Paul Graham accidentally explained everything wrong with SV world view
qz.com
qz.com
Meanwhile, if submitters would just bother to check that an obviously-suitable article hasn't already been submitted (the Search page with sort by date makes it easy to check by keyword), the problem would be stopped before it starts.
PG is arguing against a strawman using a very cold and clinical justification for his career—the wider social issues are not addressed at all.
Meanwhile this article barely stops to acknowledge that SV is actually building things as opposed to ripping people off with arbitrage and financial instruments. Beyond that it is just a frothy rant setting up another strawman about rich people telling poor people what to do (which is not really what PG was doing). Never does the author stop to acknowledge that they are probably fine with small mom-and-pop businesses, just not venture-funded unicorns, and that if we dislike the machinations of SV there must be some gray line papering over a pretty wide swath of the continuum between the two.
Personally I think PG would have been better off to just keep his mouth shut, because when you're rich it just looks like post-hoc rationalization no matter how you slice it. The social issues are real, and we are going to have to contend with what the effective replacement of labor with capital means for our society, but this is a conversation that the SV elite don't have the political capital to address.
The intensity of the response to PG's articles stems precisely from the rarity of someone in his position speaking up to defend the capitalists' monopoly. It's rare because it almost always puts an obvious target on that person. He might have well have said, "Let them eat cake."
Regardless of the relative merit of his essays, they've started a wider conversation that's raising the consciousness about the single-most important issue of our society. An issue that only 1 of a half-dozen presidential candidates is willing to talk about...
I thought that was global warming?
Would you rate that as building value or ripping people off?
1. A startup that fails doesn't mean it has built crap. Sometimes things fail for unrelated reasons, whether ahead of their time or because the economy took a downturn, etc etc. SOMETIMES because they are "ripping us off".
2. 95% of scientific experiments "fail". Are scientists ripping us off?
The whole idea of the market place IS failure. In fact, if our larger market was healthier, we'd see MORE failure (and in more established corporations, such as the "too big to fails"). The fact that 95% of startups fail is one of the healthiest indicators of SV. Experimentation necessarily means many failures in search of the one success. Maybe some day we'll have a magical simulation machine where we can run product ideas ahead of time and know "the right place" to put our money, but until then, the best system is one that invests in diverse companies with oftentimes mutually exclusive ideas.
Yeah, that's a generous reading. I'm in the startup world and let me tell you, there are a LOT of clowns running around right now with completely shit ideas, just trying to grab some of the sweet sweet VC money before the music stops. It's appalling.
The idea of the market place isn't to encourage failure, it is (arguably) to efficiently allocate resources. One can imagine that, at steady state some point in the future, we've gotten enough businesses providing enough reliable value that there is no great rate of failure.
More bluntly: the average laundromat lasts longer than the average venture-backed startup. That should at least be worth some minor reflection.
Its not sloppy thinking at all, it is very clear thinking: it shows that that fact ALONE is not sufficient in making a value judgement. As such, the argument must be "95% of startups fail, this is bad because in the specific case of markets ____".
The idea of the market place isn't to encourage failure, it is (arguably) to efficiently allocate resources. One can imagine that, at steady state some point in the future, we've gotten enough businesses providing enough reliable value that there is no great rate of failure.
This is an "end of history" mentality ( https://en.wikipedia.org/wiki/End_of_history ). If you don't have sufficient failure, your system is either corrupt (see financial sector), or almost by definition people are not trying interesting enough ideas and taking enough risks. The personal computer was a HUGE bet that could have failed, in fact, many personal computer companies DID fail along the way (sometimes because they were only a few years ahead of their time). The only way we'll reach a 'steady state' is if you believe there will be a a 'steady state' of technology to underline it: as long as there are more revolutionary technologies to be invented and discovered, you will have incredible failures associated with them.
More bluntly: the average laundromat lasts longer than the average venture-backed startup. That should at least be worth some minor reflection.
It does: I hope we don't reach the point in our society where we have a bunch of laundromats instead of a bunch of super interesting crazy ideas being tried out. Areas that don't have a lot of failure usually don't have a lot of innovation. It is really unfortunate that we fear failure so much, corporate death is an important part of an economic system. Car companies should die when new modes of transportation are discovered, rental stores when internet video is delivered, and as the pace of technology picks up, we should expect failures to happen quicker. Block Buster didn't necessarily last as long as it did because of its "fundamentals", but rather a historical accident that at the time in our technological and economic development the window of time between vhs/dvd and internet video happened to be "long".
This is incorrect. There is no law that says "Hey, if you're not failing a whole bunch you clearly aren't learning new things and trying out stuff!". A great deal of progress can and has been made by people making conservative market decisions. A great deal of success has happened without spastic startupcanistan spending of cash with no rhyme or reason.
Steady-state in an industry doesn't mean stagnation, it doesn't mean no progress, and so forth. It means the same number of firms leaving as entering--usually because crazy gold-rush investment and whatnot isn't taking place. It means that wages settle towards a more reasonable and sustainable distribution, that customers are getting value reliably, and that resources aren't getting thrown away and careers screwed up by rapid business spinups and shutdowns.
I don't mind that people claim that the startup scene, Valley, etc. are somehow "building value"...what I do mind is the complete and utter denial of valid criticisms of that claim. A steady-state economy is, by definition, one that has built non-transient value: it remains to be seen whether the last five years of companies have accomplished that.
The thing about your last point is that, honestly, the fundable things aren't "super interesting crazy ideas". They're me-too followers on where a VC or angel is trying to bet on their favorite second-mouse to get the cheese.
Don't conflate technological progress with what the current startup ecosystem is doing, because that idea is the flimsiest propaganda imaginable. Innovation happens outside startuplandia in, I'd suggest, greater quantity (if not rate!) than inside.
~
There is a lot of blind regurgitation of "startup fail fast only way to progress must progress fail faaaaster" going on right now, least of all because it kinda suits the investing class--and a lot of bright and well written people, you included, seem to be parroting it without much critical thought.
Um, source?
Also, source for 95% of startups fail?
The big winners have huge economic impact and create things that change the world.
0% of "non-startups" create money. And if they do make money, they do it by ripping people off.
So yes only startups creates wealth.
This is a completely luddite position.
So if she had it her way we would still have people walking around planting seeds instead of using modern farming equipment because the people planting seeds would have lost their jobs, even though history has shown us time and time again that people retrain and do different work. Not to mention that the new jobs that replaced the old ones are nearly always safer and more productive for society. -------- edited grammar
The more that we can do this, the more surplus wealth we create. This is clearly working by reference to history: this is the best time ever to be poor, compared to all points in history before it.
This isn't quite so obviously true, but it's likely also the case that an unemployed person today has significantly better life outcomes than a menial worker 100 years ago (which means mines or factories). That's what improved automation buys us.
The problem is that roughly half the population is fighting against this kind of social welfare system and they would only be encouraged by PG's blog post.
Or, importantly, to do menial work on things that were previously considered not as important or productive as what they were doing menial work on.
People always assume retraining means you have to learn a technological job or something else absurdly out of reach. A lot of the time it just means doing the same or similar thing you were doing, but in another context that has now become relatively valuable enough to devote labor to now that this other thing don't require it.
And, as you hint, being able to create a lot of value without a lot of ongoing cost is a pretty key step towards basic income (of which the "leisure economy" is really just a more extreme example). Having that would indeed offset the issues of those who can't or won't transfer skills.
I'd like animals to be raised by people, not machines, I think.
I've never worked on a farm, but I have to believe that 99% of the work is something that most farm workers would probably be more than happy to see automated, such that they could manage the machines, rather than the actual mechanical effort. Move up the food chain, if you will.
Also, from the videos I've seen from PETA, it's pretty clear that humans can act pretty horribly around farm animals, so it's not clear to me that the animals are coming off any better either.
Long term, though - I say automate the creation of food such that animals are not involved. All of the things we love, meat, eggs, etc.. should be technologically generated so that no animal is harmed in it's creation.
Get over the uncanny valley, and even things that would appear to be sacrosanct, such as a waiter/waitress at a restaurant, admitting nurse/doctor in an ER Ward, or teacher in a kindergarden - all of these seem to be things that automation would be a net-win.
If this is an age of rapidly improving efficiency then most things should be getting cheaper. The amount of free time and disposable income we have should be increasing. We should be getting wealthier. Instead the opposite is happening for almost everyone save a tiny class of professionals and capitalists. One could be forgiven for thinking we're living in an age of inefficiency and technological decline, since that's what the price signals are indicating.
I'm not sure this is SV or PG's "fault," but PG's rant is smug and non-productive and amounts to a whole lot of "why do they not eat cake?" It makes him sound clueless and out of touch.
What throws things off, is that new, more desirable, and more expensive items have appeared, that make things look more expensive. That's one of the concerns regarding inequality; is it okay for some members of society to have nicer things than the lower percentile income earners, as long as that group of lower percentile incomer earners have nicer things than they did 50 years ago? Or should we desire that everyone have (roughly) the same quality of thing, even if it now means that the lower percentile would be worse off objectively if inequality wasn't reduced?
PG just assumes that the goal is to reduce poverty (as in, amount of food, health care, education) for the lower percentile - but I expect there is a not insignificant group of people who are more interested in reducing inequality, even if that means an (objective) increase in poverty.
There is, of course, a third path that he doesn't even mention - and that's reducing inequality by bringing up the lower percentile. As an American, I sometimes wonder if it doesn't even occur to him (he certainly didn't discuss it in any detail in his essay) that you can develop universal health care, education, etc... that provides the same level of service regardless of wealth - which means if the top percentile want (for example) better health care, they end up increasing the level of service for everyone, including themselves.
The essay on inequality seemed to have blinders on with regards to that possibility, though I think he gave it passing mention in a sentence regarding bring the bottom up, but didn't discuss it in any great detail.
Some is very cheap http://www.trulia.com/for_sale/Detroit,MI/10000p_price/price...
And some is very expensive http://homesoftherich.net/2013/05/30000-square-foot-tudor-ma...
If price is the factor, deals can be found.
I don't want cows to be domesticated en masse at all. I want there to be a factory full of sterile stainless steel tubes in the shape of a t-bone where steak cells endlessly reproduce in a bath of ideal nutrient soup...
I mean, I wonder if those who hold such views actually realize human beings aren't actually robots or aren't actually the "extras" in the Sci-Fi stories ...
I grew up in a town where the dairy farms employed lots of people, as did the businesses that supported them. Most of those farms are gone or scaled back as dairy became an industrialized operation.
The guys who would be working as farm hands year round are now left with seasonal construction jobs and long winters of unemployment in nasty trailer parks. They lose their professional options and their dignity.
I think that we're wired to have a purpose, and not everyone identifies creative pursuits as fulfilling.
Humans would not have to work, but its a huge mistake to assume the elite will willingly share that prosperity.
Getting upset at the loss of jobs is the luddite position. The more socially liberal position is getting upset that the savings from the loss of said jobs are rolled up into the pockets of corporate executives and working to ensure that wealth is equitably distributed. The socially conservative position is that the additional wealth freed up by the automation will create new job opportunities elsewhere that the recently unemployed individual can seek out and pursue. I lean more to the socially liberal side (and hopefully this bias did not creep out in my description of the conservative point of view), but either one is preferable to putting the kibosh on progress because it might step on someone's toes.
If technology killed jobs we'd have like 100 million people working instead of 6 billion workers.
The question is, can our society survive the awkward transition period to post-scarcity, or will we crumble in civil wars and uprisings before we reach the goal of 100% unemployment?
“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”
I found PG's opinion interesting, regardless of whether I agree with him.
Author seems to have unleashed a hateful screed, which optimally includes a world where opinions like PG's are silenced.
I guess the only thing she inspired is my distaste for her creative output.
Regardless of whether you agree with PG's essay or not, he at least stated the reasons why he believes in each of his points, and sometimes even gave supporting references. This post doesn't bother to give reasons, which means we are unable to judge it by any measure other than comparing the claims it makes to our own preconceptions.
(Since it makes a few obviously-false claims, like "PG isn't creating wealth, he's just spending it", and "we should keep people doing busywork instead of automating things", I'm writing the whole thing off. If the author can't be bothered to argue their case, I don't see a reason why I should either.)
It is ironic how often this gets quoted, patronizingly, at people whose faces are literally marred by dust and sweat, by people who work in air-conditioned offices.
Bigotry, arrogance and prejudice will not.
The startup world is 100% class-based, worse than anything, and yet PG actually seems to believe that it's a meritocracy. He thinks Stanford PhDs like Larry Page (whose father was a professor) had about the same chance as anyone of getting funding.
He completely ignores the fact that startup funding and elite credentials are extremely limited pies. Harvard only admits a certain number of people. YC only funds a certain number of people. Sequoia only funds as many people as they can sit on the boards of. So who do these people always choose? Other members of their class.
See: https://www.ycombinator.com/people/
He seems to have no awareness of what it's like to live outside the elite bubble he was born into. And how could he...
More: You seem to think that VCs decide who to fund based on class. What VCs actually look for is companies that they think will make money.
2. VCs make money and raise funds by getting higher valuations. VCs in later rounds will value companies with elite founders at higher numbers, and are more likely to fund them in the first place. VCs also can't be as easily blamed when elite founders fail, so they're a safer bet, etc.
Well, I know they are making efforts toward female founders, but I suppose you can argue that they could be of "the right class" as well. I presume that YC looks at different socioeconomic backgrounds, not just gender, but I can't prove it at the moment.
> VCs in later rounds will value companies with elite founders at higher numbers
Citation needed.
> He completely ignores the fact that startup funding and elite credentials are extremely limited pies.
Well these pies are private. Its up to them who do they give it to. I dont think they claim to distrubute it "fairly" unlike promises made by many democratic political parties which get naive people all hoped-up and, worse, entitled.
This ensures that power networks remain tight, and closed to the chance of social mobility most of the time.
But please, if you're going to respond or comment on any of these articles, keep things civil and pointed at their arguments. Instead of this is a stupid opinion, say why you think their opinion is incorrect.
Also, a (perhaps) less formal article along the same lines was flagged yesterday and it sunk from the front page within minutes. It was rather harsh in its wording but the act of flagging it let no one from the community talk about the opinions expressed or why they were wrong.
The author of this essay does the opposite. He ridicules the advancements that start ups have created by focusing on things like Candy Crush. What about Dropbox and Uber. Those have had a profound impact for the positive.
What we should be saying is that income inequality is occurring because there is a skew in the system. The growth we are creating isn't being equally distributed back to the growth generators. We make Candy Crush worth billions, but that billions doesn't do anything for the majority. Nurses and janitors are vital jobs, no arguing that, but we need growth generators as well. It sad that no ones sees this to be the issue and instead we all pick our extreme corner and then drive points to bolster ourselves.
No one is arguing against technology or progress. But there is a legitimate issue here; our economic system currently punishes society for progress when it should reward it.
For instance, If automated driving becomes a viable technology, we have just eliminated most of the labour force in the trucking industry. This should be a good thing for society (we've freed up lots of time and labour, likely reduced error, increased efficiency, potentially even eliminated some accidents and saved lives, etc).
But in practice, self-driving trucks would be devastating to the nation. There's close to 1 million people in the US who drive trucks for a living -- it's literally the most common job in nearly every state. (http://www.npr.org/sections/money/2015/02/05/382664837/map-t...). All of these people would be unemployed. Many would likely be shunted into minimum wage, poverty-level employment for the rest of their lives (whatever poverty-level employment is left by then -- those jobs are rapidly disappearing to automation too).
If we continue on our current course without changing something, it will eventually be impossible for companies to create value at all -- so many people will be so poor, that it will be impossible to sell anything to them. How highly can Candy Crush be valued in the future, when 99% of it's ad viewers have zero spending money? How much value can AirBnB capture if 99% of the population is too poor to travel?
The reply that "these people should all just start highly successful businesses" is a cop-out, in much the same way that telling a poor person to "just become a movie star" or "just become a pro basketball player" is. It's simply not possible for most people to do that, regardless of how hard they try. (Startups already have a 90%+ failure rate today. Adding 1 million otherwise untrained individuals won't help that figure). And it's grossly irresponsible of us as a society to shove people into poverty for failing to meet this wildly-unrealistic expectation.
I'm strongly in favor of things like basic income, extensive free retraining programs, and a lot of social support to make sure that every citizen can be free of the desperation of true poverty, and we can maintain social and economic mobility, but there are a lot of ways that attempting to stamp out economic inequality could go really horribly wrong.
We should be trying to fix poverty, and giving more people an opportunity to be ambitious and take risks without risking ruin, we shouldn't be making it unattractive to be ambitious.
But I think a social safety net is very helpful in helping people feel comfortable taking risks - I probably would not have started a company if the cost of failure was homelessness, rather than just swallowing my pride and moving into my parents' basement.
In the 1980's there was a country wide lockout in India, when the then prime minister Rajiv Gandhi tried to introduce general purpose computing in India. Yes, the whole country was shut down in protest to prevent the widespread use of computers. It was assumed hundreds of thousands of people would lose jobs to automation, wages would collapse and India would become a more poorer country.
The computing revolution came to pass and nothing of that sort happened. If anything things got way better, uncountable number of people were lifted out of poverty to middle class. A lot of people who were other wise stuck working as peons, clerks, telephone operators etc kind of jobs were rescued and are now working on more productive jobs.
>>It's simply not possible for most people to do that, regardless of how hard they try.
If you have already decided(and know) that you will fail, regardless of your actions. Why think low of people who try anyway, and probably win?
Do you disagree with that viewpoint? If so, why?
Targeting poverty alone ignores the root causes, and thus never solves the problem.
You can see this in Africa and third world countries everywhere. Poverty has been reduced by access to capital and markets, investment, education, etc... Not by charity.
Expanding education and training will bring us to a higher technological level, and provide prosperity for society, however that won't ensure the working classes will have a 'fair' share. If everyone's income is increased, but the distribution of resources stays the same, the poor will still be poor because costs will simply climb as their income does. Furthermore, every job can be commoditized. When 7/11 jobs are automated, then the next lowest class could be programmers. If there are too many programmers, wages will be run down to the level of today's 7/11 workers. Society as a whole may be more advanced, but that won't prevent people from becoming indentured workers. Just as today we are more advanced than 1960, but it's harder for the lower classes to get by.
The distribution is the problem, poverty is a symptom.
And you don't really need your own monetary capital to have economic mobility - for the poor, time and expertise is the capital. Good public education increases that expertise, and is one of the best ways to provide economic mobility. Also, if more money is necessary than one can save up, there are always small business loans from banks.
Don't forget about transportation costs, retailing costs, etc... Most of the 'poor' are working poor, working in warehouses, restaurants, retail stores, and other minimum wage jobs. If you bring up the wage floor, everything gets more expensive (even stuff bought at Walmart) and that hits the poor, reducing their gains (however if it's enough to reduce inequality, they'll gain something, however small).
> And you don't really need your own monetary capital to have economic mobility - for the poor, time and expertise is the capital. Good public education increases that expertise, and is one of the best ways to provide economic mobility. Also, if more money is necessary than one can save up, there are always small business loans from banks.
Economic mobility only exists as long as higher quality jobs remain unfilled. The US is more educated than ever before, yet inequality has increased since the 1950's. Education certainly brings society to a higher technological level over time, but it's not a given that it reduces poverty or inequality.
This phenomenon has been well documented and can be seen in many developing countries where people are actually over-educated relative to the types of work demanded for economic growth. For example, if a country has no roads or electric grid, many industries cannot develop until that infrastructure is built, meaning there's more demand for construction workers than university graduates.
And of course, the missing piece between education and work that doesn't yet exist is capital. Without capital to develop new industries, you're limited to only the amount of work that is currently demanded, so education will never bring you to a higher equilibrium, it'll simply make the educated person more competitive within the market.
Anyhow, many economists have written entire books (cough Piketty) and papers about inequality and economic growth. In the developing world there are plenty of examples of economies that are stagnant because of inequality. Even within the US' own history, you have examples of high and low inequality, and the resulting economic growth.
There's approximately half a million businesses being created each year in the U.S. (that number used to be higher) [1], the vast majority of which are not tech focused. They are getting credit to do this from a variety of different ways, but not normally from investors. It's mostly the credit card companies profiting off of these ventures as many small businesses self-fund through personal credit cards.
We (Kiva) have a fair amount of data on this as our focus is on interest free loans for startups for poverty alleviation, though we are increasingly also funding social impact small businesses in the U.S. I do wonder if our model of charitable crowd-funding small businesses [2] will have a dent on the overall way startups are funded in the U.S., there's a lot of other folks doing it now asides us but probably too early to tell. I guess point is that both parties here seem to be discussing a broader set (all startups) when really actually just focusing on the minority of tech startups in the bay area and it'd be worthwhile to consider the broader U.S. picture and/or the global numbers.
[1] https://www.sba.gov/sites/default/files/Startup%20Rates.pdf [2] https://zip.kiva.org
>> penned by self-described “essayist” Paul Graham
Well, he writes a lot of essays that are read by a lot of people. Seems apt.
It's indeed a lazy article.
(I'm referring to the qz article, not pg's essay)
I still can't agree with PG in that wealth is something that can be created. When a woodworker makes a chair to get money, he's merely trading his skill and time with money. The net wealth of the world hasn't increased. The perceived "win-win" situation only exists because there's a partiality in different types of resources: some people only have time, some people only have food, and some others only have iron, etc. If the world gets truly homogeneous, there's no way to create value. In reality, people are not homogeneous, so they keep trading, but still the total wealth isn't increasing. i.e. the economy is almost always a zero-sum game.
It's not a zero-sum game only in two cases: 1. When we take resources from the outside world. This typically happens when we mine a natural resource. Or 2. When we do unfair trading with people who somehow we don't deem as proper "human". This is pretty much a form of slavery or extortion. i.e. the economy is not a zero-sum game when exploitation happens.
I don't think PG is advocating the second type of the economy, so I don't understand how he can think we're still creating wealth.
In addition to actually creating things, people can trade things. I have a thing you want, you have a thing I want. We trade and we are both better off, so the amount of utility - "wealth" - has been increased.
Science??? Every major scientific invention has literally created wealth. Period.
"But what the market deems valuable is not necessarily aligned with what is ultimately good for us as a society, or even what we want."
Negative externalities that harm the public good aren't factored into markets until a price is put on the value of public goods. When no enforcement mechanism is present, or at least decent incentives properly aligned, then the public good keeps getting screwed and we end up with climate change.
You're also using "public good" incorrectly. You mean "social utility", I think. But social utility is not quantifiable for the simple reason that it's not possible to perform interpersonal comparison of utility.
For the record, you can simultaneously be laissez-faire and an environmentalist. See the Property and Environment Research Center: http://www.perc.org/
This outfit is the environmental equivalent of those people who think they efficiently can haul freight in airships. It's quaint, and nobody is paying attention, for good reason.
So back around to social utility: You better figure it out, quantifiable or not, before you end up in an artisanal hand-sharpened guillotine. Disemployment is an externality as serious as dumping mercury in the lake.
That's generally true, but that doesn't mean it doesn't have a value. Social utility shouldn't be ignored simply because it cannot be assigned a convenient numeric value.
The trick is creating an arrangement such that people can settle grievances endogenously. An exogenous body can't determine social utility since its actions change the expectations of its constituents, perhaps creating perverse incentives. It has also no way of determining what constitutes a welfare gain or welfare loss. Actually the rather special role of the state in being the arbiter of law makes it rather biased towards generating welfare losses via cronyism.
Ok, if you're using such a broad definition of "market", then I probably agree with most of what you just said. The big problem I see is:
> creating an arrangement such that people can settle grievances endogenously
That is great if it actually happens. I personally believe a lot the current political situation was caused by a total lack of these endogenous corrective forces. When people observe that no such arrangement actually exists and grievances are not actually settled, operant conditioning takes over and we end up with people who think they are somehow smarter/better than other people.
Arranging everything so incentives are properly aligned would be great. In practice, we don't actually know how to make that happen reliably, so recognizing all of the needs and desires of society is important, even when we don't know how to evaluate something other than "we consider it good" or "I just want that my future". Yes, this could end up causing problems - humans are fallible and sometimes we don;'t know how to explain something other than "my intuition says so".
Note that I'm suggesting that non-quantifiable criteria should be considered, not that they should be given any special weight.
> It's actions change the expectations of its constituents, perhaps creating perverse incentives.
For this, I'm going with Mark Blyth's response[1] to a similar statement about modern economic thought.
It's not broad. It's that most people conflate various discrete ideas.
I personally believe a lot the current political situation was caused by a total lack of these endogenous corrective forces.
You're right, and my position is that much of this is because of exogenous interference. For example, people like to talk about the post-WWII "Golden Age of Capitalism" that involved Keynesian stimulus policies to one degree or another (though there were exceptions, like Eisenhower's response to the 1958 recession). What people often conveniently omit is that the Federal Register was only a seventh the size of what it is today: https://www.federalregister.gov/uploads/2015/05/Federal-Regi...
For this, I'm going with Mark Blyth's response to a similar statement about modern economic thought.
You seem to think I subscribe to rational expectations or something. No, it's a basic public choice and regime uncertainty point. If anything, Blyth's comment is overly myopic and his complete dismissal of "time inconsistencies" is unjustified. The Cantillon effects of monetary policy alone are well-acknowledged across the political spectrum, and that's a straightforward example of temporal disequilibrium.
EDIT: Another contradiction is the Greenspan put.
It doesn't matter if a theory is correct when "nobody knows what that sentence means!"
Blyth isn't dismissing the concept of time inconsistency - he's pointing out that models that rely on people making "rational" decisions are total junk if nobody actually understands the required concepts. Models that assume people would change their behavior because of time inconsistency should never have been considered in the first place because most people don't know what the term even means.
In a similar manner, I'm suggesting that while it would be nice if we could set up "markets" that self correct or allow problems to be handled locally, this might not be possible in practice.
Whether or not it's possible to set up markets that self-correct is a different matter. They already do to various degrees even in current hampered regimes, modulo business cycles. Though, we must extend the same skepticism towards state attempts at equilibration if we are to be consistent. But far too much doubt becomes an analytical nihilism.
PG's original argument seems to be - We like wealth creation. We pay the price of rich people, in order to get that. Wealth creation, as well as wealth release is happening in this generation on vast scales, mediated by technology, software and startups.
Pg concludes there is not much we can do to fix the wealth inequality gap from being created in the first place. And he fails to point out there are second order fixes that can alleviate inequality if that is our goal. In other words politics has created the SV milieu over forty years, and will be instrumental in handling the Pikkety fallout.
This article seems to claim that because Candy Crush makers made hundreds of millions of dollars, that is exemplary and desirable, and the intention of pg and his Silicon Valley cabal. none of which is bourne out by the original article.
Billionaires are a symptom of the failing of a market. No one should be able to capture that much value themselves. More Startups should create more wealth, yes, but they should also prevent monopolies from other startups.
We need more "startups" in all walks of life, started by people from all walks of life (not just MIT). Because, and this is an important point briskly touched on, the ideal size of the firm is shrinking, and the traditional jobs will not be there.
PS Has anyone else noticed that PG's essays are more and more like listening in to one half of a Socratic phone call, where the pupils questions are inferred from the half you can hear?
Holly doesn't think that's real value. She thinks she's a better judge of what value is and isn't. And that's where this becomes hilarious. Because Paul Graham respects "the poors" to spend their money and time on what they think is worthwhile. But not Holly Wood. She thinks that millions of people downloading and using and enjoying Candy Crush isn't valuable because she personally thinks Candy Crush is a stupid waste of time. She knows what's really good for people. Those people themselves, they have no idea.
No wonder she hates libertarians. She's a totalitarian. And the funniest part for the rest of us is she doesn't know it.
It seems weird to choose a job for altruistic reasons, then turn around and complain you aren't making as much as people who don't have a strong desire to do something even without compensation.
I haven't seen Gandhi, Mandela or Teresa complain that they didn't make millions out of their work.
Which finally brings us to the answer, these people aren't altruistic, they seem to latch on to whatever job they get, get stuck there, and then try to paint the altruism color to make them feel good. Deep down knowing very well that its the money they desire.
(Incidentally, it's not always the people complaining, it's activists on their behalf. Also, even if you would continue to work for a low amount because of altruistic reasons, there's still rational value in complaining insofar as you expect the complaining to result in a higher salary. But the rational sell-interest in asking for more money doesn't have any bearing on the ethical question of "should they get more money", and for that, we should remember that they chose the lower money position because of fringe benefits that higher paid positions didn't have.
Note further that this only applies to the reference class of "teachers, nurses, academia, science, childcare etc" that can plausibly be said to forgo greater value jobs for altruistic reasons. For someone that can't land a well-paying job because they aren't skilled enough, we need a separate analysis. But the argument OP tries to make that what they produce is still valuable to society wouldn't go through as easily; you could still say "everyone is valuable" or some such thing, but it has less power.)
>>But all else being equal, the one who only wants money has an advantage over the one who wants money and feel-goodies
A guy 'X' who is frugal, saves and invests is going to be richer than a guy 'Y' who might be earning the same(but making financial decisions), in the same job, after a few years.
Priorities matter. At the end one must learn to be happy with their decisions.
Paul Graham:
> Variation in productivity is far from the only source of economic inequality, but it is the irreducible core of it
Holly Wood:
> [Paul Graham] assumes people who are not rich are not driven, and so he ignores...the probability that the poors are poor because they are busy being driven at enterprises that people like Paul Graham think are valueless. Like childcare. Or science. Or academia. Or education.
They might believe market success is a fairly
ridiculous barometer for measuring societal value.
Not to say emotion isn't a valid point, and doesn't make for a good read, but it completely undermines the objectivity of the author and defeats the point.
Economics in One Lesson by Henry Hazlitt explains it. Available free online
How do I get someone to pay me that much for better quality content?