
The Refragmentation - urs
http://paulgraham.com/re.html
======
gotchange
A very fascinating article that I have truly enjoyed reading minus the last 10
or so paragraphs where Paul expressed it unequivocally that he's a status-quo
warrior and that nothing can be done to remedy the problem of the ever
widening gap of income inequality in the global economy and more specifically
in the US and that it's a "natural" product of the state of affairs in our
world. A classical example of « the naturalistic fallacy » [0].

Also, it's also worrying the degree of infatuation or affection for the early
20th century years with central planning of the economy, crony capitalism,
robber barons, an all-powerful big government, centralization and
concentration of power at the hands of a few, regimented and uniformed society
...etc.

No leftie is arguing or longing for any of these policies. What we're looking
for is just more equality in economic opportunities and esp capital and that
distribution of capital to be more fair across all the classes and not to be a
privilege only for rich and highly connected people.

That's how we envision the solution to fix this problem of "fragmentation" as
he put when it exactly is more like a "segregation" problem but not based on
racial or cultural factors but on economic one into two completely separate
societies between the haves and have-nots, between the 1% and the 99% of the
population and it's getting worse and uglier by the day.

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

~~~
hoorayimhelping
The last paragraph was the whole point:

> _I worry that if we don 't acknowledge this, we're headed for trouble. If we
> think 20th century cohesion disappeared because of few policy tweaks, we'll
> be deluded into thinking we can get it back (minus the bad parts, somehow)
> with a few countertweaks. And then we'll waste our time trying to eliminate
> fragmentation, when we'd be better off thinking about how to mitigate its
> consequences._

A few people making rules didn't cause this to happen. It was the entire world
reacting to things the entire world did for the past hundred years. A few
people making rules can't stop that kind of force, even if they have good
intentions for everyone else.

> _What we 're looking for is just more equality in economic opportunities and
> esp capital and that distribution of capital to be more fair across all the
> classes and not to be a privilege only for rich people and highly connected
> people... That's how we envision the solution to fix this problem_

He mentions this:

> _You can mitigate this with subsidies at the bottom and taxes at the top,
> but unless taxes are high enough to discourage people from creating wealth,
> you 're always going to be fighting a losing battle against increasing
> variation in productivity._

I think you're looking at a lower scale than pg. From how I read it, he's
saying that yes, you can do a little bit to ease the inequality, but you're
not going to fix it unless you stop all technology from happening or you stop
paying people their market rate. He's saying income inequality is a _feature_
of technology allowing people to be paid their market value and that you can't
'fix' that; the most you can do is take from people at one end and give to
people at the other end.

~~~
curun1r
> He's saying income inequality is a feature of technology allowing people to
> be paid their market value and that you can't 'fix' that.

The thing that I worry about is whether this feature is destroying the
conditions that allowed it to become a feature in the first place.

He mentioned the example of Apple and IBM, which I see as illustrative in
another way. Would personal computing devices have become popular in a highly
fragmented world? According to Wikipedia, the Apple II cost over $5k,
accounting for inflation. Absent a healthy middle class, which was created by
the era of conformity and relative income equality, would there have been
enough consumers to create a market for a $5k computer? As we see income
inequality rise, are we not also going to see the opportunity for wealth
creation diminish as capital congregates in the hands of a class that largely
conserves it?

I think we're already seeing this. As an exercise, try to think of something
non-niche that costs around $5k, the price of the Apple II, for which there
isn't some form of financing (auto/home/college loans and such). I'm hard-
pressed to think of something and I believe it's because there's an
increasingly small number of people that can afford such a product. We're
already losing the conditions that allowed Apple to introduce the personal
computer. There's a long ways that this trend can go before it becomes
untenable, but the end result of income inequality will be an environment
where it's quite difficult to get paid your market value because the market
that funds the employment market will have dried up.

~~~
TheOtherHobbes
>He mentioned the example of Apple and IBM,

And on that, as on so much else, he's more than a little wrong.

Apple and Microsoft simply couldn't have happened without the mega-corps - not
least HP, but also IBM, and Fairchild and its spin-offs - which only existed
because of post-war military and civilian "socialist" state support for
technology.

By the mid-70s that support had been influencing economic policy for more than
forty years.

Apple was a product of that system, not a cause of it. Companies like Apple
_do not happen_ in a pure deregulated neoliberal market paradise because
markets don't have the kind of strategic intelligence that can fund projects
like Whirlwind, TX-0, and the original Arpanet - all of which are essential
steps on the road to making an Apple or a Google.

>Absent a healthy middle class, which was created by the era of conformity and
relative income equality, would there have been enough consumers to create a
market for a $5k computer? As we see income inequality rise, are we not also
going to see the opportunity for wealth creation diminish as capital
congregates in the hands of a class that largely conserves it?

And this is why they can't happen. You can't build your economy by
impoverishing your customers with hand-wavey idealism about "market rates." If
you try that, at best you run out of customers, and at worst you get a violent
revolution.

The smart way to understand the economy isn't as a number of acquisitive
centres for a vague thing called "money", but as a way of amplifying
collective intelligence and distributing the gains as widely as possible.
Status games for their own sake - which include most purely speculative and
acquisitive activity - are the opposite of collective intelligence because
they concentrate acquisition instead of distributing it.

You can get localised negentropic blips in a speculative economy, but the
overall trend will still decrease collective opportunity over the medium/long
term rather than increasing it.

~~~
kobayashi
>Companies like Apple do not happen in a pure deregulated neoliberal market
paradise because markets don't have the kind of strategic intelligence that
can fund projects like Whirlwind, TX-0, and the original Arpanet - all of
which are essential steps on the road to making an Apple or a Google.

While I can agree that private entities/markets lacked the capability to fund
transformative projects during most of the 20th century, I'm hard-pressed to
reasonably apply that to the modern context.

It seems that the most forward thinking, transformative ideas are indeed
coming from the private sector markets (e.g. SpaceX), and with the enhanced
abilities that our technological age affords to solo individuals, it seems
that even small teams may be able to create the next transformative, paradigm-
shifting project.

~~~
woah
Leaving the buzzwordy hand waving in the last paragraph aside, spacex gets the
majority of its revenue from the government.

~~~
JBiserkov
... for services rendered, at a price no one else is able to compete. Or so
I've heard. Correct me if I'm wrong(the PR machines are not to be
underestimated). Or don't, your choice.

------
rsync
"Obviously the spread of computing power was a precondition for the rise of
startups."

If you live in San Francisco (or are visiting) you can visit the USS Pampanito
- a retired WWII submarine.[1]

One thing I think you will notice is the manufacturers plaques attached to
every little piece of equipment in the submarine ... every one of them the
plaque of some tiny little supplier that you have _never heard of_. Some
little Detroit Turbine Supply Company or American Radio Corporation of
Maryland ...

Seriously - every single component has a label on it from a firm you have
never, ever heard of.

I guess I don't have a deep knowledge of military procurement and supply circa
1942 (or whenever) but it sure looks like startups to me ...

[1]
[http://www.maritime.org/tour/index.php](http://www.maritime.org/tour/index.php)

~~~
golergka
That seems to be just small businesseses, not startups. Startups either go
Facebook or go bust, they're not created to stay stable at small scale.

~~~
jacquesm
> Startups either go Facebook or go bust, they're not created to stay stable
> at small scale.

Nonsense. Plenty of companies start out as small companies and suddenly find
themselves on the upwards slope of a hockey stick, others start out as aiming
for that hockey stick and end up being 'just' sustainable businesses.

This whole start-up naming thing denies 125 years of objective reality. You
can't start a scalable company deliberately any more than you can reliable
write an evergreen book. Time will tell what you've got, not your label of it.

~~~
edanm
But wait, some people start a pizza place or a grocery store or something
similar. Those kinds of businesses are definitely new businesses, and people
who start these kinds of businesses is what was traditionally meant by the
word "entrepreneur".

But startups _are_ qualitatively different - they are usually started with the
express (and usually _only_ ) purpose of growing very large, very fast.

Call them startups or not, but we definitely need a term for the kind of
company that behave in this "go big or go home" fashion, and startup is the
generally recognized term for it.

~~~
jacquesm
Sure, but a start-up is more of a determination after the fact than something
you decide to build. The only reason it works out for YC is because they start
so many companies that a few of them due to the expected distribution end up
being home runs. They still influence things as much as they can in that
direction but there are absolutely no guarantees and quite a few of the go-
big-or-go-home companies end up going neither big nor home, they end up being
normal companies.

So unless you're willing to apply the start-up label only after the fact to
the successful companies you're going to have to be a bit more inclusive than
to just use it to describe Facebook, dropbox, google, Uber and AirBnB.

> But startups are qualitatively different - they are usually started with the
> express (and usually only) purpose of growing very large, very fast.

No, that's the exception. The rule is that start-ups were started to be
companies like any other. At some point during their life span they found a
groove that supported the property of very fast growth (almost always these
are companies with some kind of network effect) and then retrospectively
applying your criteria you can call those companies start-ups.

Anyway, no need to believe me, you can simply prove me wrong by deliberately
starting a start-up that will scale. I'll bet you 1:50 that you won't make it.

The hard part then is this: your company has a fairly good chance (10% or so)
to become just another company. Now supposing this is the case, will you then
follow through on your 'go big or go home' slogan and go home and kill that
company? Or will you do what everybody else does in that situation and just
run it and milk the cow?

And even pizza places or grocery stores can end up scaling way beyond the
original aim of the founders. McDonalds is a nice example.

If you want a single word that identifies companies that are growing very
large, very fast I'd suggest this one: lucky.

~~~
TeMPOraL
Another angle is that the label "startup" is being applied retoractively to
companies that, at their beginnings, were in no way similar to contemporary
startups. I can't picture the founders of Google, Apple or Microsoft
frequenting "startup events" of their time, spending time on figuring out
valuations, or "growth hacking" strategies, or drinking beer together and
dreaming out loud of the world domination they're going to achieve. From what
I remember reading, the founders of those companies simply did the work and
were focused on it. They didn't dream of taking the world until they already
found themselves in the groove, being half-way into orbit and already after
first stage separation.

Contrast that with what we call startups today - companies that deliberately
attempt to be that "evergreen book", trying out every trick in the book to
force themselves onto growth path. They live within an ecosystem, a big part
of which is a mutual adoration society, with additional large layers of
parasitic actors trying to suck out some money and status by just hanging
around. And surely a good strategy was found - hence contemporary standard
business plan of bullshiting customers with half-made shell of a product to
quickly reach the point of getting acquired. It seems to work better than
"just" starting a company, at least for the founders. Not necessarily for the
world at large.

In a way, I think that early Apple and Google had more in common with a pizza
place than with a contemporary Instagram clone.

------
jusben1369
The thing to me is Silicon Valley is the place in the US that still looks like
that post WWII America. Large monopolies like Google, Apple and FB utilizing
fantastic profits and paying amazing perks to employees. Everyone working in
and on the same mission acting as a social fabric tying people together. Glass
Door and the Internet in general replacing trade unions by helping balance a
knowledge imbalance so that workers can maximize their benefits.

The irony of regularly lecturing the rest of the country and world about what
the future holds from the position as a final bastion on unassailable US
hegemony of last century (2nd only to Hollywood?) perplexes me.

~~~
HillaryBriss
It's certainly true that SV's days as a big tech hardware manufacturer are
past.

I am not at all certain, but I have to wonder if something magically keeps SV
software innovators glued to SV. This is something I've never understood. But
there must be SOME reason why software innovation/work didn't completely
disperse from SV ten years ago.

~~~
jusben1369
One very simple answer is VC money. They want you local and their talent
network (of people for your growing startup) is local. Who knows how different
Boston would be if Facebook stayed there? (Just one small example)

------
pcmaffey
"And as long as it's possible to get rich by creating wealth, the default
tendency will be for economic inequality to increase."

This seems to be the ontological point of his essay, which reads as a loosey
historical narrative manufactured to defend his belief that the fight against
"economic inequality" will undermine innovation by disincentivizing the next
Zuckerberg.

But it misses the underlying point of wealth creation: if more people create
more wealth, then naturally, there should be less poverty. Adding value to the
world makes the pie bigger. The real issue is distribution. Our current
economic model distributes wealth as a factor of capital, which is hoarded at
the top and systematically protected. It would be silly to say that the top 1%
of the population, which owns more than the rest of the 99% combined, creates
more wealth or is more productive than everyone else on the planet. They just
have a monopoly on capital.

~~~
jcalvinowens
> his essay [...] reads as a loosey historical narrative manufactured to
> defend his belief that the fight against "economic inequality" will
> undermine innovation by disincentivizing the next Zuckerberg

Well put.

The argument that general taxation disincentives innovation has never made any
sense to me: no matter how high the tax rate, your post-tax income still
scales linearly with your gross income. If your object is to make increasing
amounts of money, how does a tax give you less incentive to do so?

~~~
quadrangle
Devil's advocate: If more income takes more work, and I'm already rich, then
the extra work is only worth it to me if I get a really substantial return,
not just some minor increase.

(In reality, only totally naive people believe that any billionaire cares at
all about making more money for the sake of the money. It's actually about
_power_ and about irrational desire to be higher in the rankings compared to
other billionaires… unless they have other motivations that aren't related to
their profit, of course)

~~~
zanny
Which is also in contradiction to Grams perspective. Its insane to claim that
you need to keep wealth concentration uncapped to incentivize innovation,
because a supermajority of novel innovation comes from people at the bottom
becoming rich, not the rich getting richer.

Its important to distinguish enabling upward mobility through entrepreneurship
and incentivizing that with reasonable taxes and stopping billionaire bank
tycoons from buying houses of legislature with overseas bank accounts and
ownership stake in half the multinational corporations in town.

It also contributes to why that wealth concentration is a problem, because it
snowballs - in an unbiased economy with modest inflation the rich must
reinvest somewhere to maintain their relative wealth or lose it. When you have
enough to use force of law to distort the market so you don't have to take the
same degree of risk in those investments, or even make them at all, you break
the system.

So while wealth inequality is a symptom of globalized economic forces, that
wealth inequality perpetuates itself in how it _will_ be used to stymie
innovation and promote selective growth for those first to get there.

~~~
mhaymo
> a supermajority of novel innovation comes from people at the bottom becoming
> rich, not the rich getting richer.

Citation needed? As PG points out, most startup founders are not poor. They
take the risk of innovating not because they are desperate, but because they
see a large upside. Reducing that upside will certainly reduce the motivation
to innovate at the margins. The only question is how much does it reduce
motivation, and do the benefits outweigh the costs?

~~~
zanny
Poor is relative. We are talking about the difference between having a safety
net at your parents house where they have a combined income of 300k and might
have a cleaning maid every weekend versus a billionaire CEO with penthouses in
four cities and his own airplane. One is middle class, the other is extremely
rich.

~~~
mhaymo
So the focus on "inequality" _is_ a focus on large wealth at the expense of
thinking about poverty, to the degree that you call 6-figure earners "people
at the bottom". I'm still not convinced that a "supermajority" of innovation
does not involve the very rich. Much innovation today comes from companies
like Google, Apple, SpaceX, lead by very wealthy leaders.

Even if you were right, the point remains that limiting the upside of risk-
taking also reduces the incentives for middle-class people to innovate.

~~~
quadrangle
You're confusing causation and correlation _even_ if your premise is valid
(which is totally questionable).

First, Google and Apple have nothing to do with personal wealth, they are
corporations. The fact that have lots of corporate wealth means they have
resources to put into innovation. They can do that completely independently of
whether they pay absurd salaries or stock-dividends. Corporations can profit
off their activities and put the profits back into innovation, and when that
happens they are business expenses that aren't even taxed!!

So the entire issue about taxation of wealthy incomes is _only_ about wealth
that people take home as personal profit and do _not_ reinvest in business.

Now, let's accept the questionable premise that these people with high incomes
produce the greatest innovation. That simply means that innovation correlates
with high income. It does not tell us anything about cause. Maybe these are
people who would be innovative no matter what and our system happens to reward
that with riches. If that hypothesis holds, then higher taxes would have zero
impact on their innovation. There's tons of evidence that innovative people
are motivated in other ways besides getting richer, i.e. that the promise of
further riches isn't the _cause_ of their innovative work.

~~~
mhaymo
> First, Google and Apple have nothing to do with personal wealth, they are
> corporations.

When Steve Jobs returned to Apple, he made it far more productive, and he was
personally paid to do so. If his personal wealth was capped he may not have
found it worthwhile to do this work that he was clearly exceptionally
qualified for.

> Maybe these are people who would be innovative no matter what and our system
> happens to reward that with riches.

You can only believe this if you believe that people (or just "innovative
people") are not even slightly motivated by money, which is clearly absurd. I
certainly believe that people are motivated by many things besides money,
however at the end of the day money is what gets you many of the things you
want. I know that I personally am much happier to work hard when I know I will
be amply rewarded.

------
msvan
I think this is one of the most interesting essays he's written in a while,
and it echoes many of my own thoughts better than I could express them.

PG seems to argue that the fragmentation of society is a question of
efficiency. A natural effect of this is that the world will become more cut-
throat. Efficient systems turn hyper-competitive, as seen in university
admissions, startups, financial markets. It seems to me that too much
"liquidity" mostly causes burnout, depression, dumb risk-taking, and a few
really successful winners. Tech is really guilty of this phenomenon by tending
to produce one winner for every thousand losers.

In many ways the 20th century was an anomaly -- the wars were more violent,
the rate of growth was faster, the cultural shifts were huge and multifaceted
-- but we still use tend to see it as a normal state of things. A hundred
years into the future we'll be looking at an entirely different world and
consider it normal.

~~~
randcraw
PG's perspective is quite US-centric. The aftermath effects of WWII in Europe
or Asia was rather different. Among most nations' peoples there's long been
little cohesion due to the lack of unifying forces like media or of ethnic
homogeneity.

I agree that the economic dynamics of 20th century America won't repeat. But
I'm not sure most countries will enjoy a stable predictable trajectory this
century. Asia and China are far from being mature ecosystems (economically or
politically), and the likely loss of jobs due to further globalization and
automation, just as the promise of US-style consumerism is arising portends a
bumpy ride, especially for totalitarian-ish societies like China, Saudi
Arabia, and even Turkey.

------
wbl
I think this essay ignores the impact of the Civil Rights Movement and
feminism in undermining the 1950s. The world of the 1950's wasn't one where
women could work, despite that having been the case since the 1920's. It was
also the world in which Brown v. Board of Ed. lead to federal troops being
deployed in the south to safeguard the rights of citizens, and ultimately lead
to the Freedom Summer which radicalized a lot of New Leftists. So perhaps the
1950's was a world based on certain kinds of exclusions, that once removed,
broke down.

~~~
ArkyBeagle
There's no real reason/mechanism for the exclusions to have made anything work
better. Compared to the US being the Arsenal of Democracy, the economic effect
of liberalization was very small, ignoring long-term government debt.

The New Left in the 1960s mostly just failed outright. Any change then was due
to judicial or executive action.

~~~
quadrangle
_Partially_ devil's advocate: Women not working en masse means single-income
households as a norm, which means all the real economic value of someone
staying at home to take care of home issues and a general supply-and-demand
situation where workers needed to be paid enough to make things work on a
single income. Flood the market with twice as many workers, wages go down
_and_ the expectation becomes two-incomes, and thus people end up working
harder (there's still work at home to do), but they aren't richer for it.

~~~
ArkyBeagle
IMO, this was principally expressed in raised real estate price/value.

Some of this is hedonic in nature; if you watch "Fargo" second season, you see
in pretty good detail how people lived 35 years ago. I'm pretty sure this
would be considered something much more like poverty now. Of course, I'd be
ignoring any inflation in price of the homes shown, by design.

------
rmason
PG you may want to rethink the idea of networks of cooperating companies work
better than a single big company. Just finished reading Ashlee Vance's
biography of Elon Musk.

Real revelation for this Michigan boy was that at both Tesla and SpaceX Musk
had failures trying to use existing supplier networks. By doing a lot of
manufacturing in house Musk not only realized cost and time savings but gained
an agility and nimbleness that blew away his competitors. Granted Musk didn't
need to manufacture his own raw materials. But in doing his own manufacturing
he was able to gain a further competitive edge by making his products better.
For example the Big 3's supplier networks add to their sloth and look-alike
products.

~~~
restalis
Actually, Tesla and SpaceX are outliers. They are not so much natural
offspring of our time as are the outcome of an ambitious person with
resources. They started in a desert. There weren't really neither a serious
market for them¹ nor a sturdy supply structure that could have gained maturity
with the market support. Besides the difficulty of getting into the high-
barrier entry and heavy-regulated automotive industry, the existing electric
cars related businesses were under constant attack by petroleum cartel. It was
only natural to have difficulties in finding healthy suppliers for his Tesla.
SpaceX? Well, the existing suppliers for space-ware were not the result of a
free market, because there didn't really existed (or still exists) one (for
that matter). What existed was either imported from overseas or come from only
a narrow circle of small design labs that use to custom-build pieces required
by someone for which the cost didn't seem to be an issue - NASA. This
obviously doesn't count for something SpaceX could rather rely on.

¹ Here I expect at least some people to bring up something like Henry Ford and
his horse & carriage replacement offering as a counter-example in favor to
Elon Musk's enterprise. The car vs. existing livestock-based transport and the
electric car vs. existing fossil fuel car are not really comparable.

------
Alex3917
Great essay. I would quibble with the following though:

> [Technology] means the variation in the amount of wealth people can create
> has not only been increasing, but accelerating.

The problem with this is that success = ability * motivation * opportunity.
There's no question that technology is increasing ability. But it's less clear
what's happening with opportunity.

Networks tend to be winner-take-all, which means that technology actually
depletes opportunity at the same time as it increase ability. Which I think
means that we're actually going toward integration, not fragmentation. Only
this time we don't need another WWII to integrate society because it's already
happening, it's just less visible.

E.g. the vast majority of the traditional media is controlled by the same six
corporations. And to quote Fred Wilson's 2015 wrap up, "10 of the top 12
mobile apps are owned by Apple, Facebook, and Google."

There's no question that individuals are way more free than they were in 1950
or whatever. But I think it's more analogous to free-as-in-beer, as opposed to
free-as-in-speech.

~~~
tomjen3
Opportunity has increased massively.

When I was a lad I got my hand on a great prize: a copy of Delphi 3 (already
obsolete by then), which got me started coding. Today anybody can download
much better tools (Visual studio, IntelliJ, etc for free). Any question you
have can be searched on the internet, etc. Opportunity has increased
_massively_ the last 20 years.

~~~
13of40
Seconded. I learned assembly code on a DOS 2.0 machine by disassembling tons
of random bytes and making a hex->assembly lexicon that I could use to write
programs in hex. Not because I was trying to be hardcore, but because I was in
an information, and software, and hardware desert. My kid, on the other hand,
has a 24-hour, 50 gigabit connection to any information he wants, a computer
made in 2015, and his choice of nearly any IDE and any programming language he
could possibly want.

> Opportunity has increased _massively_ the last 20 years.

The only problem is that it's increased for everyone else, too. Used to be you
were a king if you had a board with a nail in it. Now everyone's packing Uzis.

~~~
randcraw
And a significant joy of those 'desert' years was the need for and rise of the
hacker community which brought learners and tech fans together socially and
educationally. That sharing of common experiences and cool hacks is gone now,
replaced with near infinite code repositories that send a clear message to
neophytes, "There be no dragons ahead, only well trod pavement".

------
lsc
>The ultimate way to get market price is to work for yourself, by starting
your own company.

see... this (and the implication that people working at large companies get
less than market rate) doesn't ring true for me. The real "free markets" of
labor, like craigslist and the rent-a-coder marketplaces pay about 20% of what
you get if you go through a recruiter who has "a relationship" with a large
company... for doing essentially the same thing, and from what I've seen,
contractor pay (after the middleman takes his cut) is about the same as base
pay (for the same work) at a large company.

Now, when I started contracting in the early aughts, base pay was basically
the same as total comp, and so I subtracted the payroll taxes and health
insurance and could pretty much directly compare contract vs salary wages. In
the early aughts, it was pretty unusual for individual contributors to get big
bonuses or even stock refreshes (or that was my perception; I was considerably
less senor at the time.)

But, from what I've seen, if you are full-time at a big company here, you get
a pretty significant bump now, in terms of bonuses and stock.

My point here is just that my experience has been that when I'm selling my
labor, the further I move away from "the free market for labor" and the closer
I get to a system of rank and privilege as pg describes 20th century
corporations, the more I get paid.

~~~
r2dnb
True, but PG doesn't consider selling your time as starting a company, you're
not talking about the same thing

~~~
lsc
right, but running a company requires a rather different skillset from working
for someone else as a programmer. It's a different job.

My point is just that as a full timer at a big company, you are at the top end
of "market rate" for programmers.

If you start your own company, you are on the 'business person' payscale,
which is a rather different thing.

~~~
r2dnb
Your point makes sense, however look :

You develop a software and are the PM / product lead. You get paid 8 months,
while your client makes $8,000 per month during the next 5 years. This is the
market rate.

The market PG refers to is not the labour market but the consumer market where
the metric used is not time but value.

~~~
lsc
Yeah, but "value" as measured by the market is a funny thing... you can write
an advanced compiler and it will generate "zero value" as far as the market is
concerned, because all the good compilers are open source, or you can setup a
couple jabber servers, and the market values you at billions.

I mean, I use scare quotes to convey my scorn, but the point here is that
agree with it or not, the market doesn't value technical skills very highly.

Sure, as a modern business person, you need to have some technical skills; but
technical skills alone? technical skills alone gets you one of those rent-a-
coder jobs.

Most of this "value" is... well, if I understood business well enough to tell
you why a couple of jabber servers was worth Billions of dollars, I'd be
making a lot more money than I am.

but my point is just that a lot of that "value" to the end customer is
something that happens between a business person and the customer; it's
something that the technical people are not very involved in.

~~~
r2dnb
Yes you got it all, now the next logical step is : "Stop being a technical
person only", this is what PG is saying.

My advice is keep doing your stuff, but aggressively start building your
product-based business on the side.

I encourage you to bookmark my blog and read the categories : "Startups", and
"Software Engineering" (coming very soon) for free and valuable information.
In 2016, there'll be new essays almost daily.

[http://read.reddy.today](http://read.reddy.today)

~~~
lsc
>My advice is keep doing your stuff, but aggressively start building your
product-based business on the side.

I've been trying to do that for the last decade. I apparently have what it
takes to do rather better than rent-a-coder, but my business skills aren't
nearly enough to be "opportunity cost profitable" \- I can make rent, but I'm
not paying myself nearly what one of the local big companies would. Hell,
right now I'm contracting to one of the big companies, and spending the money
getting my own company back up to snuff. (and again, it's an education.
Contractors, if you do the math, make about what 'base salary' would be for
the position as an employee. A decade ago, this was also true... the
difference being that a decade ago, base salary was pretty much total comp.
These days, bonuses and regular stock grants are the norm and make up a large
part of compensation. And if you are a contractor? you don't see that money...
either it goes to the middleman or contractor bill rates haven't risen with
full time compensation. Either way, it's another example of how technical
people get paid worse the closer they are to a "free market")

From my observations? (and always consider "you shall know him by his fruits"
when listening for advice; People who aren't successful, obviously, don't know
how to become successful. So look at successful people, and look at what they
_did_ not what they _say_ ) From my observations, a lot of business is like
getting a $BIGCO job. A whole lot of it is who you know, not what you can do.

My next project, actually, is to get myself into an elite college. Now I don't
know if I _can_ pull it off, I'm not saying it's going to be easy... but if I
want to get rich, as far as I can tell, the contacts one acquires at an elite
college are far more valuable than any amount of actual skill or effort I put
into an actual product-based business.

edit: re-reading, I sound kinda bitter, and I'm not, or I shouldn't be. I have
a comfortable place in this economic system; I'm certainly not at the top, but
I'm pretty far from the bottom. I'd probably be doing worse in almost any
system that most people would consider "fair"

Further, if I really was great? or, for that matter, if I hadn't made two or
three of the mistakes that I made, I would very likely have become rich off of
my own product business. You _can_ succeed that way; I was close enough to see
the possibility. But the point is that I did not. I wasn't good enough, while
I _am_ good enough to get a pretty cushy $BIGCO job.

~~~
r2dnb
If you've done it once you can do it twice.

I wouldn't go back to college, I actually dropped out from a top tier college
4 months before completing my MSc. To me there's only one good reason an
informed entrepreneur would go to college : buy the alumni directory in order
to have leads - not a job.

You become good at things by doing them often, do more business. Work on your
business 2 to 5 hours every day and hold yourself accountable. I don't believe
in MVPs but I believe in flexible revenue models, initially iterate this model
as fast as you can.

[http://read.reddy.today/read/4/flexible-revenue-model-vs-
mvp...](http://read.reddy.today/read/4/flexible-revenue-model-vs-mvp-and-the-
two-kinds-of-entrepreneurs)

I'll quote Donald J. Trump "Most entrepreneurs fail because they fail to see
their business as their business school".

~~~
lsc
so... tell me, are you making more from selling your 'how to be an
entrepreneur' stuff as you would from working full time as a programmer at a
top-tier bay area company?

My experience is that getting to that level of _revenue_ is pretty easy.
Anyone can sell something if it's actually a good deal. Getting to the point
where you can actually pay yourself that much? pretty difficult. My
observation is that most people who got to that level as entrepreneurs got
there more through the contacts they had than through their technical skills
they had. Of course, not all; I can certainly come up with counterexamples to
that rule.

Working at a big company, on the other hand? in my experience? it's really
pretty easy.

most of the value of college, yes, is the contacts. But having a list of names
is to contacts what one of those scammer emails promising to wire you money is
to having a bunch of money actually in your bank accounts.

It follows then that if I'm right that it's mostly about contacts and the
assumptions people make about you, you would have gotten nearly all the value
you could have gotten from your college experience if you quit four months
early.

~~~
r2dnb
I have a SaaS startup, my "how to be an entrepreneur stuff" are free ;)

The answer is no ; as for today. But I believe that the difference between an
entrepreneur and an employee is the number of hours an entrepreneur is willing
to work for free. That being said, I also expect to start cashing in and make
5 figures a month by the end of this month.

I agree that contacts are key but I also feel you don't have the right
perspective here. Business is all about contacts. Even employees have
contacts. The key thing is what you do with these contacts and how you seek
them.

Reading your comment, I have a sense that you believe a bit too much in
perception, luck, and in general passive opportunity. Being an entrepreneur is
about influencing people and choosing your destiny, that's why most people do
it. If you think like you think, even with the right contacts you probably
won't make it as an entrepreneur.

Sorry if there was a communication issue, I don't think the only thing to take
from college are contacts. I learned many stuff there. I actually left when I
decided I learnt everything I was seeking there and it was no longer worth
paying money for it.

What I was saying was that when you are a real entrepreneur, college
credentials don't really matter for you.

Well, my impression is that what you really want is security and a constant
flow of high income. However what I want is to make the impact I decided to
make on the world and become rich by doing so. I'd 100 times prefer to have
50$ left after paying my bills by developing my ventures, than 6000$ left by
having a 50 hours a week corporate job.

It's not only about money for me, it's also about how I make it. I want my
wealth to be the result of my entrepreneurial success, it's in my DNA, I am
driven by that. I refused several CTO positions, and resigned days after being
promoted to certain roles that you seem to be aiming for.

As far as my career is concerned, I don't do it for the money, I do it for the
success and I hold myself accountable to reach this success. This success is
achieving wealth by delivering the unique value I can deliver to the market,
using my unique insights and my unique worldview.

~~~
lsc
>Well, my impression is that what you really want is security and a constant
flow of high income. However what I want is to make the impact I decided to
make on the world and become rich by doing so. I'd 100 times prefer to have
50$ left after paying my bills by developing my ventures, than 6000$ left by
having 50 hours a week corporate job.

I don't know where you're getting a need for security... I'll almost always
take what I perceive to be the higher total expected return option, modulo
emotional attachments and ethical baggage. My point is just that if you have
the skills to get a big corporate programming job, that's probably going to be
your highest total expected return option, even if you don't value security.

when I started going into business for myself ten years ago? I could have been
you, only, you know, less slick. (And "slick" is interesting, because rhetoric
that plays well with one group plays poorly with another. I would have used
"plain language" and I wouldn't have quoted an entertainer, but even if the
words we used had different connotations, the denotations would be similar) I
spent many of those years living as you suggest (having $50 left over after
paying my bills... I exaggerate some... but not that much.) Sure, it was
pretty exciting, but... it's also exhausting after a few years. I mean, I'm
not saying you shouldn't try it for yourself, it's just that you shouldn't
fool yourself into the idea that it makes any kind of financial sense at all.

------
three14
One taboo on HN is pointing out that even though software _is_ a huge lever,
there's no sign of the end of raw human labor. In every industry you can point
to jobs being lost to automation, yet you still need many, many people in
health care, or construction, or manufacturing, or police, or teaching, or
mining, or working for utilities, etc. It's _complete speculation_ to suggest
that jobs are disappearing faster than they could be replaced. It's not
surprising that people who used to work for big auto manufacturers can't
continue to work for those same manufacturers, and that says nothing about
whether those same people could find low-skill jobs in other industries, nor
whether investment in sectors other than GM or Ford could create more
unskilled jobs.

If there was a larger market for unskilled labor, the competition for workers
would tend to drive up wages and lower inequality.

~~~
randcraw
When jobs move from a developed / high wage country to one with cheaper labor,
they effectively disappear. That pattern then repeats until the job finally
ends up in the least regulated sweatshop in the darkest corner of the planet.
Eventually automation will 'outsource' that job too, thereby completing the
defragging process.

Does another job necessarily arise to replace each lost job? That's a question
that only a religious person would answer.

~~~
three14
This is exactly the taboo I'm talking about. Police, health care, mining,
teaching, and surprisingly many others _aren 't_ going overseas right now. A
lot of jobs are disappearing, and a lot aren't. Why assume that e.g. the
American economy won't have enough jobs in the near future? There's no data on
HN in all these discussions, and no real trends to extrapolate from except in
very specific sectors.

~~~
zanny
Mining is becoming heavily automated. The work of a dozen men even twenty
years ago can now often be done by two with a good computer model.

We are pushing _very hard_ for computer vision, which is the real barrier to
practical robotics that could replace your electrician, plumber, nurse, miner,
driver, etc. There is no sacred cow of labor besides what is mandated by the
molasses slow state (because I would _absolutely_ argue that learning systems
like Khan's Academy, the availability of resources online, and the
technological organizational potential of software solve all the criteria to
substitute teachers with a security guard watching the kids while they listen
to robo-instructor, solve the problems themselves, and ask the neural-net for
help when they run into problems - and the kids are of course not all in the
same room in an expensive upkeep building called a school). That kind of
change though must also be culturally accepted since a lot of effort goes into
separating public education from market forces.

Point is, the jobs that we could not send overseas have tremendous pressure on
them as a result to be absolved entirely by AI, robotics, and software. It is
why the pencil pusher desk job of 1980 - rows of typists at typewriters
transcribing documents - went the way of the Dodo and _did_ generate a ton of
unemployment that we still have not seamlessly solved.

~~~
three14
Pressure, yes, but I want numbers - what percentage of jobs have disappeared
over, say, the past 20 years, and could increased demand realistically replace
those jobs in other sectors? You can't simply say "manual labor is over,
because... singularity." There's no singularity yet. Until then, you need data
before you can really extrapolate from current trends. The easiest things to
automate are already automated, and harder things are coming along slowly. It
_might_ be true that jobs disappear faster than prices fall from the
automation, or prices might fall fast enough that most people can have jobs
that don't pay much, and still get by.

~~~
zanny
[http://www.huffingtonpost.com/2013/01/23/middle-class-
jobs-m...](http://www.huffingtonpost.com/2013/01/23/middle-class-jobs-
machines_n_2532639.html)

[http://www.businessinsider.com/bill-gates-bots-are-taking-
aw...](http://www.businessinsider.com/bill-gates-bots-are-taking-away-
jobs-2014-3)

[http://www.nydailynews.com/news/national/smart-machines-
job-...](http://www.nydailynews.com/news/national/smart-machines-job-
article-1.1246522)

Most relevantly to this direct topic:

[http://fortune.com/2015/02/25/5-jobs-that-robots-already-
are...](http://fortune.com/2015/02/25/5-jobs-that-robots-already-are-taking/)

Like I said, there are demonstrable mechanisms, and in-lab and even in-market
examples of how these technologies are going to replace almost all these jobs.
This is not science fiction. This is market adoption at this point. And we are
not at the _start_ of the process, we are in the _middle_ of it.

~~~
three14
None of this really answers the question. _Of course_ technology eliminates
jobs. This has been happening since before Ford was founded and before all
those automotive jobs were originally _created_. See
[https://en.wikipedia.org/wiki/Luddite](https://en.wikipedia.org/wiki/Luddite)
for instance. The question isn't whether specific jobs are being destroyed,
but rather whether _all_ unskilled jobs are being destroyed, and none of those
links even begin to give any data on the subject.

~~~
zanny
By definition of unskilled labor you imply only work done by physical action.

If you really don't think you cannot replace the human arm with a machine, you
haven't been paying attention for two centuries. How is that even a question?
We could replace all unskilled work _today_ , if all you are doing is removing
mechanical components of labor.

Remember, unskilled labor is "work to be done without training or
certification". Driving a truck requires a Class C license, which is a
certification. Working at Mcdonalds takes no certification. You need to have
state certifications to work as a carpenter, plumber, or electrician. Your
janitor doesn't need anything. So when you ask "is there any evidence
unskilled labor can be completely replaced" then I would ask what unskilled
job is _not_ being replaced right now, from self checkout to vending machines
to roombas to combine harvesters.

~~~
three14
Certification is a red herring; assembly line workers have skills that I lack.
I'm really only interested in jobs of that could be filled by the people who
used to work in the Rust Belt, whatever you actually want to call that type of
employment.

Thought experiment: let's say a trend starts for everyone earning 6 figures in
Silicon Valley to hire a butler and a cook. How many jobs would be created?
How many have recently been destroyed? How long before robots are as good a
substitute for human butlers as the robot in _The Jetsons_?

~~~
zanny
The fact you do not have significant pressure to have a butler or cook today
is in large part due to automation making them effectively obsolete. Anyone
hiring one is making the informed decision that they are cost _ineffective_ at
jobs your phone, roomba, and local tv dinner manufactuary or new-age
restaurant where the foot is prepared by machine are more efficient at.

------
dkural
A counter-example, and a different framework to think about equality: Most of
Scandinavia has fragmentation, freedom of expression, and genuine diversity of
choice, diversity of lifestyle, of opinion, but it also has more equality. One
can have a more equal society without raising taxes or massive wealth
distribution. This is possible if a society ensures that its children receive
adequate and equal access to healthcare and education in their earliest years,
in other words, an equal start. This is where the US fails the most compared
to Europe. Property taxes are the levers through the poor are priced out of
good school districts. It acts as the algorithm through which self-segregation
is made possible, often resulting in racial segregation as well. Education
being a local affair ensures the wealthy and the educated have no incentive to
fight for the rights of the poor and the ignorant, since they can get their
fix via simply moving to a better neighborhood, leaving the others behind. Not
so in Europe. The leaders of the community put pressure on officials and the
system, and as the one system improves, so does the lot of all.A similar
dynamic is true in healthcare as well, in Europe: A single-payer system
ensures all get the same healthcare, and suddenly fixing it becomes a problem
of upper-classes as well, but the entire society benefits from the improved
system.

PG's post is self-justifying and self-interested.

Here's an alternative explanation of fragmentation: It is the sign of a new
industry. It'll consolidate once it matures. Look at semiconductor & hardware
consolidation. Google, Amazon, Apple, MSFT, Intel, Oracle etc. absorb a lot of
software biz over time. There used to be hundreds of car companies, dozens of
aircraft manufacturers.

~~~
tim333
Not very in line with the Hacker News Guidelines - "Avoid gratuitous
negativity. When disagreeing, please reply to the argument instead of calling
names."

Plus I don't think your judgments on PG are true.

~~~
dkural
Agreed re: guidelines. Edited to keep it about the argument.

------
api
I think there's a fascinating flip side to what PG calls the refragmentation:
the decline of counterculture both materially and in terms of relevance.

PG talks about his yearning for something outside the mainstream bubble. For
decades the major source for that was the various mostly youth oriented
subcultures that made up what we called the counterculture. Hippies, punks,
goths, 80s rockers, hip hop, ravers, geek fandom, and a dozen smaller variants
provided something that... well... wasn't "red delicious."

Those things still exist but today they feel more like just another culture in
the marketplace. They no longer seem to have such potency or power. Maybe I'm
just old but I get the strong sense this is true for young people too. Today
young people might visit these little subcultures as tourists, but when I grew
up they were a much bigger deal. They became your identity. They were almost
religious, like modern mystery cults.

Rave was probably the last great youth counterculture. I haven't noticed
another one unless you count the "hipster" artisan living thing and that seems
more like a lifestyle brand than a true counterculture of the postwar
music+fashion+drugs+ideas mold.

In retrospect those subcultures were more like alternative conformity molds.
They didn't really alter the underlying zeitgeist of conformity but just
provided another channel on the cultural TV dial. Still I do mourn them a bit.
Their greatest legacy was as artistic and musical crucibles and nothing has
really replaced them. I don't think it's a coincidence that there has been no
major musical innovation since the 90s. There has been good music but it all
follows stylistic currents set down before 2000. Rave gave us techno and all
its various sub-forms and... that's apparently the end of history music-wise.

Edit: would be curious to hear a counterpoint on the last item. Show me a
musical style that is as much of a step change today as hip hop and electro in
the 80s or drum and bass in the 90s or acid rock in the 60s.

~~~
abvdasker
I tend to think the diminished role of counterculture in the US is the result
of having a lot more choices available within the mainstream. The narrow
conformity of the 1950s PG discusses has been supplanted by a much wider range
of acceptable/marketable cultural styles. Generally people today are more
tolerant, meaning there is more room for more diverse people and lifestyles
under the tent of the mainstream.

------
bitwize
Graham leaves out one crucial thing:

A more equal society is a better society. Always. This was borne out in the
work of Wilkinson and Pickett for their book _The Spirit Level_.

You may have less technology. You may have less innovation. Tough. Creating
more of what Earl Dunovant called "cute and useful monkey tricks with energy
and matter" at the expense of your fellow man and the planet does not put you
ahead, and societies should not seek to optimize for monkey tricks over the
betterment of their fellow man.

Inequality (along with the environment) may be _the_ defining issue of the
twenty-first century, and once recognition of inequality and its consequences
goes mainstream, laissez-faire capitalism will join royalism in the dustbin of
discredited political philosophies.

~~~
ignasl
Oh great lets get back into the trees. Then we will be very advanced society.

~~~
sawwit
This is not what OP is saying.

~~~
ignasl
This is exactly what he was saying. I just put it this way to show how absurd
his idea is if we follow through with it till the end.

~~~
sawwit
Nonsense, please quit that strawmanning. Reducing the pace of consumer
technological progress to the benefit of more equality would very likely
beneficial for humanity; and it does not imply returning to underdeveloped
times (assuming it would reduce it significantly in the first place).

~~~
bzbarsky
> Reducing the pace of consumer technological progress to the benefit of more
> equality

Was tried, more or less successfully, in the Soviet Union. People were not
happy with the results in terms of access to consumer goods and living
conditions. Been there, done that, don't want to do it again.

------
jakozaur
Great article, but it misses two triggers:

1\. Globalization. A lot of manual labour was tied to USA, not so ago to local
labour. In last 20-30 years a lot of things get imported from China or
outsourced to India.

2\. Software (briefly mentioned in original article). Previous technology
advancement can give someone leverage, but software got probably the largest
leverage in humankind history. Single program can automate what used to do an
army of employees. Natural monopolies are common thanks to network effect,
economy of scale or technological advances.

Winner takes all market (e.g. Apple has almost all profits in smartphone
market, Android got some market share, alternatives are niches).

~~~
gist
Interesting. If you are correct (I don't know if you are actually) it means
that none of the 16 people who read drafts of this came to that conclusion. I
say because I've always wondered why PG does this (so many people reading
drafts I wonder if this is common in book publishing that can easily be
updated and corrected just based on HN comments) and can't just leave his own
thoughts to stand on their own.

------
chrispeel
It seems to me that much of the fragmentation that the post discusses is just
economic specialization, which we should encourage (see Adam Smith). I do
think it is reasonable that one limits the 'fragmentation', i.e. that one puts
negative feedback in the economic loop in the form of a progressive tax.
Negative feedback is used everywhere in electronics and even sometimes by the
Fed to control interest rates. Even so, many economists [1] throw up their
hand and say macro economics is too tough and we just can't predict how it
will work. This seems like nonsense to my engineer brain; I think that a
sharply progressive tax with an accompanying universal basic income is the
right way to _encourage_ economic diversity.

[1] I get my impression of economists from EconTalk by Russ Roberts.

~~~
clarkmoody
As an engineer, you should be familiar with chaotic systems, which produce
vastly different trajectories based on small changes in initial conditions.
Very simple mechanical systems[1] exhibit chaotic tendencies. Control of such
systems is possible on the small scale, but large scale chaotic systems may
become uncontrollable.

Now imagine an economy made of millions of _people_ who all have different
needs, desires, abilities, environments, intelligence, etc. How accurately can
you predict how a single policy decision will shape the trajectory of such a
collection of people? Now the State pushes thousands of policy changes per
year into the system without ever really monitoring the response to a single
change.

 _> many economists throw up their hand and say macro economics is too tough
and we just can't predict how it will work_

The smart ones do, but the mainstream Keynesian school have the hubris to
think they can predict the responses of millions. Most Western leaders have
been advised by Keynesian economists for much of the 20th century, and the
decisions of those leaders have caused vast displacement, pain, and suffering
in the form of economic turmoil and war.

Remember, the State is also an economic actor, and it derives its income by
coercive force. Progressive taxes simply point a bigger gun at the heads of
those who perform better in the economy.

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

~~~
chrispeel
> ... thousands of policy changes ...

I'm all for reducing the size and complexity of govt, including the frequency
of policy changes. A progressive tax can be a small-govt solution.

> ... Progressive taxes simply point a bigger gun at the heads of those who
> perform better in the economy.

A progressive tax certainly takes more from those who have performed _better
in the past_. I'm concerned about creating jobs and encouraging situations
where people can succeed in the _future_. The people who will create the jobs
of tomorrow are _not_ the ones who created past jobs. It's small companies who
create jobs, so don't tax them as much; it's the struggling entrepreneur who
will create jobs, so don't tax them as much. Instead, tax those who have
already succeeded and who are not creating as much relative economic output.

------
AstroChimpHam
PG started off talking about the fragmentation in politics, and I wish he
would have wrapped that back in at the end. It feels to me like the two party
system in the US is dying now as the oligopolistic system of just a few big
companies began dying in the 90s.

The two party political system is more unnatural than the few-big-companies
system. Libertarians and Evangelicals agree on very little yet they've been
voting for the same party for years. Proponents of extreme reform on the other
side don't want to vote for a moderate candidate. A Trump vs Clinton election
is going to leave too many people without a candidate and force the beginning
of the end of the two party system.

~~~
zanny
What is the end game of first past the post though? Its a predictable state
machine, if the GOP fragments too much the democrats will take a supermajority
of power in the country, adopt disparate ideals of its own until you rapidly
get a newly formed opposition party that all the "anti-dems" rally behind to
immediately replace the GOP. Then you can have the dems with an overabundance
of conflicting ideals decay from within all the same.

You don't have more than two parties in a stable first past the post system.
But that is what the US has always had. It takes a pretty big constitutional
amendment to adopt an alternate or transferable vote system. But how do you
fix a system where those deciding if they want to fix it are only put into
power due to the nature of the system as it exists today?

------
sce
Regarding income inequality, I recommend listening to some of the
speeches/debates with Bernie Sanders.

E.g. he argues that the greatest receiver of welfare in the US is the wal-Mart
family, because they get even richer paying their workers so little that the
workers have to live on welfare. (In other words the welfare is "paying" the
workers so that Wal-Mart don't have to.) He proposes to rise the minimum wage.

[https://www.youtube.com/watch?v=eYFueqv0iIQ](https://www.youtube.com/watch?v=eYFueqv0iIQ)

~~~
clarkmoody
Walmart employees are not compelled to work for Walmart; the employment
contract is agreed upon voluntarily by both parties. The employees know how
much they will be paid and agree to accept the terms.

Walmart is operating within the legal employment framework set up by the
government, including the welfare state and the minimum wage. That will not
change by raising the minimum wage. Rather, Walmart will simply add automation
and reduce its employment.

Minimum wage is arguably the worst idea when it comes to improving the lot of
the poor. If someone cannot command more than the minimum wage when it comes
to productivity, intelligence, etc, then raising that wage means that person
will be unemployable. That is, their skills are not worth the minimum amount
an employer is allowed to pay, so they will not be able to find a job. Ever.
That person will be a permanent liability of the State.

~~~
sce
tl;dr: Raise the minimum wage so that employees don't need to live off of
welfare. People lose their job? Good riddance, seriously. People don't lose
their job? Called their bluff.

> Walmart employees are not compelled to work for Walmart; the employment
> contract is agreed upon voluntarily by both parties. The employees know how
> much they will be paid and agree to accept the terms. Walmart is operating
> within the legal employment framework set up by the government, including
> the welfare state and the minimum wage.

Yes. And if you think everything is fine the way they are now, then don't
change a thing.

> That will not change by raising the minimum wage. Rather, Walmart will
> simply add automation and reduce its employment.

Sounds great to me. You're basically arguing that not having minimum wage is
actually holding back progress.

> That is, their skills are not worth the minimum amount an employer is
> allowed to pay, so they will not be able to find a job. Ever. That person
> will be a permanent liability of the State.

If an economy can produce the same amount of wealth with much less
workforce/work hours than today, then why shouldn't it? Sounds great if you
ask me. (And if that's not possible, just hire more people, it's apparently
worth it, problem solved.)

"Minimum amount" is in this case "amount needed to reasonably survive", ie.
not need extra welfare. If you can't produce enough value that you can't even
justify being paid to "reasonably survive" then yes you need help.

Okay, so I'm no economist, but it sounds like you're arguing that not having
minimum wage is in itself a socialist measure. In other words, paying people
something, anything, is better for the poor than paying them nothing. The only
reason to pay the employees anything at all is to "help the poor", because
their work is not really needed anyway (their work is worth that little).

To follow that line of reasoning, from a capitalistic viewpoint, it would thus
be wise to raise the minimum wage. If people are being paid to do work that's
not actually worth it (ie. subsidized via welfare), then don't. I seriously
don't understand why capitalistic Americans defend that point of view. Why
should the state/government subsidize effectively worthless labor?

What I'm doing is "calling the bluff". People won't get hired? That's fine,
the work they were doing is practically worthless anyway, and I'm certainly
not for subsidizing that. However, I think people actually will be hired
anyway. Because their work is not worthless. I think the only reason people
are being paid so little is not because of the "worth" of the work they're
doing, but because the market allows it.

I don't know how that happened, perhaps because the big cooperations have too
much power, perhaps it's just inevitable in a free market. But I do not
support subsidizing labor, and I don't buy the argument that you have to. The
money is there, the value of their work is there, there's no problem paying
people more, they just don't want to, and luckily for them they don't need to
either. And as long as everyone plays along, that's how it's going to stay.

Sometime in the future I'm sure we'll be able to produce enormous amounts of
wealth with minimum man power (re: automation). What will everyone do then?
That's up for debate, but it looks like the best bet is putting everyone on
universal basic income. And that's not a problem, because the wealth is there,
the "problem" is that no one needs to do anything to produce it. I'm sure our
future selves will find a fix. (If not, then that sounds like a base line for
a revolution. Let's hope that's not needed.)

In the meantime, redistribute some of the wealth by raising the minimum wage.
Wal-Mart don't need employees? Fantastic, the future is already here.

~~~
clarkmoody
Either you're trolling, or you completely misunderstand my position.

Thought experiment: Let's make the minimum wage $1000 per hour. I'd like you
to think through the ramifications. What would happen?

> Sometime in the future I'm sure we'll be able to produce enormous amounts of
> wealth with minimum man power

We already do! The amount of productivity possible by a single worker today
was completely unheard of 50 years ago, let alone 100 or 200.

> What will everyone do then?

What do we do now? We continue to work, even though we're far past satisfying
all of our material needs. Why didn't everyone just stop working more hours
than it takes to eat and stay warm?

Come up with answers to those few questions and you'll be well on your way to
being an economist ;-)

~~~
sce
> Thought experiment: Let's make the minimum wage $1000 per hour. I'd like you
> to think through the ramifications. What would happen?

I'm assuming prices through the roof, companies forced to sack their workers,
unemployment rate through the roof, companies go bankrupt, economy collapses.

I believe Sanders is suggesting $10/hour (and that it's around $7 now). That's
just a number, but I'm assuming it's the threshold between "needing welfare"
and not. So my argument is that if you're paying an adult less than that then
that's less than the cost of that person to "reasonably survive", thus
artificially low. (In other words, companies are paying less for labor than
the actual cost of labor.)

So now instead they're getting $7 from their employer, and in practice $3 in
welfare. That's the difference with your example: People are already earning
$10/hour, they're just not getting it from their employer. So raising the
minimum wage is not raising the cost of labor, it's simply placing the entire
burden on the employer instead of subsidizing it. There might even be room for
a tax break there once people start number crunching. (Although in Sanders
case I'm guessing he has other things to spend that money on, but I digress.)

If raising the minimum wage to the real cost of labor is a problem, then I
just don't understand why. The money is there, it's just "stuck" at the top,
and minimum wage is one way to help distribute some of the wealth (which
really should benefit the economy as a whole, since the incredibly rich can't
possibly spend all their money like millions of middle class families would).

> What do we do now? We continue to work, even though we're far past
> satisfying all of our material needs. Why didn't everyone just stop working
> more hours than it takes to eat and stay warm?

I guess it's partly because we live in a material world (where having a nice
house, car, pretty clothes etc. is rewarding in its own right), and partly
because money brings possibilities, and thus freedom: Freedom to travel, to
not work, to do whatever one pleases. So money ultimately brings pleasure, and
what else is life than seeking pleasure? ;-)

------
r2dnb
Interesting article, the insight of PG is much valuable but I find his attempt
to depict a fragmentation model unconvincing. While this model captures the
dynamics at play, it fails to explain them and to introduce an easier way to
act on them while this is the point of a model. This sums up an extensive
feeling about this article.

I'd like to react to three of my picks. First of all PG conveys with its
fragmentation model that long careers in the same company are a thing of the
past. I explain an opposite view and support that new companies will have
people work longer for them (10 to 20 years) by hiring them much earlier, for
much cheaper. This challenges the dynamics presented by PG.

[http://read.reddy.today/read/7/hire-high-school-graduates-
in...](http://read.reddy.today/read/7/hire-high-school-graduates-instead-of-
college-graduates)

The second thing is that I found intriguing that PG write "Your prestige was
the prestige of the institution you belonged to" talking about college
graduates, as if it was a thing of the past and thus presenting himself as a
hacker of this system while YC overly represents Stanford alumnis. But this is
a paradox that I found with YC in general. They position themselves as a
hacker of the system while they really are a cornerstone of this system in
many regards.

Therefore - third thing - it wasn't a surprise for me to find in the last
paragraph that PG envisages centralization as a better alternative and with a
certain nostalgy thinks that the effects of this "defragmentation" need to be
contained. Overall, PG thinks like a wealthy man who made his fortune in the
late 90s and who has the graduate syndrom - about which I will write
momentarily. His insight is certainly valuable but his proposition isn't
disruptive.

------
cronjobber
He takes the easy way out on the war theory: It would be awful, of course, so
let's not think about it.

But think about it. Would historical WWII be possible in today's United
States? Introduce the draft and send current US population off to die in
Europe? I think you'd see intense levels of political resistance, draft
dodging and desertion in the field. Fragmentation means you probably can't
unite the whole country to die for... whatever anymore.

~~~
AJ007
A full scale war today, excluding skirmishes, between two large conventional
armies would be nuclear. It would be over very fast. Perhaps there is little
to nothing to compare with WWII. A war in Europe could happen again but it
would be quite different.

The use of militarism and nationalism does not require a full scale global
war. Certainly it is being used right now in several nations under structural
duress. The enemy may be real or imagined, and if you oppose or speak out
against the changes you may be the enemy too.

~~~
jacquesm
A war in Europe could definitely happen, the outward unity belies the inner
rivalries. There is also the option of civil war. Breakaway provinces wanna be
nations, religious factions, old hatchets barely buried. The potential for war
has never gone away.

~~~
tomjen3
As a European, I doubt that unless you are thinking balkan scale wars on the
edges of Europe in countries that are not normally considered Europe as the
term in commonly used or possibly Turkey actually get of its ass and do
something about ISIS.

It is true that there are a lot of rivalries, but nobody wants another world
war. We are all fat, rich (relatively compared to 1939) and entertained, but
more importantly there would be nothing to win and a lot to lose. The same
goes for civil war - Scotland isn't going to war, nor is Catalonia. Northern
Ireland is more peaceful than it has been in decades and no country is
seriously oppressing any other country.

Even Putin isn't stupid enough to go into a NATO country, at least not the way
he did in Ukraine.

~~~
jacquesm
On what time-scale are you looking? A decade out? Two? Three? Europe is in
flux in a way that it hasn't been in a long time. And I mean that in a
downward way, until the mid 00's we were converging, since then we have been
diverging with the '08 crisis as one catalyst and the whole nationalist
resurgence as another. Add a couple of million refugees as a convenient
scapegoat and the stage is set. Between Le Pen, Wilders and a bunch of other
Euro-sceptic parties as well as a widespread fear of everything that isn't
lily white you'd have to be a tremendous optimist to think that Western Europe
has somehow become immune against war. I hope you're right but the signs are
definitely not 'all good' and it would need some serious good news (such as
the populists being voted out to the point of insignificance) before I'd be
ready to believe it.

Mind you, I'm not pessimistic, I think we'd largely survive such an ordeal, it
will never be on the scale of WWII (at least, that is something you'd hope)
but it might take more than just a skirmish before the lessons of old would be
re-learned. One of the reasons the anti-war sentiment in Europe was so strong
in the 1970's and early 1980's is that we were under no illusion what would be
the battle field, today the fact that we have the illusion that the
battlefield would be anywhere but here is what endangers us more than
anything. Two days driving separates the Russian border from Amsterdam, add
another one and you've gone from Amsterdam to Bulgaria. Conflicts could easily
spill over from one region to another. The first world war arguably started
with a single shot, the second followed from that first. I have no idea what
Europe would feel important enough to go to war over but it could just as
easily be something insignificant as something big.

The most important thing (apologies to Spain, Italy, Romania and Poland) would
seem to me to be that Germany, the UK and France keep seeing eye-to-eye. If
those ever find themselves on opposite sides of some kind of confrontation all
bets are off.

~~~
allendoerfer
France and Germany will never again be at war.

The EU might seem fragile, but that is because the NATO and the EU expanded to
fast. Remember some 20 years ago there was a wall through Berlin, now nearly
everybody behind that wall has joined. Russia destabilized Ukraine to stop
this movement.

Still the EU welcomed Croatia in 2013 and the Eurozone Estonia in 2011, so it
is growing.

North-Western Europe already has a large coalition of countries that want and
think the same things and have an excellent standard of living. The East will
catch up economically and the South will get back on its feet. It will take
some time, but I think they will join the group.

Some countries like the UK want their special treatment once in a while, but
everybody knows, that London has to play along to some degree if it wants to
stay the financial center of Europe.

~~~
abalashov
_now nearly everybody behind that wall has joined_

... and quite a few folks in front of it, too, which is a significant aspect
of the internal tensions that arose as the EU evolved out of the EEC.

------
coldtea
Amazing how he can describe the post-war era (an era, including the 50s and
60s remembered as a period of ever increasing prosperity, integration,
intellectual achievements, scientific and technical progress, powerful
movements of social change, job security, every generation having it better
than before, etc.) as some kind of "equality disaster".

Yeah, we're moving past it now, but towards something that resembles the pre-
war years of robber barons, crony capitalism, and maybe even share-cropping
(in modern form) more than some glorious future.

------
markbnj
I'm older than Mr. Graham, and grew up in the heart of the period he focuses
on. I think this is one of the smartest essays about the economic and cultural
after-effects of the great wars of the 20th century, and all the accompanying
and related social phenomena, that I have ever read.

------
Animats
He quotes Rockefeller in 1989: _" The day of combination is here to stay."_

The amusing thing is that he writes this just as the era of fragmentation in
the US is coming to a close. We have one winner in search - Google. We have
one winner in social - Facebook. We're down to a few retail Internet
providers, a few big banks, a few big airlines, a few telecom companies, and a
few commercial real estate owners per city. There would be more concentration
in those sectors without regulatory pushback.

~~~
zanny
His article is about social fragmentation, not economic. We recognize the
economics are consolidating, but we are then talking about hundreds of
combinatorial factors leading us to where we are today. Specifically, we are
seeing more collective isolationism of social circles - there is an absolute
Internet culture of connoisseurs of the blogosphere / reddit / social media
today that is distinct from anything before, but you also have all the
regional cultures of peoples now splitting from the whole because of
incohesion with everyone else. Its harder to fit the mold when the mold broke
because it was forged from flimsy material to begin with.

------
Zigurd
It's a very American take on fragmentation and cohesion. The idea of wars
creating cohesion is only valid in big, powerful, victorious nations. In
Germany, defeat resulted in the rejection of nationalism. If you don't live in
a great and powerful nation, or if you don't think your nation is as great as
advertised, you might not miss cohesion on national lines.

Good thing PG is a realist: _" we'd be better off thinking about how to
mitigate its consequences."_

But even that point of view is reactionary. What mitigation is good? The kind
that preserves mass-market politics as practiced in America? The kind that can
take us to war with some distant threat that is not even a blip in terms of
national survival? The kind that tells us cops and doctors and uniformly good
and competent? Surely not the kind that says "What's good for GM (or Disney,
or Goldman Sachs) is good for America."

Skeptical, questioning, objective people with loyalty only to those we can
personally qualify will be people less likely to be taken for a ride by the
kinds of cynical mass-market charlatans it takes to harness national cohesion.

The weakest part of this article is about taxation and the wealth gap: If
taxes rates are weakly related to wealth creation, the spectre of wealth-
destroying taxation remains a boogie man, if a popular one these days.

~~~
wozniacki
I understand that Germany is no small country (even if much smaller than the
United States) and thus does not thereby have one single national mood.

However what is the general sentiment of the peoples there about where the
German republic as a monolithic entity is headed, given the recent
developments?

Are people generally optimistic or are there significant pockets of dissenting
populaces who heavily disagree with the choices Chancellor Merkel has made, in
recent times?

~~~
Zigurd
That is a very complex question. I suppose the relevant part of the answer,
relative to your question, might be that more Germans are forgetting about why
nationalism was bad.

The US escaped being crippled by GWoT costs. no lessons learned. It may take
President Trump to teach the lesson.

------
harryh
This essay is excellent, but I wonder a bit about the fact that it focused on
the US only. On a global scale I think that experiences are continuing to
compress and will continue to do so for at least a few generations.

If this is true, does it invalidate pg's overall thesis? I'm not sure.
Interesting to think about though.

~~~
wutbrodo
> I wonder a bit about the fact that it focused on the US only. On a global
> scale I think that experiences are continuing to compress and will continue
> to do so for at least a few generations.

There's actually a little allusion to this in footnote 21:

> [21] Globally the trend has been in the other direction. While the US is
> becoming more fragmented, the world as a whole is becoming less fragmented,
> and mostly in good ways.

He didn't elaborate, but I suppose the essay was already pretty hefty.

~~~
harryh
Ah, I missed that footnote. Thanks!

------
bawana
Refragmentation is the result of the fungibility of money. When we wanted to
make things (stuff people could use to make war or make a better life) money
was spent to make those things. Like the water cycle, money would be
transformed from one phase into another so that work could be accomplished
that directly impacted humanity. But we have short circuited that cycle. Now
money is being used directly to make more money through financial instruments.
People and the stuff that people want are excluded from this new cycle. (Most
people anyway) Money goes directly from its production right back into wagers
on the production of more money. For example, the currency markets dwarf the
actual gdp of the planet.

To restore balance to the ecology of our civilization, we need to make money a
tool for humans. By requiring the use of money only for investment in real
stuff, we will deflate the artificial valuations that dwarf the real value of
human labor. We will necessarily find ways to restore value to human endeavors
and new ways to measure the value of human efforts. More people will thus have
value to our civilization on this planet. Otherwise, the refragmentation will
continue until it reaches its logical conclusion - a scary picture for
humanity.

~~~
vzcx
Bold claims. Forgive me for saying so, but your knowledge of finance does not
strike me as particularly deep!

Do you not think that use of financial instruments is vital for allocating
resources in a world of imperfect information?

For me, their utility and necessity is obvious. If you think about it, making
stuff that people want is actually rather complicated. The world is rife with
hazards and risk; the intricate supply lines upon which production depends are
all vulnerable to disasters both natural and human.

Naturally, those whose business it is to produce things and not to speculate
on future events would like to be free of such risks. This is true the source
of fundamental demand for financial instruments. All the derivatives markets,
and zero-sum game apparatuses exist in order to transfer -- and in so doing
compute a consensual value of -- these risks to those who believe they are
better informed about reality.

While I understand not wanting to personally engage in this process, I claim
that that the world is better that these contracts and exchange machinery
exist!

~~~
randcraw
I see little value generated by treating money as an end rather than as a
means to an end. Liquidity and better pricing of goods are the classic rewards
of that gambler / investor culture. Meanwhile its demerits (like the 2008
financial meltdown) are blithely overlooked.

In fact, now that there's so much automated trading of all manner of financial
instruments, there should be no real need for any new tradable vehicles. In
fact, if liquidity and accurate stock pricing _are_ the only desiderata of
non-equity traders, and these ends are met otherwise, it sounds like we could
easily do away with the entire derivative / option markets altogether as being
purposeless and overly dangerous, serving only the professional gambler banker
and his vain pursuit of gigabucks.

~~~
zanny
It does not really matter what value any one person sees in it, if people who
have the resources to sustain a market want said market they will create it
and maintain it.

Remember though that futures / currencies / even stock are just gambling at
the end of the day. Its corrupt gambling where some players have much more
information than others (and thus it is traditionally just a vacuum of wealth
from the poor to the rich) but people are just betting on where profit will
emerge with the intent to get some of it when it happens, and through their
actions of investment are trying to cause that profit to happen.

------
csense
Interesting to see that PG agrees with something I've been saying here for a
long time, about the role of globalization in economic inequality [1] [2] [3].

Of course I grew up in the Rust Belt, where the average person used to be able
to make a good living with a high school education in the steel or automotive
industry, but now most of the factories are idle, rusting eye-sores, most of
the ambitious, talented kids want to go somewhere else -- _anywhere_ else --
and the closest thing to a growth industry is health care for the folks who
earned a good retirement during the glory days and are starting to get old.

[1]
[https://news.ycombinator.com/item?id=9868017](https://news.ycombinator.com/item?id=9868017)

[2]
[https://news.ycombinator.com/item?id=9560872](https://news.ycombinator.com/item?id=9560872)

[3]
[https://news.ycombinator.com/item?id=7152378](https://news.ycombinator.com/item?id=7152378)

~~~
csours
I read a comment once that the steel industry collapsed in the US because they
failed to innovate or continuously improve (much like the Big 3 automotive
companies).

Do you know of any concrete examples of this? or books about how US Steel
lost?

~~~
wpietri
I don't know about steel, but Rother's _Toyota Kata_ makes this case for cars.
There's one graph in particular that shows carmaker productivity per worker
over several decades.

Toyota, working in a Japan decimated by war, definitely came from behind when
competing with Detroit's big 3. Toyota starts lower than the other 3, and all
of them improve gradually together. But at some point US carmakers plateau.
Toyota just keeps on climbing for decades more as the big 3 stagnate.

Eventually, US automakers try to copy the Toyota approach, and Toyota works
hard to teach them. But they never quite get it, because US automakers
basically miss the point, copying visible behaviors rather than the deeper
structures that really make the difference.

Those curious but not wanting to read a whole book should start with the This
American Life episode NUMMI:

[http://www.thisamericanlife.org/radio-
archives/episode/403/N...](http://www.thisamericanlife.org/radio-
archives/episode/403/NUMMI)

It tells the story of a joint Toyota-GM plant in California. Basically Toyota
takes one of GM's worst plants and makes it one of the best. But GM is never
able to adopt the differences, or even to really understand them. The worker-
level stories are particularly powerful.

~~~
petra
>> Toyota works hard to teach them

Why did Toyota did that ?

~~~
err4nt
Helping a competitor may cost them in the future, but I am guessing they got
paid enough money in the present for the consultation to be worrh the risk.

I cant speak for Toyota, but they probably also would feel their own future
would look bleak if their competitors died off - a good healthy level of
competition is good for all players in the market, and it drives up innovation
and drives costs down for consumers. In a very direct way, having able
competitors ensures Toyota stays strong and doesnt stagnate.

~~~
csours
I don't think Toyota got paid directly.

See my comment above, but it is important to remember that Toyota did not have
any production facilities in the USA at this time; they were not sure
(purportedly lazy) American workers could or would conform to the Toyota
Production System.

Also, at that time GM had more cash than Toyota's Market Cap. [citation
needed] [1]

1\. I wish I had better source for this, but Roger B Smith spent 80 billion on
automation in the 80's, and Toyota's Market cap was 31-45 billion in 1992.

[http://www.businessweek.com/bwdaily/dnflash/content/jan2009/...](http://www.businessweek.com/bwdaily/dnflash/content/jan2009/db20090121_417607.htm)

[http://www.wolframalpha.com/input/?i=toyota+historical+marke...](http://www.wolframalpha.com/input/?i=toyota+historical+market+capitalization+1992)

------
CloudYeller
I think Paul missed an opportunity to identify economies of _scope_ , not
scale, as a major lever in advancement.

He says:

> Incumbents faced new competitors as (a) markets went global and (b)
> technical innovation started to trump economies of scale, turning size from
> an asset into a liability

It's true that innovation trumps economy of scale, but that's because economy
of scale doesn't really apply to software; all software is instantly scalable
to 100% of humans at virtually 0 cost, more or less.

But the software giants have something up their sleeve that no startups have:
economies of _scope_. Look at Shazam/SoundHound. Google has released Play
SoundSearch which leverages all of their internal AI research + advanced
computational and human resources that aren't available to the public. In
effect, a megacorp can replace an entire _company_ by saying "Let's throw 15
engineers on it for a year and see what happens." And if a startup pops up
that seems promising? They buy it out, adding it to their trophy wall of
innovations they can leverage. And megacorp employees can easily stand on the
shoulders of giants; instead of stackoverflow, megacorp employees can search
through massive archives of top-notch, fully-working code that was designed by
some of the best engineers on Earth.

More and more, it takes something truly amazing for a startup to grow enough
to compete with a megacorp. Not only does your technology have to be profound,
but you need to withstand aggressive buyout deals from several megacorps.

------
leot
"A physicist who chose physics over Wall Street in 1990 was making a sacrifice
that a physicist in 1960 wasn't."

The trouble is the proportion of those who have the highest technological
leverage and are engaged in rent-seeking rather than wealth creation. The
1960s physicist was creating wealth they couldn't capture, while the 1990s
physicist was capturing wealth they didn't create. If physicists (and other
Ivey grads) all only chose wealth-creation, we'd see far less inequality (at
least outside the Bay Area). The trouble is the pull of the largely zero-sum
(or negative-sum) world of finance, which more than startups has increased the
pressure to "make your fortune". Inequality begets more inequality, because
when half my cohort is suddenly making 10x more than me, there are real
consequences to my own social, personal, and civic life.

This is all on top of the relatively novel wealth imperative introduced by the
progress of biotech. It used to be that, beyond a certain point, money only
really conferred social status (and even then, only within a certain peer
group): if I don't care about status within that particular group, then why
should I care about making more than (say) $200k/year? Except now, with the
rapid development of fancy unaffordable therapies and med-tech devices, having
an extra 10 million $ lying around can have a much larger impact on quality of
life than it did even a couple decades ago. And then there's the significant
(if small) possibility that, if Kurzweil + co. end up being right, a bit more
wealth might mean being able to "live long enough to live forever".

Current tax policy is heavily skewed in favor of the already wealthy, and
wealth inequality is currently orders of magnitude worse than income
inequality. So rather than just asking everyone to get comfortable with it,
why not do something to actually address it? We need to make significant
adjustments to (a) strongly discourage rent-seeking, (b) encourage those with
the highest technological leverage to make the most of their talents,
knowledge, and access, and (c) greatly increase everyone's ability to create,
capture, and save wealth.

~~~
lightcatcher
> If physicists (and other Ivey grads) all only chose wealth-creation, we'd
> see far less inequality (at least outside the Bay Area).

Choosing wealth-creation rather than rent-seeking has nothing to do with
distribution of wealth as far as I see it. The hugely wealth-creating SF bay
area is one of the most unequal places in the world.

I think redistribution of wealth is absolutely necessary to reduce poverty and
increase average quality of life. Sadly, I don't have much faith in this
happening due to the argument that selfishly motivated wealth-creators or
rent-seekers will flock to wherever taxes them the least.

~~~
leot
The Bay Area is the exception, certainly. The question concerns whether other
places would be more or less equal.

There are three assumptions behind the claim that wealth-seeking is better for
income inequality:

1) rent-seeking is "easier money" than wealth creation (so if all physicists
engaged in wealth creation instead of rent-seeking, as a group they'd end up
having less money, hence less inequality for them v.s. non-physicists

2) wealth creation _creates wealth_ , which in general is good for everyone,
thereby reducing inequality by giving more people more stuff

3) wealth creating activities have a range of side benefits. E.g., unlike
finance, it often requires recruiting, training, and leading teams to build
things, which in turn creates jobs and better people, reducing inequality.

------
basicplus2
Imagine a society of four people, one grows rice for four, one grows chickens
for four one grows vegetables for four, one builds and maintains houses for
four there is no profit and there is equality.

If one person is profiting... or in our world a person is profiting more than
the others it is inequality in action.

Progressive tax rates are the simplest solution.

The thinking that one persons work is more important than another's is a
dangerous and slippery slope.

~~~
hueving
That's ridiculous because it eliminates all incentives to invest time in
training.

Why would anyone risk harm and spend years training to be an expert welder
when he/she will get the same results as some person that throws some seeds in
the ground to grow food for 4 people?

The fact is that some people's work is more important than others. That's why
society in general is willing to pay more. The kid that rips my ticket stubs
at the theater doesn't deserve the same thing as a neurological surgeon that
spent the first 30 years of life in training.

~~~
zanny
Markets do not care how "important" your work is when it values how much you
are worth. All it cares about is supply and demand.

If people want food, and nobody is growing it, but you have a surplus of
welders and nobody wanting steelwork done, of course the farmer is going to
make more money. Farming is more valuable than welding, regardless of
training.

The training itself is not a cost center. It is a barrier to entry to
providing goods and services in the exact same way possession of seeds and
land to plant them in is a barrier to farming. If there is not enough market
demand for welders to make people train to be welders over farmers that is not
a tragedy, it is an optimization of the economy.

The economy is the will of all the money in the system. Albeit its not the
will of the people, but thats because people are not equal in wealth. But its
a strong reflection of what is _worth_ being done, because money would not
trend towards something that is not beneficial.

And sane progressive taxes wouldn't be disicentivizing welding over farming -
if people stopped training to weld because of reduced profit potential because
of taxation, the demand for welders will go up to compensate. Not all of it,
but your losses are counterbalanced by any sticky demand.

Additionally, almost anyone arguing for taxation today better be doing it as
an equalizer of people. If you are being taxed as a welder it means you have a
baseline to fall back on in case of a dramatic oversupply of your skills, so
rather than being destitute and homeless you just have to downsize your
standard of living. And anyone proposing progressive income taxes better not
start advocating taxation until at least the happiness threshold of income, or
I'd laugh them out of the discussion. A conversation about taxation should be
about excess, not what constitutes a successful life.

~~~
hueving
A market's value of work is how important it is to people at the time. It's
that simple. You are over-complicating it by pretending there is something
different to determine importance.

Also, your suggestion of sane progressive taxation is a massive backpedal from
the statement that I replied to, which implied that everyone should receive
equal compensation. We already have progressive taxation in the US, so
advocating for 'sane progressive taxation' is just a nebulous cop-out that
doesn't provide anything concrete enough to be discussed or analyzed.

~~~
zanny
> so advocating for 'sane progressive taxation' is just a nebulous cop-out
> that doesn't provide anything concrete enough to be discussed or analyzed.

Capital gains is merged into one income tax bracket. All money earned in a
year is one single income. Income from 0 to your providential happiness
threshold according to heuristic analysis based off the methodology used in
this study:
[https://www.princeton.edu/~deaton/downloads/deaton_kahneman_...](https://www.princeton.edu/~deaton/downloads/deaton_kahneman_high_income_improves_evaluation_August2010.pdf)

From that point to 100x the happiness threshold you curve progressive taxation
from 0% to 90% quadratically, approximating the median around 25% at 50x. Your
total tax burden is simply the area under the curve, so rather than having tax
brackets you use actual math to make sense and tax progressively all income
earned.

That means any money made over, if happiness is 75k, 7.5 million is 90% taxed
forever. I'd even wager to make it 100% as a short term measure to help
dramatically curb income inequality. Note this rate is actually 2% lower than
the highest its ever been, but in practice capping capital gains would have a
dramatically larger effect on economic planning.

Additionally, you need tariffs on exported wealth, on corporate holdings
accounts, and on physical goods hoarded, on property all at progressive rates
to avoid off-shore tax evasion, hiding your money in a business account,
buying material goods to hide your wealth, and stop the current and tangential
issue of land hoarding that would be an even bigger problem under a legitimate
tax scheme.

Finally, you institute a 10 year wealth tax to try to reclaim some of the
amassed ownership of the means of production the ultra-elite have racked up
over the last decade and stop some of the rent seeking. It is not just about
stopping them from acquiring even more of a share of ownership, its about
getting some of it back. The rates here are not something I have researched
much, but something of the sort may be required since so much of total wealth
has moved to the top.

You would keep sales tax as a means to fund local and state government,
because while regressive if you try to push progressive taxes locally you will
just have regional wealth flight. I strongly disagree with the argument that
if you tried realistically taxing the rich to pay for society that they would
all flee internationally - because the tax burden is pretty close to this in
almost all European countries. Where else are they going? Politically unstable
and unsafe third world nations? China? Russia? You would absolutely want some
global effort here to prevent there _from_ being such an easy escape route,
but its a problem of global scale after all, the asset controllers in the US
also dominate international commerce and are as much a problem in their
influence on every other nation as they are here.

------
h2077545
> The effects of World War II were both economic and social. Economically, it
> decreased variation in income. Like all modern armed forces, America's were
> socialist economically. From each according to his ability, to each
> according to his need. More or less. Higher ranking members of the military
> got more (as higher ranking members of socialist societies always do), but
> what they got was fixed according to their rank. And the flattening effect
> wasn't limited to those under arms, because the US economy was conscripted
> too. Between 1942 and 1945 all wages were set by the National War Labor
> Board. Like the military, they defaulted to flatness. And this national
> standardization of wages was so pervasive that its effects could still be
> seen years after the war ended. [1]

Just another article by a hypocrite capitalist talking about "socialism"
without a clue.

------
skybrian
This history is pretty well-written as far as it goes, but it's centered on
the white American male worker's experience, and particularly on the sort of
person who had a chance at being a manager.

It barely mentions women and doesn't mention the civil rights movement at all.
A majority of Americans living at the time had no chance at being an executive
at a large corporation.

There has never been a time when all workers were treated equally.

------
dreamdu5t
Unlike Paul's other essays, this one did not offer me any insight. WWII
bringing the country together, America becoming less culturally conformative
since WWII, etc... these are obvious trends that most everyone is aware of,
and which people talk about quite often.

~~~
tomasien
That's one of the reasons I like it. It's too controversial and complex a
topic to be prescriptive about it, but it's such an important topic that it
deserves to be laid out clearly and plainly. That's what PG is so good at,
regardless of whether you agree with his conclusions. I feel like I could
share this with anyone I know and they would get value out of it, and further,
it would help us get on the same page when discussing our feelings about what
to do (if anything) about it.

------
mbrock
David Chapman wrote an interesting set of posts about fragmentation from the
perspective of culture, counterculture, and subcultures.

[http://meaningness.com/meaningness-
history](http://meaningness.com/meaningness-history)

That's the intro for a series of posts listed at the bottom.

Here's a "gigantic chart that explains everything":
[http://meaningness.com/modes-chart](http://meaningness.com/modes-chart)

Here's "systems of meaning all in flames": [http://meaningness.com/systems-
crisis-breakdown](http://meaningness.com/systems-crisis-breakdown)

------
vasilipupkin
I enjoyed the essay, but I completely disagree that the 1945-2000 represented
years when America was most cohesive. That seems like a perfunctory reading of
history. American history of mid 20th century is that of strife, disagreement,
political battles, fights for race and gender equality, etc. America today
seems much more cohesive to me than ever before. Does a New Yorker today have
more or less in common with someone from Texas or Alabama than 50 years ago ?
I think way more. So, I think the rest of the esay falls down like a colossus
with feet of clay, once you demolish the central thesis of cohesion

------
wtbob
Very interesting, particularly the idea that the rise in inequality is a
ntural consequence of fairness. I wonder, then, if those opposing the rise in
inequality aren't like King Canute ordering the tide to recede.

~~~
wutbrodo
> the rise in inequality is a ntural [sic] consequence of fairness. I wonder,
> then, if those opposing the rise in inequality aren't like King Canute
> ordering the tide to recede.

The subset of people complaining about inequality that I actually take
seriously[1] are concerned with its effects (for example, on the health of the
economy[2]), not what the cause of the rise was relative to the previous era.

Another factor in the (reasonable) complaints has to do with the perception
that income inequality is driven by (and driving) inequality of _opportunity_.
Basically, the rising inequality is seen as an unfortunate side effect of a
positive thing (the aforementioned "fairness"), and the good (IMO) proposed
solutions involve increasing said fairness, instead of just rolling back to
what we had earlier (warts and all).

[1] i.e., excluding the people who dislike it without any understanding of
what its potential causes or implications might be (IME these people exist for
every single possible POV). Included in this are people who think that we can
magically re-create the economic environment of the 50s (wherein half the
world had blown itself to pieces and the other half was emerging from under
the heel of colonialism or being smushed by the heel of Communism).

[2] [http://uk.reuters.com/article/uk-imf-inequality-
idUKBREA1P1P...](http://uk.reuters.com/article/uk-imf-inequality-
idUKBREA1P1PH20140226)

------
WoodenChair
> It would be insane to go to war just to induce more national unity.

It's probably out of the scope of this essay, but we have in fact been at war
for 14 years. It's not at the scale of WW2, but it's war none the less. I
think it has not induced national unity due to precisely what Graham describes
- fragmentation in society.

~~~
clarkmoody
Of course he means _command economy total war_ when he says "go to war".

The US has been involved in foreign conflicts almost continually since the end
of WWII, but none of them have been total war.

~~~
WoodenChair
Yes, I think you're right. But since we are at war, I guess it's worth
pointing out the difference, to help elucidate why the current war _is not_
generating social cohesion. It just rings a bit hollow to not acknowledge that
we have been in a very serious war now for 14 years.

------
roeme
If this piqued your interest; or left you wondering, I'd recommend reading
Piketty's "Capital in the twenty-first Century".

As Graham's piece concludes; if we don't do _something_ , we'll get into
trouble.

\- _« Terrific work causes us to think of additional questions. »_

~~~
warrenmar
The Economist has a four paragraph summary of the book.

[http://www.economist.com/blogs/economist-
explains/2014/05/ec...](http://www.economist.com/blogs/economist-
explains/2014/05/economist-explains?fsrc=scn/tw/te/bl/ed/explainscapital)

Low growth causes more income to come from capital, which causes more
inequality due to inheritance and the rich getting richer. The solution is a
global progressive tax on capital.

~~~
r0muald
There's a 20 minute summary by Piketty here:
[https://www.youtube.com/watch?v=JKsHhXwqDqM](https://www.youtube.com/watch?v=JKsHhXwqDqM)
and even the short overview by Cory Doctorow is quite good:
[https://boingboing.net/2014/06/24/thomas-pikettys-capital-
in...](https://boingboing.net/2014/06/24/thomas-pikettys-capital-in-t.html)

After reading the first paragraphs in pg's essay I immediately went CMD + F
Piketty and was somehow disappointed that he didn't choose to cite him since
that's the crux of C21C. But, glad to see that others on HN resonated with the
same ideas.

------
orthoganol
If people enjoy reading history like this, I highly recommend Jeffrey
Frieden's "Global Capitalism: It's Fall and Rise in the Twentieth Century."

Overall, I think a dimension perhaps lacking in PG's otherwise fantastic
writeup is that this 'fragmentation' opens up a space of freedom. I mean, our
society basically interpolates individuals (younger generations at least) as
existential subjects - no set path on what we should do with our lives, no
God, no religion, we have to make our own meaning. Painful and difficult, but
a source of freedom either way. Today I can travel as a digital nomad, found a
startup, work for a rocketship, work for a stable, high paying company,
freelance, or switch careers altogether. I get to choose who I associate with
and date and marry (and it's even acceptable to not marry), while choosing
from a much larger, more open pool, and for the most part, I get to choose who
I am. Not everyone has access to this freedom, but it's still the point in
human history when the largest number of people have ever had access to this
freedom.

~~~
orthoganol
Based on the downvotes this received, I can only conclude that either people
really aren't aware of how free they are (or deny it because it's comfortable
and easier to not change), aren't interested in going through the struggle of
setting out a life for themselves (as opposed to mimicking others, which is
also easier), think I'm being elitist, or they are religious and object to my
saying young generations are born without God and religion (even though here
in the first world Angloshpere, we are, for the most part, born without God
and religion).

Whatever your reason, it is still difficult to deny (IMHO) that more than ever
today we have the freedom to set our own path, in a way we never have before.

------
twelvechairs
This is a great article which raises many important issues, but I'd like to
offer a couple of criticisms.

I'm not convinced 'fragmentation' is the best way to summarise these trends.
Small businesses are in fact still losing ground and importance to larger
businesses (see for example
[http://www.businessweek.com/smallbiz/running_small_business/...](http://www.businessweek.com/smallbiz/running_small_business/Small%20Business%20GDP.png)).
What definitely is happening compared to the mid 20th C is that the economy is
more complex and thus there are more diverse industries represented in
government, and also the lifespan of large companies is reduced, particularly
as technology advances faster now than ever before. Jobs are also becoming
ever more centralised in cities due to their increased need for direct
communication which hasn't been countered by technology yet (despite a minor
trend for remote work). These are the major trends for me.

I'd also add that while networks of smaller companies may have some innovation
advantage over large companies (depending on the industry and innovation),
many are focussed on industries where they can reduce labour rights, safety
standards, avoid tax and lower wages e.g. in construction industry
subcontracting, clothing manufacturing, hardware manufacturing, etc.)

Whats also glossed over here is the advances to society made through
mechanisms which aren't people trying to get rich, or seek a 'market price'
for their 'wealth creation'. Lets not forget that most of the true computer
pioneers were people in the corner of some university or military institution
somewhere. Similarly in medicine and most sciences, research which is not
profit-driven has been core to much of the 'wealth' of the 20th century across
the world.

------
tlogan
> A lot of the change I've seen is fragmentation. US politics is much more
> polarized

> than it used to be.

I really do not want to be jerk here but this is 'white guy point of view'.
The US politics is more polarized than it used to be because black, latinos,
women, gays, socialists, etc. have some voice in politics now. Before they had
absolutely no voice or very little.

------
tdaltonc
> Globally the trend has been in the other direction.

I think that this is misleading. Every global culture is fragmenting, but the
biggest fragments within countries tend to get along much better then they
used to. There is a "global culture" now that contains a bigger share of
humanity then ever before, but inside each nation it still looks like
fragmentation.

------
riffraff
I am unconvinced that fragmentation actually happened.

Sure, maybe there are more airlines, but are there more airplane-making
companies or car companies now then in the '60s?

Or consider this:

> Kids who went to private schools or wished they did started to dress
> "preppy," and kids who wanted to seem rebellious made a conscious effort to
> look disreputable

How didn't this happen in the 50s too? "Greasers" are _the epitome_ of
rebellious kids.

Or consider politics: I have no idea what politicians said in the US at the
time, but back in western europe we had a political spectrum that went from
"fascism is okaish" to "praise lenin". At least, didn't the US had basically
everyone on the same side regarding abortion and divorce, compared to now?

Looks to me the essay suffers from sampling bias, even if most likely
unintentional. Sure a few things are examples of increased "refragmentation"
but I am unconvinced this is a general, uniform, and strong trend.

------
neelm
"The Big Sort" by Bill Bishop is a well researched book that explains the
political fracturing of America.

The topic is explains is expressed visually in these two maps, which shows
county election results from 1976 to 2004.
[http://www.thebigsort.com/maps.php](http://www.thebigsort.com/maps.php)

One of the point is that due to economy, mobility and choice, Americans decide
to settle where people are like them the most, and that this results in deeper
political boundaries, especially in the context of our electoral system.

One takeaway is that individually we are not all different, and a single
Democrat and Republican in a room would likely come up with compromises on
differing issues. However when on Democrat/Republican is in a group of many
like themselves, they tend to take the most extreme view, on average.

The other is that there used to be more friendly relationships between senior
senators on both sides of the aisle. They would gather regularly to have a few
cocktails even if they have strongly differing views. These bonds made it
possible for them to work as a bi-partisan team to get legislation passed.
These relationships no longer exist the way they used to, and many politicians
are much more transient in the time they spend in DC.

------
mwcampbell
> The creative class flocks to a handful of happy cities, abandoning the rest

At least this trend is one that individual programmers can choose to resist,
assuming we don't have to move to Silicon Valley or Seattle to get good jobs.
I, for one, don't have any desire to leave my home town of Wichita, Kansas.

------
anoncoder
It's tax policy, plain and simple. Stop paying taxes and you'll get richer,
relative to those paying taxes. All the communication and technology changes
have made it much easier to evade taxes. That and government complicity.

For the last 40 years, we were promised a better living standard in exchange
for lower taxes. It backfired. We forgot about the vice that has no bounds -
greed. That's why we have to set limits. Paul alludes to the correct and only
solution - make tax rates so high to discourage accumulating wealth beyond a
certain point.

It's a wave, but the wave has crested. Tax rates will rise, the loopholes will
be removed, and the existing tax laws will start to get enforced. Too bad, it
could have been different.

------
ThomPete
I have one word. Technology.

Think about technology as outsourcing and you realize what the problem is
because you are realizing the trend;

Technology will compete with higher and higher levels of abstraction and so
you either have to be really skilled in an increasingly competitive space or
you need to accept taking jobs at wages that are as low as they are because of
the increased competition from technology.

And until economist stop treating technology as an externality they wont
understand whats going on and we will keep debating this as if its a political
problem. In my opinion its not.

And so because technology ends up favoring the one winner paradigm it pushes
wealth into the hands of very few.

------
marincounty
Wow!

He's seems a little self-aware of his own wealth, and what exactly he's given
society?

Sorry--I read this bloated, post holiday, thesis, and was not impressed. Why
take so long to say a few thoughts? The're just thoughts?

Yes, we rebelled, or "fragmented".

Yes, unions are not perfect. (Good luck getting rid of certain unions, like
any Union San Franciso. I have seen entire buildings go dim when the painter's
Union went on strike.)

If I were a psychologist looking for a theme to his writing it would be
basically two thing; He is one percenter--trying to rationalize his own
wealth? He trying to look for flaws in society that makes it o.k. to be very
wealthy?

Paul--take a basic writing class. You need to funnel your thoughts. You could
take out 3/4 of your sentences, and your readers would have a better grasp of
what you are trying to convey.

Paul--certain unions will never go away.

Paul--this is the downside to being very wealthy. You are living the "dream"?

I wasen't going to read that essay another time. I think we are about to see a
lot of tech billionaries wondering if they ultimately ruined the party, or
helped it?

Let's get real. In the U.S.--a lot of us didn't have to worry about missing
out on the party. All we had to do was try. Now--it's not as easy.

Do I fear the future. Yes--I do. Do I think tech will make things better. No--
I don't. That is unless we get serious about overpopulation.

I have a question to any developer here. We are constantly trying to make tech
easier. We all know, and like DRY. What's going to happen in a few years when
our skills are no longer needed? Even local politians are writing our
obituaries. Willie Brown said, 'I'm wondering what we are going to do with all
the future homeless tech people.' It's not an exact quote, but it was said in
retort to a complaint about all the homeless we step over every day.

My hope is we don't turn into Mexico. A country where someone like Paul
couldn't take a leisurely walk in the park?

------
MichaelMoser123
>Not everyone who gets rich now does it by creating wealth, certainly. But a
significant number do, and the Baumol Effect means all their peers get dragged
along too. [23] And as long as it's possible to get rich by creating wealth,
the default tendency will be for economic inequality to increase

My question is: significantly more wealth seems to be generated by big
corporations by means of financial 'instruments' rather than by value
creation; is that correct?

Also this lecture [1] says that scientific and technological breatkhroughs are
much harder to achieve these days - because all the shallow fruit is already
taken and it costs more to digg deep. Now doesn't that make value creation
harder for the coming decades? (for example the PC revolution was based on
breakthroughs in physics/semiconductors/electronics - these will be harder and
harder to achieve)

So it is hard to tell which one will dominate for the near future: value
extraction by means of financial trickery (my guess is that this makes society
more hierarchical, and the top of the hierarchy will try to enforce equal
standing for the lower ranks) or the possibility of real value creation (this
one would create a chance for a wider audience) ?

[1] Collapse of Complex Societies by Dr. Joseph Tainter
[https://www.youtube.com/watch?v=G0R09YzyuCI](https://www.youtube.com/watch?v=G0R09YzyuCI)

------
Wissmania
I don't see how someone can credibly argue that raising income tax rates
discourages innovation. As if Zuck or Gates wouldn't have started their
companies if they only would have made $25 billion instead of $50 billion.

He even argues in earlier writing that most of the innovation comes from
genuine passion for solving a problem, rather than profit motive.

People who have worked a lot to increase their wealth understandably don't
want a portion of it taken away, even if it probably won't make them less
happy, or motivate people less in the future.

------
Mindphreaker
Very interesting article. I mostly agree with the idea of social
fragmentation. I think it is no coincidence that we like to call ourselves
"individuals". Maybe the thought reflects our current zeitgeist but it seems
almost natural (nowadays) for humans to emphasize our differences / our
individualism. However, it seems very interesting, that as much as we like to
differentiate ourselves we also tend to some kind of collectivism (e.g.
trending sports, technology (iPhone/Android), etc.), even working for the same
corporations (Google/Facebook/Apple...) which also appears contrary to the
article. It may be true that the speed of change is accelerating but I can't
agree with the idea that we already reached a fully fragmented society (yet)
which is here to stay.

Another interesting part was the analogy to Ford's vertical integration. The
trend definitely went from fully integrated mega corps to fragmented networks
of corporations. The car industry is a perfect example. It would be exciting
to know if PG thought about Tesla/SpaceX and it's current move towards a
higher level of integration (producing more and more parts by themselves) in
order to control the quality of their products. It may be sign that we are on
the edge or maximum of fragmentation and there are trends emerging which pull
us back into consolidation (maybe in another form than it used to).

------
Pyxl101
Other recent Paul Graham writings on inequality that I thought were
interesting reads:

[http://paulgraham.com/inequality.html](http://paulgraham.com/inequality.html)
(Inequality and Risk, 2005) - economic inequality goes hand-in-hand with risk.
If you remove the payoff rewards of risky bets like founding companies, then
you remove the incentive to do those things in the first place.

[http://paulgraham.com/ineq.html](http://paulgraham.com/ineq.html) (more on
Economic Inequality)

------
paulpauper
In the early 20th century, big companies were synonymous with efficiency. In
the late 20th century they were synonymous with inefficiency. To some extent
this was because the companies themselves had become sclerotic. But it was
also because our standards were higher.

\------------------------------------

Huh? His memory must have stopped in 2000 at the peak of the dotcom bubble.
Everything has become much more efficient (both in the stock market and in
corporate america) and competitive, with droves of college graduates applying
for jobs that can be completed by a high-school dropout.

------
jcfrei
While the article is rather long and touches on many subjects, I believe I
agree with the underlying sentiment. Namely, that income inequality is rising
and social cohesion is eroding (whereby the former is largely responsible for
the latter in my opinion). Looking at historical income inequality in the US,
we see that it's just returning to pre 20th century levels. This is not
surprising, since the 20th appears to be at odds in many ways with other
centuries. Especially the rise of the middle-class (which quickly was
understood as a society's default state) seems like a purely 20th century
phenomenon. The real question is whether societies in developed countries will
accept a return back to more divisive wealth distributions (where people are
either clearly upper or clearly lower class).

Furthermore I think it's very important to differentiate between total wealth
and wealth distribution. Some (probably rather right-wing politicians)
advocate total wealth creation and others (rather left-wing politicians)
promote (equal) wealth distribution. Economically speaking the former is
clearly preferable, while for social cohesion the later is clearly preferable.
Which way we go is (hopefully) up to the democratic electorate (ie. you). And
should that not be the case, then at the very least we can all agree that
fixing the democratic (legislative) process must be our very first priority -
no matter if you seek more or less taxation.

------
spopejoy
Nice read, but completely oblivious to the central role of FIRE
(finance/insurance/real estate) industries, plus industrial stagnation, that
has obtained since the 70s in creating today's ridiculous wealth gap. I don't
have the exact statistics on hand but finance represented something like 16%
of GDP in the 70s compared to now around 40%.

PG's a techno-capitalist and he wants to say that somehow technology has
created all this wealth, but it's simply false. Tech has only been able to
"create wealth" because of the overheated financial forces behind ridiculous
valuations, stock prices unhinged from any fiscal reality, etc. If we were to
actually price tech on the money it makes it would pale in comparison to the
giants of yesteryear.

There's an interesting, but now practically unknown, marxist economist named
Paul Sweezy who correctly predicted in the early 70s that the monopoly
capitalism of the time would fade into permanent stagnation -- closing
factories etc -- with increasing financialization of the economy. Pretty much
nailed it.

------
kmonsen
"The ultimate way to get market price is to work for yourself, by starting
your own company." This seems to be one of his main points here, and for me it
is not true at all.

There are many people that bring real value, even if they would not be good
founders (and maybe not even good as first 1-10 employees). That is just one
specific set of skills (in addition to common skills), a person can bring a
lot of value without being a good founder.

------
Tycho
Terrific essay. It's really impressive how much of the world it explained and
tied in with history.

One thing I would like to discuss though is this line:

 _The creative class flocks to a handful of happy cities, abandoning the
rest._

This suggests that there are entire _cities_ , even _states_ , lacking in
creative people. Now I'm sure PG was consciously generalizing, or else
referring to the _extraordinarily_ creative entrepreneurs like Musk, Dorsey
etc. (creative in the business sense), so I don't want to nitpick.

But what do people _think_ about this? Everywhere I've gone in life I've found
creative, dynamic people somewhere in my midst. I know a frequent complaint
from the Left is the slightly galling idea that if the capitalists abandoned
us, society wouldn't be able to fill the ranks of the managerial positions and
keep things going. What do other people think? Have you lived in (developed
world) cities which felt entirely stultified and lacking the human capital to
make things better?

~~~
webwright
"This suggests that there are entire cities, even states, lacking in creative
people."

It just suggests a migration. Smart/educated/creative people often head to
opportunity when they can. Go to any small town and many of the best/brightest
have left. Go to Greece and you'll find the same thing. Certainly some folks
stay out of necessity (family ties, poverty, and other reasons) or by choice
(a love for the place).

------
Typhon
I remember when Paul Graham pointed out that, « internally, most companies are
run like communist states » (in
[http://paulgraham.com/opensource.html](http://paulgraham.com/opensource.html)
)

The picture he paints here of postwar-America as a bland, uniform country
dominated by a few mega-institutions reminds me of the USSR.

How ironic.

~~~
13of40
I knew a fellow who used to do some trade with the Soviet Union back in the
day, and he made the opposite point: In the US, your government is democratic
but at work it's a totalitarian hierarchy. In the USSR, the government was
totalitarian, but at work everyone got to vote on major issues. (This would
have been in post-Khrushchev times.)

------
netcan
Great essay. Though obviously, such a big hypothesis is very speculative.

I think the use of the "market price" concept so heavily here might be taking
away a little. It sort of assumes some objective (if unknowable) value to
human contribution or achievement. I think in the labour market in general,
and specifically the components that he's talking about in the lang term, are
hard to describe well this way. Between the difficulty to evaluating labour
quality, the variability in "quality" depending on specific circumstances, the
bargaining/liquidity issues and other problems, I think we enter a (Ronald)
Coase-esqu problem where markets do not play out efficiently enough to reveal
an information rich market price.

I wonder if this essay would be much different without market price.

------
golergka
> Version 1 of the national economy consisted of a few big blocks whose
> relationships were negotiated in back rooms by a handful of executives,
> politicians, regulators, and labor leaders. Version 2 was higher resolution:
> there were more companies, of more different sizes, making more different
> things, and their relationships changed faster. In this world there were
> still plenty of back room negotiations, but more was left to market forces.
> Which further accelerated the fragmentation.

I find this curiously close to a description given by a late-soviet economist
who was working on economic reforms in the 80s: he described soviet economy as
a bunch of heavy hard rocks, incredibly powerful, but without any flexibility
and connection to each other, and small new cooperative movement as a sand
that should've taken all the space in between.

------
bhuga
Interesting piece. It will take some time to digest.

I wonder about the arrow of causation for conformity back in the 40's. This
essay describes WWII as a spark of a generation of conformity (preceded by the
New Deal for some). But it's really hard to imagine modern society signing on
to a world war. What's to stop parents afraid of vaccinations from taking
their draft-age children to New Zealand?

Was there something else that was already more conformist? Or was there
another proximate cause, maybe even one as simple as a perceived global threat
(communism, fascism) combined with a lack of individual physical mobility?

The essay is good and makes a strong point in and of itself, but I wonder if
there's other variables it (and I) are missing.

If pg is reading, one piece of concrete feedback:

> the LBO wave?

LBO wasn't defined in the text previously and I had to google it (it's
leveraged buy-out).

~~~
13of40
> What's to stop parents afraid of vaccinations from taking their draft-age
> children to New Zealand?

This reminds me of something a friend of mine told me over Christmas: Her
65-year-old uncle is not currently allowed to travel abroad from Ukraine
because 25 years ago he was an Army officer and anyone with military
experience is being held in reserve. So the answer to your question is simply
"police at the borders".

------
ZenoArrow
I enjoyed the article, and found it an interesting point of view for the most
part. However, I don't agree with this...

> "The form of fragmentation people worry most about lately is economic
> inequality, and if you want to eliminate that you're up against a truly
> formidable headwind—one that has been in operation since the stone age:
> technology. Technology is a lever. It magnifies work. And the lever not only
> grows increasingly long, but the rate at which it grows is itself
> increasing."

Tackling inequality has nothing to do with technology. Let's put it like this,
we have a minimum wage already, the balancing force with regards to economic
inequality would be a maximum wage. There are no technological issues blocking
a maximum wage, it's just a matter of political will.

------
djyaz1200
The book "Coming Apart" by Charles Murray is a thoughtful read on this topic.

------
justinhj
Consider one ycombinator company,Uber. Do they generate wealth? From the point
of view of a NYC taxi driver they are directly taking both the customers and
the value of the drivers medallions. In return,uber drivers work giving 1/3 of
their earnings to a company because that company built the software and
lobbied the governments (presumably eventually) to allow this new form of
public transport. It doesn't seem any different to the past. Those with the
connections, capital and technology take a large share of the wealth being
generated by the actual workers.

~~~
dkural
Most drivers prefer Uber. Uber takes value away from the middlemen, takes a
smaller share of the middleman cut, and redistributes the remaining value to
the driver and the passenger. Hence its popularity.

Most of the profit in the old system accrues to the taxicab company +
medallion holder. Uber does hurt these folks, by giving more of the pie to the
driver, who can now drive without owning a medallion & is not hurt by this
barrier-to-entry, and Uber provides the rest as a discount to the passenger,
who receives a better overall service at the same time (you see where the car
is + estimated time, ratings, GPS, etc.)

~~~
smileysteve
> Most drivers prefer Uber. Uber takes value away from the middlemen, takes a
> smaller share of the middleman cut, and redistributes the remaining value to
> the driver and the passenger. Hence its popularity.

This is a primary result of the "fragmentation" caused by the corruption of
the medallion and taxi corporations. If drivers had continued (in some cases)
to be direct owners of the medallions or if Taxi corporations had not directed
many of the profits to the top, then the answer of driver and consumer choice
would be less known.

More drivers likely prefer Lyft if the market of riders exists (Lyft takes a
lower cut and is less harsh), and that eventually lower cost (even free / open
source) alternatives are taking over (Spain).

------
ams6110
I like PGs essays normally, but he didn't address two huge societal changes
since WWII, that is the rise in welfare and single-parent families. More
people than ever are being paid to be non-productive and to procreate without
any means or even real chance of supporting their offspring (a single parent
poor household has significantly less opportunity to move up in income
compared to a two-parent poor household).

This can't not have an impact on the social order. Perhaps he implies or
assumes that this is an effect rather than a cause but to leave it unmentioned
seems like a big omission.

------
echochar
A phrase used repeatedly throughout is "creating wealth". This is contrasted
with "zero-sum game" to get rich. Does anyone have a precise definition of
"creating wealth"?

------
auferstehung
And the cycle continues swinging back and forth. "Let them eat cake" is not
sustainable either. It usually ends in violence despite the rationalizations
of the elite.

------
caf
_And the second reason is that if you want to solve a problem using a network
of cooperating companies, you have to be able to coordinate their efforts, and
you can do that much better with computers. Computers reduce the transaction
costs that Coase argued are the raison d 'etre of corporations. That is a
fundamental change._

I wonder if the same is true of coordinating efforts in a centrally planned
economy - would computers be the same kind of fundamental change there?

------
paulpauper
Small observation: why title the file re.html? Why not just spell
fragmentation? Is there a reason to do it this way? Why .html? Doesn't that
make it hard to update all the pages at once such as menus and footers? The
design is very minimalist, but it's effective.

We're definitely in a winner-take-all economy, whether it's real estate,
stocks, the dominance of companies like Google, amazon, and amazon, or web 2.0
valuations.

~~~
visakanv
PG's urls are simple and memorable enough that you can type them into a text
message. I direct people to paulgraham.com/wealth.html,
paulgraham.com/love.html, paulgraham.com/hs.html and paulgraham.com/essay.html
all the time, from memory. It's useful!

------
graycat
Very nicely done. Awash in insight about the past and likely also about the
future.

Should connect with the role of _social media_.

In particular, explains much of why the heck I, first, got a technical Ph.D.
and then became an entrepreneur.

Did I mention very nicely done and full of good insight.

Gee, all that time people spent in courses in history, economics, political
science, B-school, and STEM field education, and the really good stuff is
right there in PG's essay!

~~~
stephengillie
Everything old is good, everything new is bad. Remember when TV was the poison
that was ruining family social time? Experts feared families would watch
instead of conversing. And yet he praises it.

------
andrewjl
I wonder if multinational corporations are the last bastion of 20th century
centralization.

In a power law driven world, players that make better long term decisions will
ultimately rise to the top and dominate their markets. This is not something
most multinationals are known for. (If so, then this process would likely play
out over several decades.)

------
marshray
Seems I was born around the same time and this is how I remember it too.

Another major economic factor he seems to have left out is government policies
encouraging (sometimes actively) the US manufacturing base to leave to other
countries. This utterly destroyed the formerly thriving US manufacturing-based
small businesses, eliminating a huge percentage of semi-skilled jobs in the
process.

------
stevefolta
> But once it became possible to make one's fortune, the ambitious had to
> decide whether or not to. A physicist who chose physics over Wall Street in
> 1990 was making a sacrifice that a physicist in 1960 wasn't.

This is perhaps not the best example, as a physicist in 1960 might've faced a
choice between academia and Fairchild Semiconductor.

------
huuu
Imho it's much simpler than PG explains. If we feel more or if we feel less
than someone else we create separation.

Ofcourse there are forces that stimulate this separation (like PG says) but in
the end it's just us.

The solution it to listen to yourself. Am I feeling less than this person? Am
I feeling more than this person? If so: stop that thought.

------
ivoras
Simply as a reference to how biology supports the human society and how
biological signals can be gamed for short term benefit, this lecture was an
eye opener for me:
[https://www.youtube.com/watch?v=ReRcHdeUG9Y](https://www.youtube.com/watch?v=ReRcHdeUG9Y)

------
bsder
What people forget is that what the big, old, sclerotic, 20th century
companies did well was provide a functional wage for the 50% of people who
were _below average_.

It's lovely that the 1% are paid what they are worth. It's not so lovely that
50% are now paid minimum wage or, worse, zero.

------
drewm1980
His distinction between "wealth generating" and "rent seeking" behavior isn't
obvious to me. Is investing in a start-up (so that you hopefully get a cut of
the wealth generated by thousands of people and machines) a form of rent
seeking?

~~~
tim333
Wikipedia: "In economics and in public-choice theory, rent-seeking involves
seeking to increase one's share of existing wealth without creating new
wealth."

So investing in a start-up is not rent seeking.

------
rdiddly
I'm old too, and I think the issue is quite a bit simpler than this rather
sprawling essay makes out. The "two forces" (WWII and large corporations) that
are now receding in memory, that supposedly used to push us all together, were
actually both manifestations of a single force, which is the "growth phase" of
fossil-fuel energy production. This has been a boon to economies the world
over for the past 100, 150 years or so.

When the world is a place where an ever-increasing amount of energy is
available to drive an economy, the best way to exploit resources (energy,
labor, materials) is by doing it "at scale" i.e. big corporations. And the
best way for Hitler to create Lebensraum and accomplish all his other now-
familiar goals is by using that selfsame large-scale industrial
infrastructure. And the best way for the Allies to fight against it, was more
of the same. It's all the same thing.

But economic activity grows and shrinks hand-in-hand with energy availability.
And when your energy source goes through a growth phase, hits a peak and stops
growing, the "large-scale" strategy slowly starts to become unviable. So a
given corporation, suddenly finds itself resource-constrained, and has to find
some way to reorganize itself and reconcile itself to the new paradigm, or
face becoming less and less profitable.

PG correctly pegs the timing of when the "disintegration" and "fragmentation"
starts to make itself evident in the US - the 1970s. By no coincidence that is
also the time when America reached and passed its domestic petroeum-production
peak. Then came all the economic stagnation, hyperinflation, factories closing
(offshoring), etc. And on the social side there was pervasive unease... the
"ennui" of the like-named Carter speech. Many subcultures came out of the
woodwork then, because it becomes less desirable to fit into and conform to a
system that seems to be faltering and becoming unstable, no longer gives you
any upward mobility, and might even be rigged against you.

In fact, for the people against whom it truly is rigged, why not outwardly
display symbols proudly showing just how thoroughly "outside the system" one
is? Hence the baggy pants of the prison parolee (who upon release gets back
the same pants he was arrested in, but finds he's lost 30 lbs eating prison
food) that became the stylistic signature of gangsters. Hence all the tattoos,
formerly the symbol of exotic and unseemly characters, now sort of the
neutered and ubiquitous symbol of wannabe unseemly characters.

Anyway it took a great pretender to hide the obvious, and that guy's name was
Reagan. Luckily for him, people were all-too-willing to get on-board and
believe a pleasant lie, rather than face a bunch of hard work.

Computers were a great invention but it's no coincidence that anything that
"gets done" and any wealth that gets created in the US today is by doing "more
with less" in the digital realm, and not by doing "more with more" in the
physical. All the physical stuff has been offshored to take advantage of labor
arbitrage and, ironically enough, cheaper energy. (Because of course there are
still countries that export energy.)

Anyone looking for why "we once were cohesive and now we're not" should be
looking at this, as the transition is a crisis-level problem. But PG seems to
have a persistent blind spot about it. The same blind spot is common among
optimistic tech-minded people because they're used to thinking "anything is
possible," and I imagine "startup people" all the more so.

I hope that can-do spirit is able to make renewables replace the orgy, the
buffet, the glut of energy we use and deploy today. An honest look at the
problem might be a prerequisite to tackling it though. Look at the numbers
(something measured in joules or watts) and it may give you pause. And given
that the initiative depends so heavily on the continued existence of the
current interconnected and fossil-fuel-powered industrial infrastructure, I
would say, better get a move on.

Tangent/epilogue: And obviously, fucking autonomous cars are not going to fix
anything, nor is any kind of car. Who fantasizes about autonomous cars when
ordinary passenger rail has so much room for improvement? Californians, that's
who. Hyperloop is closer to the mark, but suffers from Musk's attention-
whoring narcissism and is likely to be egregiously energy-inefficient. (Since
speed, not efficiency, seems to be the main design criterion.) That's enough
for you to think about, I know I'm not making any friends but that's not what
challenging ideas (an endangered species) are for.

~~~
pjmorris
I think you've got a point, but then I'm old too. I found reading Arthur C.
Clarke's 'Profiles of the Future' early on, and Yergin's 'The Prize' later on
to be valuable in reasoning about energy, and found 'The Oil Drum' [1]
fascinating during its run. But I know I'm an energy dilettante... what
resources would you recommend for understanding history, the present, and our
future needs?

[1] [http://www.theoildrum.com/](http://www.theoildrum.com/)

------
SeaDude
We are at war remember...with terror.

And winner-still-takes-all... some extremely large corporations were made in
the last 15 years.

Sorry, don't see the difference between then and now.

I appreciate you attempting to identify the cause of our current crisis, but
alas, I believe you may be too entrenched to find it.

------
jgalt212
His arguments on taxes simply don't hold water. Income inequality is expanding
because those at the very top either pay taxes much lower than all others (HF,
PE, VC) or just don't pay taxes at all (AAPL).

The other problem with income inequality is simply interest rate related. If
you look at all asset classes over the last 30 years, real estate gains have
far outpaces every other asset class. Real estate prices are very sensitive to
interest rates.

If the Fed keeps raising rates, the value of these real estate holdings will
go down and well inequality will reverse itself somewhat. To do that
significantly, I think we need Fed Funds at 5-6%. I don't see that happening
for a long time, though.

Another longer term trend which may help wealth inequality reverse itself is
global warming. The global elite own a disproportionate portion of coastal
real estate. With rising ocean levels these assets will be wiped out.

------
Gravityloss
Well, we have things like access to education and access to capital, in
contrast to a nebulous "ability to create wealth". I think the former two are
more fruitful ways of thinking towards fixing the worst aspects of income
inequality.

------
mhb
For those (few?) of us who read the endnotes at the end, it would be nice for
the endnote numbers at the end to link back to the text. (In addition to the
normal link from the text to the endnote)

------
Simorgh
PG writes that the 20th Century was "a world in which it was socially
acceptable to work for Henry Ford, but not to be Henry Ford".

I feel that this viewpoint is still common today. Success is often
glamourised, far more than hard work.

------
tammer
Some interesting theories - at first appears quite reductionist but I think
succeeds in highlighting something very symbolic.

Odd, though, that pg can write an entire essay about identity politics without
naming it.

------
abalashov
It's an insightful perspective and, along with PG's stance on the essence of
economic inequality per se, a welcome antidote to the populist outrage
machine, which does indeed the frame issue largely in zero-sum terms.

However, there are some counterpoints that don't receive adequate
representation in this account, in my opinion:

One is the size and scale to which rent-seeking behaviour dominate the
American economy. PG does acknowledge here and elsewhere that rent-seeking
behaviour accounts for the wealth of many, but dismisses it relatively quickly
as a seemingly self-evident byproduct of the expected variance in a society
that permits economic opportunity. I think the situation is a lot worse than
that; the amount of such parasitism, in the form of regulatory capture,
lobbyist influence, outright Gilded Age-style purchase of legislation,
revolving-door career paths, etc. account for an extremely significant
percentage of US economic output and the unequal concentration of wealth.
Consider for example how our healthcare system works (even post-ACA), Big
Pharma, the military-industrial complex, intellectual property law and
software patents, etc. A great deal of our government is for sale, and the
sole purpose of a lot of our legislative projects is to route money into
private hands, with the support of the government's monopoly on force, while
socialising risks and losses onto the taxpayer. In my specialisation of
telecom, I have seen this at work with the hundreds of billions in effective
subsidies given to the AT&Ts and Verizons of the world, ostensibly to support
the build-out of competitive next-generation broadband infrastructure but in
fact to line their own pockets. All in all, the total dimensions of corruption
at the top of the economic food chain are in the trillions of dollars, and I
feel this insight is not given a fair shake with the same diligence as other
aspects of corporate-industrial history of which PG treats.

The second issue relates to the optimal amount of economic inequality we can
sustain while maintaining social order and an environment conducive to ongoing
innovation. Many revolutions and upheaveals in modern history attest to the
fact that when a sufficiently large class of poor and disefranchised people
arises and is left to twist in the wind, at some point "radical
discontinuities" will occur. Pervasive, festering social ills don't serve the
self-interest of the wealthy and the middle class, either; they ultimately
impact the security of their lives and their property, requiring them to
resort to increasingly drastic measures to keep what's theirs. The market for
mass-market and/or consumer products--on which a lot of startup business
models depend--is inevitably limited or shrinks when large segments of society
see eroding disposable incomes. Instability also negatively impacts the
transaction of business by making the outer world less predictable and
dependable; lopsided opportunity in savage inequality leads to lopsided and
inconsistent educational outcomes and, ultimately, a more heterogenous and
troublesome work force.

As other countries around the world periodically assert, there may be a
formula for state economic involvement, taxation and social programmes that
better maximises more desirable social outcomes, even if it comes at the
expense of bridling notional economic opportunity and the smoothing out of
some peaks. Is it not true, for example, that much of the significant
innovation in computing and networking from which we benefit today came out of
Bell Labs, a quasi-governmental institution whose decidedly mid-20th century
model of economic existence created the right incentives for long-tail R&D?

The work done in such places, as in the pharmaceutical industry for example,
is now fiercely subordinated to narrow, short-horizon commercialisation
objectives, and while that may be a better way for some actors to get rich
faster, is it really where we want to go? It seems to me one can raise the
same kind of objection about the incentives set up by unicorn-seeking VC
funding and California startup capitalism.

All this leads me to say that perhaps these issues need to be considered in a
more global, integrated, and holistic way, rather than narrowly construed as
problems of economics. If we want to evolve toward a better future, we may
need to take up more thinking from the "normative" sphere, which economists
hate.

------
Thomas_Lord
A lot of this essay seems pretty fast and loose with history to me. I hope
nobody passively accepts this as an accurate account of social, economic, or
governmental history from the Great Depression, through WWII, the mid-20th
century, through to today.

Perhaps a ycombinator readership can appreciate a telling example of the
problems is in Graham's account of IBM's decision not to exclusively license
PC-DOS. Per Graham, this "must have seemed a safe move at the time. No other
computer manufacturer had ever been able to outsell them. What difference did
it make if other manufacturers could offer DOS too? The result of that
miscalculation was an explosion of inexpensive PC clones. Microsoft now owned
the PC standard, and the customer. And the microcomputer business ended up
being Apple vs Microsoft."

OK, first, every indication is that IBM sought to deliberately create an
explosion of inexpensive PC clones -- and that they were better off for it.

Briefly, IBM made a strategic decision that their position would be better if
personal computers were a commodity with competitive suppliers rather than an
artificial monopoly like Apple products. IBM achieved this aim. Competition
meant that PC hardware margins were low, therefore IBM was ultimately better
off letting other people make sell them. For years, this was a harsh blow to
Apple which thrashed badly after the PC took off.

Second, it is misleading to say that "Microsoft now owned the PC standard, and
the customer."

Microsoft has heavyweight influence but does not quite own "the PC standard".
More to the point, figurative "ownership" of that standard is not a
particularly valuable asset. The "standard" is the definition of a competitive
commodity. Competition is hot. Therefore nobody "owns" the standard enough to
exclude competing manufacturers in any significant way. Nobody "owns" the
standard enough to extract significant rent on it.

Microsoft _did_ gain a monopoly on DOS (then Windows) rents in the deal but
(a) There does not seem to be any way IBM itself could have kept those rents
while still making the PC a commodity; (b) Microsoft's rents on DOS and its
control of what is in DOS have never once hurt IBM. (c) Microsoft's creation
of a vast market of developers targeting DOS then Windows platforms has only
helped IBM.

In short, Graham's snapshot of that bit of history is just plain counter-
factual. I hope careful readers will look pretty skeptically on his accounts
of "socialism", economic management during WWII (which was widely understood
at the time to be fascist, not socialist), the typical experience of 20th
century employment (not nearly as described), his armchair sociology....

~~~
pravda
You've got it backwards. He is right and you are the one who is wrong. Sorry.

You really thing IBM thought, "wow, we are making so much money with these PC
things ... better turn them into a commodity so our profit margins will go
away!"

I forget how much the original XT cost, something like $2K or so? The margins
on that must have been incredible.

~~~
pjmorris
I'm with Thomas_Lord... IBM's PC division took a radically open stance with
the PC market. I remember being astonished to see the circuit diagrams in the
IBM 5150 Technical Reference manual, but understood the point to be that IBM
wanted to make it easy to build compatible hardware and software. They
reversed their stance - and lost their leadership - with the second-generation
MicroChannel and PCjr architectures, largely due to the profit margin problem
you identify.

------
unusximmortalis
This is a great sign, to see so many comments on the topics this article is
reaching. It shows a lot to me at least. Thank you all for giving your honest
and insightful opinions.

------
pravda
What does "Duplo" mean?

"the Duplo economy" "Duplo world"

~~~
alan-crowe
When pg writes "a Duplo world of a few giant companies dominating each big
market." he is referring figuratively to double size lego bricks,
[https://en.wikipedia.org/wiki/Lego_Duplo](https://en.wikipedia.org/wiki/Lego_Duplo)

Notice that Duplo bricks are twice as long, twice as wide, and twice as tall
as ordinary Lego. I wrote "double size" but they are, in a sense, eight times
the size of ordinary Lego. They appear hugely larger. Also one tends to have
far fewer Duplo bricks than Lego bricks ( 1/8 ?), about the same total volume,
limited by storage space in the toy cupboard.

This lets the figurative use of the word Duplo serve double duty, both
suggesting that the parts are eight times the size, while also suggesting that
the grand total is about the same, there are just one eight as many of the big
ones.

It is literally a childish metaphor, but still an apt one.

------
return0
This was very insightful. One thing he doesn't tackle though, is how this re-
fragmentation affects the idea of the national state itself.

------
frik
On the one side we have very huge corporations that have a (near) monopoly on
a sector (big, small or niche). On the other side we have many small players
"fighting" [not the best word] for the remaining niches ...the rest. And they
dream to be the next big player by betting on a raising sector (new
technology) and sometimes disrupt old players that are too slow to adapt. Or
they fix it with cash. Absolute monopoly is often bad (for everyone except a
few (shareholders)), so anything else (fragmention) is better.

------
hoodoof
>> With the centripetal forces of total war and 20th century oligopoly mostly
gone, what will happen next?

Or I could just read The Atlantic.....

------
MBCook
Click the link (I'm on an iPhone), see a few lines as a 'read more' link.

All apparently so I can see the 'sidebar' menu below the content?

When I follow a link to an article why should I have to press a button to
_read the article_?

I'm getting so tired of this crap on so many sites. I'm really disappointed to
see it here.

2nd big story in two days that I found unreadable due to poor web design on
someone's relatively simple site (i.e. not crammed with junk like Bloomberg).

------
matchagaucho
Finally, a PG essay returning to true form.

------
unimpressive
>If total war was the big political story of the 20th century, the big
economic story was the rise of new kind of company.

Typo.

------
venomsnake
I think that the field in US in urgent need of refragmentation is the
political systems. The two parties are oligopol that don't care about their
customers and they don't deliver enough political product to the people. We
need more smaller parties that could represent the increasing diversity of
opinions.

~~~
ericd
Agreed, and some system of voting that allows people to express near-
substitutes, to avoid a Gore-Nader situation. I don't know the name of it off-
hand, but there was a system proposed where you could assign up to 10 points
for candidate, so if I happened to like Nader, but also Gore slightly less, I
could give Nader 10 points, Gore 9, and Bush 1, rather than give my one vote
to Nader with the knowledge that I was probably helping Bush win.

~~~
clarkmoody
Look into instant-runoff ballots, where you simply rank your candidates in
order of preference. If your first choice does not reach 50% of the vote, your
ballot is reverted to your second choice. This allows you to vote for a
candidate who most accurately reflects your views with a second-choice of the
next-most-accurate, etc.

[https://en.wikipedia.org/wiki/Instant-
runoff_voting](https://en.wikipedia.org/wiki/Instant-runoff_voting)

------
lifeisstillgood
weirdly this is the most useful insight to me of a insightful article

[6] I wonder how much of the decline in families eating together was due to
the decline in families watching TV together afterward

------
thesz
_From each according to his ability, to each according to his need_

It is a _communism_ motto, not socialism (from each according to his ability,
to each according to his work).

And this shows how little PG knows about socialism.

------
thadd
Good read. Not sure if I agree with everything, but fascinating.

------
jzd
The inequality gap is the direct result of an education gap

------
tmaly
something not touched upon,

1 the huge pension liabilities that have been accumulated by states

2 the excess credit/currency devaluation and excesses risk taking created by
central banks.

------
clamprecht
I love that _The Refragmentation_ references _Economic Inequality_ , and
_Economic Inequality_ references _The Refragmentation_.

------
jgalt212
Paul Graham used to be one of my heroes, now I just see him as just another
fat cat apologist in the vein of Ken Langone.

------
be21
not even wrong :)

------
kenjackson
A tldr on this one would actually be appreciated. :-)

~~~
yodon
pg provided his own tldr; in the first paragraph of the essay:

"One advantage of being old is that you can see change happen in your
lifetime. A lot of the change I've seen is fragmentation. US politics is much
more polarized than it used to be. Culturally we have ever less common ground.
The creative class flocks to a handful of happy cities, abandoning the rest.
And increasing economic inequality means the spread between rich and poor is
growing too. I'd like to propose a hypothesis: that all these trends are
instances of the same phenomenon. And moreover, that the cause is not some
force that's pulling us apart, but rather the erosion of forces that had been
pushing us together."

In general he tries to look for a net positive outcome resulting from these
changes, but is not confident there will be one.

