Comment by fivedogit | Hacker News Reader

Comment by fivedogit | Hacker News Reader

Parent Full thread

Usually pg's essays are spot-on. But this one, I feel, is based on a false premise: People aren't upset about startup founders getting rich -- in fact, society loudly applauds it. What people are upset about is legacy capital growing and growing and growing while the poor and middle class stagnate or even contract.

On this subject, I always think about farms.

Back in the day, it took ~100 people to work a large farm. Now it takes one (or a few) guy(s) with some machinery. All those farm workers aren't now out on the beach somewhere -- they've migrated to the city to drive cabs, etc. The wealth generated by this astounding leap of productivity went entirely to the shareholders of the John Deere corporation. (edit: Yes, cheaper food benefits everyone. I meant the share of the revenue generated by the farm going to its workers, vendors and shareholders. And the farm owners obviously benefited, too. Farmhands? Not so much.)

And that was great! Good for those speculators and innovators!

What I think most have a problem with is 7 generations later, the John Deere family (<-- edit:metaphor) still controls all that capital and pays taxes at 15% on capital gains while losing count of how many homes they own.

Yes. This is a very strange article. When you think about what goes into the startup ethos, of independent hacking and really a passion for work, there's nothing antithetical about that and being turned off by massive income inequality in America. I, for one, would prefer to be an entrepreneur in a society that strove to make it harder for dynastic companies like Wal-Mart to accrue power.

The "polynomial curve" historical argument is naive and I would have expected better. Movement toward free markets has been precipitated on political intervention, c.f. the shock doctrine, and conservative moves to increase income inequality (repealing financial regulation, Citizens United) do not occur as a historical inevitability.

I am also weirded out by the "hunter" metaphor. The people fighting income inequality are not predators out to get pg's billions, they are working class people who can't afford healthcare or to send their kids to college.

"I am also weirded out by the "hunter" metaphor. The people fighting income inequality are not predators out to get pg's billions, they are working class people who can't afford healthcare or to send their kids to college."

+1 on that alone. I was concerned that this was completely misunderstanding those that understand the income inequality issue.

> I am also weirded out by the "hunter" metaphor. The people fighting income inequality are not predators out to get pg's billions, they are working class people who can't afford healthcare or to send their kids to college.

The rabbit deems the wolf no less a predator because the wolf seeks to keep itself and its cubs alive.

As Graham notes, many of those decrying inequality really do want to improve the lot of the poor, not hurt the wealthy. What they don't realise is that they are very likely to kill the goose which lays golden eggs: the wealthy are, in very many instances, wealthy precisely because they have created circumstances which have benefited the great mass of mankind; if they are punished for improving the lot of others … they will stop doing so.

And then inequality will be less, but everyone will be worse off, rich and poor alike.

>The wealth generated by this astounding leap of productivity went entirely to the shareholders of the John Deere corporation.

Nonsense. The fact that people can buy food for an insignificant portion of their annual income and were freed from grueling manual labor to pursue more creative endeavors is a benefit to everyone in society.

> The wealth generated by this astounding leap of productivity went entirely to the shareholders of the John Deere corporation.

It's worst than that. Only a very small portion goes to the machine maker.

Most of money that used to goto the cost of the labor displaced by the machine (which came from the harvesting of crops) goes to whomever reaps the rewards of the farm itself. It might be the farmer, or if the farmer is a simple laborer running the machine on behalf of another, it's likely a multi-national company with the capital to purchase the initial machinery and amortize those costs over many years.

"The wealth generated by this astounding leap of productivity went entirely to the shareholders of the John Deere corporation."

No, it did not.

Mechanization makes food much cheaper, which benefits everybody.

Well food prices are significantly lower in the EU than the US. A more dramatic case, Spain, the consumer bread prices can be 1/10 US prices. Vegetables run a fraction of US price, eggs about 1/3. Even corn is less expensive when it reaches the consumer. Yet the median wage is on the order of .75 US and minimum wage including farm worker wages, are higher.

Yet US agriculture is more mechanized and agro-business more consolidated and the country significantly more efficient. So empirically the most significant factor is now something else.

"So empirically the most significant factor is now something else."

That "something else" would be the 40%(!) of the EU budget that is spent on agricultural subsidies.

The EU spends approximately the same per capita on direct farm subsidies as the US.

Your choice of words however would mislead people into believing that 40% of European national budgets are devoted to farm subsidies and that EU subsidies exceed US subsidies by a similar proportion. This is grossly untrue.

The difference is the US consumer realizes far less benefit. e.g. corn receives far more subsidies in the US than in the EU yet somehow is still more expensive to the US consumer.

What the US does have is an aversion to enforcing anti trust laws, tariffs designed to disadvantage consumers (eg on rice), a taboo on regulations and effectively no consumer advocates in government.

Yes exactly, instead of being wrapped up in the John Deer corp. the money is being used to lower prices for society and do a better job of making food accessible to the people.

I'm sorry, do you actually believe that the John Deere corporation keeps all its money in a big money bin, like Scrooge McDuck or something?

That is not actually the case.

And there is plenty of "food accessible to the people". Too much of it is far more common than too little nowadays.

If that were all that happened it would be great. But automation leaves a lot of people off the payrolls without jobs and if those jobs are paying less then less expensive food is not less expensive. And incomes have dropped more than inflation in most cases for the poor which means it is not cheaper for those less able to afford it. Complicated problems are not whisked away with making things less expensive = benefit everyone.

"But automation leaves a lot of people off the payrolls without jobs"

No, it does not.

Before automated agriculture something like 90% of the population was directly engaged in agricultural labor.

We don't have 90% unemployment or anything like it, and we also have social supports for those who are unemployed (also largely nonexistent in those days).

" And incomes have dropped more than inflation in most cases for the poor which means it is not cheaper for those less able to afford it."

This is pure nonsense. Sorry, it just is.

http://www.theatlantic.com/business/archive/2012/04/how-amer...

In 1900, 43% of income was spent on food.

In 2003, only 13% of income was spent on food.

> "we also have social supports for those who are unemployed "

Something that the very wealthy are trying to roll back.

I think the premise that automation will just shift work to other industries will be severely tested in the age of the self driving car and other forms of advanced automation.

"I think the premise that automation will just shift work to other industries will be severely tested in the age of the self driving car"

Look: we've gone from 90% agricultural workers to about 1% agricultural workers. Hand-weavers and spinners: gone (other than specialized or artsy-craftsy stuff). Neighborhood bakeries: gone (likewise). The list could go on forever.

People have been predicting massive unemployment since the days of the Luddites. It's never happened. What's special about driving that makes it an exception to the historical trend?

Imagine a machine that has all of your intelligence, dexterity and creativity. What work will you do that said machine will not do better?

Perhaps we can all become artists - but then again, machines will be able to compose songs, write stories and create abstract art.

This is going to be very different than previous waves of automation that largely augmented human muscle.

Bringing it back to the original thread, I think the concern is that rising income inequality will accelerate as the wealthy will increasingly own the means of automation.

Some mechanism for wealth redistribution will be needed if we are going to avoid a meltdown in society. That doesn't mean that all should be equal, but we ought to think about how we can provide everyone with enough to live with dignity.

Or perhaps we'll all just sit around watching porn and playing video games. Who cares? Why not let people do what they want?

"I think the concern is that rising income inequality will accelerate as the wealthy will increasingly own the means of automation."

Machines can make hamburgers, but they can't buy them. "Income inequality" is not the problem you think it is, or pretend to think it is.

Since when did "income inequality" become the worst possible thing in the entire world? Given the track record of previous regimes that sought to produce "income equality" (> 100 million killed in the 20th century), I think calls for "income equality" need to be looked at with a very harsh and critical eye.

The problem with your argument is that you make it sound like it's inevitable that the net effect of automation on the welfare of human societies will be positive in the past, present and the future and while the other party questions this assertion and IMO he's legitimate reasons to be skeptic of this claim that automation was, is and will always be a good thing.

Also, can you tell me what would happen to the work force when most of the jobs in the services sectors will be automated?

Because as I see it, jobs in the agriculture and manufacturing - to greater extent - sectors are almost extinct and their counterparts in the services sector are on the way, the so-called quaternary sector can't absorb all the surplus and masses of labor that will sit idle because the the nature of that sector of the economy is that it's more of capital intensive and labor averse and can't create enough job opportunities to an ever growing human population and work force.

What would be the solution to this problem then?

There is actually a lot more turnover of wealth than in the past and most of the richest people in the world are self-made (albeit most were not exactly from humble beginnings).

> Over the past 30 years, the origin of the wealth of the richest people in the United States has shifted away from old, inherited money. Our new metric, the self-made scores developed for the Forbes 400, shows that increasingly we find self-made billionaires among the ranks of the richest people in the country. This has accompanied the incredible increase in wealth of the members of the Forbes 400, which has jumped 1,832% times since 1984, when the total net worth of our list was $125 billion, compared with $2.29 trillion today [0]

[0] http://www.forbes.com/sites/afontevecchia/2014/10/03/there-a...

My take away was the discussion about poverty, specifically "I'm sure most of those who want to decrease economic inequality want to do it mainly to help the poor, not to hurt the rich." So I don't think he based it on a false premise.

also

"When the city is turning off your water because you can't pay the bill, it doesn't make any difference what Larry Page's net worth is compared to yours."

Reply on news.ycombinator.com