And whenever someone makes the point I'm making in this post, people rush in to point out that you can do so much good with lots of money. As if that somehow runs in opposition to hoarding it from being used by the broader population in the first place. It's as if you caused the collapse of an entire economic structure and then said 'but look what I'm going to do with all these resources!'.
Also: for me, the most interesting part is that I would have no problem with this system if there wasn't such a miserable bottom rung beneath them, i.e. the poorest of poor in the USA. If we had actually reached some post-scarcity conditions and the poorest among us were still well off, then I would be much less concerned about the ethics of startups. But as it stands, I think the startup/VC world needs to have a reckoning with their place in all of this... not that it will actually happen.
edit: it was downed off the front page in an hour.
I mean, duh. Half of the US federal income tax comes from 1% households. The rich disproportionately pay tax. If poor people had enough money to pay significant amounts of tax they wouldn't be poor; they only get charged anything to enforce a perception of fairness and give them some skin in the game.
Any tax break is going to favour the wealthy; because as a rule the median tax dollar came from someone wealthy.
It’s not luxury but isn’t it major progress vs 100 years ago?
Sure almost everyone in this country has a computer in their pocket, they also very often have no access to fresh groceries at the same time. The town I grew up in is 60% below the poverty line and the nearest grocery store with fresh produce is a 30 minute drive away. That's over 800 people in one city who eat frozen gas station food on a daily basis. Do you think their wifi access and cable television is a good measure of their quality of life? They've also had to shutdown the local hospital recently. Meaning their already-terrible access to healthcare just got that much worse. Most people there only visit a doctor once every 5 years.
And I can already imagine the replies to this "well, times are changing, they're living in a dying region". Which... while true... doesn't come close to forgiving the systemic problems that put them in this situation. Systemic problems that by no measure had to come to fruition, if we had only had a stronger system of wealth distribution and thus physical and educational support for the people at the bottom of the pile.
Also, for the record, they're actually closing the library in my hometown.
USDA estimates that 12% of households qualify as "food insecure": https://www.ers.usda.gov/topics/food-nutrition-assistance/fo...
Adult Medicaid recipients often have only "emergency services", aka having your teeth pulled, as part of their benefits: https://www.medicaid.gov/medicaid/benefits/dental/index.html
All-in-all it's not pretty being poor in America, even if you have cable TV and heat to distract you from the mountain of paperwork where you have to repeatedly state how much help you need and the gaps in your teeth and the "joy" of paying with food stamps at the store.
We can have major progress and still not have sufficient progress. We can make major improvements and still feel like we have a long way to go.
Just because we're better off than our grandparents doesn't erase that some of us are relatively badly off against today's standard, and we could be doing more to help those who are at the bottom of our socioeconomic ladder.
Yes, it is. There is hyperbole on both sides of this debate. Being able to show we've made historic progress makes future potential progress look more realistic. It shows our institutions are capable of solving this problem.
I should amend my statement to say, "Is that a reasonable metric to use to declare success?" I regularly bump into folks who say, "Well, what more should we do? We're already better than we were 100 years ago."
Got it. I think there may be confusion between a metric and a threshold. The metric being certain objective measures of quality of life. The thresholds being where we were 100 years ago, where we are today, and where we should be today.
More broadly, anyone "declaring success" on such a broad question is--at best--deluded. More common is people throwing their hands up at what looks like an insurmountable problem. I've found pointing out the often-unappreciated magnitude of recent historical performance to be useful in that respect.
If you keep moving the goal posts, you'll never get there.
Yes, by many measures, life for the poorest in the first world is far less miserable than it was 100 years ago. But still pretty miserable as anyone who has been poor - really poor - knows. Dickensian quality of life shouldn't be used as a the baseline against which we measure ourselves in the 21st century.
AC, Heat, cell phones, internet are all easily achievable, sometimes with an RV or a car. But housing has been hoarded to an extreme, locking out all sorts of people.
We're not comparing today's poor to yesteryear's.
We're comparing today's poor to today's robber barons.
Or, tl;dr- "Better" still isn't good enough.
Not entirely. A lot of the VCs (and also hedge funds, private equity) get money from regular people like us in the form of pension funds. Think of retired teachers, firemen, grandmothers, etc. E.g. the Oregon Public Employees Retirement Fund was one of the investors in Union Square Ventures.
Yes, some money does come from wealthy family offices like the Vanderbilts but the huge pension funds trying to meet their obligations have even more money to invest.
Your comment is quite literally just wrong. Your average American has relatively no direct stake in financial systems. Notice the word "average". Most people on HN tend to mistake that for meaning them. You are not average if you have enough wealth to think that investing money is normal, even in pensions. Estimates of the percent market investment tied up in pensions is something between 5% and 15%
In the case of Union Square Ventures, the majority of the money in their 2004 fund came from pension funds. It's all public information.
>Estimates of the percent market investment tied up in pensions is something between 5% and 15%
Your 3 links and the "5 to 15%" math are not relevant to my point. Let my try to put it another way. Let's say you looked at the LPs (investors) of a VC fund that raised $400 million. The list of wouldn't be filled with just the Rockefellers and Vanderbilts. The money sources do not entirely from the concentration of wealth.
Instead, a lot of the money comes from retirement pension funds, charities trying to stretch out their donations, university endowments, etc. And it's not just the public & private pension funds in the USA. Canada and Europe pensions also invest in VC funds.
And yes, pretty much every pension fund invests in a mix of alternative assets including private equity, hedge funds, and venture capital. Pension fund managers can't meet their financial obligations by only parking their billions in T-Bills or only investing in a passive index. They need the higher returns of those alternative investment vehicles.
 examples of public pension funds with funding shortfalls:
Pensions were eliminated in most employers in favor of 401k or other types of investment vehicles, and so Pension funds will get more rare and smaller over time.
The day of the Pension Fund is largely over.
The difference is that Hedge Funds are created by the ultra-wealthy, for the ultra-wealthy. And their only purpose is to generate massive amounts of more wealth, for the ultra-wealthy.
Right, but that is sort of the point I think. Sure you may have collapsed the economic structure for the moment, but when you say "but look at what I'm going to do with all these resources!" its because you (assuming good faith) intend to use the hoarded resources to make some lasting improvement. You have the resources, so you can make a discovery or something that leads to not as many resources needed for the future. Its obviously not the best methodology, but it is one.
As an analogy: if you were living in an isolated tribe of 300 people and the smartest 5 people got together and said: "we have an idea! if you give us 50% of the tribe wealth we can make the lives of our great-great grandchildren wonderful. We've done the math and we acknowledge that 60 people will die unnecessarily and 50 families will lead miserable lives for the next few generations... but we're going to do great things!" I would much prefer if someone stood up and said: "how about we do this slowly, live happy lives now, and then our great-great-great grandchildren can live great lives".
As in: what do individuals and small groups of individuals see such need to be the personal figurehead of success in a society, especially at such great costs to those below them? I refuse to accept that it's OK to moralize someone's actions by letting them say "but I'm going to help everyone from my throne." It sounds more like justifying greed and less like benevolence to me.
Also, I'm of the cynical belief that the phrase 'assuming good faith' is a pretty goddamn big assumption.
"The 1% are just normal successful people (who happen to also be the NIMBY ladder pullers who often perpetuate inequality in unintentional ways), it's the 0.1% we should be talking about!"
"Don't blame smart, motivated people for making money (and pursuing growth-at-all-cost companies that often provide little value to people who aren't yuppies), anyone could learn to code and pull themselves up by their bootstraps!"
And my favorite, "These authors don't understand basic economics! Tech people are expanding the economy and creating wealth for everyone (when your definition of 'everyone' is mostly people with enough money to be investors or enough youth to be startup employees), so of course it makes sense that we're getting richer faster than 99% of the population!"
If we were to equally distribute resources among the entire population, over time we would see those resources begin to bunch up into the top 20% of society due to superior abilities (intelligence, business instinct, skills, etc.)
As time continues, then resources continue to pile up at the top 20% of the initial 20, and so on, and so on...
Make each generation work hard for their wealth, and you avoid the concentration of wealth that occurs because it is also a concentration of political power, at which point the sole purpose for that wealth and power is to accumulate more wealth and power and give their kids an insurmountable advantage over the next generation of kids.
But they are redistributing the money precisely by investing it in startups.
If we assume that there are two million of us, each earning on average $200,000 and saving $80,000 of that it means our wealth as a class grows by 160,000,000,000 per year. The Forbs Rich List's wealth increased by 2,900,000,000,000 last year.
You can see the three extra zeros at the end. It's not the top 20% or the techie scum, or whichever other group is currently not underwater that's destroying the economy.
It's much easier to make those with nothing attack those with little for the benefit of those with everything than to fix the economy.
Thing I find grimly humorous is how doctors have been waking up to the realization that they're just 'the help' and the over-class think's they make too much.
Also like tech scum dogs the tax structure is designed to keep they and their spawn from breaking through into the over-class.
So you can 'invest' half a million and 12 years to become a doctor and get hit with close to 50% taxes if you are successful. And the amount of your student loan expenses that's deductible is nil.
Compare with borrowing half a million to 'invest' in stocks.
It's the same.
Also 'investing' in stocks is investing. It's not a fake investment or a scam. Lower income people pay 0% taxes on capital gains, and some online brokerage houses charge 0% commission.
Essentially, anyone can invest in the stock market. It's a lot better than 'investing' in lottery tickets. There I used the quotes appropriately, because lottery tickets are gambling, not investing.
The difference between investing and gambling is investing is when the mathematical odds are in your favor, gambling is when they are not.
$2500 if you're school teacher making $50k/year. Bupkis if you're a doctor making $200k/year.
> Also 'investing' in stocks is investing.
See useless zero sum activities.
You could apply the same reasoning to every trade where someone wants something someone else wants to sell.
At least the last two of those numbers seem very high to me. $200k might be the average if you're just looking at major metro tech markets like SF and NYC, but that's not going to get you anywhere near 2m people is it? I suspect the true average compensation for technology professionals is less than half that.
So I see nothing wrong with focusing on the top 1%.
Wealth and Democracy: How Great Fortunes and Government Created America's Aristocracy by Kevin Phillips
Similarly, the USA previously decided three times to explicitly create its middle class. The New Deal, the Homestead Act, etc. Policy choices which were hard fought and narrowly won.
The middle quintile holds about 3% of national wealth.
Thats really low, but the 60-80% group isn't exactly high or disproportionate.
We're talking about a real power law distribution of wealth in the USA, and it's downright counterproductive to scold or shame the hockey stick before the blade.
Sometimes that middle class protects its turf but there is much more going on.
It reminds me of some other sensible tax policy that the Democrats have been trying to eliminate for a while -- the SALT deduction and the mortgage deduction. The GOP did them a huge favor by eliminating those deductions.
When the Democrats eventually gain control again, I suspect those deductions will be left out.
The author is hung up on the idea that there will always be a bottom 20% and an top 20%. Might as well bay at the moon.
The author is recognizing that there is a power disparity between different income brackets, and that power disparity is used to limit upward mobility. No wealthy family wants their children to be less successful than they were, and they can invest much more time and resources into ensuring their children are successful than the bracket below them.
This is at odds with the 'American Dream' that's sold to many of us -- that this is a country of limitless economic mobility if you just put in the elbow grease.
Disappointed that 4,000 words of herd morality drivel is upvoted on HN. Guess it's en vogue everywhere, even here.
Upper middle-class parents obviously have more money to spend on their children, but there is also a social fracture. Class is not only defined in dollars, but by education, attitude, and zip code, by its way of life. America, warns Robert Putnam in Our Kids, faces “an incipient class apartheid.”
The typical child born and raised in the American upper middle class is raised in a stable home by well-educated, married parents, lives in a great neighborhood, and attends the area’s best schools. They develop a wide range of skills and gain an impressive array of credentials. Upper middle-class children luck out right from the start, even though this country was founded on antihereditary principles.
As part of the process of naturalization, I had to sign part 12, question 4 of Form N-400, which reads as follows: “Are you willing to give up any inherited title(s) or order(s) of nobility that you have in a foreign country?” I had none to give up, sadly, but very much enjoyed this question. Inheriting a particular position is un-American, after all. But while the inheritance of titles or positions remains forbidden, the persistence of class status across generations in the United States is very strong. Too strong, in fact, for a society that prides itself on social mobility.
(emphasis mine). I mean, c'mon, this isn't very insightful.
If those „values and habits“ are supposed to be „be white and have a trust fund“, I may have misunderstood you.
The sheer quantity of information and habits children must process to climb up the rungs of success in the developed world is quite large. I don't mean just academics, but also soft-skills areas like networking, leadership, interpersonal communications, etc. More interestingly, the sheer amount of information to evaluate and reject is also quite large.
Read any Ask Reddit thread about what is common knowledge in a particular industry but isn't well-known publicly. Much of this information is passed along in many well-to-do families, but not as much in less-well-off families. Yet all of this information is either passed off as inaccurate common knowledge (you save more money per fluid ounce buying the biggest cup of Coke you can; truth: you shouldn't drink any sugar water of any kind, in any common American quantities, full stop), or is simply not known at all (insurance company tells you to use X body shop for repairs after an accident they're paying for, but fewer working class than middle-class people know you can tell them you're choosing Y body shop instead).
It takes a massive amount of parental involvement time to convey this mountain of information and inculcate these habits of thought into children, starting at infancy with baby sign language to impress an early predilection to communicate thoughts, all the way through adulthood with assessing people's character and financial affairs. Since these are young developing minds, repetition is the mother skill you will turn to time and again, so many lessons are taught many times over, increasing the time commitment.
If you're already time-trapped trying to hold down enough work to pay for exorbitant American urban/suburban real estate, healthcare, and education (among other expense categories), then you won't have the time to convey all this information that is definitely not taught in schools in America. Of course the issue is way more complex and nuanced than just what I've touched upon, but I see tons of parents in America spending way too little time with their children.
But thanks for smearing all 20% of us with your slur. It sounds like you don't know much about the bottom of the top 20%.
> learn in school
Easier in a wealthy school. May be impossible or extraordinarily difficult in a low income school.
> go to college
Easier if you come from a wealthy background. You may have legacy, or financial means to apply to more schools, or ability to take more test prep, etc.
> Learn to do something that pays
Are wealthy kids more likely to have mentors or connections in their network due to their parents? Are their parents more likely to understand which careers pay well?
> don't waste your money
Invest wisely? Someone taught me how to manage money beyond my immediate expenses, and compound interest works, and how different investments work, and what a mortgage rate was, and how I could evaluate a bank. Those are all skills that allow you to turn your money into more money more efficiently, and they are all skills typically associate with upper class folks.
> But thanks for smearing all 20% of us with your slur. It sounds like you don't know much about the bottom of the top 20%.
I am currently a member of the top 20%. I have also lived in the bottom 20% for years. At no point did I feel the parent comment was smearing anyone.
Would I wish that upon anyone? Absolutely not. Which is why I believe in fixing things by removing the huge wealth disparity and actually providing a proper safety net for people. The culture I inherited required me to make many sacrifices which I'm sure other, far smarter people have made. The difference is that I was lucky enough to not be killed by them.
>> the top 20% possess superior values, habits, and cultural systems for social success and upward mobility
Wut? The top 20% possess a disproportionate amount of the real wealth. This isn't a value or habit, it's just the money itself. You don't need upward mobility when you're already at the top. You know what they say, the easiest way to make a million dollars is to start with 2 million dollars...
>>make choices to gear themselves and their children towards development of important skills to thrive in the modern workplace.
Or, they then use that disproportionate level of wealth to skew the system towards benefiting them. If you're a CEO, you can create a culture that favors people like you (because hey, you're a CEO, and "logically" you should want people that resemble you since you're so successful) which creates a bias towards certain people and therefor against others. If you have huge sums of money you can afford to hire the best accountants that allow you to avoid paying as much in taxes (because the tax code was lobbied for by previous generations of extremely wealthy people). Oh, and you already have a built in network of connections to allow open (or just fully remove) doors blocking your way towards success.
Getting rich is extremely hard. Staying rich, much less so. The point of this article however seemed to be that if you agree that there is a problem with the distribution of wealth (spoiler: pretty much every poll in recent years has shown this is overwhelmingly true on both sides of the political spectrum) then figuring out people who may be responsible for this would be a good way to solve it.
Also, "herd morality" is just "morality" or "culture". There's no such thing as objective morality that I've encountered. At best you'll just find common cultural agreements.
This one  says "Most of these studies have found inherited wealth to be in the range of 15% to 31% of total household wealth (Menchick and David, 1983; Modigliani, 1988; Hurd and Mundaca, 1989; Gale and Scholz, 1994; Juster and Laitner, 1996)".