inequality, we accept that we are not citizens but
instead are largely debt-laden effortful passengers in a world owned by our
betters.

~~~
tezza
It was a nice riposte. Altough the concentration on _income_ inequality
overall is perplexing to me.

Income can be measured and is emotive ( I earn X but my cousin earns 10X ),
yet I think concentrating on this metric is obscuring some bigger issues. You
do touch on them in your counterpoint.

Karl Marx in Das Kapital explains the situation post Industrial Revolution and
prior to the World Wars. The landlords conspired with the factory owners to
keep rents high and wages low so that workers had little ability to move or
leave.

This lack of freedom in a self determination sense is creeping back into
Western economies. Mortgages and rents are so high that workers spend most of
their wage paying that.

So never mind that middle class income equality is 17% lower than middle class
income equality 1980. House prices and rents have climbed more than enough
even if 'equality' had persisted. ( Also prices for the very rich have
increased too. )

But instead of a landlord class and factory manager class conspiring the
prices have risen via market forces and lax monetary policy and the relabeling
of debt as 'credit'

Another factor is opportunity equality. Meritocricy has greatly reduced since
1980, and is acutely poor now. Entry into elite jobs like CEOs, the Media
Class, _(cough)_ VCs and Private Equity firms are chosen from just a few
streams. Harvard, Wharton, Ivy League in the States and moneyed private school
in Europe. From outside those circles it is a struggle to join.

Paul touched on WW2, but I would go further and say both WW1 and WW2 were the
genesis of a burst of meritocracy unleashed by mass death in Europe at the
same time as vast strides in technology.

Getting a good job was easy in 1960 because everyone had died in 1915 - 1945
and there were many new classes of job.

These days, people are working and living longer and it is harder to get to
the top... your boss didn't die in battle, you'll have to wait.

~~~
collyw
Property prices are probably one of the most manipulated I can think of.
Certainly in the UK, it is far from a free market.

------
datashovel
I get the feeling the air is quite thin up in the ivory tower PG must be
living in these days :)

------
HiLo
I like how he tries to quote a "Nobel prize winning economist" as an appeal to
authority, but then (without naming him) insults Picketty's work, which will
probably win a Nobel. PG is a smart guy but he really should stick to his
areas of expertise, him and Marc Andreessen both frequently make basic finance
and econ theory mistakes. PG's claim that he is in a position to speak with
authority on inequality is like an electrician claiming he is in a position to
speak with as much authority as the architect concerning the overall progress
of the building.

------
Apocryphon
Any hacker working in San Francisco can take a look outside and see the
rampant inequality our industry is surrounded by.

------
guscost
OK, there are a lot of claims here but the one I'm interested in is the idea
that productivity has increased while wages have stagnated. I'll have to read
more about which of those are adjusted for inflation and how all that
measurement actually works, but for now I'd like to make a few points that
might be relevant:

\- There's not much consideration _why_ productivity has increased. If I had
to guess a significant part is because executives hired analysts and planners
to increase productivity, not just because better technology had that side
effect. The incentive to do this is presumably that more productivity means
better margins for the company. I can understand the argument that the workers
deserve a bigger share of the rewards than they have gotten, but there is also
a share deserved by the executives and analysts who were involved. And legally
you can't really say that anyone is _entitled_ to a share, which I guess means
that in our society the balance comes down to ethics and morals.

\- I think this point is made elsewhere, but there are a lot of things you can
do with a "middle-class" income these days that were simply not possible when
the wage stagnation started. Could it be the case that even if wage numbers
don't track productivity, there is some balancing elsewhere that means actual
quality of life does increase with productivity?

I'd like to hear peoples' thoughts, if these ideas are not full of trivial
fallacies (which may very well be the case as I am not very knowledgeable
about economic stuff).

------
boona
Let's be clear that Thomas Piketty's book has been thoroughly refuted, not in
some minor way, but Thomas claimed that all he did was objectively looked at
the data, and that the conclusion simply showed itself. Unfortunately he
cherry picked data, and fabricated bits of history to make it fit his claim.
The following paper does a great job of completely dismantling it.

[http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2543012](http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2543012)

Not to mention that most people haven't even read past the first few pages of
the book, and yet they quote it.

[http://www.telegraph.co.uk/finance/economics/10951407/Has-
an...](http://www.telegraph.co.uk/finance/economics/10951407/Has-anyone-
finished-Thomas-Pikettys-Capital-in-the-21st-Century.html)

~~~
eli_gottlieb
So, just to be clear here, the refutation to Piketty was published in the
_Journal of Private Enterprise_ by a policy professor from George Mason
University and another author from the Institute for Energy Research?

Or in other words, it was published in the Libertarian Journal of
Libertarianism by a libertarian academic and a libertarian think-tanker at a
libertarian think-tank, funded by the Koch Brothers[1]?

This really doesn't pass the smell test.

[1] --
[http://www.sourcewatch.org/index.php/Institute_for_Energy_Re...](http://www.sourcewatch.org/index.php/Institute_for_Energy_Research)

~~~
boona
Instead of smelling it, it may make more sense to actually read the arguments.
;)

------
lhh
"..the standard of living for the rich has risen and the standard of living
for everyone else has dropped"

Really, standard of living has dropped? Just to pick one counter-example,
something like 500 million iphones have been sold in the past 10 years, and
over 1 billion android devices were sold last year. Compared to 10 years ago,
we've given half of the planet 24/7 access to the sum of human knowledge.
Seems like a pretty good step up to me.

I think what you mean is wages have fallen, but standard of living has risen
dramatically and only shows signs of accelerating.

------
natural219
I'll give a short explanation as to why I flagged this:

This piece irrationally pisses me off, for purely petty social dynamics
reasons.

1) There's a first-mover advantage to thinkpiece responses. Everyone obviously
is going to read the first response, many people are probably writing
responses of their own. This seems like a quick way to jump into a discussion
and say "hey, look at me!" You better have something useful to say.

2) It's just a really poorly thought out response. It rehashes basically the
same points everybody knows, adding zero new information or insight, without
responding to the meat of what Paul's saying.

3) There was a time when I sincerely believed Hacker News was the one place to
go to escape from petty thinkpiece nonsense. It continues to sadden me to see
this community in decline. PG should start another website.

~~~
cryoshon
I'll admit that I read PG's piece coincidentally when it was just posted and
formed my article shortly after, but I'd have been writing something else
("thinkpiece") around that period of time anyway if I hadn't come across it.
I've wanted to start writing about economic inequality for quite some time,
and this was a convenient stepping off point.

I take issue with #2, though: if everyone knows those points, why did PG fail
to address them adequately in his original piece? The data supporting my
perspective are quite compelling and not yet disproven.

I'll agree my piece isn't insightful: I considered it a diligence to reply
point by point (by the book, perhaps) specifically because influential people
cannot go unchallenged when they make faulty arguments.

------
enraged_camel
This is spot on.

I think it is important to evaluate PG's essay within context. He, like most
people in Silicon Valley, is stuck in a bubble and views the rest of the world
through a very distorted lens. That's where much of his rhetoric about wealth
creation comes from: he's surrounded by people (founders) who create value in
the form of software. When a portion of those founders become rich, he looks
at himself as a promoter of inequality.

What he doesn't realize is that the vast majority of wealthy people did not
become wealthy by creating value, but by playing zero-sum games -- and then by
influencing politicians and bending the system to their will so as to
guarantee that they will hold on to as much of that wealth as possible.

I think the question PG needs to address is this: what is the justification
for non-founder executives getting paid tens of millions of dollars at the
expense of other employees? What is the justification for those top-level
salaries to exist even when the company is doing badly and regular employees
don't see a dime in raises or bonuses that year?

Bottom line is that the type of wealth PG enables founders to create, and the
subsequent inequality, is not the type society has a problem with. Sure, some
people may balk at the idea of an instant-messaging app being valued in the
billions, but those controversies tend to be completely detached from the
inequality debate.

Now, if PG ever starts preaching that founder CEOs should pay themselves
millions of dollars while keeping salaries as low as possible... that would be
a different story. As things stand though, I don't think he's part of the
problem and measures to address inequality won't really affect him and his
crew.

~~~
PaulHoule
PG is in a bubble and has a distorted view, but unlike a lot of rich people,
he's a real producer. Y Combinator has made the world a better place in terms
of new businesses, wealth created, people trained, etc.

Also PG and Sam Altman are very responsive to critics, they understand that
they live in a bubble and that other people have a valid point of view.
Compare that to the essays written by the people at Andressen Horowitz which
vary from "let them eat cake" to the kind of rich people complaining that
people criticizing them are ruining the economy for the rest of us as Paul
Krugman has recently pointed out.

~~~
hobs
Yeah, I submitted this article not because I think pg needs to have vitriol
heaped upon him as much as the article really missed the meat of the issue and
this was a good response.

~~~
PaulHoule
I agree with you. He's the right person to engage in a dialog.

------
dang
This article was flagged by users, presumably because it is a dupe of the
discussion at
[https://news.ycombinator.com/item?id=10826838](https://news.ycombinator.com/item?id=10826838).

~~~
enraged_camel
With all due respect, content like this is better served in an article format,
rather than a comment to an existing (and already very crowded) discussion.

We have had many submissions in the past that were responses to another
submission. In my opinion, this submission was wrongfully flagged, and should
be unflagged so that it can go back to the top where it belongs.

~~~
dang
The limited space of the front page is the defining constraint of HN. We often
treat follow-up articles as duplicates for that reason, so the flags are
acting in a moderation capacity here.

Some users would like to see two heated discussions about income inequality on
the front page, but I can assure you that many others would not.

~~~
davesque
That's great. But those of us who don't agree feel as though our opinions are
being squelched by those who are in control of the system (ironic, no?).
Consider that before you enforce your policies and potentially alienate a
large part of your community.

~~~
dang
"Those who are in control of the system" in this case are simply your fellow
users. The community is often in disagreement about what should be on the
front page. To the extent that we intervene as moderators, it's often to try
to balance the competing concerns. Unfortunately it seems to be impossible to
do that perfectly.

~~~
davesque
I'm fully aware of that. However, partly since it's impossible to quantify the
number of users who wish to avoid so-called duplicate posts, it's easy to
interpret efforts at moderation as disagreement with an opinion.

At the end of the day, if Paul Graham's opinion gets a chance at prime blog
real estate, shouldn't people who disagree with him get the same chance?

~~~
dang
> _it 's easy to interpret efforts at moderation as disagreement with an
> opinion_

It certainly is easy, but it's an uncharitable interpretation. We're
moderating this thread less, not more, than we normally would.

One asymmetry here is that you're upset about a specific case, but we have to
moderate HN in general. If you can come up with a viable set of general
principles that would make HN significantly better, I'd like to know what they
are. I personally have found it to be a hard problem.

A second asymmetry is that the cases where you dislike HN moderation stand out
far more than the cases you agree with. (I mean "you" the reader, not you
personally.) The latter simply blend into the status quo. Such perceptions are
prone to bias, which is one reason it's easy to be uncharitable.

~~~
Estragon

      > If you can come up with a viable set of general principles
      > that would make HN significantly better, I'd like to know
      > what they are. I personally have found it to be a hard
      > problem.
    

How much transparency is there into the decision-making process? It would be
great to see the measurements you're making to come to the conclusion that
"Some users would like to see two heated discussions about income inequality
on the front page, but I can assure you that many others would not."

------
ricksplat
I've seen Paul Graham make a few shocking remarks about wealth distribution
claiming for instance there'd be no Sergey and Larry (i.e. Google) if they
thought some of their wealth was given to the poor. I doubt Sergey and Larry
would have been one bit perturbed if they thought they would have amassed 80%
of or even less. In their wildest dreams they could probably not have even
imagined amassing 20% of that. But I don't want to get bogged down talking
about their outlying data point - though Mr Graham chose to present it as
exemplar.

My main objection to Mr Graham (apart from his general "let them eat LISP"
tone) is that his point is moot in the larger context. Yes it is true that the
technology sectors have been phenomenally successful in the last few years but
they are such a tiny amount of the actual working economy. They only stand out
because they are still in growth while the vast bulk of the economy is not.

Mr Graham quite grandiosely describes himself as a "creator of inequality" as
though he is somehow on a par with these captains of industry, the 1% or
economic elite as we variously describe them but he is not. He's just another
cog in the system - a well remunerated cog certainly but a cog nonetheless.

As a programmer myself I enjoy an elevated income and standard of living.
Having worked in a few startups I have rubbed shoulder regularly with a few
millionaires (self-made and otherwise) and by and large I would describe these
guys as often friendly, often generous, and always fiendishly clever and hard
working. I've never envied them their gains and I've never wanted for more -
I'm doing a job I love and I have enough money to live in comfort and can buy
most things I need without having to struggle.

But we are in a different world my millionaire friends and I. In the various
other walks of life I encounter I see people working harder than me, more
qualified than I, and enjoying far less job security than me, and all simply
because they work in "low growth" sectors of the economy. Sectors that are
nonetheless necessary, such as health, with skills that are nonetheless
indispensable (nurses, firemen) yet woefully under resourced. All because they
aren't growth industries - which can basically be reinterpreted as "there
isn't a quick buck to be made".

On the flip side to that Mr Graham talks about how the successful businesses
are those that have increased productivity by harnessing technology to
increase efficiency and productivity but if that is the general trend, that
the economy is nurturing more efficient use of resources then why isn't the
cost of living going down?

The truth of it is that Mr Graham and I are enjoying relatively sweet times
because we are the darlings of capital. We give better returns on investment
than other sectors of the economy. We find new ways to do things so that the
cost of running businesses is decreased whilst still charging the same price
for the services to the consumer.

We shouldn't be so quick to set ourselves at odds with the egalitarian
movement. Certainly I wouldn't rush to pay more tax or earn a lesser wage -
but at the same time it does hurt me to see the numbers of homeless
increasing, my friends and family struggling, and the quality of medical care
in decline. I'd have to weigh these factors up before taking flight with my
valuable skillset.

But what I do wonder about, is about these shadowy figures in the background
that always seem to be taking a cut. I mean the actors and organisations that
fund and manipulate all of this - that nurture "high growth" systems and
starve the "low growth" ones - whether it's on purpose, or just an emergent
pattern - and what are we going to do about it?

I believe in Capitalism, and I accept that inequality is a natural factor of
society. But that shouldn't preclude me from saying that we need more
socialism in our society - that doesn't mean I want a centrally planned
communist state like the USSR, it just means that I want our valuations to be
more nuanced than just "return on investment".

Somebody somewhere else on here wrote that if you increased taxes on the
wealthy it would only amount to a few thousand dollars extra per person. Well
I can only say that is a _lot_ of money to somebody that doesn't have a
thousand dollars and collectively it is a _lot_ of money for an institution
such as a hospital.

I believe the phrase these days is that you should "check your privilege".

------
amelius
Related:
[https://www.youtube.com/watch?v=v8Lb8ZgQP74](https://www.youtube.com/watch?v=v8Lb8ZgQP74)

------
dnautics
As a response to PG's article, I posted this:

>PG is wrong that he is a creator of economic inequality. Technology
development usually brings prices down. This is deflationary; the 'big
picture' way that deflation happens: that prices are discovered more
efficiently, or resources are used more efficiently, or that idle labor
capacity is recruited to fulfill a want or need that was not known before
(esp: think uber/lyft).

>Deflationary processes are inherently anti-inequality. Think of it this way.
If we never changed the minimum wage, then people's incomes, especially at the
bottom segment of society would make their net economic potential greater over
time.

>It is not the investment in technology that makes "tech drive inequality". It
is the political structure around it. We have a structure where monetary
policy shoves free or cheap money into the faces of banks and the investment
classes in efforts to 'stimulate' the economy, where the secular (over
decades, not over years) inflation drives low- and middle- class citizens into
risky investment activity just to be able to sustain themselves in their later
years (effectively a subsidy for the rich).

"families often consist of two breadwinners (& no children) with a hearty
amount of debt, nothing owned, and few savings. The family unit itself may
even be weaker because of less shared ownership. Wages haven’t tracked
productivity for decades, so wages haven’t risen since the previous story was
normal."

Is this because of rapacious capitalists taking wages? The nominal wage has
increased since the early 70s, but the purchasing power of that nominal wage
has gone down faster than the increase. This is policy, not capitalism.

[http://www.nytimes.com/2012/04/06/opinion/krugman-not-
enough...](http://www.nytimes.com/2012/04/06/opinion/krugman-not-enough-
inflation.html)

Policy wonks like to argue that the fed should "pay more attention to
employment". The irony is that if you think that people are consigned to being
wage slaves, a national policy of total employment is keeping people there.
There is a cost to getting people employed, and that is that those who are
employed are going to be paid less, and the way you trick people into that is
by making what people earn be less, even for the same or greater nominal
amount ("sticky wages argument").

What happened in the early 70s? Prior to the nixon shock we had wage increases
leading inflation and a trending toward decreasing of the wage gap that had
momentum enough to continue till about the 2000s (if you think about it that
momentum makes sense because entrants into the workforce in the 70s started
retiring in the 200s) - during the bush/obama era we see income inequality
turning the corner.

While we are certainly trending towards getting worse things actually are not
that bad:

[http://im.ft-
static.com/content/images/d823a614-9e82-11e5-b4...](http://im.ft-
static.com/content/images/d823a614-9e82-11e5-b45d-4812f209f861.img)

Everyone is worried about the far right side of the graph (which is partially
a histogram artifact) but look at the left hand side of the graph and see how
the lowest income fraction of society is far less populated than 40 years ago.
(yes, between 2008 and 2015 it is getting worse, which is cause to worry)

~~~
Pyxl101
> The nominal wage has increased since the early 70s, but the purchasing power
> of that nominal wage has gone down faster than the increase. This is policy,
> not capitalism.

Which option would you prefer? (1) You have a 70s real wage, but can only
purchase goods and services that were available in the 70s, or (2) You have a
2016 real wage and you can purchase all goods and services available today.
Keep in mind that real wages have stayed roughly constant since 1970.

Most people I know will pick option (2), which suggests that purchasing power
has in fact increased rather than decreased. Technology is improving and
everything is becoming cheaper, bringing up our standard of living.

Here are some facts about Americans living in poverty, according to the Census
Bureau [1]: 80% of households below the poverty level have cell phones. 96%
have a television and 83% have a DVR. 97% have refrigerators, 96% have stoves,
93% microwaves, and more than 83% have air conditioning. 58% have computers.
If you had to choose, would you prefer to live in poverty today in 2016, or
would you prefer to live in poverty in 1970? How about 1900 or 1800? How does
the standard of living in poverty compare to any other time in history? An
American living in poverty today probably has a better standard of living than
a typical king did in centuries past.

[1] [http://www.census.gov/hhes/well-
being/publications/extended-...](http://www.census.gov/hhes/well-
being/publications/extended-11.html)

~~~
dnautics
You're presenting a false choice. You could have a 1970 real wage and buy the
stuff of today? My point is exactly the fact that we don't have that is a
result of inflation. Please explain, mechanistically, why you believe that
there are only two options here.

~~~
Pyxl101
I'm simply presenting a thought experiment, not an actual choice. The thought
experiment demonstrates that purchasing power has increased from 1970 to 2016
(at least, if you prefer 2016 wages and products to 1970 wages and products).

If you'd like to argue that "purchasing power should have increased _more_ if
it wasn't for XYZ..." then that's fine, but it's separate from the point that
I was debunking:

> but the purchasing power of that nominal wage has gone down faster than the
> increase

If one prefers 2016 products at 2016 wages, then purchasing power has
increased. Since real wages have stayed constant, we're basically just talking
about 1970 products vs. 2016 (and 2016 products are much better, cheaper, etc)

~~~
makomk
Sure, purchasing power has increased massively for fancy new 2016 products
like cellphones, TVs and gadgets. Unfortunately it's also plummeted for old-
fashioned 1970s-esque products like food, fuel to go to work, and a roof over
your head and even though it's 2016 people still need those products. Having a
42" television for a price that would have seemed astonishing a few years ago
is little help if you can't feed your family and can barely pay the rent.

~~~
yummyfajitas
Not true for food or energy, hard to find (imputed) rent vs income.

[http://www.npr.org/sections/thesalt/2015/03/02/389578089/you...](http://www.npr.org/sections/thesalt/2015/03/02/389578089/your-
grandparents-spent-more-of-their-money-on-food-than-you-do)
[https://www.eia.gov/todayinenergy/detail.cfm?id=10891](https://www.eia.gov/todayinenergy/detail.cfm?id=10891)

~~~
collyw
In the 70's a family with only one breadwinner earned enough to pay for a
mortgage as well as all the other food and energy.

------
mcguire
Perhaps I've been sensitized by recent reading[1], but I don't think this
response addresses the real problems with PG's article.

The problem with inequality is not _necessarily_ the inequality itself. The
poor in America are significantly better off than the wealthy were not very
long ago, in most material senses, as has been repeatedly pointed out. So what
if they don't get _as good_ health care or education or whatever as some of
their neighbors; it's still better than they would have had. The problem is
that relative wealth, inequality, _is_ power. It always has been, and it
always will be.[2] (Admittedly, in other societies, wealth isn't the only
power. But with the decline of the church and the significant lack of both
feudal aristocracy and totalitarian[3] governments, wealth is really the only
power left.)

So, here's a question: is it proper for a vanishingly small segment of society
to be able to establish and maintain power over the vast majority? Me, I've
got no idea. Don't really care, either. Because a better question is: is it a
good idea? And I think the verdict of history there is a pretty solid Nope.

Are you unhappy with the Koch brothers' political views? That's another stupid
question; their specific desires are pretty much irrelevant. Much more
important is how you feel about how they go about expressing and supporting
their views. When reading PG's or this article, remember that Charles' and
David's father was very much a start-up entrepreneur. Their grandfather was a
Dutch immigrant and printer and Fred was _exactly_ the kind of person PG is
talking about in his essay. Now, you can can go on about "limiting corruption
in politics", but keep in mind that the Koch brothers are apparently planning
on putting something like a trillion dollars into the 2016 election; it's hard
to perceive anything but that their views will always matter more than yours.

Inequality in wealth and power is not even a new thing in this country; I'm
given to understand that the state now is at or approaching levels from the
gilded age, but not exceeding them. What is new, is that for a time in this
country we _didn 't_ have wild inequality. Here's what Paul has to say about
that:

" _I think rising economic inequality is the inevitable fate of countries that
don 't choose something worse. We had a 40 year stretch in the middle of the
20th century that convinced some people otherwise. But as I explained in The
Refragmentation, that was an anomaly—a unique combination of circumstances
that compressed American society not just economically but culturally too._"

(Personally, I think that the cultural compression that Paul fears so much is
somewhat overblown. But then, I grew up in the '70s in Amarillo, TX (not far
from the Koch's Quanah, weirdly) and rather fortunately had the library at
WTSU about 45 minutes south in Canyon.)

The thing that bothers me most: All of those fancy technologies that PG
emphasizes, those that some commentors here are happy to trade 45 years of
real wage growth for, had their direct roots in that brief period of weird
equality. What happens next? What happens after AirBnB puts all the hotels out
of business and we're all staying in each other's spare bedrooms on trips?
What happens after Uber has killed off all the taxi companies in the world and
replaced them with spare-time drivers? Do things still keep getting better and
better? Sure, my nifty new Galaxy Note is better than my old land-line, but
exactly how much better is an iPhone6 compared to a 5?

Or, ultimately, do Larry Ellison's sons, Charles and David, decide they don't
want to deal with all of this bullshit and start throwing their weight around
Silicon Valley?

And when they do, what are you going to do about it?

[1] _The Story of Philosophy_ , by Will Durant, if you're interested. In fact,
I'm in the middle of the chapter on Nietzsche; one of the best comments in
this very well-written and quite good book is a footnote following a quote
from Nietzsche regarding how excesses in the behavior of the übermensch will
be restrained by morality: something to the effect of "How did that get back
in here?"

In any case, PG's comments like, " _Most people who get rich tend to be fairly
driven. Whatever their other flaws, laziness is usually not one of them_ " (
_Laziness_ isn't one of the flaws of that single mother working three jobs,
either.) or " _Louis Brandeis said 'We may have democracy, or we may have
wealth concentrated in the hands of a few, but we can't have both.' That
sounds plausible. But if I have to choose between ignoring him and ignoring a
polynomial curve that has been operating for thousands of years, I'll bet on
the curve_" strike me with a certain sense of deja vu.

[2] In anything remotely resembling a foreseeable human society.

[3] "Totalitarianism is best understood as any system of political ideas that
is both thoroughly dictatorial and utopian."
([http://www.iep.utm.edu/totalita/](http://www.iep.utm.edu/totalita/))

~~~
eli_gottlieb
>The thing that bothers me most: All of those fancy technologies that PG
emphasizes, those that some commentors here are happy to trade 45 years of
real wage growth for, had their direct roots in that brief period of weird
equality. What happens next? What happens after AirBnB puts all the hotels out
of business and we're all staying in each other's spare bedrooms on trips?
What happens after Uber has killed off all the taxi companies in the world and
replaced them with spare-time drivers? Do things still keep getting better and
better? Sure, my nifty new Galaxy Note is better than my old land-line, but
exactly how much better is an iPhone6 compared to a 5?

The Google founders attempt to throw us out of cyberpunk capitalism by setting
off a technological singularity.

I'm not joking. Look at their hobbies: artificial intelligence, life
extension, robotics. It's really obvious: they are trying to play at being
Vernor Vinge characters.

Which actually carries an important point: a lot of the people who do the real
work of pushing the high-tech business forward don't particularly _care for_
capitalism itself. They'd just as soon push for _far more_ technological
solutionism and alter socioeconomic relations to suit.

~~~
pdkl95
They think they are Vernor Vinge characters, but in reality they are end up as
_Sleep Dealers_ [1].

[1]
[https://www.youtube.com/watch?v=xW8oSRSzS7M](https://www.youtube.com/watch?v=xW8oSRSzS7M)

~~~
eli_gottlieb
Oh hey, I remember that movie! I always wondered why the cyberpunk dystopia
revolved around Mexican labor, but hey.

------
temp
This sure is getting flagged a lot.

~~~
cryoshon
I noticed this too. There's some weird behavior going on with the algo, I
think... it keeps popping on and off of the front page.

~~~
dang
That's the standard effect of flags.

------
bad_user
This article is being buried, dropping from second place to tenth in an
instant. Interestingly it's being surpassed by articles that are both older
and with less points.

~~~
dang
The thread is clearly a duplicate of
[https://news.ycombinator.com/item?id=10826838](https://news.ycombinator.com/item?id=10826838).
Normally we bury duplicates outright. We're actually holding off doing that
here, because some people seem to feel strongly about it.

~~~
ddingus
I have read both, and there is value added here, despite it having a large
overlap with the earlier discussion.

------
cxromos
this feels like populism. pg's articles are well thought and argumented. i
actually learned a lot from them. it does not matter do i agree with
everything there or not though i mostly do. if someone can write that good
from a different aspect or point of view so that i can learn more on his/hers
views that would be great.

------
Mz
Got this far and stopped reading:

 _To quote Graham, mafioso of the startup incubators:_

I have lots of valid reasons to be really grumpy about lots of things. I am
also not a fan per se of PG. But any supposed debate that starts by basically
smearing the character of the person you are debating is unlikely to be based
on sound, objective reasoning. This piece is almost certainly not motivated by
a desire to correct any logic missteps in pg's writing. It is most likely a
thinly veiled excuse for trying to trash the man personally.

~~~
gist
Maybe it's actually better that OP did that as in "you've been warned" as to
some bias. I didn't see it as a smear and by the way Ron Conway has been
referred to as "the godfather" by the mainstream press and bloggers (at least
as I recall).

~~~
Mz
Sure. And we also have the expression "PayPal Mafia." But those are written
for mainstream audiences. This piece appears to have been written for Hacker
News, where the vast majority of readers know exactly who pg is, what he does
and that he is enormously powerful. Almost no one here needs to be told by
analogy that pg is a serious contender of that sort.

But have an upvote.

------
tie_
I disagree with most of the post, but here is one point that I'm particularly
at odds with:

> We have no obligation to stop someone from “becoming rich”– but we have a
> strong obligation to stop someone from becoming poor.

I don't see a way to stop people from becoming poor. The most common way of
becoming poor is not to produce wealth. How could we fulfill our "strong
obligation" and force people to produce wealth?

~~~
sangnoir
> The most common way of becoming poor is not to produce wealth. How could we
> fulfill our "strong obligation" and force people to produce wealt

There is a break in your logic: your conclusion would only make sense if not
producing wealth is the _only_ way of becoming poor, which is not the case
(think bankrupting medical bills that can make you poor even as you 'produce
wealth').

To answer your question directly: you can fulfill the strong obligation to
stop people _becoming poor_ by having a strong social security net, and
possibly a guaranteed minimum income.

~~~
tie_
> There is a break in your logic: your conclusion would only make sense if not
> producing wealth is the only way of becoming poor.

I read the strong obligation of stopping people becoming poor as stopping
_any_ people from becoming poor, rather than stopping _some_ people from
becoming poor. If there is a single feasible way to become poor, then _some_
people would go that way, and we have failed that obligation. The flaw is not
in my logic.

Even with strong social security net, you cannot stop people from being poor.
The strong social security net would represent the lowest level of income. At
the lowest level of income in a society, you're poor, as everyone else is
making more than you do. If someone was working and making less than what the
social security provides, then they can just stop working and be better off at
the security net level.

No matter how strong the social security net, the people resting on it will
always be the poorest in the society.

Speaking from experience (grown up in a communist country, living in Western
Europe atm), even the strongest form of state-forced salaries/job availability
did not prevent people from becoming poor. Unsurprisingly, the current Western
European societies are not preventing this either.

~~~
sangnoir
> At the lowest level of income in a society, you're poor, as everyone else is
> making more than you do.

That doesn't sound like the correct definition of being poor. To me - poverty
isn't relative but absolute: if you live on less than $X amount a day, you're
poor. The amount may vary, depending on who you ask (and where), and this
amount depends on the cost of living rather than income percentiles.

If most people makes more than you, you are poorer than them - but not
necessarily in poverty (or poor). I can safely say there are no poor Apple
engineers, regardless of the existance of someone being the least paid Apple
engineer.

~~~
tie_
> To me - poverty isn't relative but absolute: if you live on less than $X
> amount a day, you're poor.

I agree that the poverty that we should be fighting against is the absolute
one. The complaints about "income inequality", however, are by definition
dealing with the relative type of poverty.

Indeed, if the topic was "increasing the wealth/well-being/opportunities of
the poorest", the discussion would be _completely_ different. Alas,
inequality, implying rich people robbing poor ones is so much juicer of an
idea.

The second part, about "live on less than $X amount a day" I find badly
defined. It's not about money, but about having access to basic wealth (food,
clothes, shelter, etc). The money (in any currency) that can buy that wealth
changes not only by region, but with time as well. Money is far too fast
moving of a target, and it doesn't bear an intrinsic value.

I'd wager that what a poor man has nowadays is way ahead than what a poor man
got 50 years back. As somebody above pointed out, the vast majority of
households below poverty level in the US have TV set, DVR, cell phone, air
conditioning, etc. I don't think that a poor guy in the middle of the last
century would think twice about changing places with a poor guy today.

------
clarkmoody
> Now: none of the above, and families often consist of two breadwinners (& no
> children) with a hearty amount of debt, nothing owned, and few savings.

All of this is by choice on the part of the families. People choose to seek
employment. People choose to go into debt. People choose to spend rather than
save.

> The family unit itself may even be weaker because of less shared ownership.

"The death of the family is the life of the state."[1] When the welfare state
grows larger, the family itself becomes less important. If you want to restore
the family to its former place, then you _must_ reduce the welfare state.

> Wages haven’t tracked productivity for decades, so wages haven’t risen since
> the previous story was normal.

How about total benefits, including those _mandated by the State_? Your wages
haven't increased but your employer is spending more than ever on your
benefits.

> We’ve lost all of that ground: not just some of it, all of it, and more.
> We’re back to the 1920s– wage slaves with few rights and no political
> ability to change things.

We've lost a lot of ground in the quest for liberty, that's for sure. But each
June, the Supreme Court creates more "rights" out of thin air. What about
those? We have more "rights" than ever, when you look at the burgeoning list
of goodies the government doles out.

Income inequality is the result of a free society. Imagine perfectly
egalitarian society, in terms of wealth. One day, a musical artist gives a
concert, and people voluntarily choose to pay money to see it. Now you have
inequality, and it was all voluntary. Should the State jump in and steal the
excess capital from the artist and give it back to the patrons to restore
equality?

[1] [https://mises.org/library/welfare-states-attack-
family](https://mises.org/library/welfare-states-attack-family)

~~~
djur
Which "State" are you referring to? I'm not aware of an organization by that
name.

> Imagine perfectly egalitarian society, in terms of wealth.

The "perfect egalitarianism" strawman is, at this point, barely recognizable
as either man or straw for all the beatings it's suffered. It is as useless a
hypothetical in discussing the appropriate distribution of resources as would
be "imagine the entire universe was owned by a single person".

The vast majority of people support the use of some degree of compulsion to
obtain a more stable or fair distribution of resources than would be obtained
in a state of nature. "Stable" tends to be the goal of the right, while "fair"
tends to be the goal of the left. From there, everything is a subject of
debate -- how much intervention is too much? what is the preferred
distribution? can we reach the preferred distribution with a permissible level
of intervention?

~~~
clarkmoody
> Which "State" are you referring to? I'm not aware of an organization by that
> name.

The State is the entity within society that holds a monopoly on the use of
force. It uses that power to coerce members of society to fund its exploits
through legal theft called "taxation."

You probably know it by a different name, depending on where you live :-)

~~~
djur
There is no single entity that holds a monopoly on the use of force and
effects taxation, so I don't see anything worth granting a proper noun. Part
of the reason I am not an Austrian is because I prefer my political science
and economics to deal with concrete actions and actual people and
organizations, not Abstract Capitalized Entities.

The assertion that taxation is legalized theft enforced through the threat of
force is a popular one in certain circles, but it isn't the self-evident fact
you believe it to be, either.

~~~
clarkmoody
Of course the individuals who act in their capacity as government employees
affect all the outcomes of state action. You may be more of an Austrian than
you think if you refuse to recognize "society" and "the state" as independent
actors.

> The assertion that taxation is legalized theft enforced through the threat
> of force is a popular one in certain circles, but it isn't the self-evident
> fact you believe it to be, either.

What other collection of individuals claims this privilege but the state? (see
what I did there ;-) )

Seriously though: if I get a band of guys together and point a gun at you and
force you to hand over 25% of your income to us, wouldn't that be illegal? But
if I wear a badge and the band of guys is the enforcement arm of the IRS,
that's any different?

A more complete analysis: [https://mises.org/library/taxation-
robbery](https://mises.org/library/taxation-robbery)

~~~
MisterBastahrd
And there we have it. A mises.org citation.

Good luck finding a country that doesn't engage in taxation. You won't find
one with a functioning government, or utilities, or roads, or a military. Keep
on with the "taxation is violence" meme. I'm sure that'll get you far.

~~~
clarkmoody
Yeah don't worry about challenging any of my ideas in actual intellectual
debate. That'll get you far.

