How Silicon Valley Fuels an Informal Caste System
wired.com
wired.com
“An Outer Party member could reach the Inner Party by chancing into an early job at a lottery-ticket company (such as Facebook or Google) or by becoming a successful entrepreneur. But that’s rare; most of the Outer Party prefers working for the Inner Party, gradually accumulating equity through stock grants and appreciating real estate.” -If you look at the bios of VC “inner party” people, very few were born VC. Many became VC based on their work experience. The quote calls this a “lottery-ticket” experience implying that there’s no free will involved with the shift between statuses.
The article also calls out the difficulty of moving from service to skilled worker “outer party”-“The Service Class will likely never be able to drive/shop/handyman enough to rise to the Outer Party, at least not without additional training or skills.“
This is really odd because how else would you change status of not through training or skills? Complaining about randomness for skilled->VC and also about need for education for service->skilled seems like a mixed message.
Caste means a rigid hierarchy with no ability to change or even being born into ones status and no or limited marriage between castes [0]. This is not the case based on the level of mobility into and out of status that clearly breaks the definition of caste. This old paper from 1999 shows 24% of firms led by just Chinese or Indian immigrants [1]. So obviously they could not have been born into Silicon Valley castes if they are new to the US altogether.
The mobility to enter, exit, and change between these four defined statuses seems, to me, to disprove the entire premise of this article.
Perhaps the article would be more accurate if addressing issues of wealth and wealth segmenting social constructs like marriage, socialization within communities, etc.
[0] https://en.wikipedia.org/wiki/Caste [1] http://wwww.ppic.org/content/pubs/report/R_502ASR.pdf
From that perspective, it's weird to look in on a typical Silicon Valley company, where it's understood that only people with specific technical knowledge are qualified to make important decisions. And it's downright scary to look at Uber, where the drivers have no internal mobility even in theory.
If anything this is less of an issue in tech than other industries.
Tech knowledge isn’t innate, no one is born with it. So it’s good that decisions are made with people who have specific tech knowledge. It’s also good that tech knowledge is one of the most democratic, accessible, and learnable knowledges out there. I know dozens of high level tech leaders who have no degree at all, a couple with no high school diploma and one who dropped out of middle school.
And there may be some inequities and inefficiencies in the merit of people at classes. But my experience (and the data in general) shows that there is low inequality and my personal experience shows more mobility that other professions that require a lot more certification and training.
I believe if you’re a great programmer, you can make a great product, and make lots of money and stay in the outer party or join the inner party. Or, even better, not recognize these artificial classifications and do whatever you want.
What the author is saying is "most people in the Outer Party will not join the Inner Party", not "most people in the Inner Party started in the Inner Party". Similarly, you could say it's rare for a US citizen to become President, even though all Presidents were US citizens.
That’s perfectly fine as there are way more engineers than VCs. This is only a problem when there is low mobility, like on caste systems.
While it’s impossible for someone to change castes and they are born into it, it is possible for mobility between engineer and VC.
Thus my complaint that the author’s piece isn’t logically sound as a mobile system with inequality isn’t a problem as long as there is efficiency and low barriers to access.
Inequality isn’t bad inherently. It’s bad when corrupt. For example, it’s not bad that 1 out of 1M wins the lotto and now has way more. It’s bad if the lotto is rigged.
But I suppose if the author believes that it’s bad that not everyone gets a trophy, then that should be a different argument. And a different piece. And not incorrectly refer to castes.
Just like there are almost 50% of women in a society, the bottom social class (in terms of power, money, etc) is huge. So, whatever mobility one perceives is in the bottom class: moving from $15 hour security guard job to $150K jr dev job.
People from non-American countries recognize this. However, in America, the bottom class since WWII till late 1970's, had a nice job, pension, a home, two cars, with one spouse working; this created the illusion of 'class less' society in America.
When one says that there is no mobility, we are comparing the life of today with that of post-WW2 middle class era.
Even if we look at John Rawls, his difference principle does not eradicate classes. Basically, that principle in one version is same as "a rising tide lifting all boats"; in another version, it is fair to lift some poor boats higher than other boats, even at the expense of the latter.
The article even admits this implicitly by saying that skills and training are necessary to be admitted to the inner party. Farmers may overthrow the hereditary monarchy because frankly the monarchs never had anything but historical accidents and tradition for their position anyway. But if farmers overthrow google who’s going to keep the servers running? Who’s going to fix bugs, manage projects, write code?
The same people will end up running everything anyway, because they are the only ones who know how to do it.
They may be just as smart, but wired’s old dumb stories (“The Future is Push”) were at least earnest.
I'm curious as to which neo-Marxists you're referring to; I'm familiar with the Frankfurt School and Zizek, though I'm not aware of anyone (either Marx or "neo-Marxists" in academia) who propose a "victim ideology". "Neo-Marxist" and "postmodernist" are frequently used as boogeymen, however.
i share the author's sense of horror that SV is becoming a dystopia led by tech elite that think they're building a utopia, but literally have little to no meaningful contact with people that live two or more rungs below them on the socioeconomic ladder.
Homelessness exist because rich don’t care, which is an empty argument.
The better argument is that we don’t have systems in place to deal with the problem. Let’s build them.
I'm very much pro-UBI, yet anti government waste. Too much of government acts, or at least appears to act, as little fiefdoms, employing people with relatively comfortable salaries, no market pressure, and little other controls to ensure they run tightly, efficiently, and effectively.
If you want to raise taxes to only fund UBI, I'm in. If you want to raise taxes because you don't like that some monkeys have more bananas and you think society could make better, unspecified, use of those bananas, I'm against.
Is your issue with government in the abstract or your government?
If the latter, the caring solution is to change the government through voting, vocalizing and organizing. Governments are instituted to maintain a level of civility in a society. Naturally, poverty erodes the means for civility so governments in civilized nations around the world successfully apply their government as an organization sufficient for this task. If that sufficiency falls below their approval, they repair it.
If your issue concerns government in the abstract, then quite simply: you don’t care about people in poverty. If you can’t find the decency to be honest about that, then you’ve got even bigger problems.
UBI prioritizes your economy, not your neighbors in poverty. Note Socialists do not support UBI and for anyone concerned that socialists simply want handouts, this should table that argument once and for all.
Social programs prioritize caring for people by:
- Decoupling access to basic commodity needs from the whims and woes of the market
- Built-in protections from abuse. Uncaring folk like to criticize welfare cash recipients as dishonest and lazy. Social programs that avoid cash also avoid this potential altogether.
The problem is that you can't decouple commodity needs from the market because life is suffering.
Why not? Isn't that what agricultural subsidies are for?
I have a positive, but finite, amount that I care about people in poverty.
> UBI prioritizes your economy, not your neighbors in poverty
Giving people in poverty a sustenance level of amount money per month seems it prioritizes neighbors in poverty more than today. To use your own words: If you can’t find the decency to be honest about that, then you’ve got even bigger problems.
It appears too low to effectively help them except in the case that the same effort might also help yourself. This is not caring.
>Giving people in poverty a sustenance level of amount money per month seems it prioritizes neighbors in poverty more than today
The contradictions and other problems really are too long to list here but it shouldn’t be necessary. For someone so concerned with wasting money, advocating UBI over direct commodity distribution is about as hypocritical as it gets.
The only difference is an additional and purely self-serving dependency on market values, which are drastically unstable across time, geography and, social structures. So, while your claim is of course untested, your proposal only further establishes that once it is instatiated, the results will be ever-changing and your claim therefor unknowable.
You might do best to just state why* you would prefer UBI over direct commodity distribution.
UBI would absolutely not help me or my family in aggregate. We would be net donors to that program, likely by a factor of more than 20. I support it not because it's good for me, but because it seems the best way to ensure a minimalist safety net for all members of the society.
> This is not caring.
I understand your opinion.
> You might do best to just state why you would prefer UBI over direct commodity distribution.
I believe that individuals know better how to and will do a better job in allocating cash than any other agent, governmental or not, would know how to allocate commodities to them. I like this cheese, or that bread. I don’t like crunchy peanut butter. I’d rather live on the East side of the city. I’d rather live with roommates and have more free cash; someone else might want to spend more to live alone. Lots of choices to be made to optimize for limited resources.
I don't want a new governmental agency (likely with the usability of the DMV) deciding where poor people live, what they are given to eat, and what clothes they are given to wear.
Money is trivially easy to distribute without creating any parallel logistics operations to buy, store, inventory, move, and distribute physical goods. We already have market-based distribution mechanisms for all of those things.
Give them cash and let them use their agency to decide how to spend it. They'll do a much better job of it than we would on their behalf.
I hope I don’t sound disrespectful, but your ongoing insistance that governments in the abstract are inherently dysfunctional seems to underwrite most of your last comment and this is just such an ignorant roadblock. It’s not a matter of opinion. I take immense issue with many businesses, and most American business traditions, but I would never be so ignorant as to refuse acknowledgement of what they do well or to misrepresent their role in all civilized societies. Why insist such a limitation on your own understanding?
Governments are essentially for the people. They serve to facilitate a common civility. Feudalism was born of the necessity to protect the farmers and their crops with a military. It’s legacy was diminished by a long period of failing to prioritize the people. Democracy + capitalism is not a perfect match; but some of Europe has had the courage to face it’s failures and inches closer to actualizing governments which are for the people.
When you criticize America’s government, you’ll want to be careful. “Business” is probably a more accurate descriptor of what you’re actually criticizing. It’s no secret, either. So when you insist on discounting the configuration of a particular “government”, you’re devolving what could otherwise be a productive conversation. Therefore, I’m going to ignore most of these assaults on proven successes and the potential for future innovation. Without criticality, we an go ahead and just agree we are fucked.
This is not meant as a straw man but it deserves a word or two: When it comes to who should speak for the needs of poor people, how do you reason that you are qualified?
Of course, poor people are not always* their best spokes people, but they do have a type first-hand experience unlike any other.
I’ve been economically lucky compared with many people I know but there were periods in my childhood when my family would benefit and a significant one as an adult. It’s hard to imagine our different experiences are not causal to my position, but the nature of that relationship is far from obvious.
For you, capitalism has consistently meant freedom. For me, it has meant moments of awe for the wonders of capitalism soon to be fraught with sudden peril and lasting threat. I don’t think guilt on either end is necessarily useful, but the dreadfulness of the poverty experience in America is reason alone that it’s not easily shared. Some films have tried, like Kelly Reichardt’s Wendy and Lucy. The lack of natural story arc is a problem, but the real dealbreaker is invoking what it is to be robbed of one’s dignity.
Dignity is complex, but the day-to-day of poverty in America leaves no doubt of it’s fragility. The dizzying network effect of ever-more-tangling dependencies intercut with penny counting, truth-stretching, psychological escape, false hope, begging, crime, self-doubt, and the many flavors of shame have a way of defining it’s importance.
This can’t be said enough: The purpose for social programs is not to provide freedom, but to provide security against loss of health, life and dignity.
Freedom is fallacious. The limits to one’s freedom are defined by their relative power over others. It’s risky and has many exterior dependencies. It’s unnecessary but nice to have.
Security and dignity are far more meager and far more important. Loss of these defined by one’s means for survival and health. Loss of security and dignity has tremendous direct physical and mental health consequences, and is the most common gateway to violence, crime, and suicide.
Poor people know not to fuck with the latter. Poor people have cutting experience with the countless ways that money’s value is dependent on those who have more of it.
>I don’t want a new government agency deciding where poor people live, what they are given to eat, and what clothes they are given to wear.
In a life of poverty, the difference between a government deciding and nobody deciding incredibly often the difference between sickness and health, hunger and nourishment, or life and death.
Direct commodity distribution done well (by an educated, compassionate, and civically engaged population) is drastically more efficient, drastically more effective, and drastically more humane. Of course, it might require a little innovation. Hopefully you don’t hate innovation.
Citation needed.
It appears you believe the proper purpose of social programs does not include freedom. Others believe that spending more money than today, in the form of the most flexible instrument we have, money, will create freedom and allow everyone to have basic security against starvation and other loss of dignity. No waiting period. No qualifying event. No requirement to prove you’re jumping through arbitrary hoops. No restrictions, other than the same budget constraints that most anyone works with.
On the dignity point, no one will see you going down to the warehouse to get your government issued block of cheese or whatever some central authority has decided is best for you. Instead, you shop at the same grocer as everyone else, making your own selections for what you need.
I don’t hate innovation. Hopefully you don’t hate freedom or believe it should be reserved for high-income people. See how stupid that sounds?
Food stamps are an in-between solution which are neither direct distribution of commodities nor cash.
You seem to prefer we move towards more direct distribution; I prefer to move towards cash. Differences of opinion like this are why we have a democratic/representative process to end up deciding.
>>Direct commodity distribution done well (by an educated, compassionate, and civically engaged population) is drastically more efficient, drastically more effective, and drastically more humane. Of course, it might require a little innovation. Hopefully you don’t hate innovation.
Your proposed "solutions" put simply DO NOT work. Source: I have lived through them in the Eastern block. Others live through them right now in Venezuela. Hopefully you don't hate history and facts.
“Those who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety.” Benjamin Franklin
Also, UBI by its very acronymm is Universal, meaning everyone gets the same amount. That's the only fair way to do it, and would negate criticism of cash recipients being "dishonest and lazy." Yes some pay more than others, but that's simply a re-implementation of our current progressive tax system.
I think it all basically comes down to your view on government - can they do the right and best thing, or can the individual make better decisions for themselves. By disempowering the invididual, you may even the outcomes, but you disadvantage those who would most benefit from achieving more in life - which in turn, benefits society.
UBI is another attempt to save an economic system which works for you but incentivizes maintaining a class of desperate and powerless citizens. Each of these ill-fated attempts punishes another slew of innocent generations of poverty-ridden lives, in the name of ignoring the root issue of misaligned incentives. How many chances do you believe the ruling class to deserve?
The issue may not be the amount that you care but that your caring evidently depends on what you get out of it. That’s not caring. Try again.
>Giving people in poverty a sustenance level of amount money per month seems it prioritizes neighbors in poverty more than today.
The contradictions and other problems really are too long to list here but it shouldn’t be necessary. For someone so concerned with wasting money, advocating UBI over direct commodity distribution is about as hypocritical as it gets.
The only difference is an additional and purely self-serving dependency on market values, which are drastically unstable across time, geography and, social structures. So, while your claim is of course untested, your proposal only further establishes that, once implemented, the results will be ever-changing and therefor unknowable.
You might do best to just state why you would prefer UBI over direct commodity distribution.
And if you claim to care about poverty, maybe you should care about the efficiency of the programs that are supposed to be helping poverty. Maybe you ought to care whether they really do some good, or whether they just employ a lot of middle-class bureaucrats. Note that it's not the middle-class bureaucrats that we're really trying to help.
So for all your ripping sokoloff for his/her alleged lack of compassion, you seem to have your head in the sand. You act like government programs actually do what they say on the label - as if passing a program to help people actually helps them.
Some of those program probably do some good. But they could do more. If you actually care about the poor (instead of just claiming you do), you have to care about the efficiency of programs that are supposed to help them.
- John Steinbeck
Are you temporarily embarrassed?
You may not realise it, but you could be a temporarily embarrassed millionaire. Do you plan to someday in the future have more money? Are you concerned that your taxes are too high, because someday you might pay too much tax. Do you ride the bus only because this year you can’t afford that luxury car you’re going to have? Do you live pay cheque to pay cheque like most people just because you haven’t had your lucky break.
And even on an average American software engineer salary, it's not extremely challenging to become a millionaire - you just have to be frugal and save a large percentage of your salary for a decade or two (depending on your compensation & stock options).
The median salary for an electrical engineer was $97,970 [0]. If you invest $50k/year at 6% return you get $10M in 45 years.
Of course this requires pretty massive discipline. But it’s easy in the sense that if you go to a good stem school, get a job and keep it, and don’t get sick, anyone can do it.
Of course 6% is super conservative as the total return of the s&p over 90 years is 9.8% [1]. If was you could get that rate somehow, you only have to save $15k/year.
Of course this is really hard in the sense of willpower, discipline, etc. And there’s certainly bad luck that make it not 100% certain, but it’s an open path to anyone in America (and other countries). Even for $10M.
[0] https://www.bls.gov/ooh/architecture-and-engineering/mobile/... [1] https://www.investopedia.com/ask/answers/042415/what-average...
Edit: You're also not accounting for taxes, which will take a sizable chunk of dividends and capital gains.
It’s a simple model that doesn’t take into account many factors. But it’s meant to demonstrate that getting $10M is certainly feasible and reliably predictable.
If you’re wondering if taxes and inflation change the outcome of the example, they don’t. (Which is why I didn’t include them) So the fact that there are taxes doesn’t matter for purposes of this example. Neither does inflation as the example is about getting $10M, not in getting $10M in present day purchasing power.
But certainly inflation is important in how $10M will be worth much less 45 years from now. But I don’t expect anyone to not know that.
But maybe I missed how inflation would impact this illustration. Let me know if you think inflation would change the meaning or validity of the example.
There are way better programs and calculators if you want to actually carry this out. They will factor in tax deferral, capital gains, inflation, etc etc.
But the nice thing is that if you were 18 and thinking of what to do with your life. It’s pretty reliable that you could get an engineering degree and save for 45 years to get $10M. If you wanted to.
I don’t think I would want to be in the “inner circle” because it’s quite a different lifestyle than I want.
Today's hypothetical 18 year old doesn't want $10 million as a nominal amount. He wants 10 million present day dollars worth of value. In 45 years, this might be something closer to $25 million (as measured in 2063 dollars). That's actually a difference that you need to consider.
Using your numbers of somebody who saves $50k per year and gets 6% annual returns, and assuming that their wage and savings increases with inflation, he'll end up with about $15MM. Certainly no small chunk of change, but equivalent today to about $6MM. Enough to retire comfortably and leave a legacy, but not a staggering sum.
Also, the taxes do matter. Marginal changes in your post-tax rate of return have compounding effects due to the long investment timeline. Getting an effective annual return of 5% instead of 6% shaves off almost a full third from the final amount.
Also, if the taxes didn't matter, the government wouldn't bother collecting them =P
(Of course, a salary and careful investment will only get you so far - if you want to be staggeringly wealthy in a short amount of time, a high-risk but high-reward strategy such a startup is more appropriate.)
This may or may not be true. OP was referring to a historical document that called out $1M and they remarked that today more like $10M is needed.
For practical purposes I guess it depends on whose hypothetical 18 year old.
If inflation is 2.5% then you need $3M in 2063 to have the purchasing power of $1M now.
Having a million bucks in purchasing power at retirement is pretty good.
So how much do you think an 18 year old wants?
I didn’t mean that taxes don’t matter at all. It depends on what you want to measure.
I was trying to show that it’s possible to end up with $10M after 45 years. I think you’re arguing that taxes will reduce that value and inflation will reduce that value. Yes, of course, so what. Arguing over how much is enough is a bit moot (or at least we should do it in person over drinks so it has some purpose and at least we can get drunk).
For me, $10M in 2063 dollars that is worth $3.3M in 2018 dollars that gets taxed at 40% lump sum or 25% per year or whatever is perfectly suitable for comfort and for angel investing. As far as staggering sums, $15M isn’t staggering in 2018 or 2063 dollars.
And yes, of course earning 5% is a huge differance than 6% over 45 years. So is earning 7%. What’s your point? Do you have a better arbitrary number for an average 45 year return?
I think we have different points and are talking past each other. You may have a more specific need for a certain number. I just want to point out that “being rich” isn’t some elusive, unobtainable outcome.
Wouldn’t it be super strange if it was casually easy for everyone to earn $10M. Comically, if it was, then we’d have hyper inflation until it got hard again.
I provided a link to the s&p history. Check it out. Anyone who can open a vanguard account can buy an s&p index. Of course maybe you’re wondering who is getting 6% risk-free and the answer is no one.
Past performance doesn’t guarantee future returns, but it’s a good idea anyway. Check out Buffet’s bet on whether index funds will beat the professional hedge fund managers in a 10 year period [0].
My point is that while very difficult due to discipline and with some risk, it is possible if you set your mind to it. As opposed to say, winning the lotto which has no reasonable way for a hard working person to pay out. So if you want to join the inner circle, it’s better to just get training and work hard for 45 years than to win the lotto.
You can certainly trade this for being “massively more comfortable” if that’s your preference. Most people do.
Every time I look at my Netflix viewing history over long periods I kind of wish I hadn’t traded hard work for “massive comfort.”
[0] http://blog.longnow.org/02018/02/09/warren-buffett-wins-mill...
>America is the wealthiest nation on Earth, but its people are mainly poor, and poor Americans are urged to hate themselves.... It is in fact a crime for an American to be poor, even though America is a nation of poor. Every other nation has folk traditions of men who were poor but extremely wise and virtuous, and therefore more estimable than anyone with power and gold. No such tales are told by American poor. They mock themselves and glorify their betters.
But my sibling commenter is right - this kind of post won't go down well on HN, given its nature and near-dogmatic faith in (neo)liberal ideology. For what it's worth, I upvoted you, though.
B. Also, I noticed that you spell check as 'cheque'. Thank you for condescending to us poor American rubes, we always appreciate it!