[1] https://en.wikipedia.org/wiki/Post%E2%80%93World_War_II_econ...
[2] https://upload.wikimedia.org/wikipedia/commons/7/73/US_produ...
I'm by no means wealthy, and at my age of 29 I've donated more money than many of my coworkers. And I'm all for a portion of tax dollars supporting the underprivileged. But when I read about Larry Ellison's yacht-racing hobby, I think to myself, "good for him." He can spend his money on whatever he wants, right? I don't see that he owes anyone anything just because he has more.
We do begrudge people avoiding taxes, buying legislation and legislators, funding think tanks that support only the interests of the wealthy, and blowing up the financial system and/or economy.
Politics is a zero sum game - at the end of the day everyone is pulling the rug in their own direction. The poor do it by voting in populist politicians, the rich by paying off those politicians through lobbying, or gaming the tax system.
What everyone needs is an economic model that maximizes the wellbeing of society as a whole, so the pie at least gets bigger as it gets redistributed. That, and a political model that prevents any single group from pulling the rug completely out and causing war.
This gets to the core of the question! How did a rich startup person get wealthy anyway? They built something that people wanted. People said: "hey, that thing you built, I value it at $20 and you're giving it away at $10, so I'm happy to buy it!" Anyone who made money from business has already created wealth and contributed to society, via the market.
To the people who would disagree with me-- Look at your surroundings. Do you feel oppressed by the manufacturers of your laptop? Do you feel like you have no other option but to buy a $5 latte at the coffeeshop you're at? Are you being held at gunpoint by your new-used car? Do you wish the refrigeration oligarchs never existed? No! You are getting _insane_ value out of these relatively cheap items. Your $5 latte couldn't even exist a century ago. So it's okay that all the people who worked 40 hours a week to bring you your gadgets get a cut.
Let's not get carried away. This is how the market is supposed to work, and often it does work this way, but there are plenty of businesses built on exploiting information asymmetry, bad regulation (often lobbied for by the businesses themselves), etc. Yes, markets are generally good, but there looks to be plenty of room for improvement in our implementation.
Most startups today aren't really creating brand-new "value" (which is a horribly nebulous term, hence I'll leave it in quotes), but rather taking part in a shifting of existing "value" from place to place, and the VCs who fund them glean some profit out of the process.
And some of the most controversial startups are doing this not by offering genuinely better products or services; they're doing it by offering a similar-quality product or service, but bringing the price down by simply ignoring laws and regulations their competitors are required to abide by.
You're right, in a lot of cases (Taxis vs Uber comes to mind) the government has created these sub-optimal local maximums with its unnecessary regulations and industry protectionism. Technology is the big energy input needed to break free and move to a new maximum.
When I use Uber, I get much more value than I ever did with a taxi. Not only does it cost me less, but it's faster, the experience of ordering is painless, the cars are nicer, the drivers are honest, and there's accountability for bad drivers. Uber is most definitely creating value.
More generally, new ways of doing things displace old ways of doing things. If you're a company doing things the old way, adapt or die. That's progress. In capitalism, the destruction of old business models is as essential as the construction of new ones. They are two sides of the same coin.
Addressing your argument again, lots of the businesses being displaced were basically profiting from regulations that kept out competition. He who lives by the sword dies by the sword.
As for your general point that the valley isn't really creating much value, remember that all of those wild valuations are just risky speculation by a small few, given that there's no open market for buying and selling shares in these companies. Risky speculation is a valid investment strategy for a portion of your wealth. Beyond all of the hard-to-believe valuations, there's also thousands of small technology companies making small profits and providing real value, but not getting any media attention.
It also is certainly possible to recognize that government overregulation has enabled rent-seekers to do great harm in staunching competition and establishing a low level of quality for consumers, but also that government has the power to protect the customer and the worker from exploitative businesses.
A thing can do both good and bad. We must all recognize that.
Yeap, Uber is awful. Oh, wait, this is actually a report from 2007 describing the Taxi industry: http://www.nelp.org/content/uploads/2015/03/Unregulated_Work...
There's a lot of propaganda about how Uber is reducing the welfare of drivers, but it all seems based on some ideal of the taxi industry that isn't actually true.
> They don't give a flying fuck about the law, and they're too big for any single city to pressure them into anything.
I think that's a little overblown. Uber has been forced to leave many cities (Paris, Frankfurt, Hamburg, Madrid, etc) and parts of cities (e.g. Calgary Airport).
Uber may be willing to bend the law, but the cities can literally call their cars and ticket them (or even impound them), it's not like it's an underground operation, and not even Uber can sustain that, as we've seen.
But it's not bending it, it's disregarding and breaking it. Bending was what Uber-like services have been doing in Europe for past 10+ years, and in time they managed to integrate themselves with the infrastructure nicely.
In my city the IRS tries to randomly call and then fine the living crap out of Uber drivers, but it doesn't seem to be effective. Frankly, if Uber teaches people anything it's how slow and inefficient local governments have become. Which is both good and bad to know. On the other hand, local startup community figured out that they're obliged to help Uber win, so they promote them and jobhunt for them and if our startup community is good at anything, it's good at promoting and finding people.
Well, you have fun with that.
>but bringing the price down by simply ignoring laws and regulations their competitors are required to abide by.
This gets to the core of the question!
How did a rich startup person get
wealthy anyway? They built something
that people wanted.
What in your opinion would be the contribution of a high frequency trader to a society or an individual ? Getting markets to be arbitrage less at sub-mili-second time scales was a pressing problem for no one.
For some of the other industries, if you price the externalities, it is far from clear if they are providing a benefit.
"It was estimated that as of 2010, high-frequency trading accounted for an estimated 50 to 70 percent of trading."
50-70% of auto transactions are between dealers who don't even drive their cars and only own them for weeks!
50-70% of bread transactions are between distributors and supermarkets who don't even eat bread and want to sell it in days or even hours!
is a very charitable way of putting it.
Economically, if a person is willing to spend $5 on coffee then coffee is worth $5 to them. Trying to attach solid philosophical reasoning behind that may be a fun thought experiment but it's hardly the solved one your responses seem to imply that you think it is.
>any system that defines value in a way that doesn't allow for these people
wat
Hedonism defines pleasure as the primary and most intrinsic good so any system allowing it is just hedonism. WTF? How would any system acommodate competing theories? Fun thought experiment, sure.
>Economically
Usually it would go the other way, if coffee is worth something to me, I will be willing to pay that. You mess up simple logic, get your head straight.
Your subjective evidence is not convincing, even less as I was implying coffee had an addictive and hence behavioral conditioning effect, part of which comes from advertisement like yours, so stop it, will ya.
I take mine black. I admit it is an acquired taste, but oh what a glorious taste it is! Maybe you just had some bad coffee.
You know, for many, that's a completely irrelevant factor in their appreciation for coffee.
And by the way, I'm pretty sure it does quench thirst, seeing as it's 99% water.
If 99% water solution just has to satisfy thirst, then a 1% zyankali solution doesn't kill, is it? It's a bad comparison, because I really don't know what else coffee brew consists of exactly, but you probably don't either, so ... that pretty much wraps it up.
If you don't think someone selling you coffee that you want is providing value, then perhaps you should try make your own. Once you have to "spend" time to physically make/get yourself the good/product that you wanted, you'll quickly learn what "value" a seller provides. Technically, not the seller as much as the actual producer, but the seller provides value as well. And in most examples represents the entire supply chain.
This is the point I was addressing.
>"Let me be pessimistic: coffee doesn't provide a positive value, because it's a drug that get's people addicted however little and subliminal."
Oh, so now it's "positive value". This is something you are imposing on the person based on your own personal opinion about value and coffee.
>"Maybe that is a value to society in general, but it isn't to the individual."
No, it's a value to the individual that chose it. You, being external to the hypothetical individual we are discussing, don't get to make decisions for said individual.
>"That's just sad how much you are missing my point, all the while defending the coffee that your text kind of reads like you had too much before reading."
My comment had nothing to do with advocating coffee.
My comment did. You can't just reply to the whole comment without considering that part.
What about people that produce heroine? Run casinos? Magic weight loss pills? Free-to-play games?
As for casinos and F2P games, what about them? Certainly some people get hooked, but 95% of casino players don't[1], yet they still enjoy it. What's wrong with that?
[1] http://www.pbs.org/wgbh/pages/frontline/shows/gamble/etc/fac...
If you want to get rich, create value for people. It really is a wonderful system.
Friedman and Hayek wrote their work before we had a thorough understanding of how complex systems are optimized. Thanks to more powerful computers, we now know that search guided by purely local improvements gets stuck in local minimum (in Economics, those are the Pareto points). Those local minima can be incredibly far away from a true global optimum, but can't be improved by "consensual and mutually beneficial transactions".
Sometimes you do need to take actions that temporarily inconvenience one actor to achieve a point that will benefit all them in the long term; see the prisoner's dilemma for a simple example. The GP post mentioned 40-hours work weeks; those weren't brought by laissez-faire economics nor individual negotiation either, 60 or 80 hours a week were the norm before socialism.
Capitalism tends to create immense concentrations of power without checks and balances on the hands of tycoons, of the kind that should make any true libertarian be very afraid of those holding it. The system that really works best is one where wealth is created for a few years through capitalism, and then that wealth is redistributed by government's welfare politics to the wider population. This is what has been going on in Western countries in the last century, bringing us stability and avoiding the frequent revolutions that plagued Europe and the Americas in all its previous history.
It would require some constitutional amendment for both sides to trust each other enough.
I'm very tempted to throw in with the former, except that I worry about the follow-on effects of basic income. Would a basic income just be a windfall for landlords, as they all increased rents by some large percentage of the average basic income? Or would the formerly-urban formerly-poor head for the hills, now that they could budget over the long term without relying on urban amenities? This would be a windfall for a different set of landlords and real estate investors, but it would drastically change the nature of 80% of the communities in the nation. That's not even to consider the wealth effects on markets more elastic than housing. It would be a grand experiment, but somebody would start crying.
Tech hiring collusion, 2008 financial crisis, environment degradation and global warming, slavery-like conditions at suppliers of multinational corporations, medical bankruptcies in US and lack of guaranteed holidays, ghettos, plundering of natural resources, monopolies everywhere (as prescribed by Thiel btw).
Such a wonderful, mutually beneficial, ethical system with so many positive externalities! /s
You may claim that capitalism is the "best" system at this point, but to state that's wonderful is indeed indistinguishable from parody.
In my country, it's part of the basic law (constitution). Specifically, 14/2
Well, in a non altruistic and Ayn Rand inspired world, rich folks don't owe us anything but MORE IMPORTANTLY we don't owe them anything either.
I mean no bailouts, no tax breaks, no "Job Creators" incentives in public policy, no privileges or special treatment whatsoever. We're all equals and we all should be treated as such!
It was a gigantic public policy catastrophe all the 2008 bailouts extended from the US taxpayer to Wall St. that they used to preserve their wealth and then denigrate the general public for not being as successful as them when it was the general public that saved their asses in the first place.
Because we're in this together. Collaboration allowed us to thrive as a species. Greed and the "fuck you, got mine" attitude is what is going to ruin everything, starting with the ocean level rise in the near future.
In addition many patents are rentier activity. They are taking collected human knowledge and ring-fencing an area to derive economic rent.
I'm not even sure I'm interested in Graham's writings on lisp. Economics, forget it.
Yet for some reason countries with weak IP protection do not present the world with abundance of new technologies or pharma.