A Response to Paul Graham's “How to Make Wealth” (2012)
czep.net
czep.net
And secondly, I know this isn't the main point but, these "introversion explanations" are annoying and likely part of the reason the industry has problems with diversity.
Looks to me like a lot of the people in the industry want to constantly propagate the idea that "the programmer" or "we the programmers" are utopian introvert nerds to anyone who would listen.
Got me avoiding talking about what I do so I can have normal conversations about sports and politics with people working outside tech.
Excellent point, thank you. The changes we've seen in the industry even in the 5 years since I wrote this do suggest a declining relevance of the introverted programmer meme. I admit I'm stuck in a 1980s "we're all social outcasts" mindset which doesn't reflect the present day make-up of this varied industry. However, I think certain aspects of the metaphor remain intact. The work of programmers is introverted. The point was that the mental structures that attract programmers are the same ones that can lead to reductionist views of social, economic, and political matters. I've often marvelled at how easily some of the most brilliant engineers apply their ideas about computer systems to human systems, without the necessary due diligence. I'm not saying they all do this, just that the introversion tendency can explain how it happens.
What I'm bothered about is that he makes a blanket statement about "the programmer". Would've been better to say, Graham was probably introvert, there's where his ideas come from.
Why would "ability to create and inhabit a mental utopia devoid of the complications of external reality is a truly liberating experience" be limited to introvert programmers, like introversion is some kind of super power?
Architects, painters, mathematicians, and many others are just as capable of abstract thought. Most mathematical and physical models could be called "mental utopias". As are financial or economic models for that matter.
No one would claim that because an architect is able to draw a house made of ice cream cones or a physicist come up with a model where frictions is 0 he must be introverted though right?
Why does everything concerned with programming need to be then?
It's similar to claiming that programmers are good at programming because they're white, or male, or fat, or bald...
And people thinking they know everything are common in every field, mechanical engineers, doctors, architects, you can find them wherever you go, this is not limited to software engineering.
I'm not an expert but I believe you can research Austrian Economics, laissez-faire, and Milton Friendman. The deepest I went with the subject was "Basic Economics" by Thomas Sowell. I thought it was a good book and had compelling arguments. Its also very easy to read and American-centric so you have a lot of relatable examples.
What I was somewhat sloppily referring to was the classical liberal ideas based on writings of Adam Smith (who's mentioned in the article), David Hume, John Locke etc. As opposed to the Marxist view I guess.
And I said it because the article argues somewhat (in)directly that management gets paid well because of position of power and luck, not merit, that free markets don't work, and throws around words like libertarianism, meritocracy etc., but makes no solid economic arguments, it's explained more from a point of populist left ideas based on my reading.
Note that there's more than one competing idea here, and I personally don't necessarily agree with one single theory, but if you're interested in it in general here are some sources off the top of my head:
Adam Smith - The Wealth of Nations [1]
John Locke - Two Treatises of Government[2]
Friedrich Hayek - The Road to Serfdom[3]
david Hume - A Treatise of Human Nature[4]
Austrian school of economics[5]
Chicago school of economics[6]
[1] https://en.wikipedia.org/wiki/The_Wealth_of_Nations
[2] https://en.wikipedia.org/wiki/Two_Treatises_of_Government
[3] https://en.wikipedia.org/wiki/The_Road_to_Serfdom
[4]https://en.wikipedia.org/wiki/A_Treatise_of_Human_Nature
[5] https://en.wikipedia.org/wiki/Austrian_School
[6] https://en.wikipedia.org/wiki/Chicago_school_of_economics
EDIT: Need to add at least Friedman I suppose. From here on out you can google classical liberalism, libertarianism, Age of Enlightenment, etc.
And if you want different ideas, of which I guess the author would support some if he'd actually read / cited actual economic theory,
Keynesian economics, Marxian economics, Economic interventionism etc...
Milton Friedman - Capitalism and Freedom[7]
Attacking these essays as an oversimplification while presenting a caricature of the introvert and disconnected programmer is borderline ridiculous.
Author here. Man, if I took it down a few notches, I'd bury myself under my own hubris! I'm nobody, certainly not worth PG's time or perhaps yours, I'm trying to speak truth to power and won't apologize for stepping on anyone's hero worship. I absolutely agree with you that Graham's essays are inspiring and fun to read. I think I made that clear as well. The frustration which drove this essay was his casual observation that the best programmers are libertarians. I don't think that's true and have data to support it. I'm also frustrated to see a powerful man perpetuate self-serving ideologies without acknowledging the influences of power and luck.
> borderline ridiculous
Story of my life. But I think my caricature still stands as an illustration of how the introverted mindset can shut off more nuanced views of social and political structure and lead one to adopt a personal view that serves those in power.
> I'm also frustrated to see a powerful man perpetuate self-serving ideologies without acknowledging the influences of power and luck.
I agree with this above statement maybe or maybe not for the reasons you do.
The "Power Game", or even the lack of willingness or know-how to play it is the reason a lot of programmers think themselves superior to the sales guys who peddle the product of their labor.
The "Power Game" is also the same reason the good sales guys feel that despite being so technically smart, programmers can be damned idiotic fools.
As an introverted "programmer-type" myself, life would be way easier for me if there was no Power Game. But the Power Game is as human as eating, drinking and pissing.
Hell, I get irritated daily that I even have to eat, drink or piss. It feels like a waste of time when I am in the zone with something. Same thing with the Power Game.
Luck... hugely important. Heck, we've all played RPG's and know to fill up that skill bucket ASAP.
Maybe what would really be helpful to programmers is something that can stir inspiration like Paul Graham, but that covers something akin to "The 48 Laws of Power" for the introverted modern day employees.
The author sounds rather more arrogant than Paul Graham did. And free markets are the ultimate solution.
EDIT: The more I read, the more ridiculous it gets. The author takes something that Paul Graham said, throws away all of the context, and attacks it as a strawman. The article seems more keen on attacking Paul Graham than making any actual point.
It is also written in a very verbose style that makes it hard to follow whatever argument might be present.
> It is amazing how well this piece serves as marketing fodder for Graham’s venture capital arm, Y Combinator. His business model relies on convincing hordes of eager young hackers to sign over their surplus labor to his investors. With logic crafted to appeal directly to the introverted minds of recent computer science graduates, he has no shortage of cannon fodder lining up on his doorstep willing to eat Ramen and gleefully line the coffers of his investor’s portfolios.
Having been through the SV startup wringer several times I totally agree - (hidden) power structures matter much more than people would like to admit, and neither work nor rewards get distributed fairly. And the whole startup hype machine (which includes pg) serves to attract more naive programmers to contribute years of unpaid overtime work in exchange for vague promises of future riches. (But I'm not bitter, just realistic.)
Also your observations about hacker politics are right on. Watching political discussions here is painful.
Sorry to see you're getting crucified here for your dissenting essay, though. People who claim to be rational end up just as susceptible to groupthink :(
Thanks! Honestly, that makes it all worth it.
However, I don't feel crucified or a victim of groupthink, I put this on the web and anyone can feel free to agree or disagree. I think there are many people in the HN community that agree with me. I find there are some very valid criticisms here and more than anything I simply want to inspire and encourage debate on these issues. I'm not the best writer, and I certainly added a lot of rhetorical fluorish to this essay, but in my mind it was necessary to underscore how casual off-hand assertions like "the best programmers are libertarians" are also rhetorical tactics meant to align people on what their political beliefs should be.
As you noted, the section about "Wealth and Power" seemed to have been tacked on almost as an afterthought. So it isn't until the end of your piece that you get to this point:
Graham concludes: “The same recipe that makes individuals rich makes countries powerful. Let the nerds keep their lunch money, and you rule the world.” Sadly, the bottom line is that unless you are among a tiny handful of the elite, a laissez-faire economic system would enslave you, not liberate you. The only people who will enjoy the fruits of a truly free society are those with the power to keep you in line. Given more freedom, those in power will first cut off the access to power, to prevent anyone from challenging them. They will immediately go for the jugular. There is no compromise with power and no means to share it. Thus, the power elite will readily command vast armies of people and resources to ensure that you stay down. This will be their first priority. Their second priority will be to extract labor from you in the manner that serves them best. In a perfectly libertarian society, the bullies would not only take your lunch money, they would murder your family, burn your house, and leave you for dead by the side of the road.
If you were to re-write / edit your piece today, my recommendation would be to start off with this as your premise. We have sooooooo much evidence today from many, many people who followed this path recommended by Graham thirteen years ago. Sure, maybe a few of the nerds got to keep their lunch money. However: catapulting a reserve of lunch money into the kind of wealth that matters (the kind of wealth that buys power) just doesn't happen for your average nerd. There's one more layer needed on the recipe.
Graham rightly points out that wealth is not a zero-sum game. Power, on the other hand, is most definitely a zero-sum proposition, and those who have it will stop at nothing to retain it and quash any perceptible threat. Power is a black hole—it consumes everything and yet remains a perpetual void. We see instances of this even with the meager controls in place in our society today. Loosen or remove those controls and power, unchecked, will accumulate until nothing remains. Anyone or anything in its path will be destroyed.
It's hard not to think about the political implications of how this relates to just about everything these days.
You. You wrote the article, posted it on your blog, used your HN account to submit it here, and it is you that is posting a comment in support of yourself. Writing in a way that implies you aren't the author is disingenuous.
I wrote this 5 years ago, someone else posted it to HN today. It's Sunday morning so I have some time. Calling me disingenuous is not fair.
My 3rd person reference calling out the parent's use of arrogant and verbose to refer to me, was firmly tongue in cheek. I do have a sense of humor, despite my flowery rhetoric and dog-eared thesaurus :)
"cannon fodder lining up on his doorstep willing to eat Ramen and gleefully line the coffers of his investor’s portfolios"
characterization, which I've read a good twenty times now. How does this make sense, when generally speaking, if an investor gets rich, it means the company succeeded, and thus the founders get rich too?
Also, not to speak for the author, but the "cannon fodder" is not just the founders, but also people who are joining startups as employees, with the idea that they will trade years of below market pay and years of unpaid overtime for a shot at the moon. The startup ecosystem wouldn't be able to exist without a steady supply of them.
Where libertarianism is on a separate axis to the usual left/right.
Where does he try to do this?
On the subject of arrogance, spoken like a true believer..
There is hardly ever an ultimate solution to anything, and to take an extreme position on matters is almost always harmful. Things are never simply black and white.
The problem with "things that are not free markets" is that we simply know very little about those things, and the learning curve is significant. USAian bulk crops agriculture is not a free market, it mostly seems to work well that way but it started under FDR and only reached its present form after decades of tweaking.
In effect ( the theory goes that ) larger price uncertainties will create price instabilities that, net-net, add more inefficiency than pricing things a skosh higher and accommodating overproduction.
As political speech, the term "free market" has been rendered threadbare. "Trade agreements" seem to mostly be more akin to Mercantilism than free markets, and so on.
Objecting against the free market illusion is not advocating for a planification entity. Free market is a fallacy because there is no such things in the real world.
Studying economics with the perspective of free market is like studying mecanics assuming mass-less bodies. It might offer a nice framework (the math becomes really simple) in which most of the problem we face disapear (no inertia, flying cars \o/), but that gives you no help if you want to understand and fix the world we live in.
In practice nobody is even really trying to make free market a thing, otherwise you would see politician advocating for bans on price discrimination and investor would stop asking founders what are the barrier that prevents their competitors to get in their market, because both price discrimination and barrier to entries are responsible for «market failures».
Is communism/economic planning a good idea ? Of course not. Is free market salvation ? Nope.
Hayek had a really good diagnostic of the drawbacks of communism, but he had a totally irrational faith in the free market and this vision is shared by too many people. Unfortunately irrational faith does more harm than good …
The free market is a lot like a mosh pit. Everybody is free to move (in principle), but in the end some may get seriously injured.
The result may not be perfect, but overall it's a better place to find yourself in.
I'm simply making the observation that there can never be any ultimate solution, be it for economics, religion, or choice of wallpaper. There will always be edge cases, and there will always exist a better way, for any given definition of better (whether it be maximizing profits, freedom, well-being etc.). To claim otherwise is arrogant at best, and uninformed at worst.
Ultimate solution to what?
There’s an entire field of economics dedicated to the way free markets can fail to allocate resources efficiently, even when the participants are free agents acting without external constraints.
Do you think this work is false? Or do you believe that the inefficient allocation of resources is an acceptable price to pay, because “free markets” are more important than outcomes?
Imho, we as a community should put more weight on that aspect, and we should stimulate also the failures of Silicon Valley to come forward with their stories to prevent bias. For example, we've heard some stories of people making truckloads of money on app-stores, but do we really have any bearing on what the average capable developer makes? If we don't want to end up as disillusioned gold-diggers, we should really get that kind of data out.
Now years later, after having started a company through YC and then becoming a YC partner and now seeing this same kind of magic happen over and over again with hacker founders, I can't help but attest to the fact that his worldview has proven to be valuable.
The disillusioned worldview justifies lying on the floor. The essay's worldview prods you to get up.
Yes, that is certainly laudable, but he may be suffering from survivor bias.
But it's a big basket. It's expected that you're going to need to try a dozen different variations of the same idea before something sticks.
What brand of libertarianism is the author talking about here?
That sounds like anarchy, not libertarianism.
I think most would agree that "arbitrary exercises of power" would include murder and arson. The author really does his argument injustice by throwing around a caricature of a political philosophy.
The minimal state of the government is directly proportional to the strength of one's extended wealth network, and wealth reinforces wealth. There are inconsistencies regarding the minimal services that the government should perform because Libertarians tune their notions to their own wealth level, and discount everyone below them. If we wish to create a government that is representative of all citizens, the minimal state of government is much larger than has been allowed within the libertarian framework to date.
Isn't this a strawman? Libertarianism isn't a theory that ensures everyone has whatever they want. It's a philosophy centered around liberty (in contrast to freedom). Libertarians are only arguing that anyone should be free to move where they want and free to obtain the means to do so. Libertarianism has never argued that liberty means everyone gets a house on the beach.
This is the strawman. No one is suggesting that everyone gets a house on the beach.
The problem is that Libertarianism has a naive presentation of coercion strategies. It ignores economic and generational coercion mechanisms, instead focusing on violence (and the government's monopoly on it) as the only form of coercion. This prevents it from achieving the liberty which it promises, except for those who are already wealthy. By seeking to obfuscate and divert attention from other coercion strategies, it disproportionately favors those who wield them to reduce liberty, and so it has a net negative effect on liberty.
Right, and then "...the bullies would not only take your lunch money, they would murder your family, burn your house, and leave you for dead by the side of the road".
The problem is that the arguments that Libertarians use to show that taxation is theft don't leave room for that sort of exception. So sure, you could just say, without supporting argument, "I think that taxes should pay for x, y and z and nothing else". But then if someone suggests that taxes should also pay for a, b and c, you can no longer give a principled objection.
If you assume that it is the case that, absent the government, people will go crazy, then you're also positing the need for a police state and things like survellience.
edit: Apologies for this utterly useless comment. To elaborate: The construct "brand" is a psychological hack, a marketing fnord. Reading about it in a presumably rational discussion is what I found amusing.
Historically, ALL societies have possessed rigid, hierarchical social structures with negligible social mobility, and very few of them had anything close to laissez-faire economic policies.
What made Renaissance / Enlightenment Europe a little better than the rest was its intense competition along several dimensions (political, economic, technological) both between and within political entities; such a world made creative types too valuable to be liquidated or enslaved.
>In a perfectly libertarian society, the bullies would not only take your lunch money, they would murder your family, burn your house, and leave you for dead by the side of the road. This is your free society. Enjoy.
And eventually the bullies would run out of prey -- and would have to prey upon themselves. But it would probably not come to that. Anyone with half a brain would have stopped contributing to such a flawed society a long time ago, and maybe even started undermining it, e.g. the USSR.
Statements like these are pointless theatrics. The more wrong someone is, the easier, not harder it is to point out where and how. What's the argument?
You have to wait until section 2 to find one:
"...there are actually several critical errors in the above reasoning which render Graham’s conclusions baseless. The first is the idea that measurement of things like quality and success can be objective, perfect and fair. These are not objective facts, they are highly contextual and can be manipulated by power struggles, charisma, clever marketing, or outright fraud. Value is a social construct..."
After about eight paragraphs about how "pedestrian" PG is, his point (finally) is basically that value is subjective and immeasurable. I don't know how true this is philosophically, but for all intents and purposes, if it were true, it would mean that nothing could be better than anything else. [1] It's also a conflation of ideas. Marketing doesn't create value; it distributes and sells it. Value as defined in the original essay is the meaty stuff people want: a home computer, for example, or an affordable spaceship.
"Graham identifies that “Many of the employees (e.g. the people in the mailroom or the personnel department) work at one remove from the actual making of stuff.” So what exactly do they contribute to the wealth generation process? Does Graham imply that without these others working at “one remove”, the programmers could still create the wealth they do? Without the human resources team to coordinate their medical benefits, would the programmers be as productive? Without the legal team to fend off frivolous lawsuits brought by patent trolls [...]?" (And so on.)
All Graham is saying is that programmers are directly involved in the creation of the product itself — its design, engineering, and maintenance. Other people create the social environment that makes it possible for this product to be distributed and not be killed, but don't make stuff in the artisanal sense.
I can understand why it would be insulting if someone claimed that anyone who isn't a maker were somehow useless, but Graham never did.
I'm ten minutes in, and everything I've read is basically a verbose form of "it's all relative" and "things are more complicated than that." Philosophy has a standard refutation to this: we deal with complex phenomena by isolating principles. For example, the abstract idea of value, the distinction between creation and distribution, and so on. It's the most boring thing in the world to hear, "the universe is more complex than that idea captures." All abstractions are reductions.
This sort of argument based on moral outrage and authority about how the real world works holds back truthseeking discourse.
[1] I also have a hard time understanding how someone who has earnestly tried to make good things could want this to be true.
But that value doesn't exist until marketing "unlocks" it! The example discussed is marketing finding a new vertical which then expands the profitability of a product line without any additional work. A portion of the value didn't exist until marketing sold it to a new market. I don't consider that conflation of ideas, more of highlighting the nuance that quantifiable portions of value cannot be ascribed to individual efforts.
The fact that value is subjective and immeasurable doesn't insult anyone who tries to make good things. I try to make good things too, the value I get from them is the sense of accomplishment that I've done a good job. But whether my "good job" translates into a $1bn unicorn is up to luck, not simply my effort.
I think your disagreement with Graham is over a definition of words. You seem to be saying that creation of value is the indivisible sum of efforts to (a) decide what to build, (b) build it, and (c) sell it. He assumes a and b can be isolated out.
In any case though, take any highly successful company. Imagine if all the marketing people and product/engineering/design people were suddenly segregated, and forced to work without the other. Who's more worried?
I'm not at all saying marketing people are useless, which seems to be the idea you take issue with. They provide value. But (I'm sorry) less than the designers and engineers, and measurably so, from successive thought experiments like the above. That's why they're paid less.
"The fact that value is subjective and immeasurable doesn't insult anyone who tries to make good things. I try to make good things too, the value I get from them is the sense of accomplishment that I've done a good job."
But by your argument, I can steal your sense of accomplishment by saying, who knows how much of your success was due to you? How much was due to the marketing team? 10%? 50%? 80%?
"But whether my "good job" translates into a $1bn unicorn is up to luck, not simply my effort."
On this topic I mostly defer to Hamming's point in You and Your Research. I'd say there's luck involved, not that it's up to luck. While it's true not everyone who can become Bill Gates does, some people outright can't become Bill Gates, while others can. The point is, this doesn't show that value is subjective.
I tend to avoid engaging in the eternal engineer vs. sales/marketing debate (nothing ever comes of it), but that sounds like a pretty disingenuous argument. Whether you remove (a) and (b) or (c) from the equation, you're still missing an essential part of the business. Engineers with 0 sales channels make 0 revenue. Marketers/Salespeople with no product make 0 revenue. Who should be more worried?
If you're saying "Well, engineers could always try selling stuff themselves, while marketers couldn't code" you're adding, I believe, unwarranted assumptions. The reason people are paid more or less has more to do with supply/demand. Also note that salespeople at Oracle often make more money than their engineers.
FWIW, I've seen 3 or 4 "rebuttals" of pg essays, and they all read about the same.
For instance, one pg essay mentions how large glossy magazines all cost about the same, and how this spelled difficult times for the publishing industry in the future, given the likely average for a digital book or a website view. Someone wrote a rebuttal from the viewpoint of the publishing industry, which, when unpacked, contained only one concrete point, which was approximately "No, publishing is doing great -- look how many millions of copies Sarah Palin's book sold!"
I would argue it does create value. Not only for increasing the speed of information, but to attach a sentimental value to an object people like it more. People enjoy coca cola more because of the brand and thus the value is greater.
It's a touchy feely piece (not any worse as such). One of the important things to feed ones intuition is to convay how a thing should feel.
This was food for intuition, not a detailed analysis. That's how I read it, anyhow.
I approach any non-peer reviewed work as prose and poetry. Some other people mighr be more stringent.
There is an implicit assumption in his definition of an introvert that is introvert == cut off from society. This is just plain wrong. An introvert is a a shy, reticent person and this does not imply that he is cut off from society or does not understand social interactions. I would argue that it's the exact opposite. Introverts understand social relationships and the "real world" very, very well. They just don't actively take part in social interactions much.
> The first is the idea that measurement of things like quality and success can be objective, perfect and fair. These are not objective facts, they are highly contextual and can be manipulated by power struggles, charisma, clever marketing, or outright fraud.
The article is concerned with startups with a very small team working on it. Measurement is easier than in large teams of people. I don't see OP disputing this directly. The question of power struggles, charisma etc does not arise in startups with a small team.
> A second critical assumption being posited in Graham’s essay is that one person’s direct contribution can be disentangled from that of others.
No, it's easier to have a better idea of what people in a small team contribute than in a large team.
> Although he never says this payoff is guaranteed, he doesn’t deny it either
First valid criticism.
> Here is the crux of Graham’s assumption that programmers are the real engine of the value chain. He ignores the fact that without the infrastructure and ancillary components of the business, it isn’t so easy to simply translate that new piece of software into pure profit.
That's exactly what small startups do, where the founders manage everything from code to sales to legal work (in the initial stages of a startup).
> Graham so desperately wants to justify his own wealth as the righteous product of his own personal labor without acknowledging the effects of either luck or power
Uncalled for personal attack, but yes, luck plays a major role.
> “Smallness = Measurement”. Here, he uses the analogy of the “ten best rowers” who, if you take them out of a large system and put them together with a shared goal, will necessarily be superior.
In comparison to large teams, measurement is easier in small teams. Team dynamics are still important, whether the team is small or large.
> It is amazing how well this piece serves as marketing fodder for Graham’s venture capital arm, Y Combinator.
Looking at it from a cynical perspective, yes. Nothing stops people from questioning or rejecting (or dismissing) his work publicly as lots of people on HN and twitter do.
> Libertarianism != Meritocracy
This section has some valid criticisms of libertarianism and PG's implicit bias towards it.