Billionaires Build
paulgraham.com
paulgraham.com
I think the "principle of charity" or "steel-man" criticism of billionaires isn't that every single billionaire is directly exploiting people. It would be closer to something like this:
The problem is that our society has feedback loops that make it hard to escape poverty, and feedback loops that let the wealthy amass more wealth and power. It doesn't have to be this way, it's a product of our laws and can be changed.
Warren Buffet doesn't directly exploit anyone. However he does pay less taxes than his secretary. To the extent that Uber drivers and Amazon warehouse workers are exploited, it's because our society has millions of desperate people struggling to get by. What's the point of being the wealthiest nation ever on paper, if there's terrible schools, high infant mortality, and lead in the drinking pipes?
FWIW He has a significant stake in a company (Berkshire Hathaway) that does own a series of companies that engage in questionable practices. And he is uniquely in a position to stop that practice and chooses not to.
https://publicintegrity.org/business/warren-buffetts-mobile-...
It is true that there are other, more reasonable beliefs.
You needn't use your real name, of course, but for HN to be a community, users need some identity for other users to relate to. Otherwise we may as well have no usernames and no community, and that would be a different kind of forum. https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme...
But what it is is that it’s basically impossible to accumulate that amount of wealth through work. Instead, you have to be able to capture the difference between the value of someone else’s work and what you pay them to do it. And you have to do that at scale. So Jeff Bezos has figured out how to pay people $X and make $X $Y off their labor, pocket a significant portion of that $Y and do it for the hundreds of thousands of people that work for Amazon. Nowhere in this argument is anyone saying that this practice should not be allowed or that he’s done something wrong. But what people are saying is that the narrative that billionaires built their wealth themselves is false and that they should be taxed heavily in recognition of the fact that they built their wealth off of the work of others.
The billionaires Paul identifies and helps create are no different, other than the possible exception that they rely on market’s expectation of future exploitation of workers’ value rather than having actually done it already. Paul would never fund a founder who wanted to divide all profits among employees. Therefore, based on that single fact alone, he is identifying future billionaires based on their willingness to exploit their workers...to pay them less than the value of their work.
Some guy delivering stuff in a garage is not going to be nowhere near as productive as an Amazon worker.
The crucial bit that people miss is that it is capital, goodwill and organisation allows employees to generate so much money in the first place.
Basically the sum is greater than its parts.
If you want to know where profit comes from(assuming a well functioning market) in a modern economics point of view, look into Subjective theory of value and marginal economics.
Marx never defined the terms about value rigorously, so it can be whatever people want it to be.
I know all about socially necessary value, etc and all hacks people have applied to it over the years. There are tons of interpretations about it.
It still has zero predictive ability in the real world.
Subjective preferences explains where profit comes from with much greater predictive ability. And models real world phenomenon we see.
The result is that I have no reason to believe you, or to even understand your point. Because you've essentially made no point.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
Expecting that is how you convince a large subset of folks to never bother with said deconstruction, and ultimately let bad ideas roam free and otherwise get adopted by impressionable / gullible minds.
Snark is there to suggest the reader go do their own research.
In a context like this, snark doesn't encourage people to "go do their own research" or save "impressionable / gullibile minds", nor is that really what people care about. (If it were, they'd expend energy doing those things in a way that might actually work.) Rather, its function is to vent one's own frustrations by translating them into concentrated language. The effect this has on community is to pollute it with fumes.
This is destructive of the ecosystem, unless one is happy with a single species, the snark, consuming all the others. Therefore we all need to find better ways of self-regulating and containing our frustrations. Then we can address other people in a way that has a chance of connecting with them.
Regarding the rest, I’m happy to simply disagree with you having observed this in practice in other communities. It’s not black and white.
As for flagging, what thread are you referring to?
And we all know that nobody is going to "go do their own research" because you snarkily disagreed with them. People do research when you make it easy for them to do, not when you drive-by insult them with an unreasonable reply. Drawing conclusions without providing reasons is literally being unreasonable.
There are billions of people with bad opinions on the internet. Nobody is forcing you to educate all of them. If you decide to try, it's predictable that you will at some point become tired of repeating yourself. At that point, you have two choices:
A) take a break
B) post crappy comments and justify it by saying you're tired
it doesn't. that capital was built by labor.
Is it morally wrong?
Profit is simply value extracted from workers.
As opposed to the arbitrage of the subjective preferences of multiple actors. The modern interpretation of how value can just appear.
Those workers who got a return on capital delayed consumption now, for more consumption later. That's a preference. I don't think that's a bad thing. But you can see how over a long time it can generate massive inequality.
But I don't think the fundamental mechanisms of how this occured is particularly exploitive.
Where as LTV pretty much just says it your just stealing value.
but ltv on its own provides no such judgement, it simply describes the material relationship.
Marginal economics explains and models a lot things we see in reality.
I'm much more likely to believe a model that has predictive ability.
> Is it morally wrong?
Not per-se, but as the denominations grow, society is structured to privatize most of the upside of that risk, while socializing the downside, but at the lower end of the scale the reverse takes hold.
In other words, even aside from the way the ratio between CEO and average employee pay has ballooned over the past fifty years, upper management gets bonuses when the company does well, labor gets downsized when the company does poorly.
Another way this plays out is that if you owe the bank a few hundred thousand dollars and the company you work for goes out of business, you have a problem. If you owe the bank a few hundred million dollars and the company you work for goes out of business, the bank has a problem.
-- Adam Smith, Wealth of Nations, Book 1,Chapter 5 https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/...
The marginal revolution happened in economics and a lot of those problems disappeared. A lot the things they couldn't explain suddenly could be using marginal economics and subjective preferences.
Marx simply didn't have the modern tools we have now. In fact if he was around afterwords it is likely he would never came up with Marxian LTV.
Frankly the only reason for it's popularity now, is because of it's association with communism. It provides the moral basis for it. As a result you've had a lot of people desperately trying to get it work in modern economic models as well without much luck.
But you can critique market economics using marginal theory of value. It just means markets have failures, not they are morally wrong at the core.
My own view is that the entire value discussion is tremendously muddled, confuses multiple issues, and is used to justify or support any number of spurious or specious arguments, generaally over policy.
The marginalists mistake price for value. Most orthodox economics does likewise.
Using the rational model somebody will only purchase something when it's price is below how much the person values the object.
It's related to consumer surplus. To make it measurable we use money as an approximate judge to work out much somebody values it. But the market price and how much somebody values something are different things in marginalism at the core.
But yes, costs, price, and value are three distinct, though connected, concepts.
I hate the term wealth creator as well. But it certainly is possible to create to wealth. If you take things that people don't value that much, use them in a way to provide something that people do value. You have created wealth.
In much debate and discussion I see "market value" substituted for "value". Often the implication is a vague one, as withmuch equivocation. pg's argumentventures there.
Keep in mind that Smith, Ricardo, and Marx each commit this error, including in the Smith passage I quoted. So do the Marginalists, or at leaast most of them.
Mariana Mazzucato may be an exception. (I've just discovered her, still going through her work.)
https://www.ted.com/talks/mariana_mazzucato_what_is_economic...
There couldn't be consumer surplus without it. I don't know how you could be marginalist and believe market price = value for user.
He's definitely right that it is valuable to society that people who have such insights are given the opportunity to build their solutions. We all win from being in a society where more of our needs are met.
What's perhaps slightly more dubious is the idea that, by bringing that insight, the person who has it deserves to own a billion times more of a vote in how our society is run than the average person.
Because that's what wealth, what a dollar, is: it's a voting share in how society spends its time and resources. As the owner of a dollar, you get to decide whether people spend their time growing and picking and shipping some plants and making them into some bread and then putting together a sandwich for you, or if you'd rather they dig up some rocks, extract some silicon from them, imprint it with complicated patterns, and then construct it into a device you can put in your pocket that lets you see photographs of influencers.
The pg thesis here is that instigating an idea, creating something that doesn't exist, is not inherently exploitative. That is true.
But what is perhaps arguable is, that in delivering on that original founder's vision, one which attracts many of those votes for how society should spend its time from many people, and thus accumulates billions of dollars of revenue - that many people other than the original founder end up creating the organization and building the factory and working the machines and writing the software and actually serving the customers to make that solution real - a bunch of people other than the founder are involved, and... well, if you choose to structure the rewards of that organization so that all those billions of votes in the future of society accrue to the founder, while only thousands of them accrue to the people who do the work of making it happen... that it's possible to construe that distribution of rewards as maybe slightly exploitative?
But not for all aspects of society. Pre-democracy, kings and royalties get to make these choices. But in western democracies, you at least have an unalienable vote which is independent of your economic output. This vote means that no matter how many billions get spent, this vote is up to your own decision.
The average person has $60k-ish a year. There is nobody out there with 60 trillion.
Regardless, the billionaire has to actually spend the money to get goods and services from the market. While his/her needs will dwarf an individual, they are still just a drop in the bucket compared to the middle class. This is why all of the largest companies/product markets/etc all cater to the middle class.
The only way billionaires can actually get leverage on how society is run is through direct monetary influence of politicians, but that’s going to happen whether the average income is $60k or $200k.
But anyway, whether it’s a billion times more or merely a million times more, the difference is still staggeringly huge.
If you have a dollar, how many more do you need to make a billion? About a billion.
If you have a million dollars, how many more do you need to make a billion? About a billion.
What we wind up with is a system where business owners have substantially more money than workers, purely as a product of the fact that they can use their power to make this happen. If someone uses their power to divert money into their own pockets away from people who need it more than they do, they're exploiting others.
It's not the fact that the organization Amazon exists to coordinate labour that we have a problem with. It does increase efficiency. It's the fact that Jeff Bezos has total control over it & uses that power to massively benefit himself at the expense of all his other employees, who have a much greater need for the money.
If George Washington had argued that, by virtue of having been the one to found the country, he was entitled to rule it as a dictator, we would take issue with that. While he may be a competent leader, he must still be accountable to the public, lest he use his power to benefit himself at the cost of the public well-being. Hence, democracy. It's strange to me that people are so unwilling to apply the same analysis to corporate hierarchy.
There's no objective way to say how much "work" is worth - only subjective. This subjective measure is given by the market rate. And in a functioning free market, this should give you consensus as to what some "work" is worth.
> the one to found the country ... people are so unwilling to apply the same analysis to corporate hierarchy.
to have found the country, he could've asked to be a dictator. The problem is that the founding is based on the principle of equality (at least at the time, of men...). So if he chose to turn around and take that equality away, everyone would just reject his founding. People in the country are attracted to the idea of equality, not to the guy named Washington.
However, a business does not start on the same premise - that of equality and rights (for all employees). The business started by the business owner is based on the premise of pay for work. That's as far as the relationship goes.
Anyone (in the USA) can start a business on a different principle - no one will stop you other than natural forces like competitiveness! And i think some businesses do that - a family business for example, which shares the work, and shares all the profits between them (and don't hire employees).
Nothing except not having the capital to do it.
> There's no objective way to say how much "work" is worth
Fortunately I explicitly said at the beginning that my argument wasn't going to involve talking about the value of work at all.
> everyone would just reject his founding
Literally every country up until that point except perhaps Athens had been a dictatorship of some sort. Democracy doesn't just happen -- you have to make it happen. There was no presupposition that everyone should have equal rights before then; that was the innovation of it. There's no reason why that same innovation couldn't be extended into industry.
> Anyone can start a business on a different principle
And anyone can start a country on a different principle. But you have to have a lot of resources to do so, and unless you found it on equality, it'll be terrible for most of the inhabitants. So, given that we have a government to regulate society, I see no reason to let people found businesses based on principles which will lead to such gross wealth inequality.
So when the dinner bill comes and you are given the power to choose how much to tip a waiter/waitress, do you exploit them by not giving them all of the money you can afford?
When shopping for a car, do you look for the dealer with the highest markup knowing how tough care salesman have it and pay asking price?
But frankly, I'm not interested in moralizing individual's actions at all. I'm not interested in going "oh Jeff Bezos is a BAD PERSON for X Y and Z." I think that's silly. I want to use the legislative system to raise is taxes and put his money to better ends whether he likes it or not. Whether Jeff Bezos is "good" is entirely irrelevant.
That's how a lot of countries are governed but it doesn't actually have to be the case. There are places where there are more businesses than employers which gives more power to employees. A lot of export driven economies are basically based around the principle that workers in those countries are cheaper than any other country. Governments introduce policies that reduce the purchasing power of employees over time.
>What we wind up with is a system where business owners have substantially more money than workers, purely as a product of the fact that they can use their power to make this happen.
Yeah the real problem is that governments love to listen to what businesses have to say at the expense of workers.
You're ignoring the fact that capital has most of the systemic advantages such as various information asymmetries, and thus reaps most of the rewards.
Capital also exerts quite a lot of influence to ensure that labor markets don't get too tight (eg. economic policies that target unemployment rates that aren't "too low") that might somewhat counter capital's negotiating advantage.
And when that still isn't enough of an advantage, colluding to limit the mobility of labor among competitors is absolutely on the table, because even if caught the consequences aren't particularly severe.
This implicitly assumes that "the value of someone else's work" is independent of the context in which that work is done.
The reason Jeff can pay someone less than the value (to Jeff) of that person's work is that, somewhere other than Amazon, that person's work would be less valuable.
The reason is Jeff must pay someone less than the value they bring is because that's the only way for a business to make a profit. If you pay me $100, and I add exactly $100 of value to your business, then you're no better off than if you hadn't hired me at all.
Not really, since no one is arguing that this worker-capital relationship should change. That the synergy exists is a good thing.
But the tax burden of the two groups is what’s at issue. On the one side, you have the “they built it, they should keep it” folks. On the other side are those that believe they built it on a foundation of societal investments and the work of others and should pay most of it back in taxes. No one is arguing that they didn’t built something of value.
> If you pay me $100, and I add exactly $100 of value to your business, then you're no better off than if you hadn't hired me at all
Ahh the refrain of the myopic capitalist. In your hypothetical situation, we’re all better off because I’ve gainfully employed someone, added purchasing power to the overall economy and added value to the world since, presumably, the customers who paid me $100 received something they value above $100. To whatever small degree, putting $100 in the hands of my employee who will then spend it also creates more purchasing power for my own customers as that money circulates through the economy.
This is one of the problems with such an individualistic view of capitalism...it utterly disregards benefits that are not directly seen by the individual. We don’t have to become socialist or communist to start to provide greater emphasis on the contribution of workers and society as a whole. We can keep the market forces that allow for efficient allocation of capital while putting policies in place that provide for those who aren’t at the top of hierarchies and whose contributions are less unique. This isn’t about preventing businesses like Amazon from existing, it’s about ensuring that the people who work for Amazon can live a comfortable and dignified life and that Jeff Bezos should only be fabulously wealthy instead of obscenely wealthy.
Maybe this would be better stated as "...since many of us are not arguing that...".
That's... getting rather close to the definition of Market Socialism, actually (depending on how much greater the emphasis is). It's certainly firmly within the range of Social Democracy (which USAian conservatives would happily label as 'socialism').
This is the textbook definition for how wealth is created, and it's exactly what's supposed to happen in every transaction in the marketplace.
You buy an apple for $1 and it brings you $1.10 in value. You have captured the difference between its value to you and its value to the seller, and the ten cents is wealth that didn't exist before.
This also works for the seller, who sold her apple for $1 even though it only cost her $0.95. She captures five cents of the wealth created by the transaction.
Wealth is created because things have contextual value. It's the same when we exchange our labor for money. They wanted our labor more than the money. We wanted the money more than the time. Win/win for both of us.
But, and I hate to stretch this analogy to its breaking point, it's more like the overwhelming majority of Americans are apple sellers (read: wage laborers) and they have no way to achieve basic human rights like food, shelter, and baseline medical care without selling their apples. And they can only sell to one buyer at a time as part of an apple contract (employment contract) and if that buyer decides to stop buying from them ("restructuring"), which the buyer may do at any time (right-to-work laws), our apple seller has to go looking for another buyer (job search) which can take months all while their savings dwindle...
So you can see why some people might think this is not the optimal way to structure a society. Or to just put the analogy in its coffin, they might see this situation as more complicated than just a few apple-buyers getting a bargain.
But that’s a dumb generalization. Microsoft wasn’t paying low wages and software people easily found jobs elsewhere but it still made Gates a billionaire.
Warren Buffet gave cash to companies he thought were undervalued and on hard times in exchange for ownership stakes. This worked out more frequently than not and made him wealthy without exploiting any labor (many of these companies paid/pay solid middle class wages).
The Google founders are billionaires and their company has nothing to do with paying for cheap labor and up selling it.
Exploiting labor prices isn’t a business model that pays well enough by itself. In other words, companies that produce billionaires have to be providing more than just labor at a higher price than they paid for it.
Google executives (possibly not the founders personally) colluded with management at competing employers to reduce employee mobility and negotiating power.
The cost of getting caught wasn't much compared to the salary increases they saved. So, yes, the labor wasn't 'cheap' but it also wasn't the fair market value.
Something like mandatory equity contributions to the company pension fund would probably work.
$10-20 an hour is better than minimum wage and a few years ago I worked a labor job that "only" paid $12.00/hr.
Is Jeff Bezo's personal net worth the causation behind someone not being able to support a family?
What about Zuckerberg, what is the average salary of a FB employee? If its above a certain amount is that a "moral" billionaire?
I would argue that pursuit of profits can lead to bad things for employees... but I never understood going after billionaires when their wealth is almost exclusively because they created a company worth billions. If that were the case, everyone making minimum wage should have seen their salaries skyrocket when these billionaires lost great %'s of their wealth over the last year.
I personally see rent/CoL being the problem. I don't know of solutions but I do feel going after billionaires is just a waste of energy. I'm a bit bias as my work has some crossover with "wealth and finance" (trading stocks) but all too often these ideas about "taxing rich people" just blow up and leave everyone worse off.
https://en.wikipedia.org/wiki/Swedish_financial_transaction_...
TL;DR, they tax each trade on the market. It makes a fraction of what it was projected to make and never comes close to making more than they did before by just taxing the capital gains (profit from trading). Its an idea I've seen showing up more and more.
I am not sure why you feel that "taxing rich people" makes everyone worse off. 60 years ago a man with a high school diploma could support a middle class life for a family of 4. Taxes on the highest earners were much higher than they were today. 60 years before that there was no federal income tax and people worked 14 hour days in dangerous conditions while Carnegie and Rockefeller amassed wealth on scales not seen until today.
But yes I agree with you that a tax on each market trade is lol stupid. But I think it is a straw-man argument along with setting the tax rate at 100%.
Because they were first or best to do it. MySpace was already a thing, several other social media sites but today they're mostly dead while FB is not. Luck does have a lot to do with it. I feel trying to quantify luck though will get us no where. Trying to "correct" for it, even more so.
>The people like Newton and Einstein who actually had revolutionary ideas were not even close to billionaires.
Do you think they should be? I cannot think of a reason... but I do understand what you mean.
>I am not sure why you feel that "taxing rich people" makes everyone worse off.
I think it would be hard to quantify it but yes, I do think people are "worse off" - not by much though, if you're going by metrics like salary. I'm thinking about all the advances we've made. I don't see half the stuff happening if not for the ability for excess money to be invested. I mean, the very thing we're talking on for instance (and yea maybe it could have been on some other site like FB or reddit) but those are also because of investing.
>60 years ago a man with a high school diploma could support a middle class life for a family of 4. Taxes on the highest earners were much higher than they were today. 60 years before that there was no federal income tax and people worked 14 hour days in dangerous conditions while Carnegie and Rockefeller amassed wealth on scales not seen until today.
I don't see how the two are related though. There were a lot of things different about back then vs today. I would like to see the focus be on rent and CoL as I see those as way more of a problem than if Jeff Bezos has $50b or $100b. (his wealth has fluctuated like crazy with covid and divorce).
>But yes I agree with you that a tax on each market trade is lol stupid. But I think it is a straw-man argument
I'm glad you agree and also glad its not like twitter or reddit where we have to try to score cheap condescending shots in to "argue" lol... but alas. I would say if its the very thing presidential candidates like Bernie and Andrew Yang are saying they would like to get done, I would consider that beyond a straw man.
https://markets.businessinsider.com/news/stocks/why-bernie-s... https://www.yang2020.com/policies/financial-transaction-tax/
It is also what people are pushing as a solution for student debt.
I agree the 100% tax is a strawman though! ... Unless a significant figure proposes it, I will always say that's a strawman lol
I think this is a fundamental feature a winner take all/most market. FB beat out myspace and happened to win, but if not them it would have been someone else. 5 billion internet connected social animals is the value, not the app that facebook built.
>Do you think they should be? I cannot think of a reason... but I do understand what you mean.
I don't think they should be because I don't think billionaires should exist. But I do think the value they created was much bigger than the value Zuck created. They were better at creating value than capturing it.
>I don't see how the two are related though. There were a lot of things different about back then vs today. I would like to see the focus be on rent and CoL as I see those as way more of a problem than if Jeff Bezos has $50b or $100b. (his wealth has fluctuated like crazy with covid and divorce).
The two are fundamentally related. Gdp per capita is higher now than it was in the 60s, yet the median person is no better off. That can only be explained through how the wealth distribution has changed between now and then. Whether Jeff Bezos is worth 50B or 100B doesn't matter too much. The issue is that the wealthiest are capturing a larger percentage of income now than they did 60 years ago. I don't view our age as being more innovative than a time where we invented the atom bomb and went to the moon and other cool shit. And we paid for it with taxes! Jeff Bezos isn't more innovative than those guys, he is just having his workers piss in bottles to squeeze out every last cent. It is a return to the bad old days of Rockefeller.
>I would consider that beyond a straw man.
Did not realize that Yang supported it, learn something new everyday. Would like to hear his reasoning beyond the short blurb on his website as he has always struck me as deep thinker.
What do you feel is the "solution" ?
>I don't think they should be because I don't think billionaires should exist. But I do think the value they created was much bigger than the value Zuck created. They were better at creating value than capturing it.
How much do you think they should be worth and why? I have some ideas, however I think it just comes down to the fact that some things are more easily monetizable than others. I don't think that's necessarily a problem.
>That can only be explained through how the wealth distribution has changed between now and then.
How do you come to this conclusion? I feel there are more factors than any one person can point to for the reason why people are "worse off"
>The issue is that the wealthiest are capturing a larger percentage of income now than they did 60 years ago.
Is it income? I still fail to see how Bezos, Musk, Zuckerberg, Gates etc. Having an ownership in their respective billion dollar companies makes the average person worse off.
> I don't view our age as being more innovative than a time where we invented the atom bomb and went to the moon and other cool shit.
It depends on what you view as "innovative" - by this logic, I fail to see how going to the moon helped the average person. I can agree with the sentiment though.
>Jeff Bezos isn't more innovative than those guys, he is just having his workers piss in bottles to squeeze out every last cent.
I don't think Jeff Bezos is a billionaire because of this. Stuff like that certainly happens at other places, you just don't hear about it because its not as interesting. These aren't billion dollar companies by a long shot. Poor working conditions aren't exclusive to billion dollar companies. I'm not defending it though, that is terrible. I've worked in a warehouse and thankfully I never had anything like that happen but I did see some questionable things.
>Did not realize that Yang supported it, learn something new everyday. Would like to hear his reasoning beyond the short blurb on his website as he has always struck me as deep thinker.
I feel you. I really liked him. Still do I suppose, its just I do algotrading and I was shocked to see all that about "profitable algorithms" - I don't think he personally wrote that but I guess he has to be responsible for what is on his site. I will have to see if he's ever been asked about it directly.
A shocking amount of people seem to think they know how "wall street" works... I don't even know and would be silly to pretend but I do know that trying to eradicate "profitable algorithms" and imposing FTTs would be disastrous. That is what I'm worried about in regard to "going after billionaires". I'm not an economist though, so I can't pretend to know what will or will not happen. All I know is that the same principals when applied to "wallstreet" or trading in general always end in disaster and only end up hurting the "average person" indirectly.
I'm bias though, as I've personally worked on a few things that were only possible because it was funded by wealthy people with an idea. To me I hardly see a difference if their company is worth $100m or $1b. I suppose it affects how many projects they can realistically start... but eh.
Tax rates were higher but there were far more deductions. The effective rate was similar to that of today.
60-70 years ago a man with an HS diploma could support a family due to massive demand for labor. This was mainly because America was the economic engine that provided for the reconstruction of the world after WW2. Go back another 15 years to pre-WW2 and shit was pretty bleak even with high taxes.
> You mention FB. With network effects, it is inevitable that there will be a few large dominate social media companies. If it wasn't Zuckerberg it would have been someone else.
It was someone else, it was MySpace and Friendster and other trashy shit. Facebook brought a vastly better user experience that seems mundane in retrospect but it won because it was so much better. Like it or not, Facebook did innovate a lot early on and had a unique, clean, consistent experience. They made social media mainstream. It was not a given this would happen.
My impression is more that FB won because of Zuck's talent/luck/vision for weird acquisitions (instagram, whatsapp) that paid off in ways nobody foresaw. Facebook was by no means the clear winner then, and I would argue most of it's success since then has been first-mover in global markets. FB engagement has been in decline in the US for years.
The problem with just taxing it all away to prevent him from being a billionaire is the money is tied to control of the company, so it's equivalent to saying nobody can build a business bigger than some arbitrary limit. Which is equivalent to saying nobody can build a business with more than a certain arbitrary number of employees. Where would any of us work if that were the case? It's not at all a given that you would get millions of new small and medium businesses that would completely make up for that gap you'd have from lopping off every big company at a couple billion dollar market cap. The world is just not zero-sum like that as much as progressives might (either deceptively, or obliviously) pretend that it is.
> Paul would never fund a founder who wanted to divide all profits among employees
While YC might not recommend a founder take literally 0% equity, they are hugely supportive of founders giving more equity to employees and keeping less for themselves and have done a lot to move the industry in that direction https://blog.samaltman.com/employee-equity
Limits are hardly arbitrary. If you control a large enough chunk of economic output that your decisions have distortionary effects on other markets and people it’s not an “arbitrary” standard that this should be disallowed. I assume everyone on HN would be pretty pro something like net neutrality to constrain gatekeepers from carving a slice out of all business done on the internet for themselves on these grounds. But, for some reason, people seem to have trouble connecting how the same logic applies to distortionary control over the media or something like urban transit.
Yes. That's generally what "no billionaires" policies are focused on. But "market power" is still a useful consideration.
Jeff Bezos is rich because his ownership stake (stock shares) are worth a lot of money on the stock market. He did not get paid out profits (amazon doesn’t pay dividends). There is nothing here than even makes sense to ‘return’ to the employees.
Meanwhile searching products on Amazon is still a shitshow and it's generally not possible to disable third party listings.
There are examples where a group of people came together and decided to share in the profit or loss of a venture, and worked on it as employees (REI is a popular US outdoor equipment company that was started this way).
Amazon seems to have chosen a path where instead of asking individual employees to take a loss or break even for 20 years, they paid their employees while the company absorbed those losses and scaled.
The "billionaire" bit here seems arbitrary. Bezos is a billionaire because he owns a lot of shares because he didn't have a lot of cofounders. If he had started Amazon with 20 different cofounders then he (probably) wouldn't be a billionaire. Either way, the concept of exploiting labor for profit doesn't impact his billionaire status.
I'd be open to having a separate discussion around what it means to "exploit" labor, but on this topic I think moving the conversation from the concept of billionaire founders to how the system oppresses those that fall below a certain income would be more productive.
I don't know why Paul funds or doesn't fund certain founders, but if I were Paul I would be funding those founders that I believe can start companies that will eventually have stock collectively worth a lot of money. From the stories I've read - most of the founders that Paul funded DO plan on splitting their profits amongst all their employees - purely by virtue of when he invests in a company, the founders usually were the only employees. If I was Paul my dream would be that a company started by a small group of initial founders would be able to get big without having to "exploit" (or hire) any people at all.
Why not? He explains what YC is looking for in a founder, and I don't see "what will the founders do with the profits" mentioned at all.
Not at all. I have no doubt that Jeff Bezos, for example, works very hard. The difference is not whether or not a person works, but what they work on.
Another poster upthread (mightybyte) suggested viewing this in terms of leverage: how much is the impact of your work magnified? I think this is a very fruitful way of looking at it; see my post upthread in response.
The difference was in the songs the Beatles created. The Beatles created those songs, not the laborers who pressed the records.
Or take Stevie Nicks, who google reports is worth $100m. Are the stage hands who set things up for a concert creating that wealth for her? Nope. Those stage hands could do exactly the same for my unrecognized musical talent, I could pay them the same, and would lose gigantic amounts of money.
Is Stevie exploiting those stage hands? If she is, then wouldn't those stage hands doing the exact same work for me be exploiting me for my foolish money?
Bottom line is people are entitled to what they can negotiate for. They don't give it back if their employer loses money, so why would they be entitled to what their employer made?
Sounds about right. Meanwhile the owners of the capital are free to make money off the float (and pay capital gains rates on those profits).
But it’s not. I can put shit into boxes in my yard and put them on a truck but that doesn’t mean I’m providing the same value as the Amazon worker. Labor has no value on its own. You have to do work that is useful for someone to generate value and identifying the useful work (i.e. connecting the participants) is a big part of that value.
It is the company’s structure accounts for the majority of the value created by that engineer’s work. So, how is it exploitation to give them less than the total profit created?
Except that billionaire founders also persist in flattering themselves that their company "only hires the best". If that were true, FAANG salaries for ICs ought to be even higher than they are, and competition between them for employees would be cutthroat rather than collegial.
As it is, they are competing for employees as a group with the rest of the industry, more so than with each other, so the truth is a mixture: individual employees matter more than their compensation actually reflects, and the company the employee is embedded in matters a great deal too (enough so that we only ever see a randomly occurring concentration of high quality employees producing innovative products and services when that group is more-or-less the whole org: a startup. Inside a larger org, such groups only flourish deliberately).
That difference is attributed to the company, not the laborer. Now whether that is because of “monopolistic forces” or because the company is truly “better managed” is up for debate.
So just because your labor is worth $X to your employer doesn’t mean all of it can be attributed to you. It would be inaccurate to believe that they owe you exactly $X, and anything less would be exploitation.
So are you saying that there should be a higher tax for a person who profits off the labor of someone else?
Surely the person who constructed the system (that gave opportunity to the other individual they’re profiting off of) added some benefit to the other individual as well, otherwise wouldn’t the other individual work for himself or elsewhere?
Or is the argument that there is always a moral cap on how much profit a person can make off someone else?
Jeff Bezos shouldn't be making 12-figure gains while his warehouse workers are on welfare. Those warehouse workers shouldn't be paying a higher tax rate than he does on their income.
That IS an unquestionably exploitive relationship between a CEO and his employees, even if he isn't personally being an exploitive monster he isn't doing anything about the systemic exploitation he lead the way in creating.
This is pretty much true of any billionaire, regardless of their personality or views.
The existence of billionaires is a economic luxury that should only be afforded once society as a whole has taken care of its people. The co-existence of billionaires and homelessness is an economic failure, especially when some billionaires possess more capital individually than the entire homeless population of this country.
Given the state of consumer indebtedness now, I think our economy is actually underperforming because there is not enough demand due to low wages.
The problem with Fordism is that if you are a manager, there are strong incentives for your firm to defect from paying high wages. If you are the only firm doing this, the consumer economy still hums and you have larger margins. If all the firms do this however, consumers' spending power diminishes over time.
Once the tide has turned, defection becomes a matter of survival as high wage firms become uncompetitive.
Someone like Jeff Bezos has enough market power and technology to turn the tide again like Henry Ford. But he chooses not to.
i think, this is a key point
we are beholden to someone with great power and wealth to be more fair; those who are under them dont have any kind of vote in the matter and therefore have little power to ask for more (whatever that may be)...
Amazon has 1.3M employees in the US and $11B in profit globally.
If you increase the wages at the bottom that pushes everyone up (why would a manager of the warehouse workers make less than the people they manage?).
So if you divide up that $11B in global profit across all 1.3M US workers, you get $8,700 per worker or maybe $500 extra per month after tax. A much appreciated boost by the folks at the bottom, but now global profit is $0.
I’m certainly not arguing against paying warehouse workers more. I’m just saying the “billions in profit” don’t go that far in a company the size of Amazon.
Amazon understands that in the context of organizations it stands to benefit from being seen as the meanest competitor, and that it can get public investment at scale by making this case. The argument isn't that it will hand more money to investors directly, it's that it will attack other things one can invest in, and make those things lose, and therefore it's the safe bet.
In so doing, the adoption of a crazy, aggressive, Spartan attitude among all its workers and management is beneficial, because the easiest way to convince the world you're a psycho axe murderer of a capitalist is to actually be one. In other words, 'making massive profits' isn't the end goal: 'killing other companies' is. And so, the workers do need to be paid that little and treated that harshly because every worker must be first a warrior, willing and able to trade away their health and well-being for the betterment of the company, and this goes all the way to Bezos, whom I'm convinced is going to live a shorter life than a billionaire might otherwise expect, from stress related damage. It's that or go soft and see his company go soft, and I think if he could do that there wouldn't be an Amazon as we know it: people will not follow a leader who doesn't at least pretend to represent what he is leading people towards, and Bezos is leading Amazonians to be warriors and throw themselves into the wood-chipper in order to destroy all competition.
They're paid more than they would be at easier, more civilized jobs. Part of the compensation is this emotional compensation intimately tied up in the American attitude, the cost-less, intangible compensation of knowing you are on the winning team. That is inherent to what Amazon is.
I mean, as an example, billionaires have access to top notch lawyers that lower their tax bill, look at Trump’s recent tax filings for example. Can you reasonably argue that they are not unfairly taking advantage of society, and by extension its people?
What about government lobbying etc. I mean the list goes on.
Personally I think PG just attacks the weakest form of the argument against his view. He obviously benefits from billionaires being created as he is an investor. Getting a large payout is literally the purpose of his job.
PG's statement:
> The second is about something politicians sometimes say — that the only way to become a billionaire is by exploiting people — and why this is mistaken.
He is framing it so he is debunking an absurd claim: that the only way (no other ways are possible) to become a billionaire is by exploiting people.
This is distinctly different from whether "exploiting people" (opinions vary on what this means) is the most common way it is actually done.
It's a shame we don't have a political party that would end this rhetorical he said / she said approach we take to this topic, and instead adapt a thorough data focused approach to this problem, accurately illustrating the situation in a way that the common man could understand. It would be nice to know with some level of accuracy how "bad" the problem really is, as it is we have little to go on other than our intuitions and propaganda from both sides.
Ross Perot did all right, and he was a total amateur. If a group of people actually put some serious though and effort into it, who knows what might be possible.
https://en.wikipedia.org/wiki/Ross_Perot#1992_presidential_c...
In the 1992 election, he received 18.9% of the popular vote, about 19,741,065 votes, but no electoral college votes, making him the most successful third-party presidential candidate in terms of the popular vote since Theodore Roosevelt in the 1912 election.[46] Unlike Perot, however, other third-party candidates since Roosevelt won multiple electoral college votes: Robert La Follette in 1924, Strom Thurmond in 1948, and George Wallace in 1968. Compared with Thurmond and Wallace, who polled very strongly in a small number of states, Perot's vote was more evenly spread across the country. Perot managed to finish second in two states: In Maine, Perot received 30.44% of the vote to Bush's 30.39% (Clinton won with 38.77%); in Utah, Perot received 27.34% of the vote to Clinton's 24.65% (Bush won with 43.36%). Although Perot did not win a state, he received a plurality of votes in some counties.[47][48] His popular vote total is still by far the most ever garnered for a third-party candidate, almost double the previous record set by Wallace in 1968.
A detailed analysis of voting demographics revealed that Perot's support drew heavily from across the political spectrum, with 20% of his votes coming from self-described liberals, 27% from self-described conservatives, and 53% coming from self-described moderates. Economically, however, the majority of Perot voters (57%) were middle class, earning between $15,000 and $49,000 annually, with the bulk of the remainder drawing from the upper-middle class (29% earning more than $50,000 annually).[49] Exit polls also showed that 38% of Perot voters would have otherwise voted for Bush, and 38% would have voted for Clinton.[50] Though there were widespread claims that Perot acted as a "spoiler," post-election analysis suggested that his presence in the race likely did not affect the outcome.[51]
https://markets.businessinsider.com/news/stocks/aoc-accuses-...
To become a billionaire, one must be able to amass 10 thousand times more wealth than the median household in the US. To reach the lofty heights of Bill Gates et al. one must amass ~ 1 million times more wealth than the median US household.
The reason why some believe that to be a billionaire is exploitative is that they believe this 4-6 order of magnitude disparity in wealth is inherently exploitative. You could always imagine a society where the warehouse workers were paid double ( or even quadruple ) for the effort they perform and a 100 billionaire would simply be a 100 millionaire.
Regardless of where you draw the line for the discrepancy to be considered exploitative. The line exists somewhere for everyone. Tsar Nicholas had the equivalent of ~1.3 trillion in today's dollars in wealth prior to the revolution, and I can't imagine the US supporting anyone with amassing more than 10-20 trillion dollars in wealth.
Carnegie et. al. each managed to earn up to ~300 billion in today's dollars prior to the anti-trust act.
At some point, when the wealth gap is extreme enough and the circumstances of enough people is sufficiently degraded -these arguments stop holding weight.
And the bigger question is - would Microsoft or Tesla happened at all with Gates or Musk? I mean, at least in Musk’s case everybody thought he was guaranteed to fail. I don’t begrudge his $1B of wealth in the least - he put his money where his mouth was when everyone else said it was dumb - but he was right.
It’s not like they Gate and Musk kept all the wealth for themselves. Didn’t Microsoft create several hundred millionaires? But if Gates and Musk were the key drivers for the very existence of the companies I don’t see any issue with them getting the lions shares of the returns.
The list of billionaires is expansive at this point in time. While there are some like Elon Musk who are directing the economy in ways that would be perceived to some like myself as positive. For the ~262 million people in the US who would be unable to afford a Tesla, will never go to the Moon or Mars, live paycheck to paycheck and may lack the education ( or interest ) in space to appreciate the science and technology advancements being made, These activities can best be summed up with this song inspired by the 1969 landings.
Only part of Bill Gates' wealth is attributable to the value he created. At least some of that wealth was due to establishing and protecting monopolies on desktop operating systems and office suites.
Yes, quite a bit of harm was done as a side effect of protecting those monopolies, not to mention from extending them into other markets. The simplest and most direct harm was an extra $50 tacked onto the price of every desktop PC purchased even if you didn't want (or already had) a copy of Windows.
As for Musk, it's early days yet, and his companies are still in "Blue Ocean Strategy" mode. We'll have to wait and see what happens once SpaceX and Tesla are defending an entrenched position.
I don't think any of your three statements are true, based on my (limited) knowledge of history. Far as I know, the only way to break the feedback loop is to restart it - a revolution or the like - and build something in its place that maximizes the time until the loop has to be broken again.
If anything, I'd guess that it's human nature to try and amass power/money/influence/cows, and the more you have the easier it is to get more. That's not a fault with our laws, it's what people do - on average, in aggregate.
People do those things because the pressure to avoid doing those things is far too weak, and the pressure to be a good person is one of the things that society should provide.
I don't know how you're imagining that society can provide that pressure without also giving ambitous people a way to collect power.
There might be something to discuss there: https://publicintegrity.org/inequality-poverty-opportunity/w...
Of course millionaires and billionaires can still _work_ themselves in the sense given above, i.e. in a way that creates value. And one could argue that one can be a self-made (no exploitation of others) millionaire. But it becomes farcical to claim that a person can become a billionaire without exploiting people. Any person on Earth would need much more than one lifetime to create a Billion USD worth of value _through their own labor alone_.
It is farcical to a Marxist maybe, with infinite patience for labor theory of value despite century worth of contradictory evidence.
> One reason for the measure’s current strength is that the balance of power seems to have moved in favour of capital, and against labour, in recent decades. The decline of trade unions, and the addition of China to the global market, have weakened workers’ bargaining power; in the past 15 years, corporate profits have been regularly equivalent to more than 10% of American GDP, and at a much higher level than they were between 1960 and 2000.
https://www.economist.com/graphic-detail/2020/12/04/expensiv...
But I’m still Graham’s Billionaires Build la-la land is still a reality, though.
It is obvious that you can't really have any social advancement without any supporting social dynamics. Also odds are overwhelmingly against any given individual becoming a billionaire from a commoner background… yet the examples are numerous, and particularly in tech.
I'm not commenting about merits of Graham's observations as am not a venture capitalist. But the LTV bit you were on, that's some ancient bullshit. I lived in the tail end of USSR, could observe first hand how well it worked.
The exploitation is a side effect.
The Doordash people don’t want to steal tips, but the law doesn’t punish them for doing so, and the people getting exploited are drinking lead water anyway.
For a W2 worker it’s wage theft. Since these folks are 1099s it’s not protected by law. Either way is gross and unethical.
People oppose billionaires paying low taxes, and the related lack of public investment in bedrock services and infrastructure they need. When a rural area has no hospital, or a city has crumbling roads and transit, yes, people resent enormously wealthy people for whom those are not concerns. People do not, however, oppose their success at building companies that make money.
PG is picking a fight with the least sophisticated form of the anti-billionaire argument (i.e. "billionaires suck"), which is beneath him. I get that it's easier to do that than than argue over how the structural issues that allow massive wealth accumulation also undermine the foundations that markets and societies are built on, but it's really beneath PG to choose such a trite argument to oppose.
> if we just tax Jeff Bezos more then the Water Authority in Flint, MI will somehow become more competent.
That, however, is a strawman. Nobody suggests that at all. People who support more progressive taxation point to things like the New Deal and the strong progressive taxation coupled with public investment in infrastructure and education that propelled the United States forward.
You're making that exact argument in fancier words. "strong progressive taxation coupled with public investment in infrastructure" implies that the problem is not enough money. So take more money from people who have lots of money and let the government spend it.
The US spends more per-pupil on education than almost every other country [1], with worse outcomes in most cases. The corrosion inhibitors that would have prevented the Flint water crisis cost $140 per day. That's not a misplaced decimal point. That's One Hundred and Forty dollars. Do we need to revamp the entire US tax system to come up with a 140 bucks? No. The money is there, what's needed is some competence in how it's applied.
[1] https://www.manhattan-institute.org/issues-2020-us-public-sc...
There are other systems, like where everybody owns everything, but historically when you allow it so one person can own something that someone else has to create it doesn't work out very well. People don't have any incentive to make things if they can just own things that other people make.
Entrepreneurialism is at an all-time low in this low-tax, finance-happy environment, so I don't see how you can conclude that low taxes are good for creativity. It seems like it's been pretty good for concentration - low taxes means more money for acquisitions and buybacks.
You seem to be proposing that taxation is an unalloyed good and that more taxation is always better - that all problems are the result of insufficient taxation. Do you have any actual plan for how to spend all this money you propose to collect in taxes, or do you just want to throw more money at the people who are currently doing a bad job with the money they already have?
> Do you have any actual plan for how to spend all this money you propose to collect in taxes, or do you just want to throw more money at the people who are currently doing a bad job with the money they already have?
Sure, but I'm not running for office, because "small government conservatives" and their presumptions make it absolutely miserable for anyone who would do a good job of it. You can burn the money in a furnace for all I care, as long as the ratio between the richest and poorest goes down substantially.
How does making everyone worse off make things better? For example, inequality skyrocketed in China after they liberalized their economy [0]. Why would it be better for everyone to be equally miserable and starving? I really don't understand this mentality.
(Heck, for all intents and purposes given the high marginal tax rates in many countries and the enormous amounts of waste that those governments are guilty of we're already doing just that, and the last 80ish years of human history have been pretty darn good!)
Am I wrong in sensing that you believe in a bit of #3?
This is exactly the problem I have with this "taxing the wealthy will fix it" arguments.
What happens if it is the latter? What happens if taxing the rich doesn't fix it and actually makes things worse?
>His wealth also gives him disproportionate power to shape the incentives of the government, the economy, and the media narrative.
Disproportionate to what?
>Taxation is the proper remedy for breaking this power.
Why?
>We won't know what's possible until we stop letting barons write the laws.
Again, what if "what's possible" is worse?
Its not some "what if" either, its literally happened.
https://en.wikipedia.org/wiki/Swedish_financial_transaction_...
Same exact line of thinking too. They figured if they taxed "the rich" they would get more money. To this day they have probably lost untold amounts because it essentially killed their markets. You would have to do some modeling but all else holding true, they've missed out on decades capital gains taxes that just don't exist anymore because of that FTT.
How is it going to be worse if Jeff Bezos is worth $50,000,000,000 instead of $180,000,000,000? I don't get it - America doesn't have a Communist party, what are you picturing happening here?
> Disproportionate to what?
Me. If he wants a policy to change, he has lobbyists and the Washington Post. If I want to change a policy I have to spend my whole life building a coalition. That's unacceptable for a democracy or a fair capitalist economy.
Lots of "what if" and narrow examples here, but we've tried this experiment before, in this country. It worked really well! Economic prosperity, a broad middle class — https://en.wikipedia.org/wiki/New_Deal. We've also seen some really gruesome examples of what happens when concentrated wealth is allowed to run amok for too long — https://en.wikipedia.org/wiki/Slavery_in_the_United_States, https://en.wikipedia.org/wiki/American_Civil_War, https://en.wikipedia.org/wiki/World_War_I.
Keep nitpicking individual policies, you are missing the bigger picture.
Hmm, how would it be if Amazon stock dropped in price by 73%? Actually, I think that would be pretty bad. Ironically, least of all for Jeff Bezos. How good would it be for you if your 401k dropped by that much?
Or maybe you're thinking we could just confiscate the stock, or force him to sell it. Sell it to whom? Other billionaires? And do you think this wouldn't have an effect on the stock prices (i.e. people's retirement funds) and availability of capital (i.e. money to pay people's salaries)?
Again, how will things be worse if Jeff Bezos was worth $50,000,000,000 instead of $180,000,000,000? That's what was supposed - that it would make things worse if we made him pay a fair rate to the American people for helping maintain his wealth.
I also don't see how you talk about fair while proposing to enact a special tax to target one specific individual. That seems more like a personal vendetta than an economic policy.
> That seems more like a personal vendetta than an economic policy.
Won't somebody please think of the poor billionaire! I'm using him as an example, because he's first on the list, but feel free to substitute whatever name or array of names you want if it makes it more palatable for you. FWIW, there is historical precedent for passing a tax law targeting the single richest person in the country (John D. Rockerfeller at the time).
Ah, we've reached the crux of the problem. You are not concerned with making things good only with making them even. This is just crab mentality[1]. Someone else has more than you, so you need to pull them down. Or perhaps you've conflated the two and think that if things are even, they will necessarily be good, or at least better than they are when they're uneven. Let me assure you, it is entirely possible for things to become more even and also have everyone be worse off than they were before.
> If you also pursue a more robust, less concentrated economy more generally, you could certainly invest the money in entrepreneurship, small farms, improved IT infrastructure, etc., etc.
Sure, we can invest in those things. We can also pursue policies (like antitrust enforcement) that would naturally result in less inequality without distorting the market by confiscating and destroying wealth when it reaches some arbitrary number.
> Won't somebody please think of the poor billionaire!
I stated early on that Bezos and other billionaires would be the people least hurt by what you're proposing. They're not who I'm concerned about. Bezos doesn't have $180,000,000,000 or however much he's currently worth. He has shares representing about 13% of Amazon. Now they're worth that much. Ten years ago they were worth a lot less. 20 years ago they were practically worthless. It's the same shares. The market just collectively decided they're worth a lot more now. He didn't take anything from you, do you see?
It's not clear when you're proposing that his shares should only be worth $50B instead of $180B whether that you mean you want to take away a portion of them, or just limit how much they can be worth, or what. Generally stocks are priced based on how much money investors think the company will make in the future. In the aggregate, the price of the stock market overall is our belief in how well the economy will do in the future. When you propose that the value of this should be limited, you're proposing that the economy - everyone - should be collectively poorer in the future. This does happen sometimes, we call it recessions, depressions, etc. It generally does not bode well for the poorest people (billionaires are usually fine though).
But hey, who cares if we're all poor right? As long as nobody has any more than anybody else it must necessarily be good.
> Again, we've done this kind of thing before, and the billionaires and their defenders ho-hummed the same tune, and all that happened was the emergence of the middle class and fairly broad economic prosperity.
It's true the New Deal happened and then a strong middle class emerged some years later, that doesn't mean one caused the other. There was a little thing called World War II as well, and the rest of the productive capacity of the industrial world being destroyed with only America left may have contributed to the abundance of high-paying manufacturing jobs, just a little.
> FWIW, there is historical precedent for passing a tax law targeting the single richest person in the country (John D. Rockerfeller at the time).
Yeah, there's a historical precedent for burning witches at the stake too, that doesn't mean it's a good thing.
That's another assumption, I'm concerned about both. You still haven't answered the question of what is going to be harmed by reducing the wealth of every billionaire by 73%. I see you have concerns about government ineptly wasting the money, but even if they did, it's not clear how that would be materially worse for the average American. The worst way the government could spend that money would be to hand it back to the billionaires, which would put us back in the current situation. I'm open to an alternative, but I don't want assurances. I want historical examples, preferably ones that occur in the United States. Raising the specter of Communism is useless demagoguery, since there is no serious constituency for it.
> Sure, we can invest in those things. We can also pursue policies (like antitrust enforcement) that would naturally result in less inequality without distorting the market by confiscating and destroying wealth when it reaches some arbitrary number.
War anti-trust enforcement! You have to do both though. You don't have to destroy wealth, you can also redistribute it in various ways. Even George W. Bush was a fan of the ole' stimulus check. I also hear the people would really like a public healthcare option - investing in that might spur some economic growth.
> It's true the New Deal happened and then a strong middle class emerged some years later, that doesn't mean one caused the other. There was a little thing called World War II as well, and the rest of the productive capacity of the industrial world being destroyed with only America left may have contributed to the abundance of high-paying manufacturing jobs, just a little.
Well, we tried doing it the way the laissez-faire way after Europe destroyed it's labor capacity in WW1, and it resulted in the Great Depression. We tried the New Deal, fought a Europe-destroying war, followed by more Keynesian policy, and it resulted in prosperity (including the areas rebuilt under the Marshall Plan). I'm just some guy, but I'm going to go with my gut and say we should do the thing that worked, over the economic ideology that has failed the average American every time it has been trotted out.
> Yeah, there's a historical precedent for burning witches at the stake too, that doesn't mean it's a good thing.
Now you are just being hysterical. Forcing Jeff Bezos to live on a mere $50,000,000,000 is hardly burning him at the stake.
Not an assumption at all. From your response to my other comment: "You can burn the money in a furnace for all I care, as long as the ratio between the richest and poorest goes down substantially." I'm really trying, and I can't find any other way to interpret that than your primary, if not only concern, is just making rich people poorer.
> You still haven't answered the question of what is going to be harmed by reducing the wealth of every billionaire by 73%.
You still haven't explained exactly how you would make this happen. Forced stock sales? Government mandated price caps on stocks? What? Is Bezos supposed to write a check for $130B? You realize it's not sitting in cash in a bank account, right?
But more importantly, you are the one proposing a radical change to the status quo. The onus is on you to prove, not only that the change is not harmful (not at all apparent from historical evidence) but that it will provide some benefit that will outweigh the cost to implement it. I mean a benefit besides "It makes me feel bad when people are richer than me, and I'll get to enjoy some schadenfreude if they get knocked down a peg".
> We tried the New Deal, fought a Europe-destroying war, followed by more Keynesian policy, and it resulted in prosperity (including the areas rebuilt under the Marshall Plan). I'm just some guy, but I'm going to go with my gut and say we should do the thing that worked, over the economic ideology that has failed the average American every time it has been trotted out.
What you are proposing is not the New Deal, nor the Marshall Plan, nor any economic policy that has been tried in the US before. The New Deal did not involve confiscating 73% of the wealth of billionaires (or the inflation-adjusted equivalent). It did not involve taxing unrealized gains on stocks. The US has never had a wealth tax before. Most countries that have had one ended up repealing it because it's expensive to enforce compared to the amount of revenue it brings in and wealthy people, unsurprisingly, are quite capable of moving to another country that doesn't have a wealth tax.
> You still haven't explained exactly how you would make this happen. Forced stock sales? Government mandated price caps on stocks? What? Is Bezos supposed to write a check for $130B? You realize it's not sitting in cash in a bank account, right?
Assume that Congress can edit a database of every citizens' net worth by legislative fiat. Answer the question about how lessening economic inequality is going to negatively impact the average American.
> But more importantly, you are the one proposing a radical change to the status quo. The onus is on you to prove, not only that the change is not harmful (not at all apparent from historical evidence) but that it will provide some benefit that will outweigh the cost to implement it. I mean a benefit besides "It makes me feel bad when people are richer than me, and I'll get to enjoy some schadenfreude if they get knocked down a peg".
Disagree. I'm proposing a return to a previous status quo that was more broadly equitable. The onus was on the neoliberals to prove the changes they were making in the 80s and 90s weren't harmful. Turns out they were. Again, you are reducing my argument down to my feelings, but I don't personally give a fuck if Jeff Bezos is a ba-zillionaire, so it's not really hitting home - I'll be fine either way. I just think it's bad for society generally when a few jerks with money get to have private space programs in a country with millions in poverty and homeless. I'm not a huge fan of bloody prole revolutions or fascist coups, personally. That's just me.
> What you are proposing is not the New Deal, nor the Marshall Plan, nor any economic policy that has been tried in the US before. The New Deal did not involve confiscating 73% of the wealth of billionaires (or the inflation-adjusted equivalent). It did not involve taxing unrealized gains on stocks. The US has never had a wealth tax before. Most countries that have had one ended up repealing it because it's expensive to enforce compared to the amount of revenue it brings in and wealthy people, unsurprisingly, are quite capable of moving to another country that doesn't have a wealth tax.
Again, I'm not proposing any specific remedy, so you are assigning an argument I haven't made. I'm totally fine with re-appropriating the money, but you seem to really hate the idea of giving the government having any ability to direct funds. I'm diagnosing the problem, and asking what you think would be the negative impact if we simply took away 73% of the wealth each billionaire holds, which you won't answer, because you know the answer is "nothing bad". Many countries aren't the United States. If the billionaires want to try offshoring their money and renouncing their citizenship, I'll trust the (ideally, re-empowered) Treasury and the State of New York to get our money.
> I'm diagnosing the problem, and asking what you think would be the negative impact if we simply took away 73% of the wealth each billionaire holds, which you won't answer, because you know the answer is "nothing bad".
Ok, in a hypothetical fantasy land where the government has a magic database and they can manually edit anyone's net worth at will and it is further specifically stipulated that this causes nothing bad to happen, then yes, I agree nothing bad happens in that scenario.
Back in the real world, such a thing doesn't exist. So if you want to talk about real things that could actually impact the net worth of billionaires you have to consider what other secondary effects they might have. Here's one: stock market crashes. Billionaires lost a lot of wealth in 2008. In your opinion, was this a generally positive event for the rest of the country or not? Bezos's net worth could easily drop by 73% on Monday without any government intervention at all, do you think that would help anyone?
To the extent that governments do have the ability to manipulate people's net worth via printing money, this has a long history of disastrous consequences like the Weimar Republic, Zimbabwe, etc. In your hypothetical world where the value of anything can be changed at a whim by a bureaucrat, how would anyone even conduct any business at all? How am I supposed to sell you a bag of potatoes for $5 if tomorrow the government might decide it's "more fair" if my $5 is $0 instead?
> Disagree. I'm proposing a return to a previous status quo that was more broadly equitable.
Dude, literally one paragraph ago you're talking about a magic database that can edit anyone's net worth at will. That is not a status quo that has ever existed anywhere in human history.
Are there possible scenarios in which billionaires have less money and everyone else has more money and everyone is happier and healthier and better off? Sure. Is a wealth tax (the closest thing to a policy that you've mentioned) a path to get to any of them? I think probably not. Is a legislative fiat where the government just flat out declares that someone has less money a realistic thing that could happen that wouldn't be a tremendous overreach and huge magnet for corruption and abuse? I think definitely not.
If you want to theorize about potential policies and what their impacts might be, then cool, I'd love to brainstorm about what things might happen. If you just want to fantasize about "Like..what if rich people had like...less money...and we had like...more?" I mean, I'm not sure where to actually go with that.
By what mechanism would the stock market crash? I mean sure, if Bezos dumped 73% of his stock on one day, yes, temporarily. No one would actually propose that though. What about Jeff's ownership is holding up the economy?
I don't think 2008 was good for the country, because inequality increased. All those distressed homes that average people lost are now owned by private equity funds. Over 12 years, those billionaires have almost all gotten wealthier relative to the rest of us. I've already stated my preference for increased anti-trust regulation to protect against that kind of outcome. What was the point of that question?
> Weimar Republic, Zimbabwe, etc
Yeah, you know, those storied 230-year capitalist republics in Weimar Germany and post-colonial Zimbabwe. The US Government printed trillions (!!) of dollars this year and gave the majority of it to the wealthy. We can start by taxing that right back, with no obvious consequence.
> Dude, literally one paragraph ago you're talking about a magic database that can edit anyone's net worth at will.
It was a device to overcome your obstinance, not a literal prescription.
> If you want to theorize about potential policies and what their impacts might be, then cool, I'd love to brainstorm about what things might happen.
I don't, because it took like, 12 messages to get you to acknowledge that simply having the wealthy be less wealthy wasn't the literal apocalypse. It's exhausting.
Your contention that a wealth tax won't work is ridiculous, we already have property taxes in most states and state and federal estate taxes. We already successfully tax wealth, the rest is just about setting the right incentives, and removing the insane raft of tax avoidance loopholes that the barons have paid to place in the tax code.
on the inverse, how much worse has it gotten since Jeff Bezos went from $50b to $180b?
It keeps coming back to the fact that there is such a focus on "wealth" or whatever.
That's like asking "how is this tax bad if it literally makes more tax revenue?" - the answer is that it will have unforeseen consequences (or even foreseen by a lot).
>what are you picturing happening here?
You're the one even implying its possible, I figured you would have the answer lol
>Me.
Oh, so anyone with more power than you is bad? What about people that don't even have the privilege of arguing on HN?
>That's unacceptable for a democracy or a fair capitalist economy
Why? I would probably agree there's limits that should be imposed so that anyone can't just push around whatever law they want but at the same time, how else would you suggest these things work?
>Economic prosperity, a broad middle class — https://en.wikipedia.org/wiki/New_Deal.
Since we're talking about taxes... I checked out the section called "Tax Policy"
https://en.wikipedia.org/wiki/New_Deal#Tax_policy
It literally says here: The bill imposed an income tax of 79% on incomes over $5 million. Since that was an extraordinary high income in the 1930s, the highest tax rate actually covered just one individual—John D. Rockefeller. The bill was expected to raise only about $250 million in additional funds, so revenue was not the primary goal. Morgenthau called it "more or less a campaign document". In a private conversation with Raymond Moley, Roosevelt admitted that the purpose of the bill was "stealing Huey Long's thunder" by making Long's supporters of his own. At the same time, it raised the bitterness of the rich who called Roosevelt "a traitor to his class" and the wealth tax act a "soak the rich tax".
The only other thing is: https://en.wikipedia.org/wiki/Undistributed_profits_tax
Which essentially only lasted 3 years... If you're not talking about these things, then I would ask you don't just send a wikipedia link with over 100 subsections lol.
>We've also seen some really gruesome examples of what happens when concentrated wealth is allowed to run amok for too long
How do you reason all these things are "caused by concentrated wealth"?
>Keep nitpicking individual policies, you are missing the bigger picture.
The big picture is made up of individual policies... that is actually my entire point. I gave you clear example of what happens when one fails to remember the big picture. You gave me links to wikipedia pages covering topics as broad as WWI and left it at that...
> Oh, so anyone with more power than you is bad? What about people that don't even have the privilege of arguing on HN?
Snore. If you really want to reduce things to personal jabs, that's cool I guess. I was using myself as a stand-in for an average person - feel free to substitute any name that makes your heart warm.
> I would probably agree there's limits that should be imposed so that anyone can't just push around whatever law they want but at the same time, how else would you suggest these things work?
Sever the links between money and political power. Limit private ownership of news organizations. Take away the tools that are being abused.
> Since we're talking about taxes... I checked out the section called "Tax Policy"
Social Security taxes and Medicare Taxes; and most New Deal programs were financed by the Revenue Act of 1932 [1] passed in the year FDR was campaigning on the New Deal. Again, I didn't realize you were going to be a pendant, otherwise I would have linked more specifically. My b.
> How do you reason all these things are "caused by concentrated wealth"?
Slavery was propagated by the concentrated wealth of the southern aristocracy. They rebelled when they felt that their wealth was threatened. Similarly, in Europe, World War 1 was a war of prestige and conquest fought between a bunch of wealthy (largely related) families who had built huge empires.
> The big picture is made up of individual policies... that is actually my entire point. I gave you clear example of what happens when one fails to remember the big picture.
You mocked me a bit and told me I should have the answers, but I didn't see any clear examples. You are wrong about the first point - you can nitpick implementations and individual policies all day. I'm not claiming that 100% of policies that tax the wealthy are good, or will succeed. The big picture is important because it abstracts those smaller points away - the bigger picture is that inequality is driving our societal issues, and taxing the wealthy is an obvious, primary way to help remedy that. Talking about a Swedish wealth tax from 1990 is a joke.
Based on what metrics?
>If every American had healthcare and access to quality education, housing, and food, it would not matter to me how wealthy Jeff Bezos gets
These aren't mutually exclusive though...
>Snore. If you really want to reduce things to personal jabs, that's cool I guess. I was using myself as a stand-in for an average person - feel free to substitute any name that makes your heart warm.
If you're arguing on HN you're most likely not the average person. Even then, how would you quantify how much political "power" someone should/could have?
>Sever the links between money and political power. Limit private ownership of news organizations. Take away the tools that are being abused.
Sure. You're just going to run into problems trying to define "tools" and "being abused". And I'm saying that as someone that agrees there are problems with abuse of power.
>otherwise I would have linked more specifically
Yes, cause otherwise you'll link to something and when I do "ctrl+F taxes" it wouldn't lead me to something that argues against your point ;)
It doesn't say there how much revenue it generated. Do you have something you trust showing numbers for the revenue targets and how much it made? I find conflicting information.
>Slavery was propagated by the concentrated wealth of the southern aristocracy. They rebelled when they felt that their wealth was threatened. Similarly, in Europe, World War 1 was a war of prestige and conquest fought between a bunch of wealthy (largely related) families who had built huge empires.
You can have both slavery and wars without a "concentration of capital" as the driving factor. I'll say sure, its a factor. So is the "ability to own land" and half a million other things.
>You mocked me a bit and told me I should have the answers, but I didn't see any clear examples.
I linked to the wiki page detailing how a FTT pretty much destroyed swedish financial markets and did the opposite of what it intended to do.
>Talking about a Swedish wealth tax from 1990 is a joke.
...? Literally everything you have mentioned is several times older than something from 1990. Also... it was introduced in 1984, 1990 is when they reversed it because it was so bad.
Yep, I underestimated your unmitigated pendantry. I suppose shouldn't have assumed that you would know that the New Deal involved raising revenue. Concise data from the 1930s isn't super easy to come by, you are going to have to look at broader economic trends and make your own conclusions.
> Literally everything you have mentioned is several times older than something from 1990. Also... it was introduced in 1984, 1990 is when they reversed it because it was so bad.
* Sweden GDP, 1984 (2020 dollars): $108,000,000
* US GDP, 1984 (2020 dollars): $4,000,000,000,000
The U.S. also has much greater reach into the financial markets since we control a lot of them. Older is better - more time to see the long-tail effects of policy.
Regardless of whether FTT would work or not, it's a single tactic (small picture), when we already successfully tax wealth in various ways (estate, property taxes). The big picture is breaking the power of concentrated financial power, and taxation is an obvious method. Nit picking specific policies seems to be a favorite bad-faith tactic to avoid acknowledging that the issue is an issue, which would then require the nitpickers to suggest ideas themselves, instead of just criticizing.
I don't really need concise data, just some rough numbers. How much did they project the revenue act would raise, how much did it actually raise. How much did it impact investments, spending, choices etc.
Without so much as numbers its really hard to argue its impact. You could say going off the gold standard was much more impactful.
>Regardless of whether FTT would work or not, it's a single tactic (small picture), when we already successfully tax wealth in various ways (estate, property taxes).
Man... it isn't regardless. If an FTT doesn't work we're taking one step forward and several steps back.
>The big picture is breaking the power of concentrated financial power, and taxation is an obvious method.
Yea... and sometimes obvious things are not the best things.
>Nit picking specific policies seems to be a favorite bad-faith tactic to avoid acknowledging that the issue is an issue, which would then require the nitpickers to suggest ideas themselves, instead of just criticizing.
Then why would you bring up the Revenue Act? That is literally a "specific policy". Do you want me to show dozens of examples of FTTs failing? Do you simply need more?
I'm "nit picking" this because 1) I have knowledge on it as I've researched it. 2) It would personally impact me. 3) It is a ridiculous policy because it has been tried so many times and never in its history has it raised as much money as it has projected to raise. They are constantly repealed shortly after they are enacted because people realized they messed up.
Its hardly nit picking when its pretty much one of the major policies of politicians wanting to "redistribute wealth" or "fix inequality" - Bernie Sanders has talked about it at great length. Andrew Yang proposed it as one of his policies. There's nothing to nit pick. Every single time it has been tried it has been repealed after terrible results.
I'm saying I see a very high chance of the wealth tax doing the same exact thing.
You were being pedantic about how the New Deal raised revenue. Literally the only reason I linked it.
> Do you want me to show dozens of examples of FTTs failing? Do you simply need more?
If you have examples in the United States or the United Kingdom, sure I'll take a look at them. Otherwise, I don't really see the point, when no other country has had global financial controls comparable to the US/UK in the last 100 years. Further, I've already said that FTT is only one approach, and not one which I have specifically advocated for at any point in this thread. You are arguing against yourself on that one.
We already tax wealth, so it's not clear at all why you think it's so catastrophic. It sure doesn't seem like you've done real research if you haven't been able to come around on the existence (and non-apocalyptic nature of) property and estate taxes.
How is it pedantic. It's completely relevant. I want to know if it was successful, where the money came from and how it got there...
Much in the same way people preach a wealth tax would bring in "billions" without realizing that probably wouldn't put a dent in anything considering the overall budget.
>If you have examples in the United States or the United Kingdom, sure I'll take a look at them. Otherwise, I don't really see the point, when no other country has had global financial controls comparable to the US/UK in the last 100 years.
ahaha man, isn't that kinda ironic though? Maybe because the US/UK has seen the consequences of an FTT and realized that maybe its not a good idea. This is like saying "I don't want to see anything unless its from the last 50 years, since so much has changed since then"
>Further, I've already said that FTT is only one approach, and not one which I have specifically advocated for at any point in this thread. You are arguing against yourself on that one.
Where did I ever say you were? I'm using FTT as an example of an "effort to tax the rich" that completely backfired because the people behind it assumed they were dealing with a vacuum.
>We already tax wealth, so it's not clear at all why you think it's so catastrophic.
Because it is a waste of energy at best and something that could have catastrophic consequences at worst.
>It sure doesn't seem like you've done real research if you haven't been able to come around on the existence (and non-apocalyptic nature of) property and estate taxes.
I'm not a fan of those either for the most part. However, there's a big difference between property tax and trying to tax something worth $50b one day and then $100b a half a year later.
Also, you only seem to care about "fallacies" when dealing with those you disagree with ... so please try to be less sanctimonious. Here's a link that might help you: https://www.merriam-webster.com/dictionary/sanctimonious
No, it's one possible remedy, and historically it doesn't appear to have worked very well. The fundamental problem with taxation is that governments are even worse than individual billionaires like Jeff Bezos at choosing what to do with large amounts of money.
Another possible remedy is to reduce the power of governments, so there is less value to be captured by influencing them. IIRC pg recommended this fix in one of his (fairly early) essays.
> We won't know what's possible until we stop letting barons write the laws.
If you think taxation stops this from happening, I have some sad news for you.
Citation needed. When Governments had lots of revenue, they assist the population with public services, which tend to benefit the lowest stratum of society the most. But the cumulative effect is to raise the quality of life of society as a whole. There is little evidence that billionaires have that kind of effect on society as a whole (outside of a few notable exceptions like Gates).
Having a billionaire class that has so much resources that they can influence public policy and Government... is an even worse outcome, and could be considered the only reason to dismantle this class. The Government is elected by the people (in a democracy) and having mini-kings is absolutely detrimental to the health of our democracy.
Citation needed.
> Citation needed.
That's actually fairly uncontroversial. Small government fetishists insist that left unfettered the flourishing market and voluntary charity would more than make up the resulting gap, but any evidence to the contrary is generally taken as proof that we just haven't lowered taxes and deregulated enough.
The defense of Communism that it hasn't actually been tried for real yet doesn't make any more sense when applied in turn to laissez faire capitalism.
On the other hand, we have quite a bit of data about the broad middle ground, and it is pretty clear that the current settings for the US economy are that taxes are currently too low and not progressive enough (how much is a matter of some debate), and that we probably need to revert to Reagan-era levels if only to be able to afford to refresh and replace crumbling public infrastructure that has been a drag on the economy for a while (because putting off maintenance doesn't save money in the long run) and step up enforcement of existing regulations.
I'm not making this claim. I'm making the claim that the government does not actually provide all the benefits you are assuming it does, so the "gap" you speak of, if it exists at all, is much smaller than you think it is.
I think most people simply aren't aware of how much inefficiency there is in government services or how much of their tax money does not actually go to benefit the people they think the government is helping.
If all we expected the government to do was to provide basic national defense (not aggressive foreign wars, just keep the US itself from being attacked), enforce basic common sense regulations (laws against obvious crimes like murder and regulations against obvious bad things like dumping toxic waste in rivers), and maintain basic public infrastructure (roads, bridges, public buildings, basic utilities, national parks), we would not have nearly as much inefficiency. The problem is that we expect the government to do much, much, much more than that, and the government does all those other things so inefficiently that, on net, it would be better if we left them to private entities.
Anyway, feel free to advocate for greater efficiency in government, by whatever means, including public-private partnerships or full-on privatization. More discussion of what services are needed by society and how best to provide them is generally a good thing.
How Effective is Government Welfare Compared to Private Charity? [0]
“[Government] income redistribution agencies are estimated to absorb about two-thirds of each dollar budgeted to them in overhead costs, and in some cases as much as three-quarters of each dollar. Using government data, Robert L. Woodson (1989, p. 63) calculated that, on average, 70 cents of each dollar budgeted for government assistance goes not to the poor, but to the members of the welfare bureaucracy and others serving the poor. Michael Tanner (1996, p. 136 n. 18) cites regional studies supporting this 70/30 split.
“In contrast, administrative and other operating costs in private charities absorb, on average, only one-third or less of each dollar donated, leaving the other two-thirds (or more) to be delivered to recipients. Charity Navigator, www.charitynavigator.org the newest of several private sector organizations that rate charities by various criteria and supply that information to the public on their web sites, found that, as of 2004, 70 percent of charities they rated spent at least 75 percent of their budgets on the programs and services they exist to provide, and 90 percent spent at least 65 percent. The median administrative expense among all charities in their sample was only 10.3 percent.”
Later on Edwards adds: “In fact, the average cost of private charity generally is almost certainly lower than the one-quarter to one-third estimated by Charity Navigator and other private sector charity rating services…” and tells why.
The bottom line: Government spends about 70% of tax dollars to get 30% of tax dollars to the poor. The private sector does the opposite, spending about 30% or less to get 70% of aid to the poor.
[0] https://www.theadvocates.org/2013/06/effective-government-we...
The right-wing strategy is consistently to smear competent government systems while working tirelessly to undermine them with the final goal to sell them for cheap to private interests.
There is a LOT that competent legislation could do to rein this in. But it isn't in the interests of the investor class. So no, the $140 missing part is not the problem, it was a thoroughly corrupt city management that was the problem, and it's brought to you by the same ideology that sees taxing the rich as "unproductive."
PG has good ideas and experience in programming and startups, and some fresh perspectives that I enjoyed reading in the early days of HN. His essays today seem to be devoid of that. I can speculate on the reasons why, but that's not useful. He has a huge following, and like any thought leader they will consider his word as gospel. I just wish he would do better.
I don't see a feedback loop that makes it hard to escape poverty. Why did the high school dropouts drop out in the first place, and why does that make their kid more likely to drop out? Ideally their kid should still have access to public school education, with all the tools needed to go on to become successful themselves.
To be clear I'm not saying there is no poverty feedback loop, just that even taking what you've said about fundamental human preferences at face value it is not inevitable that it stay this way. We can improve our systems to make it easier for people to escape poverty. But this doesn't really have anything to do with billionaires. Many of the issues in these systems are not even for lack of funding, but inefficiently spent funding or other poorly designed incentives or bureaucratic rules that make things more difficult for poor people.
Ideally, but in reality public education is not an equalizer like that. Wealthy parents give their students advantages that school can't provide in our society: e.g. upper class culture and habits, resources for extra education, connections, etc.
Even the institutional bits aren't equal: local property tax based funding mechanisms mean richer people live in better-resourced school districts than poorer people, with better educational opportunities.
Really?
You’re 16 years old, you’ve a high IQ and a passion for programming.
Your parents are alcoholics. You don’t have nice clothes. You don’t have perfect manners because it’s just not the world you live in.
How do you get to the university admissions interview in the next town? How will you compete against the mannerly, well turned out student with no record of truancy. All you have is a high IQ and a passion. Will that cut it?
> incentives
Actors are sometimes irrational, you can’t rely on incentives.
The absolute best will usually find their way out. I think a society should optimize for beyond those who are just in the vanishing tail of the curve
Not to mention the role his familial connections had in his landing that sweetheart deal with IBM.
He got business connections with IBM, he is a skilled negotiator, he got an expensive education paid by his parents, founded his own business with his parent's money (do you have a $150k allowance?) and knew intelligent but "poor" people who were even more skilled than him who he then could hire to actually do the important work.
In short, he was born a billionaire.
This kind of can’t-do attitude really saddens me. I see it all the time in these discussions about wealth inequality.
The idea that someone somewhere can probably maybe might be able to make this work does not make the case that people have opportunity.
But if you have a library nearby, that can take care of a lot of the concerns you’re talking about. Before the pandemic, I frequently worked out of one. Your hypothetical 16 year old likely has a suitable spot at their school.
You really don’t need an existing network to get a business started. You can find initial users on Internet forums, or reach out to people on LinkedIn.
There are quite a lot of successful small saas startups that took no funding. Are you familiar with microconf? The business of software conference?
It might seem rare if you don’t know anybody doing it, the knowledge isn’t evenly distributed. Doesn’t mean it is rare.
But what about advertising? Branding? Anything that a $5 droplet can do, someone else's product can probably do too -- you don't have the tech advantage. Do you stand out with UX? By doing the legwork yourself? All of these take manpower, and that means capital.
It's not the website that costs money to make; it's making that website profitable.
Sure, you will be able to point to many people who have managed to do it. But many, many others have tried and failed - through no fault of their own.
The parent I replied to says you're 16. You're not working 50 hours etc.
At the same time, do you think the average income of a given internet business--let alone the segment that are run by solo entrepreneurs in their basement with just a computer and a $5 droplet--compares positively to the salary of the average CS graduate? Because we're talking about inequality, not asking "can poor people possibly make money online?"
The fact that the internet has made things better does not mean the problem is solved.
Even if you fail (and you probably will) what you learn from it will position you much better when trying again. It often takes multiple failures before making it work. (Even Gates/Allen had business failures before starting Microsoft.)
> does not mean the problem is solved.
Most people don't recognize opportunity because it comes disguised as hard work :-)
> just that even taking what you've said about fundamental human preferences at face value it is not inevitable that it stay this way
You're not wrong, but funding education is _expensive_, and education is only part of the puzzle, access is another large part of it, and so are the social norms you develop. My family and I grew up in "poverty-lite", and while I did manage to get into a great college, the adjustment was quite difficult. In high school I would show up to regional science fairs, and would often come in 2nd or 3rd place, and would lose to kids who used their high school's teacher's Masters thesis as a science project (for reference, in my school nobody even had a Masters degree.) Socially, I grew up very different from them. Where I grew up, you kept your head down and got in line. Disputes were aired out publicly, and often descended to fistfights if you were under 21. Textbooks were expensive, and my school often couldn't afford enough for everyone. I was constantly begging the librarian to borrow math books, but I never could because we didn't even have enough copies for the students in the actual class, let alone me, an interested kid.
For my college peers money was never an issue. I used my good grades to become a TA as soon as I could, and I worked as many hours as I could so I could pay rent and make expenses while my friends seemed to have endless amounts of time to go to social hangouts and parties, which certainly blocked the connections I could make.
Over the years I've made a handful of friends in tech who grew up in a similar income bracket as mine, and they remain comforting to me because even now, I have a hard time relating to the average Silicon Valley tech worker whose life started in upper-middle class gated suburbs.
For instance, we could say that the heritability of intelligence among the children of suburban Chicago families in a particular income bracket is 70%, but not that the heritability of intelligence in general is 70%.
The most informative studies in this area are usually of twins-separated-at-birth, but the datasets aren't very large.
The children of two collage graduates have collage graduate genes and a collage graduate upbringing. It’s no surprise they’re (we’re) overrepresented in collages.
Genes are determined before college. And education doesn't change genes.
> For example, Björklund and Jäntti (2012) estimated using Swedish data that shared environmental and genetic factors explain 40–60% of inequality in a number of productive traits, including cognitive and non-cognitive skills, schooling and long-run earnings.
https://www.researchgate.net/publication/333090512_Heritabil...
Assuming that this paper holds up, then at around half of lifetime earnings would be attributable to environment.
Also, speaking purely of heritability factors is a little reductive. Two parents that lack a particular phenotype that, say, is fit for wage growth in our contemporary economy, may have offspring that does. Similarly those fit to succeed in the economy today, may not be in the future if the stressors change.
The are large social circles that being smart is a bad trait. There are social circles where there is little opportunity to learn as well. There’s little differentiation between baby brains and epigenetic traits aren’t set in stone by parentage, though upbringing will have a strong effect throughout life.
You don’t inherit intelligence, you get taught to throw it away or not based largely on environmental factors, including how your parents raise you.
You're glossing over the role of other personality traits in success. And yes, environmental factors are hugely important to those as well, but often in complex ways.
For example, food insecurity during childhood has an enormous impact on an individual's ability to delay gratification. While there is certainly quite a bit that parenting can do to make that even worse, there isn't a lot that can be done to make it better.
The one thing you can do that won't be harmful is basically funding genetic selection research, e.g. lowering the cost of IVF embryo selection. This is relatively morally palatable (esp. compared to e.g. eugenics) but will actually have the desired effects.
I think it was in The Meritocracy Trap that spoke to how this is a relatively recent phenomenon that is exacerbates wealth inequality. Previously it appears to have intermarriage between social classes
I used to live in an upper middle class area, and a worrying number of the people were very polished thieves. They spent an unholy amount of time fighting over inheritances with other family members and over property boundaries with neighbours. When they worked - inevitably as land owners, landlords, upmarket real estate agents, investment advisors, lawyers, company directors, horse breeders, and so on - they'd always pad their bills and expenses, inflate their prices, and cheat on their taxes.
Were they "successful" - in the sense of being very comfortably off? Of course they were.
Did they try to marry their own? Naturally - out of snobbery and opportunism if for no other reason.
Were they admirable human beings or truly productive members of society? Not noticeably. Between the drink and drug problems, the predictable infidelities and ensuing dramas, and the polished and educated facade hiding feral greed and entitlement, they looked good from the outside - not so much from the inside.
If you don't own shares/stocks to any significant extent your labour goes to supporting these people. They make a lot of money from "investments" and pretend this is a glorious, noble, and risky social service. In fact they're simply skimming money from the top of the economy into their own pockets - effectively wasting it when it could be put to work doing something innovative for future generations.
If you think they are skimming money, then there has to be a way to offer the same services cheaper (without the skimming). So instead of complaining, do it. What's your excuse?
Of course crooks exist. Most people are not crooks, though. And especially the professionals you mention may have problems to persist. Like the shoddy dentist will be busy with lawsuits presumably.
I still prefer those "private crooks" to people feeding on government money (not meaning people on social security, but people in useless jobs paid for with taxpayer money).
Of course psychopaths exists. Most people are not psychopaths, though. And especially the CEOs you mention may have problems to persist.
I still prefer those "CEO psychopaths" to people feeding on government money (people in useless jobs paid for with taxpayer money).
https://www.washingtonpost.com/news/on-small-business/wp/201...
I personally think that the "successful pyschopaths" meme is also way overblown, but I don't really know. I think being a psychopath is actually a deficiency, not a super power. Also in business I think people who help other people tend to be more successful overall than the stereotypical ruthlessly selfish people.
Edit: I think you added the link later on, that cites 21% of CEOs to be psychopaths? I would wait for replication on that one. It reminds me of another thing I read where reading about economics allegedly turned people into psychopaths (which is of course bullshit - just because you learned about rational decisions, as perhaps most CEOs do at some point, doesn't mean you are a psychopath). I suspect the questionnaire or the study they used to determine the "21%" number may in fact be motivated by politics.
What if they are skimming money precisely because they made it difficult to offer the same services cheaper?
The only institution that can do that is government via regulations (like who can practice law or become a dentist). I agree that there are some (many?) fishy regulations like that. But that is on the government, that is, socialism. Only free markets can guarantee fair prices.
Attacking "Billionaires" is easy to do, but its the wrong target. A "wealth tax" will probably make a pretty good bandaid, but for a real solution here, we need to think harder about fixing the root cause - that skimming strategies are dominant in the first place. In other worse, say we pass a high tax. Great. Except it doesn't change the best action for people(rich or poor): make money by skimming. So now instead of having an unequal society of skimmers, we end up with a more equal society of skimmers.
Way too much capital right now is devoted to skimming: marketing/advertising, legal/accounting, real estate, and finance have ballooned. The largest tech companies in the world are ad companies. Lawyers and accountants spent significant time on tax avoidance. Real estate is run on speculation and bubbles. Finance is now more about about the short term rather than long term value investing. It didn't used to be the case, but in the modern world, the margins on these departments make them better ways to spend our time and resources to get money. I wish I had a mental model of things good enough to suggest what the right fix would be, but as a random guess, I'd rather see taxes on the industries above than a tax on billionaires.
Edit: in retrospect this rant went overboard. Wealth tax/higher taxes on extreme wealth are probably still needed as part of the plan. Easy to get carried away with rants lol!
No, it isn't. For intelligence, in adulthood, it clearly isn't. For harder to measure skills, current estimates are at around half and half, but the error is mostly in the environment category. So much general-population variance is genetic (and that's only amplified at the highest skill levels - you need great 'cultural and social influence', but also great genes, lol)
> Did they try to marry their own? Naturally - out of snobbery and opportunism if for no other reason.
fun fact, the trait that shows the most assortative mating is intelligence. curious!
> I used to live in an upper middle class area, and a worrying number of the people were very polished thieves.
and I know a worrying number of lower class thieves. '20% of rich people are grifters' doesn't impune rich people as a whole, any more than Tony the crack money launderer impunes poors.
Here's a slightly different take on this idea:
The only way to become a billionaire is to use leverage.
I think this is a much more defensible argument. You can't become a billionaire by yourself. You have to have some mechanism of leverage to magnify your impact. Hiring employees is a form of leverage. Using a computer is a form of leverage. Putting your software on a large number of cloud computers is yet an additional form of leverage. The question of whether one is exploiting their employees is a worthwhile question to ask, but it is a completely separate (and much more polarizing) question. I think that leverage is the core kernel of truth lurking within this question.
Using your example, a billionaire doesn’t hand 1,000 more dollars to a hedge fund manager and get 1,000 times more wealth amplification. They hire a team of accountants and lawyers to do 1,000 times that base amplification each.
Making 100k and having a stock based retirement plan is an open drainage from the wealth factory, it definitely has access to the same levers, but it’s effectively the equivalent of a pension, just managed in the marketplace according to marketplace rules. That earning category is basically the automobile manufacturer lead/plant manager of our generation, the only difference is there’s more people who get that slice. People in this role largely don’t have the capacity to even think about increasing their leverage, they just get “benefits” and call it a night.
People who become billionaires have an entirely different approach. Their work is split between using whatever leverage they have access to, and whatever affords greater leverage. It’s mathematically the only way (given current dollar valuation) that you can get that many dollars.
(See also the sibling comment to your by pdonis.)
The term "using leverage" is often used in a creditor / debtor relationship. But it's funny how the term works because in that setting "using leverage" is usually associated with the debtor being the exploited one in the relationship.
More generally, in a given exploitive relationship it's not always obvious who is exploiting who.
Oil and Gas billionaires leverage the fact that society hasn't figured out how to factor in negative environmental externalities. Consumer Staples billionaires leverage their supply chain monopolies and labor monopolies.
The original tech billionaires leveraged their early knowledge of computers/internet. Web 2.0/3.0 billionaires leverage the fact that society hasn't figured out how to appropriately regulate stuff that's similar but slightly different from their old school regulated counterparts (i.e. Uber, Airbnb).
In general, leveraging technology capabilities seems less exploitive than leveraging human/environmental resources/lack of regulation.
I see what you're getting at here, but I don't know that I completely buy it. Case in point: privacy. I guess it depends on how one defines exploitive.
I like this idea, because it focuses the ethical/moral/policy question on something that seems to me to be much more tractable: what kinds of leverage should society allow you to use, and to what extent?
One route to becoming a billionaire seems to go like this: you persuade a group of investors to make a pile of money that's so big that you can corner a market. Which is often true. But is it fair to the people already in this market? And is it fair that it makes you a billionaire?
I have no idea what "leverage" means in this text. From context I can tell it's something bad.
I understand "leverage" in mechanics. I also understand that in "corporate-talk" it's just a synonym to "use".
But I agree that there is moral and amoral leverage. I of course only love the moral kind.
Same reason they might get them to start out?
Wall Street originally was built to trade shares in corporate plantations.
Many plantations did not get going with ethnicity-based slave labor, it was voluntary indenturement as a result of extreme inequality relative to the royal shareholders of these non-free-enterprise corporations, i.e. economic slavery as a foundation for the lowest-class labor force to begin with.
It's a slippery slope from there, keeping them down on the farm.
Don't forget the American colonies were founded by (royal) multinational corporations for the benefit of multinational corporations.
But B.Franklin and those guys came along and wanted independent non-royal corporations, and the next thing you know, it's the USA on the Eastern Seaboard with its well-developed ports and united plantations.
And they were trading shares right there in Manhattan, on that previously underutilized street with the characteristic old wall.
Otherwise not much had changed from how they did it in London, or it would have been an even more difficult transition.
Imagine what it was like under bondage when a downturn or business model failure pressured a worker to tend 5 acres instead of 2. When 2 was already quite tiring and not very rewarding.
And with the shareholders up on Wall Street having financial control, when the market comes back nicely the shareholders recover even more nicely if little or none of the prosperity is intentionally returned to the now much-more-productive & hard-working laborers.
Simply because the system is made to extract from bonded laborers, and they are the lowest-hanging fruit when shareholder returns need to be maintained during a downturn.
Wall Street volatility gives some of them the chance to rinse and repeat each time before their big wigs get repowdering.
For real major upsets or windfalls the banks can go further and adjust the terms on their notes to most strongly leverage the situation.
The mint can change the value of its legal tender notes in response too, so far only periodic devaluation for the dollar, no two-for-one splits in your favor or anything like that for you wage-earners even in the best of times.
If every citizen were generously issued two new dollars for every old dollar you had in liquid cash at the time, you can expect to continue working for the same dollar pay as before and have the same debt payments to minimize upset, but who would benefit most anyway?
Don't even think about a reverse split which is severely in your disfavor by comparison.
Better get accustommed to what a dollar won't buy any more now, a change in value either way and you'll be worse off.
Turns out dilution of certificates is the most effective if not expedient way to overcome liberty & justice for all.
If you're going to be a billionaire anyway, build something with real value added that's more than worth it for as many people as possible, with enough success to completely commit to avoiding significant negative consequences.
That's what billionaires are supposed to be there for.
None of that fake stuff.
Gag me with a silver spoon if you can't build anything real of widespread benefit, plus avoid negative outcomes with all that money.
Something that would help would be more benevolent billionaires willing to pay whatever it takes to bypass our current crooked political parties. There simply still exists the same need to admit only the most ethical to Washington (or preferably a new capitol) before Wall Street can be expected to deviate from the plantation model these parties sustain.
Looks to me like pg has built YC to be more worthwhile than not, even if every company has not created value itself.
One measure of success is the increased number of opportunites for upcoming entrepreneurs to have an open-ended upside if they are ambitious and can build a scalable system.
Often this can be leveraged to exponential growth by wise application of capital, without the need for involvement of destructive greed of any kind.
Depending on where in the food chain the food for growth comes from, some businesspeople are bound to make better billionaires than others, especially if they can avoid harmful wealth extraction from the most vulnerable workers and populations, and substitute responsible value creation with resulting widespread prosperity instead.
Works best when you build something people really want and always give them more than their money's worth.
In the case of the founder, as I have mentioned, hiring someone gives them leverage. But conversely, a person taking a job with a large company gives the employee leverage. For instance, as a Google software engineer, you have the ability to command huge amounts of computing hardware that Google has at its disposal. Different roles may have varying degrees of ability to leverage the corporation's scale to their purposes but it's certainly a very real thing for many roles.
Sure. But even setting aside whether the ability to use it is evenly distributed, the availability of resources to be leveraged definitely isn't, so the rich get richer even with relatively passive strategies.
Think how a mobster in a movie might use it, "we leveraged the pictures of the cop to get warning of any raids". Same meaning, just about things that are legal.
No, he does not. He claims he paid $1,850,000 in federal taxes in 2015, do you think his secretary earned that much, let alone paid that much in taxes?
In addition:
“In 2019, Berkshire sent $3.6 billion to the U.S. Treasury to pay its current income tax,” Buffett said in his annual letter to shareholders. “The U.S. government collected $243 billion from corporate income tax payments during the same period. From these statistics, you can take pride that your company delivered 1.5% of the federal income taxes paid by all of corporate America.”
>> What's the point of being the wealthiest nation ever on paper, if there's terrible schools, high infant mortality, and lead in the drinking pipes?
A higher percentage of people graduate from college today than graduated from high school a hundred years ago, infant mortality is 6 per 1000 today vs. 100 per 1000 a hundred years ago, and blood lead levels in children have been reduced so much that it is claimed to be largely responsible for the drop in crime rates since the 1980s.
The point of getting wealthy is that it gives you resources to deal with your problems.
A quick googling suggest that he pays a lower tax rate than his secretary.
Scenario one: Warren Buffet's secretary (making up some numbers here) makes $50K a year, twice the average salary for a secretary, and pays around 8K income tax, for an effective tax rate of 16%, And Warren Buffet pays $7000 in taxes.
Scenario two: Warren Buffet's secretary (making up some numbers here) makes $50K a year, twice the average salary for a secretary, and pays around 8K income tax, for an effective tax rate of 16%, And Warren Buffet pays $1,850,000 in taxes.
Those two are equally outrageous to you?
> No, he does not. He claims he paid $1,850,000 in federal taxes in 2015, do you think his secretary earned that much, let alone paid that much in taxes?
I think it was clear that they meant as a fraction of income, not as an absolute value.
Similarly, the Buffett story can be traced back to an interview he gave in 2007 where he shared that his tax rate was 17.7%, whereas the average tax rate of the employees in his office was 32.9% [2]. On the surface, this is shocking and will make you want to rebel against the system. But a closer look reveals that the bulk of Buffett's income comes from dividends and long-term capital gains, which are taxed at a much lower rate than ordinary income. We might argue about the specific tax rate numbers, but fundamentally there are good reasons for those tax rates not to be identical [3], and as such Buffett paying a lower tax rate should not be causing any outrage (don't confuse this with my view of the overall tax code, I am just focusing on the specific example above).
By the way, you may wonder why Buffett does what he does, including giving the interview I referenced above and going through the trouble of collecting the tax rate of his employees, sharing his own tax rate, etc. He's coming across as being generous for voicing his support for a higher income tax rate for the wealthy (aka, the Buffett rule). But in reality he's just deflecting from other potential sources of taxes, such as taxing people on wealth vs on income (which someone in his wealth bracket can easily live without). This scheme becomes even more obvious when you observe his attacks on Elizabeth Warren [4] (who is pro-wealth tax), while being more "aligned" with AOC [5].
[1] https://www.caoc.org/?pg=facts [2] https://www.fool.com/taxes/2020/09/25/why-does-billionaire-w... [3] https://taxfoundation.org/why-capital-gains-are-taxed-lower-... [4] https://www.realclearpolitics.com/video/2015/03/02/warren_bu... [5] https://www.cnbc.com/2018/12/04/ocasio-cortez-and-warren-buf...
In 2007, 33% didn't kick in until around $200K (married filing jointly) so not bad pay for Omaha.
>> But in reality he's just deflecting from other potential sources of taxes, such as taxing people on wealth vs on income (which someone in his wealth bracket can easily live without).
Given that he has pledged to give away 99% of his wealth either while he is still alive or when he dies, why do you think he is doing that?
Wealthy people wanting to polish their legacy while still directing the use of their wealth from beyond the grave by establishing endowments and non-profit foundations etc. isn't really a new phenomenon, though there is much less emphasis on monumental architecture these days.
I'm not sure if anyone has studied whether such foundations and endowments are particularly efficient allocations of those resources compared to the government (either is in principle less efficient than the market, but the government steps in where society in general judges that markets have failed, and non-profits generally step in where donors, specifically, perceive the government has failed as well, but I'm unsure whether that implies more or less relative efficiency in allocation).
[0] - I agree it most likely was; the most likely other option being comically misinformed.
IME (including writing the actual SQL queries against a corporate billing system that calculated ideal writeoff amounts every year), corporations evade so many taxes that this amounts to an empty boast. 1.5% of bupkis is bupkis. Supporting the state through income taxes is inherently foolish, and moreover we do it in the most foolish way one could imagine.
It's not a strawman, people repeat this as fact in any far left leaning forum. To socialists all work in a capitalist system is exploitation.
I think it's a little more complicated than that. I think "virtual goods" make it hard to figure out exactly where we stand these days in terms of economic health, a la this past comment of mine:
https://www.visualcapitalist.com/ranked-the-social-mobility-...
The OECD have a better report :
https://www.oecd.org/centrodemexico/medios/44582910.pdf
From page 5 Australia ranks #2 and Canada #5 and the US is #10.
That's on intergenerational income quintile mobility.
Disclaimer/source: I worked for D. E. Shaw & Co and have close friends who work at RenTech. My personal experiences were amazingly positive and friends at RenTech say similar things.
Which explicitly excludes dictators and royal families
It's super easy to defend the actions of "industrious" businessmen if you're even a little bit to the right
Is it so easy to defend dictators who are even richer?
Those feedback loops are directly created by wealthy people for wealthy people, because politicians like money like just everyone else its easy to manipulate them into creating feedback loops that help those wealthy folks amaze even more wealth. The more corruptible the politicians are the more the wealth gap increases, from there is easy to conclude why millions are struggling to get by even in the wealthiest nation on paper.
I don't if it is the only way to become a billionaire. But the bigger problem is every billionaire is exploiting people.
Imagine you are one of the wealthiest guys in the world. You can either:
- Hire the best financial guys to take care of your equities (although they are the best they look cheap to you).
- Hold a share of the equity of every business you can find in the world.
Either way, if the world is growing, you earn money by lying on the bed all day long. And then you can use the money exchange a large amount of people's labor for your own pleasure, instead of building costly infrastructures for your country for very small returns.
Even if the world is going through a recession, other people would more desperate than you - you would lose part of your money, but people's life would crash, small companies would go broke, most of the entities have to do sub-optimal choices, and you don't have to. Then you can do the purchase and hold even more equities of the world.
In a word, holding extreme large number of equities is exploiting people because they can barely do nothing and enjoy people's labor without any risks.
Old soviet joke:
Under capitalism, man exploits man. Under communism, it's the other way around!
and
https://en.wikipedia.org/wiki/Economic_mobility != https://en.wikipedia.org/wiki/Social_mobility
His secretary can buy Berkshire Hathaway stock at any time and pay a lower tax rate than Buffet, while growing wealth at the same rate as Buffet.
https://money.cnn.com/2013/03/04/news/economy/buffett-secret...
And you better not get too ambitious and pursue a degree that's too difficult, or you won't be able to complete your degree and you'll have all the debt but none of the credentials.
If you take out a loan for professional training for a skill that is in high demand you will have little trouble paying it back. Software engineering is an example, but really any type of hard engineering training will relatively easily result in a relatively high paying job. There is such a high demand for those jobs in the US that we currently import many of those workers from China and India via H1B.
And how do you recommend pursuing this skilled career when you don’t even have enough money for food, clothes and shelter?
I mean that’s pretty much a working definition of poverty and I’m really curious how easy you think it is to do when you’re hungry, dirty and tired.
Once you have a stable base it’s a matter of hard work.
I went to the absolute worst schools. Literally F schools.
How does this affect me as a wealthy person?
It would be great if Y Combinator filters well to emphasize non-exploiting billionaires, but that’s certainly less that all billionaires.
No, he absolutely does not. He pays a lower effective tax rate but vastly more in actual money than his secretary. His effective rate is 17 something percent because the capital gains tax rate is 15%, not because he’s rich. https://www.fool.com/taxes/2020/09/25/why-does-billionaire-w...
We could certainly increase cap gains rate to regular income, but that would fuck a huge portion of the middle class depending on gains in 401ks for retirement.
Isn’t that what we want?
Just a week ago or so on Reddit someone posted imagining how much good Elon could do with his Billions. I replied that yes, maybe he could devote those resources to push forward electrification of transport to mitigate global warming, invest heavily is solar power technology and devote resources to trying to create a future for humanity in space.
Well, of course, that’s exactly what he’s doing. All those billions aren’t stacked in a mountain of dollar notes in his basement, it’s embodied in the jobs, infrastructure, technology and products of his companies. This basic, fundamental ignorance of even the simplest economic concepts is incredibly common. I see it all the time, here as well.
It's usually much easier to make money in unnecessary bullshit, and via rent-like activities, than in socially valuable activities. So that's what most rich people choose to do.
Yes of course there are inefficiencies in the system, rent seeking behaviour does happen and it's an important aspect of policy to try and minimise and disincentivise it. Nevertheless, our economic system does work. All those companies employing people, paying taxes and generating goods and services are the economy. That's where the wealth is being generated. The vast majority of wealthy people are incredibly hard working, dedicated people running companies, employing people and creating wealth. If they weren't the system just wouldn't work.
If his secretary paid more than $1.8 million in taxes, they have extremely high income and they shouldn't be used in a comparison of "desperate people struggling to get by" like Uber drivers.
Secondly, in the same vein, the kind of (aspiring) billionaires YC meets are, by definition, builders, because they're self-sorted fledging entrepreneurs. Paul somehow uses this as an argument when he should notice that this means he has a bias.
Nobody called Zuckerberg or Bezos exploitative when they were coding in dorm rooms and folding boxes on Ikea tables, and that's the kind of people Paul thinks off when he thinks of billionaires in his job. But that's a different story from the conglomerates they run 20 year later when the majority of their employees are warehouse workers and content moderators with mental issues
Reason for not recognizing this is obviously that PG mistakes Silicon valley startup culture for the entire world, which I wouldn't have blamed him for 20 years ago, but what is odd is that it seems to have gotten worse even though he moved away from it.
Actually lots of us called them exploitive. It might not change anything, but it's worth noting that a lot of us knew that facebook would grow into the great evil that it is today. It was also obvious that Amazon would eat all retail stores, and it pretty much has.
Recently I have begun ordering from Walmart. Why? They have upped their ecommerce game.
Just as Sears was once dominant and even sold houses via catalog, and no one in 1930 could have imagined Sears going bust, no one in 2020 can imagine Amazon losing its dominance.
But Sears collapses, IBM fades, and the world moves on.
In 2020 I’m happy Amazon exists, proud America allowed it to grow, and don’t feel ill-will towards people who voluntarily agree to work for them.
Retail margins: 20-80%
Amazon is directly helping poor people by cutting out the greedy middlemen between them and essentials.
That's actually not a good thing. Something is seriously wrong if we don't value efficiency. Having many separate retail shops creates massive inefficiencies, especially for commodity products.
Amazon can get most products to my house at near lowest market rates in a day or two. Sometimes the same day.
The problem isn't Amazon, it's our reaction to this newfound efficiency. We're eventually going to end up in a place where having humans doing most work is objectively worse than having robots do it.
What we're doing now can't sustain, but going back to a pre-Amazon model of retail is not a viable path forward.
Also, working retail sucks. We should be glad when it dies entirely.
If Jeff Bezos were in front of a YC interview there is no chance they ask him whether his stock workers will get healthcare or if they'll get pushed so hard that they have to piss in bottles to keep their jobs.
You mean when he was coding the site to rate which of his classmates were hottest? Yeah, cool cool.
Again, Airbnb is probably the best example: users who book stays and users who rent out rooms/homes may love the service, but other people who live in those neighborhoods or buildings may not. Airbnb overrides those objections by exploiting a few issues: ambiguities in local laws; inadequate enforcement agencies who cannot handle the number of listings in their area; the inability of local residents to sufficiently organize and force their local governments to prioritize enforcement, etc...
What PG doesn't address (which isn't his goal, so no dig intended) is a bigger issue than the immortal souls of founders and billionaires: Bad things happen just as often as a result of good people with good intentions as they do from the diabolical acts of sociopaths. That truth is equally under-appreciated by both American progressives and the well-meaning people who help create big problems even as they create joy for billions.
Basically, the "work" has to come from somewhere. The reason FB is rich is because 2+B people choose to work for free. The reason Google is rich is because they do not have to create the content (in fact, "content creators" are pushed to the back seat). The reason Amazon is rich is because you can use cheap labor and sprinkle tech-efficiency on it. The reason all gig-companies are rich is because they can circumvent many "worker-rights". The reason Microsoft is rich is because they give a damn about compatibility and competition (the will extinguish probably even the classic "open source", given enough time).
Some hedge funds are rich, because they buy the order-flow data of poor people playing with their money - maybe they use it against them, maybe not.
I cannot see non-exploitation in any of these. Another grandiosely self-serving essay by a rich man, who thinks he has figured out how the world works.
If he really had, he would probably want to change it. For the better - which is probably much harder then just doing more of the same.
Edit: I sometimes think people who write these things are painfully aware of the kind of illusion they create and choose to create it nevertheless. Mundus vult decipi.
Hedge funds do not pay retail brokerages for order flow. The vast majority of trading activity from retail investors is motivated by public information, so it offers basically no insight worth paying for.
This is the exact reason why market makers do pay for order flow. They can safely execute a huge number of these trades with very little risk and collectively make a hefty profit from the small spread.
Yes. If this is all you need to calm others and your own mind, I would probably do it, too.
I mean, of course. Y Combinator is looking first and foremost for people who will make them billions in the aggregate. Most of those people who pass the interview will personally fail to join the billionaire club.
Also, its not like "building" and "exploiting" are mutually exclusive.
Since the only way this happens is by funding founders who go on to build big successes, you're confirming what pg said.
He seems to be trying to make a general statement about billionaires or becoming a billionaire, but he's really only talking about a certain kind of potential billionaire that's suitable input for the VC business. His working definition of exploitation also seems to be far more limited in scope than the one the "mistaken" "politicians" use. Even someone who's kind and considerate to everyone around them can build system that exploits people.
Most startups fail, though.
So do most batters in Major League Baseball.
VC is the batter, though. They're interviewing people to be their balls.
And YC will not make much money from those people. They will lose money on a lot of them.
Facebook, Amazon, Apple and others didn't start out exploiting people, but they sure as hell do exploit at at least some group of people now. Content moderators, warehouse workers, assembly line workers. It's not a neat and clean picture, a lot of those people would themselves say it's a job they decide to do-- and their agency shouldn't be diminished-- but the exploitation does exist and it is real. You at some point just have to listen to people, and enough people in this country are saying its systems are exploiting them.
Simply put: It would be nice to see Paul write an essay about how Facebook should treat their contracted content moderators better, rather than expend his mental energy retorting to a few progressive politicians. I too wish that those politicians understood tech a bit more, but there's lots of people who I wish understood lots of things better. This essay is mostly quite wise and thought-provoking, too bad his grievances color it.
The founders I see in recent YC batches don't seem so different in this respect—but perhaps I'm out of touch with out-of-touchness.
Personally, I've watched YC grow from something that I thought was an obviously good idea but nobody else agreed with me about (I applied to the first SFP in 2005, as a college student), to something mainstream that lots of people aspired to (~2010), to being something at best ho-hum and at worst actively bad for the world (today). Getting rich is just not desirable anymore; technology is only desirable insofar as it helps solve pressing problems for the world as a whole.
In 2010 I was the one who would go to parties and young people would be like "Oh, you work for Google, that's so cool!". In 2014, it was "Oh, you're founding a startup to fix unemployment, that's so cool!". Now when my wife (who works as a professional impact investor) goes to a party with young people, it's "Oh, you're solving climate change and funding reproductive healthcare and working for racial justice, that's so cool!" Meanwhile, I say "I work in software" neutrally and omit that it's for Google.
The other thing I'd be cautious about here is that the curve you describe basically always happens. Shit was always cooler when it was newer and we were there before everyone else, etc.; people say this about everything. I'm not sure how to correct for this, but it's a strong skew.
There is a moral judgment behind the "That's cool dude!" you get when you reveal you're working to fix the climate crisis and I suspect there is fear of moral judgment behind GP's omission of their employer, due to their employer's poor record on the moral issues of the day. This goes deeper than shit being less cool as time passes. In short we're not talking about dubstep or fidget spinners.
Moral judgments like this do not follow a curve that "always happens". It has always been good to volunteer at soup kitchens on one hand, and on the other hand while it used to be good to not be evil and "to organize the world's information and make it universally accessible and useful", I'm sure you'd agree nowadays Google is not perceived as less cool than it was only because it's not the latest shiny new tech success.
And fashions also come into play in these judgments. I will eat my 8G-networked collapsible VR headset if, 20 years from now, people aren't horribly cringing at the popular 2020 notions of "solving climate change" and "working for racial justice".
Not because of whatever feelings I have towards those advocacies, but because even their currently-"cool" instantiation is largely driven by fashions.
Are people today horribly cringing at the civil rights activists from the 50-60s or gay rights activists from the 80s-90s?
I think people are far more likely to cringe at naive optimism (e.g. postwar enthusiasm for heavy industry and its products) than genuine attempts to tackle problems.
Any pointers or books to read about this topic? Admittedly I haven't looked too hard.
I'm glad people like Elon Musk and Bill Gates have billions of dollars - they're solving some of the world's hardest challenges right now with their wealth.
I have a favorite illustration of what just one billion dollars is: a million dollars per week for almost 20 years.
Bill Gates is giving away the vast majority of his wealth
You don't know what Elon Musk will do with his wealth, but given his track record -- probably something good for humanity
That's a tax-avoidance scheme. Here's a recent (and certainly not the first) article laying it out:
https://www.inc.com/geoffrey-james/bill-gates-promised-to-gi...
> You don't know what Elon Musk will do with his wealth
I think we both know that whatever it is, first and foremost it'll be good for Elon Musk.
> I'm glad people like Elon Musk and Bill Gates have billions of dollars - they're solving some of the world's hardest challenges right now with their wealth.
There's a difference between having billions of dollars and controlling billions of dollars. Having usually implies controlling, but it's not necessary for that.
A hypothetical value system that "demonizes excess accumulation" will can still allow talented people to use massive resources to solve challenging problems. For an actual real-world example: the US didn't have to wait for a SF fan to become a billionaire before it built rockets to travel to the moon. Similarly, billionaires often don't solve any problems with their wealth. Musk spends millions to build rockets and win government contracts, but other purported billionaires spend millions on money-losing golf courses and vanity airlines instead.
The Code of Hammurabi predates it by 1700 years(almost 4000 years ago). Not allowing murder seems good for the survival of any society of humans.
Uh, what? Do you think murder was first outlawed 2000 years ago? I mean "Thou shalt not kill" is one of the Ten Commandments which is part of the Old Testament which predates Christ by at least several hundred years if not over a thousand. Even the Code of Hammurabi references charges of murder and it is closer to 4000 years ago. The idea that murder is bad is probably as old as civilization itself if not older.
If I find a special rock in my back yard that someone would pay me $100,000 for - I get to keep all that money in your system I assume. But if I find a special rock in my back yard that someone would pay me $1,000,000,000 for - I don't get to keep the money, or if I want to hold onto the rock, I need to give part of the rock away?
More concretely - imagine if TSLA has crossed the threshold because of the recent rally, where now Elon "should" be forcibly divested of part of his ownership of the company. Let's say he goes from 20% to 5%.
Later, the stock crashes back down below the threshold. Does Elon get his 15% back?
Startups like Airbnb and Lyft likewise have built amazing things, and would easily make their founders 100' millionaires, but there is a point where to reach a certain level you need to leverage some flawed, unjust legal system at scale (stupid regulations around housing/hospitality/and taxis, in these examples).
None of these founders created these legal systems, but their rapid success and scale I can't see happening without those dumb legal environments they found when they started.
Now, maybe the best method to fix unjust laws is exactly this: when you see a stupid legal system, found a company to exploit it, become a billionaire and then finally society will take notice that the legal system is stupid and will fix it.
So I could see an argument that maybe not only should we not penalize billionaires who built their wealth from scratch, but we should thank them, like we thank white-hats, for identifying inequitable laws that they were able to leverage at scale.
* Tesla
* Twilio
* Stripe
Would you help me see how those 3 leveraged unjust laws? As a software developer, I feel Stripe and Twilio have added a lot of value to me, to small businesses, and the world.
In other words. Lyft is a product of hard work and innovation multiplied by corruption and bad government in the taxi industry. The value created by Lyft comes from the former, but the value captured by Lyft is just as dependent on the latter as well. Nothing wrong with that—it's still a big net win for society, but maybe we could do a better job at refactoring our laws so we can get the value without the unnatural inequities. After all, I know a lot of these people and while they are almost all smarter than me, none of them is 10x smarter than me (well maybe pg).
In response to your 3 examples:
* Tesla
Carbons were subsidized and solar/electric better tech. Automotive industry is highly regulated and innovation was sloooow. Elon and company are the best of the best (a shareholder), but still I'm not going to pretend that the business opportunity would be so great if the governments around the world hadn't been creating corruption after corruption (look at the car dealership stuff with the states as a tiny but egregious example).
* Twilio
Oh man the telecom infra went from magic to just rotten in the past few decades. I don't know enough about government here to comment, but I suspect something bad here.
* Stripe
The amount of protection the finance and banking industry has (and their symbiotic relationship with the government) made me sick so many times. Finally someone had the stamina and determination to solve that. But Stripe isn't hitting $100B if US Government wasn't letting the finance industry sit on its ass for 3 decades with protective legislation.
Bill Gates didn't write Windows 95. Steve Ballmer didn't write Microsoft Office. But they owned stock in a company that employed people that did (and all the various other labor that goes into building software products). Why did they make so much more money from it than the people who were more directly involved?
This dynamic is reducible. If Person A starts a software company, Person B, C and D build the product, and then Person A gets $10,000 while Person B, C and D each get $1, something is off there.
The capitalist defense of this is more or less, "B/C/D agreed to those terms", but this ignores the context. If every B/C/D wanted to be As, there would be no B/C/Ds to build things. And it's not always possible to choose to be an A--it usually requires a fair amount of privilege to start a business. But nonetheless, their work is equally important, and even if it isn't, it's certainly not the case that A's work is 100,000x more important.
We need to recognize this kind of bonkers concentration of wealth is a huge problem, and fix it with profit sharing and taxation.
- Your argument could be rephrased as "profit-sharing isn't necessary as long as you pay people enough." This may work at mega-successful businesses like Microsoft, but doesn't work so well at something like a restaurant chain (or Amazon), where income inequality is far more pronounced. And those cases are far more common.
- Concentrations of wealth and capital have a destabilizing effect on society. It leads to political corruption. Further, even if we have a handful of companies where income inequality is relatively low, that's not the case for most Americans, even at those same companies. In other words, sure software engineers are doing fine, but most people aren't, including many people working for the same companies as those software engineers.
Overall I think it would actually be really cool if we could get to where we think we are, where I can essentially pick from a menu of career options based on a risk/reward profile (OK not literally a menu but, yeah). But we're pretty far away from that right now; very few people are making these decisions based on that kind of calculus.
The unfortunate reality is that you will never be able to pick from a menu of all possible career options because you (whoever you are) are not cut out for all possible careers. There are many people in the world who are better suited to doing job X, even if you think you'd like to do job X more.
The numbers are real bad though [1] [2] [3]. White people own 80% of small businesses, and men own 64%. In 2012 (admittedly old but, the Census site is very bad) white men owned 2,933,198 firms with employees on the payroll. Everyone else owned 356,816 firms. Those same white men's firms had sales receipts of $8,221,010,815. Other firms had $88,657,443. That's nuts. Even more so when you consider white men are only ~33% of Americans. My guess is that COVID-19 makes this even worse, but who knows really.
> The unfortunate reality is that you will never be able to pick from a menu of all possible career options because you (whoever you are) are not cut out for all possible careers. There are many people in the world who are better suited to doing job X, even if you think you'd like to do job X more.
I 100% agree but, I wouldn't say it's unfortunate. I just think people should get equal pay for equal work, and CEOs aren't 270x more valuable than average workers. Maybe it's 5x, maybe even 10x, but not 270x. And that's salary difference, we're not even factoring in lifetime earnings.
[1]: https://www.pewresearch.org/fact-tank/2020/04/23/the-financi...
[2]: http://www.experian.com/whitepapers/BOLStudy_Experian.pdf
[3]: https://data.census.gov/cedsci/table?tid=SBOCS2012.SB1200CSA...
But white people are 73% of the US population. Obviously it'd be nice if everything was proportional, but all things considered (how recently black people got fully equal rights, for example), I think 7% over-representation is pretty damn good, not "real bad", and the trend is heading in the right direction. Seems like a gap that is very doable to close with purely "encourage everyone to start a business" policies, and egalitarian policies like those should be the preference when possible. With respect to men vs. women, I think a similar argument should be made. Women were < 30% of the workforce ~70 years ago, and still haven't even made it to 50%. Given the importance and biological realities around childbirth, I'm not sure women ever will be 50% (until we grow babies ex-vivo, that is). But as long as trends are positive, it is better not to use regulation as an attempt to overcompensate for perceived inequalities, as that can (and does) frequently backfire. Even if the number of women-led businesses is not going up, you can't just assume this is because women are actively being prevented/discouraged from doing so, you need to demonstrate that. Because an alternate explanation is that women (for whatever reason, maybe they like healthy work/life balances?) are choosing, very much of their own free will and without undue pressure from society, to not start businesses at a higher rate than men.
> Maybe it's 5x, maybe even 10x, but not 270x
This doesn't seem to be a particularly rational stance. If you don't have a good reason behind why it should be one multiple and not another, I don't think its your place to decide that multiple. This sounds a lot like the oft-repeated "nobody should be a billionaire". Um, why not? A billion dollars is an arbitrary amount of value. For example, a billion Zimbabwean dollars in 2008 wouldn't buy a coke[1]. Obviously in the case of USD right now, $1B is a lot of value. But if I make some useful piece of software (entirely on my own) that I sell to 100,000,000 people for $10 each, why should I not be a billionaire? Again, if you don't have a rational (rather than emotional) underlying argument for why X amount of value is "too much", it is not your place to decide that number.
[1] https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
> 2,933,198 firms with employees on the payroll. Everyone else owned 356,816 firms. Those same white men's firms had sales receipts of $8,221,010,815. Other firms had $88,657,443. That's nuts. Even more so when you consider white men are only ~33% of Americans. My guess is that COVID-19 makes this even worse, but who knows really.
White people aren't 89% (or 99%, in the case of sales) of the population. And at numbers this big, 7% is 210,000 firms. That's not nothing.
> This doesn't seem to be a particularly rational stance. If you don't have a good reason behind why it should be one multiple and not another, I don't think its your place to decide that multiple.
CEO pay isn't meritocratic and has all kinds of ills besides [1] [2] [3] [4] [5]. I think generally the argument here is something like, "well, CEOs/CTOs/etc. just provide a lot more value than your average white collar worker", but the studies don't show that. Further, data show that (again) high relative CEO pay is bad for the company and bad for society in general.
I'd be remiss if I didn't also say that while we're spending a lot of time on high incomes here, high levels of wealth are far, far worse. We need policies to reign in disproportionate salaries certainly, but we also need a wealth tax. I could cite some more stuff but, frankly the best thing to do here is read Capital by Piketty.
> This sounds a lot like the oft-repeated "nobody should be a billionaire". Um, why not?
Because people are dying from poverty; they're losing their cars and houses; their kids aren't going to college; their parents aren't getting medicine they need to stay healthy and live; etc. etc. Meanwhile Jeff Bezos could give every person in the US restaurant industry $1,000/mo for a year and still have hundreds of millions of dollars.
You might dismiss that as emotional, but I think these are exactly the reasons people have money: to provide shelter for themselves and their loved ones, to get medicine, to get education. That's not emotional stuff, that's like, what are the basic needs of humanity stuff.
[1]: https://www.epi.org/publication/reining-in-ceo-compensation-...
[2]: https://www.researchgate.net/profile/Steve_Werner2/publicati...
[3]: https://www.wsj.com/articles/ceo-pay-and-performance-dont-ma...
[4]: https://d1wqtxts1xzle7.cloudfront.net/46078405/The_effects_o...
[5]: https://hbr.org/1990/05/ceo-incentives-its-not-how-much-you-...
From there we are on to wealth inequality. Wealth inequality has absolutely nothing to do with poverty. The wealth gap has been growing for the past 50 years while poverty has been going down – not sure how much clearer of a sign is needed. Nobody is starving as a result of Jeff Bezos owning Amazon. And can we please, for the love of god, stop pretending that wealth (especially wealth in the form of owning a significant portion of a very successful business) is liquid? Jeff Bezos absolutely cannot give all those restaurant workers $12k, as the price he would get for selling all of his Amazon shares is nowhere near his current "net worth". The problem with this argument is not that it's "emotional", it is that it is wrong. It is also an emotional appeal, and sometimes those are useful. But only when they are also correct.
[1] https://www.inc.com/amy-nelson/women-drive-majority-of-consu...
Race-conscious (and gender-conscious etc.) policies like affirmative action are effective because they directly address the systemic and institutional discrimination these groups face. If you're not a cis straight white man of a certain height and background, you aren't starting with the same advantages as those who are. Therefore, if we adopt policies that don't take those disadvantages into account--i.e. they benefit everyone equally--we don't solve anything. We simply magnify the existing inequality.
And it's important that we do solve this. White men hold a disproportionate amount of power in American society because it's easier for them to make more money, own more things, run for office, buy houses in neighborhoods where housing value increases at high rates, start businesses, invest in stocks, network with others who are able to do these things, send their kids to prestigious schools, avoid crime-ridden neighborhoods and food deserts, etc. etc.
> Rather than begrudging the success of white men, how about we encourage non-whites and/or non-men to participate in that success.
Can I ask you where it seems like I was begrudging the success of white men? I think you're reading a lot into what I'm writing. I certainly don't feel that way. I'm not saying we should tax white male owners of SBs and redistribute the wealth to others; I'm saying we should tax Jeff Bezos et al down to $50 million and remake US society.
Further, what are your ideas for encouraging minorities to participate in that success? Is it something other than adopt policies that directly benefit them?
> But nobody wins when you tear the successful people down because you are jealous of their success. It didn't work in Nazi Germany with the Jews and it didn't work in the USSR with Kulak farmers, and it's not a good idea here either.
That's a little hyperbolic. I don't find it productive when you impugn my motives as "jealousy" and compare my tax prescriptions to the holocaust.
> Wealth inequality has absolutely nothing to do with poverty. The wealth gap has been growing for the past 50 years while poverty has been going down
I think it depends on how you look at it [1], but broadly yeah, I would agree wealth inequality isn't related to poverty. But I'm saying we take money away from billionaires and give it to those in poverty. I think that would have a direct effect on their poverty status. Maybe I wasn't explicit enough about this, I don't always make all the connections clear.
> Nobody is starving as a result of Jeff Bezos owning Amazon.
Not by virtue of owning Amazon, but quite literally because he didn't spend the money to feed them, yes they are. It's also the same for you and me, FWIW, it's just that I could maybe do it for 1-2 people and he can do it for millions.
Maybe that's what we're dancing around here, maybe you're a taxation is theft person and I'm a property is theft person.
> And can we please, for the love of god, stop pretending that wealth (especially wealth in the form of owning a significant portion of a very successful business) is liquid?
It actually seems like it's pretty easy for him to do this [2], and his ex-wife is proving it also [3]. Selling stock is pretty easy. I don't super care about the exact numbers, and I would prefer a better policy framework that prevented him from amassing so much wealth in the first place. But again I think that's profit sharing, taxing inordinately high comp, worker membership on corporate boards, etc.
[1]: https://aspe.hhs.gov/system/files/pdf/154286/50YearTrends.pd...
[2]: https://www.forbes.com/sites/angelauyeung/2020/08/05/jeff-be...
[3]: https://www.cnn.com/2020/07/28/tech/mackenzie-scott-bezos-do...
- At best there's no behavior to encourage, person A just got lucky. At worst, person A cheated and by making cheaters super rich, we give them outsized influence on our society
- creating billionaires creates bonkers, destabilizing income inequality, for which we rarely get anything in return (not everyone starts the Bill and Melinda Gates Foundation)
- relying on this dynamic entrenches privilege, because it's much harder for women and people of color to become the next Steve Jobs (which is a weirdly super rare case to structure a society/economy/labor theory on, stipulating you think Steve Jobs was actually good at anything substantial).
quite confused at this one, what studies? as an example, surely the fact that page and brin created PageRank for web searches led to google being so successful https://www.theverge.com/2019/12/4/20994361/google-alphabet-...
> best there's no behavior to encourage, person A just got lucky
the behavior of ... understanding and creating a useful service like pagerank? or amazon?
> relying on this dynamic entrenches privilege
this is quite ridiculous, this is only believable if you consider having 3-4/5 quintile parents as 'privileged' as having ten billion net worth. equally so when you look at where their parents came from (quite often, poor farmers who immigrated) or their history (jews who had to leave poland or germany due to the nazis js)
> because it's much harder for women and people of color to become the next Steve Jobs
so? heard of 'lisa su'?
I would recommend reading Success and Luck [1]; it's well-researched.
>> relying on this dynamic entrenches privilege
> this is quite ridiculous, this is only believable if you consider...
There are pretty good [2] papers [3] about it, which convinced me and might convince you.
> so? heard of 'lisa su'?
Your post uses a lot of anecdotal evidence, which is a fallacy [4]. I encourage you to build up a habit of diving deeper. Oftentimes our intuitions are wrong because they're influenced by our local experiences, which are very rarely representative. It's why we do things like run studies and experiments, because we've learned we can't trust our experiences and intuitions. This pattern is, unfortunately, widespread and leads to a lot of problems.
This is actually a great little microcosm of one such problem: income inequality is a huge problem in the US; societies with dramatic income inequality are historically corrupt and unstable. However, it's counter to a lot of people's intuitions and experiences. So whenever someone tries to rally people to address it, people like you toss out lots of unrepresentative anecdotes (and employ other common fallacies) to try and convince people either it's not a problem, or that it's a feature and not a bug. And it works, because these fallacies are common bugs in the way people think about things.
It's up to us to recognize these patterns in ourselves and others and work against them.
[1]: https://press.princeton.edu/books/hardcover/9780691167404/su...
[2]: https://www.nber.org/papers/w23733
[3]: http://www.equality-of-opportunity.org/assets/documents/race...
> income inequality is a huge problem in the US; societies with dramatic income inequality are historically corrupt and unstable.
This seems ... less than proof of anything. Past societies were highly unequal due to 'half the population gotta farm' at the very least, so comparing them to modern societies seems like a mistake, and at any rate the 'successful' integrating empires were, well, integrating empires. Modern society hasn't existed for that long, and the US (land of inequality!) is quite a bit more stable than many poorer and more income equal (or ... poorer and less income equal!) countries. Historically, societies in europe were much more successful than ones outside europe, yet you wouldn't take that correlation as a causation, so i won't take yours either.
Anyway, you cant just throw a book at me and expect me to read it for a HN comment without laying out its argument at all lol
Your second paper says that 'racial discrimination exists'. The idea that asians somehow derive most of their success from systemic racism and entrenchment - "Overall, these results paint a picture of a rigid income structure by race and ethnicity over time" - seems absurd. Your second paper doesn't say anything about meritocracy though.
Your third study is also just 'black people are poorer'. That doesn't mean understanding of an opportunity (not 'general skill', but local, specific skill) doesn't lead to success. So i'm left with a book (i don't have time to read it, it's midnight) and two papers that don't relate to your point. Maybe asians are just really smart? Maybe they work really hard as kids while the whites play tennis or soccer, which explains why despite being 13% of the population they're 52% of the coders?
If B, C, and D chose to strike for a higher wage then they could but there might be an E, F, and G which could take over for them at their previous rates.
Anybody can make a giant sized, billion dollar company. Those workers chose to work as employees under standard labor terms.
The early Microsoft employees that made lots of money from their stock options probably aren't bitter about their compensation.
The labor market doesn't set prices based on value to society and scarcity. If it did, nurses and teachers would be millionaires (there's a shortage of both and they provide high value to society) and middle managers would make very little (there's a glut and they provide very little value to society). It assigns value based on prestige. Capitalist labor market folks would argue strongly otherwise, but the evidence is very clear.
The law of supply and demand also doesn't explain or account for things like race/gender pay gaps, monopsonies, and collusion. And generally this doesn't pass the sniff test--if the labor market shifts and suddenly people in your profession are in higher demand, it's extremely rare that companies offer pay raises to keep their employees. That's because they know that while theoretically their employees can reenter the labor market to negotiate a higher salary with a different employer, in practice employment is very sticky and employees tend not to--for lots of rational reasons (some of which are "oh you're a job hopper, declined").
> There was nothing stopping persons B, C, or D from being person A and founding a company for that idea.
This is generally untrue. Companies build moats with patents, litigation, monopolistic business practices, and corrupt, ladder pulling litigation. I think a lot of committed capitalists believe the market will sort this out, but it clearly doesn't. How many upstart chip design houses are there? How many upstart medical device companies are there? Etc. Etc.
Furthermore and again, not everyone has the privilege required to be A. Being A takes more risk, and you have to have more resources to reasonably take that risk. It's also been shown that it's far harder for women, recent immigrants, and people of color to become As.
> Anybody can make a giant sized, billion dollar company.
What?
> Those workers chose to work as employees under standard labor terms.
Often people don't have the resources to start businesses (let alone billion dollar businesses). It requires a lot of privilege, and it's even harder for women and people of color. It's not at all a simple choice.
> The early Microsoft employees that made lots of money from their stock options probably aren't bitter about their compensation.
While being pretty tough to prove, I would say a couple things here:
- Microsoft continues to post multi-billion dollar profits, and people still work there. I don't understand why early employees are valued more than current employees here.
- It's conceivable that even if you made a few million dollars, you might be bitter if the person next to you who didn't work appreciably harder than you made a billion. Everyone's different but, that seems possible.
- Even if these effects are less pronounced or acceptable at a place like Microsoft, concentrations of wealth and capital have destabilizing, corrupting effects on society and governments. Taking a per-company view is short sighted. It's also worth saying that most companies aren't made up of relatively wealth software engineers, and income inequality will be more pronounced.
I know the situation in Germany will be quite different to that in the US, but the reason we have a shortage of nurses is that the pay is not decided on supply and demand in order to have enough of them, but rather as a political decision.
> The law of supply and demand also doesn't explain or account for things like race/gender pay gaps, monopsonies, and collusion.
I'll mostly (but not completely) agree here. Humans are never fully rational, and that irrationality is certainly a relevant element.
> employment is very sticky
Of course it is. Teaching an employee on your systems/way of working costs money and is an element in the decision of whether or not to hire an employee. This decision affects demand and therefore price/wages.
Totally and this is the danger of state-controlled markets. Capitalists have a point here. I tend to argue that at least in democratic societies people have some control over it, whereas in a free labor market they don't. But in practice, like so many things democracy is supposed to fix, people largely aren't concerned with it.
> Of course it is. Teaching an employee on your systems/way of working costs money and is an element in the decision of whether or not to hire an employee. This decision affects demand and therefore price/wages.
Definitely, stickiness works both ways. We've all probably encountered situations where someone's made themselves virtually unfireable because no one can do the things they can. I think generally people characterize that as some kind of selfishness or at least a labor antipattern, but I tend to view it as a rational response to a lack of financial stability: if your employer can completely destabilize you financially, it's pretty rational to take drastic steps to guard against that.
Suffice to say it's complicated; far more complicated than the supply/demand curves charts you get in econ 101.
---
I'll add that my prescription generally is:
- Enshrine the right to organize
- Require equal profit sharing across all employees
- Require significant worker representation on corporate boards
- Heavily tax relatively high salaries, e.g. if everyone makes $1m then 0 tax. If one person makes $100k and 99 others make $1, insane super tax them down to $100 (include tricky stuff like bonuses or whatever)
- Heavily tax nationally high salaries with a progressive income tax
- Heavily punish tax dodging
- Set the minimum wage to a living wage and pin it to the CPI
- Abolish "right to work"
> Enshrine the right to organize
As in with a constitutional amendment? Because the NRLA already guarantees this.
> Require equal profit sharing across all employees
Germany does not do this and neither should the US.
> Require significant worker representation on corporate boards
Germany does not do this and neither should the US.
> Heavily tax relatively high salaries, e.g. if everyone makes $1m then 0 tax. If one person makes $100k and 99 others make $1, insane super tax them down to $100 (include tricky stuff like bonuses or whatever)
Germany doesn't do this and neither should the US.
> Heavily tax nationally high salaries with a progressive income tax.
The US already does this, as the US does not have a flat tax rate for income tax.
> Heavily punish tax dodging
Addressing symptoms not causes. Reduce tax avoidance by simplifying the tax code. It's that simple.
> Set the minimum wage to a living wage and pin it to the CPI
Probably a good idea.
> Abolish "right to work"
Terrible idea.
Here's an example where you could have done even a little token searching; the title of this article is "Workers on Corporate Boards? Germany’s Had Them for Decades" [1].
Another example is when you write:
> Addressing symptoms not causes. Reduce tax avoidance by simplifying the tax code. It's that simple.
It truly is not that simple. There's a reason tax codes are complicated and broadly speaking, it's that you have to choose winners and losers to simplify them and that's politically and policy-wise very, very difficult.
I'm sure you'd like to dispute that, but the way you'll dispute it is with normative, opaque statements like "it's that simple" or "terrible idea" which will take you 8 minutes. The way I'll engage is by searching the internet and citing a post, and asking good questions to keep the conversation going. That will take an hour.
I'm not gonna do that, and I think this breakdown makes it clear why. I think you should keep in mind what you're asking of people you're having a discussion with, either implicitly or explicitly, and how your responses indicate what you're expecting to get out of a discussion. From where I sit, you're not looking to learn anything or to inform me of something, you're looking to win an argument. Sometimes that's productive but it's surprisingly rare, and besides that, I'm not interested. I haven't learned anything from you over the 3-4 threads you've chased me down on, but I do feel a little worse about humanity, and I get enough of that already.
And overall, I'd urge you to take a moment to consider the damage you do by logging onto public forums and spreading your ill-informed, normative opinions around. It greatly reduces the signal to noise ratio, and because it takes a lot of time to respond to things like this, it effectively DoS's productive conversations. I love a good internet argument as much as the next mega-arrogant software engineer but, we need to keep in mind the effect that has.
[1]: https://www.nytimes.com/2019/01/06/opinion/warren-workers-bo...
I have no interest in winning the argument, I have an interest in the truth and sound fiscal and social policies that result in a good balance of strong economy + innovation + lack of exploitation.
For all the things in the discussion that you claim Germany does that make its economy stronger, you need to demonstrate that. For all the things in the discussion that Germany is not doing, you need to justify why they are good, as the one making the claim that they are good ideas. You have not done so. You made a list, and are now claiming everyone else is arguing in bad faith when they ask you to justify that list. My response was not very high effort because I was not actually responded to a thoroughly sourced list. It was just a list.
You accurately stated that I was incorrect about co-determination in Germany. I read your point as "majority representation on boards", when what you actually said was "significant" – an error on my part. Germany does indeed do that, and as such the policy would indeed fall under "Germany+". However, I maintain that amongst all your other bullet points, the only other point that 1. Germany does 2. US does not is living wage. And one (good) argument for why the federal minimum wage is not particularly looked after / updated is because the US is a federation of strong states, so minimum wage is better handled by states individually (which they currently do). Cost of living in Montana is very different from NYC.
> You've made claims like "this is Germany+" without actually supporting that claim.
I wasn't like, making a legal statement or whatever. You're arguing "this is communism with extra steps" and my point generally is that these prescriptions largely exist in democratically socialist, productive, EU countries. There are actually not that many communist countries that aren't also authoritarian so, I don't think the "communist" characterization is super useful. But, either way I'll expound.
- Enshrine the right to organize
You wrote that the NLRA already created this "right", but it's been hobbled by the Taft-Hartley act [1] and subsequent legislation in multiple states [2].
On the other hand, Germany (like many other EU countries but unlike the US) has ratified the "Right to Organise and Collective Bargaining Convention", which, well it's in the name [3].
- Require equal profit sharing across all employees
Profit sharing is pretty common across EU countries, but it takes different forms and certainly isn't equal. The coop corporate structure is closer to my thinking here but, admittedly it's not mainstream yet.
- Require significant worker representation on corporate boards
We covered this one but, yeah generally the idea here is for workers to have a big say in how their company is run. Definitely not the majority though; my personal preference would be that there were no majority and representation would be equally divided between workers, c-suite/owners, and shareholders, but baby steps.
- Heavily tax relatively high salaries, e.g. if everyone makes $1m then 0 tax. If one person makes $100k and 99 others make $1, insane super tax them down to $100 (include tricky stuff like bonuses or whatever)
High CEO pay is (variously) subject to tax penalties in Germany [4] [5]. And it seems to be working; their ratio of CEO pay to average worker pay is 136x, just over half the US' at 265x [6]. That's not wonderful and I'm sure there are other factors but, these problems are tricky and one policy probably won't fix it all in one fell swoop.
It's also worth saying CEO pay is generally bad and not meritocratic [7].
- Heavily tax nationally high salaries with a progressive income tax
Germany's 3rd tax bracket is higher than anything in the US and kicks in around $69k (USD) [8].
- Heavily punish tax dodging
Germany does this a little [9] [10] but, obviously not enough. Re: simplify the US tax code, no administration since Reagan has done this, for reasons outlined here [11] [12]. TLDR tax prep is big business, and--like I said before--our tax code does a lot, and changing it creates winners and losers.
- Set the minimum wage to a living wage and pin it to the CPI
Germany has a comparatively high minimum wage of €9.35 ($11.33), but I don't know enough to say if that's a living wage or not. Something that's nice about their (relatively new, 2015) law is they have to update it at least every 2 years [13].
- Abolish "right to work"
I've been wrong about what this is called my whole life. Apparently what I mean is "at-will employment". Mea culpa. But, still the US has it and Germany doesn't. We should get rid of it.
---
OK that's my prescriptions. I do feel like what I've described is the natural evolution of democratic socialist policies in the EU, exemplified not just by Germany but other big EU countries as well and definitely don't qualify as communism. But I think a lot of people think democratic socialism is communism so, maybe we just have a definitions problem.
I'll quickly respond to your minimum wage point and say that you can peg minimum wage to a State's CPI, and cities can create their own minimum wages. New York/New York City do this, for example. I wouldn't say that States are handling this well; 1 in 4 kids grows up in poverty so, something is off.
[1]: https://en.wikipedia.org/wiki/Taft%E2%80%93Hartley_Act
[2]: https://en.wikipedia.org/wiki/Right-to-work_law
[3]: https://en.wikipedia.org/wiki/Right_to_Organise_and_Collecti...
[4]: https://www.firma.de/en/company-formation/ceo-salary-in-a-gm...
[5]: https://link.springer.com/article/10.1007/s11573-020-00978-y
[6]: https://www.statista.com/statistics/424159/pay-gap-between-c...
[7]: https://www.epi.org/publication/reining-in-ceo-compensation-...
[8]: https://taxsummaries.pwc.com/germany/individual/taxes-on-per...
[9]: https://finance.yahoo.com/news/ubs-group-face-93m-penalty-11...
[10]: https://www.espn.com/soccer/news/story/_/id/1613004/bayern-m...
[11]: https://www.taxpolicycenter.org/briefing-book/why-are-taxes-...
[12]: https://www.vox.com/2016/4/13/11417676/elizabeth-warren-tax-...
-- re: unions
Right to organize is not the same as "right to force people to join a union". That is what right to work laws prevent. Anyone should be able to join a union. Any group of workers in any industry should be able to form a union. Unions should not be able to force people to join their union. This is a gross violation of individual liberty.
Right to organize and right to work are not conflicting goals. If unions need to force workers to join them, they're arguably not good unions.
I agree that unions are important. But unions are not universally good – they sometimes have serious downsides. Any push for unions need to be met with a measured understanding of this. Do you have a solution for the problem that unions with too much power are actually bad for the economy in that they stifle competition and decrease efficiency? Monopolies in general are bad, and that includes monopolies on labour.
-- re: profit sharing
You can start a coop in the US today. But a coop is not the end-all-be-all of business structures. I'm fine with people starting coops. In fact I think that's great. But requiring it has the potential to stifle innovation / (constructive) risk-taking while fixing a problem that doesn't need solving (because labour can already join coops if they want). There are many companies that want to re-invest profits into CapEx or similar, which becomes more difficult with a profit-sharing structure.
-- re: co-determination
Probably don't have a problem with this as long as it is not majority. Haven't thought enough about possible negative ramifications of such policies though. Want to steel man the counter?
-- re: CEO pay
I agree that executive compensation seems out of wack, but my real issue is that I don't understand how the problem exists, and am wholeheartedly against slapping band-aids on things until I understand the underlying cause. You seem to be taking the stance that wildly different pay is always bad, which I cannot agree with. Fair pay is pay which is proportional to the value delivered. If you are delivering 100x the value than the average worker, you should get paid 100x more. To be completely frank, I don't even think it is a requirement that people should be paid the same rate for the same work, but that is an argument we don't need to get into, as the aforementioned idea of "fair" comes before that anyway.
What I mean to say here is: assuming a free and competitive market, you'd think disproportionate executive pay (disproportionate not to other employees but to the value being delivered by the executive, as to my mind this is what fairness is about in business) would result in a company that is less competitive than one which is not overpaying its executives. So how did this come to pass? To my mind the only options are: 1. markets aren't actually competitive 2. American CEOs actually are delivering 256x the value of their average worker.
If 1, my preference would be to find ways to solve the underlying problem and make the market more competitive rather than this band-aid solution. If 2, then again I don't think there is a problem that needs solving.
There is a 3rd option that disproportionate (again, wrt value delivered, not wrt other workers) executive compensation somehow makes a company more competitive, but I don't see how that could be the case.
-- re: taxes
For someone that seems to be a bit of an idealist, you don't seem to be following through here. I don't think "tax prep's lobby is strong" is a good reason to not simplify the tax code. It's a reason it might not happen, but if simplifying the tax code is good we should strive to do that anyway. Everyone in US government always trying to find the middle ground is why we have settled on a bunch of highly mediocre yet expensive solutions to many (most?) of our biggest problems. Hell, the best tax prep is literally helping you avoid taxes, so clearly if tax avoidance is the problem then they are a big part of it. Are you actually talking about tax evasion when you say dodging? If so I agree that this should be punished, but again, this is something the US is already doing. You can serve jail-time for evasion.
With regards to progressive income taxes, I stand by my point that we already do this. Sure, Germany's brackets are higher (as are many other places), but in this case I don't think "other people do it" is a good argument. I think the de-facto "fair" way of taxing people is with a flat tax. If you choose not to do a flat tax, you need a good argument for why not. Once you have that argument, it should also be able to justify somewhat specific (evidence/reason based) brackets, not arbitrary ones.
-- re: minimum wage
I stand by the idea that states can determine their own minimum wage and that this isn't something the US federal government needs to concern itself with. If states are not doing so, residents need to make a change in their own state. To this end though (supporting the idea of states with real autonomy), I do think it is important that the federal government has policies in place (not exactly certain what form they would take) that allow people to more easily "vote with their feet", i.e. move to another state if their current one isn't treating them well. Competition is often pretty great at improving things, and I think that includes competition between states. I'm still fine with a US federal minimum wage, but I don't think it should be pegged to an average US CoL, as again, different regions have wildly different CoLs. Pegged to inflation / purchasing power makes sense though.
-- re: at-will employment
Disagree strongly with this one. If I can hire someone for any reason, I should be able to fire someone for any reason. Just like you can start a job for any reason and you should be able to quit for any reason. Besides, even when you try to prevent this with regulation, most of the time you end up being able to fire people anyway by finding some stupid reason that's valid, which you just have to sit on for a while. There is no possible way such a policy is good for the economy and therefore society. You end up with HR people who's job is to just find excuses to fire the people that you want to fire anyway, and that certainly isn't productive. It also requires involving more bureaucracy to provide the oversight in judging when reasons are valid or not.
I think one of the big reasons Silicon Valley is in California and not anywhere else in the world is Cali's great combination of 1. at-will employment 2. unenforceable non-competes. It is a great combo that supports individual liberty while also encouraging innovation. You can fire me for any reason, but I can immediately go to a competitor and put my skills to good use. Together it is a great balance. One without the other and you have serious downsides:
• At-will, w/o non-competes: good. Mobility encourages competition and innovation, relationship between employer/employee is a balanced one.
• At-will + non-competes: bad – employers can screw employees even when they're not working for them, violates individual liberty without the worker getting anything for it.
• No at-will, w/o non-competes: bad – chilling effect on hiring + training. Employers don't want to invest in employees if they will struggle to fire them without a corresponding incentive for the employee to stay where they are.
• No at-will + non-competes: bad – stifles competition/innovation by discouraging mobility of the workforce on all fronts.
I was responding to your assertion which was "It very much does not sound like Germany+." Further, the EPI article says right up top:
> Why it matters: CEO pay is not just a symbolic issue. High CEO pay spills over into the rest of the economy and helps pull up pay for privileged managers in the corporate and even nonprofit spheres. Because pay for top managers—CEOs and others—is not driven by their contributions to economic growth, this pay can be reduced and others’ incomes boosted if we can figure out a way to restrain CEOs’ market power. Importantly, the most direct damage done by excess CEO pay is to shareholders. Since shareholders are a relatively privileged group themselves (if not as privileged as CEOs), they could potentially wield power in this situation; policymakers should try to figure out how to enlist shareholders in the fight to restrain excess managerial pay.
> Right to organize is not the same as "right to force people to join a union".
I'll try and skip to the end here and say that the union system isn't optimal. It would be a lot better if we had a solid social welfare state and, coop-style profit sharing and worker representation on corporate boards, and better laws protecting workers. But here we are. All of this stuff is to enhance the financial and collective bargaining power of unions so they can effectively advocate for workers (note I specifically didn't say "their members", as unions represent everyone, members or otherwise).
Right to work laws are meant to undermine unions' collective bargaining leverage, and they've worked [1] (those WSJ studies are real bad, anything could've caused those effects). But besides that, you can also choose to just pay agency fees, not contribute to the union's political activities, and not become a member, even without right to work laws.
> re: profit sharing
Can you cite some things here? You write "a coop is not the end-all-be-all of business structures" and "requiring it has the potential to stifle innovation" without any kind of backing. Plus, I'm not at all saying cooperatives are perfect. I think they're a good way to achieve profit sharing, but there may be other models that are better. I'd caution against the stock comp idea though; that turns into short-termism really quickly.
> co-determination
I can imagine some pitfalls a-la term limits in governments, where when they're so short you don't allow anyone time to build experience. I think compared with the management or investment classes workers have less experience making company-level decisions, and that could have some weird effects. Boards also aren't perfect, you can bribe and blackmail people. But I think in the aggregate that probably doesn't have a big effect. I'm just spitballing, I haven't read anything.
> re: taxes
Haha I haven't been called an idealist in a long time, thank you :) I don't think the US will do even a single thing on this list and is doomed in probably a dozen ways. Maybe that's why my list comes off as idealism: if you're sure you won't get anything on it, it doesn't matter what you put on it.
But re: taxes, Paul Ryan tried his whole career to simplify the tax code. Libertarians have been pushing a flat tax for a generation or more. People come out of the woodwork when things like happen [2] [3] [4] and are generally (and understandably) a little flighty at "various" winners and losers [5].
Re: tax evasion/dodging/etc., I mostly mean it all but, in particular corporate tax avoidance should be fixed [6].
Re: progressive income taxes, as you point out the US tax system is really complex. Our income taxes are progressive. But many of the taxes we pay aren't, or are very barely progressive (property taxes are generally either 1, 2, or 3% for example)--e.g. many states have a flat sales tax as their largest revenue source.
But broadly the goal here isn't to technically meet the definition of a progressive income tax, it's to bring down income inequality. Progressive income taxes can do this, but not if the net effect is to lower taxes--such as it has been in the US [7].
So I'm not saying we should do it because other people do it. I'm saying we should do it because it will work and studies show it will work, but we have to do it right, because we've been doing it wrong, and that's made it not work.
re: minimum wage
I don't care if the federal government sets the minimum wage to a living wage and pins it to CPI or if each state/district/territory does it relative to their CPI. To me that's completely beside the point.
> it is important that the federal government has policies in place... that allow people... move to another state if their current one isn't treating them well
I think theoretically this seems like a good idea, but in practice it's not that common. People aren't gonna take their kids away from their grandparents or leave their whole friend/family network because minimum wage is $1.50 higher 2 time zones away. Really this is just like, a privilege measure. Yeah if you're an NBA player you want to play in Miami or Orlando because they're bigger markets with no income tax. But if you're a roofer in Massachusetts? Moving might not even be an option.
Broadly federalism claims to solve a lot of problems but, due to a mixture of weird politics, baked-in shortcomings and geography, it's pretty ineffective most of the time. There were some cases (gay marriage, slavery, weed) it was super effective, but when you consider all the possible policies, it's batting like .00009. I actually wish federalism could work, in particular I think it's really well-suited to gun policy. But gun policy is actually a really good case study for why federalism just doesn't help.
re: at-will employment
I love this topic because I think it's like, one of those icebreaker topics--you quickly learn a lot about someone's world view from their answer to this. I do think that it seems to make a lot of sense that, as you say, "If I can hire someone for any reason, I should be able to fire someone for any reason." But here are my issues with it:
- Can you hire someone just because they're the same religion as you, or fire them because they're not, or not hire them because they're not?
- What about being gay, or ugly, overweight, or disabled? What if you're a strip club? What if you're a synagogue?
- The power balance between employers and employees is completely different. If an employee quits without warning, it's pretty rare that that employer's housing, health care, retirement savings, college savings, and food supply are threatened. If my employer fires me, it's very likely all those things are threatened, immediately.
You can see how all these things really add up in the aggregate. So much so that we had to amend the Constitution to prevent it for certain groups. But discrimination is still a huge problem, in no small part because many people believe "If I can hire someone for any reason, I should be able to fire someone for any reason." And firing or not hiring is a huge deal to people. Your entire life grows out of your ability to have money--your ability to make friends, your ability to have romantic relationships, your ability to have kids, your ability to save for retirement, etc. etc. It's such an important part of life, and we really need to take it more seriously than essentially, yolo.
> most of the time you end up being able to fire people anyway by finding some stupid reason that's valid
Eh, this can happen but, when there are laws against it, a couple of wrongful termination lawsuits chill that pretty quickly. Ask any hospital lawyer.
> California, etc.
I wouldn't mind seeing some studies about this. You might laugh at this, but I'm innately suspicious of a lot of top-down planning in a policy, and I think there is definitely a ladder-pulling dynamic to putting so many regulations on small businesses. Generally I try and advocate for cutouts for really small businesses--you shouldn't have to jump through a bunch of hoops to open a bar where only you and your family work there for example--but there are serious ill effects in the aggregate absent regulation.
I would say that the only reason at-will employment + unenforceable non-competes works is that the market for software engineers is bonkers and has been for a while. You can imagine it's probably not a party for like, the ops people.
[1]: https://en.wikipedia.org/wiki/Right-to-work_law#Studies_of_e...
[2]: https://www.youtube.com/watch?v=23SXAYWZHc8&feature=emb_logo
[3]: https://www.aei.org/economics/how-border-adjustment-could-tr...
[4]: https://www.bloomberg.com/news/articles/2016-12-08/koch-indu...
[5]: https://www.marketwatch.com/story/meet-the-new-friendlier-al...
[6]: https://www.imf.org/external/pubs/ft/fandd/2019/09/tackling-...
[7]: https://www.taxpolicycenter.org/briefing-book/how-do-taxes-a...
---
Edit: I might be broadly wrong about relocation [8] but, still I think because it's almost entirely for job reasons, the point about not relocating for State policies holds.
[8]: https://www.theatlantic.com/business/archive/2016/10/us-geog...
1. Person A can be the person that actually builds the product (and often is).
2. It is always possible to be person A.
But it is N and N^N
I believe in perspective too, and agree that perspective matters.
But I also believe their is a common perspective (very hard to get at, that is the journey of scientists), and so at some point when you have enough data you can say "well there really is a black and white here".
In a way all the YC interview prep stuff is written for the wrong people (for YC, and this is obviously a little wrong) but also the right people (who will chase prestige to read the article about interviewing at YC).
I'd say it's like writing an argument to decrease penalties for shoplifting and titling it "Don't Punish Thieves". It's not wrong, but it's certainly not a productive way to frame the discussion.
Here, I guess I'm of the belief that there's nothing wrong with billionaires; the wrong thing is how little there is for a billion people in the world.
To me, clickbait means that I'm luring you into reading an article by using a catchy title, but the content of the article doesn't exactly match what I expected; or that I use human psychology to trick you into opening a new web page (e.g. "you will never guess what happened next").
I instead find the title refreshingly nice and simple, and reading the article fully matched my expectations. Great "marketing" (the ability to pick a catchy title is good marketing) shouldn't be confused with being clickbaity.
Marc Andreesen published an essay "It's Time to Build" [0]. He claims that ostensibly, COVID-19 inflicted acute trauma on the U.S. economy. But it merely excaberated the symptoms of a deeper dysfuntion. The root problem is the cultural decay of "a will to build". The solution is to rekindle this norm.
Several have published their own takes [1]. pg must have figured "What you can Learn from How to Ace a YC Interview" conveniently dovetails into the larger debate. Had he written the essay in a vacuum, I suspect he'd have emphasized "sell users what they want". Rather than the grand narrative "civilization is built by founders" which might increase exposure but possibly dilute the original intent.
[0] https://a16z.com/2020/04/18/its-time-to-build/
[1] https://scholars-stage.blogspot.com/2020/06/on-cultures-that...
People who have become billionaires from the companies YC has helped launch have that in common.
How long before we just have a permanent ruling class, and how does that move humanity forward?
It means the rich capture a growing portion of productivity, and in modern days it is on the strength of the financialization of productivity, not necessarily people actually doing work.
How is this an optimal system? How is it even a functioning system? What we are doing as a species, today, right now, is not working and our ability to live on this planet is increasingly in danger.
What I firmly oppose is someone who has a birth lottery of being born to such wealth creators - they don't deserve to inherit a vast fortune and all the power and privilege that come with it.
Irrespective, the wealth is the property of an individual who earned that wealth through voluntary exchange. If they want to give it all to their kids, to a charitable cause, or just destroy it, that should be their right as owners of that property, it is not just for the state to steal that property because some people don't like it when the parent decides to give that wealth to the child. Focus taxation on things that harm an unwilling third party, not things that involve only two consenting parties where nobody is made worse off.
Hard disagree. We won't see eye to eye on this point, and it really invalidates the rest of w hat you are saying.
I find it hard to believe that anyone could disagree with the above, which means you must disagree that the fruits of this exchange should be my property. Well let me ask you this: the customer made $20 in utility by engaging in this transaction with me. Why should they be able to keep the $20 utility but I must give up part of the $60? And what right do you have to reach into my pocket? If my customers instead traded groceries for my hour of training, should I not be able to keep these groceries?Is it only money that makes the difference for you?
As far as pushing back against crony capitalism and corporatism goes, we are in total agreement.
Consider point 13.6 of Scott Alexander's (Slate Star Codex) Non-Libertarian FAQ:
https://slatestarcodex.com/2017/02/22/repost-the-non-liberta...
If you assume that "individual property earned through voluntary exchange" is the ultimate value to be upheld, you may end up having to defend a hellscape world. You need at least to temper it with something along the lines of the Lockean proviso.
But I do consider it an important value since a lot of the motivation behind redistribution is self interest and jealousy (this is a finding in social science research), benelovant compassion only explains a small proportion of the variation.
1. Who do you think decides what rights an individual has in a society, and on what grounds do they hold that right? 2. Why grant property rights
On what grounds do they hold that right? I'm not religious so I can't appeal to an ultimate moral authority. See (2).
2. If you grant and enforce property rights you stake the individual, and the overall outcome is a more prosperous world. Removing property rights is a good way to collective starvation, it's been tried before. So it's moral in the sense that enforcing property rights minimises human suffering through the above mechanism.
If so, what kind of distribution do you think makes sense?
It's not like alternatives to billionaires owning the planet doesn't exist. Just America seems to be fairly resistant to the idea of public good.
And the other consideration is how the money of billionaires is actively used to make everyone else's lives worse, either through manipulating markets and commodities, raising our rent, or literally polluting and destroying the planet.
Or buying media and brain washing the population with their crazy ideologies. These are all highly negative events that come from a small group of people having control of too many resources.
No one yet has responded to me why it's such a great idea for billionaires to exist. I wonder if an argument could even be made that didn't even a personal fantasy/wish fulfillment scenario.
K, here's one, whether or not you accept it. I don't think the world would have SpaceX or Tesla were it not for the existence of billionaires.
Elon Musk already had a billion before founding/buying these companies. If he had "maxed out" and couldn't make any more money, I think there is a good chance he wouldn't have taken risks on these companies. I think we are better off with the existence of companies like these.
Even if you don't like Tesla or SpaceX, these are just examples. There are a lot of other companies that would not exist as well, especially if you consider the potential scarcity of funding in this scenario. And without their existence we would all be worse off.
There are downsides to having billionaires too, but it's pretty disingenuous to pretend there aren't upsides as well.
Someone else would have taken Musk's place. There is no inherent quality to billionaires that make them valuable outside of their wealth.
> especially if you consider the potential scarcity of funding in this scenario.
how is this an argument? I assume banks still exist in this world without billionaires?
As mentioned, there are other vehicles to obtain financing. Secondly, when billionaires disappear, their wealth doesn't disappear with them. Not sure what you are asking.
And even if you could gather the funding, you now have to keep a few dozen investors happy versus just pursuing your idea however you want.
And sure the money doesn't disappear, but would you really expect an Amazon warehouse worker who now makes $70k instead of $35k to be investing in highly risky ventures? I mean, they wouldn't even qualify to invest.
That seems unlikely, considering the USSR produced the space launches, and electric cars existed before Tesla. Without billionaires, you'd also lose the Koch's making it hard to move away from fossil fuels, which I think would make electric cars significantly easier, rather than harder
If you just mean that we won't have those brand names, should I care? It's just a name
Even if you assume that power correlates perfectly with wealth, there's not really evidence that billionaires control anywhere near enough money to become a "permanent ruling class".
[1]https://www.brookings.edu/blog/up-front/2019/06/25/six-facts... [2]https://en.wikipedia.org/wiki/List_of_Americans_by_net_worth
By far the biggest source of wealth inequality is the division between the top and bottom 50th percentile, who have essentially zero wealth. The uber-wealthy may be rich on an individual basis, but in aggregate they still hold constitute significantly less than run-in-the-mill retirees, dentists, and actuaries.
[1]https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...
It's much easier for a billionaire to hire lobbyists to protect his latest exploitative venture than it is for some dentist to do so. That's why the 1% held 30% of the total thirty years ago and they hold 40% now. That is a dark trend.
Your focus is too narrow. Broaden the timeline -- the meritocratic spoils cascade across the generations, as they ever have. It's part of the motivation to achieve.
Edit: because i can't reply right now:
I'm curious if a direct application of your question to something you need to survive would get a different answer.
We think of money as something we can accumulate without limit but if you replace it with other things in a similar context it seems different. Why is it okay for billionaires to exist, but not for someone to stockpile too much food?
I'm curious if anyone has an answer to both.
Literally nobody is suggesting that the children of the wealthy should be penniless.
Just looking at history of presidents...George Bush Jr and George Bush Sr. Do you think George Bush Jr would have been president if his father wasn't? I'm not saying that GWB isn't competent or anything like that...but is your assertion that if he didn't have the name (and inherited wealth and connections), he would have been a viable candidate?
Same could be said about the Clinton's, so I don't think this is partisan.
In the United States, the titular head of state is chosen through a weird gameshow, and any given head of state can play that game twice. On two occasions, the son of a successful game show contestant has leveraged name recognition to also win a round in the hot seat.
I believe no individual has ever _earned_ a billion USD. If it were up to me, people like Jeff Bezos would have everything to their name seized by the state. It should be used for the benefit of the many -- and not a selected few. He'll be compensated with a trophy, though: "Congratulations, you won capitalism. Continue for New Game+."
...everything? Also what does "people like Jeff Bezos" mean? Bald ones?
History teaches us that extreme inequality and class resentment leads to societal collapse. First there is civil unrest, then revolution. We have seen the beginning of some serious civil unrest this year.
From a purely self-interested point of view, if you value living in a peaceful and stable society, you ought to be concerned about wealth inequality. Generational wealth is one of the major factors here.
This way, a billionaire giving his fortune away won't be taxed. If that fortune goes to charity, still not taxed. If that fortune goes to his kids or to their trust fund, it should be heavily taxed.
Stealing partly from someone else I can't find a reference for:
Ownership capped at 1 billion, you get a sticker saying "I won capitalism" and all further growth and income goes to the government for social programs. You get a new ticker that estimates lives saved and people homes/fed/educated - that becomes your new boasting figure.
Not entirely serious but extreme wealth should be considered a bug. Perhaps it's true that the best system overall always results in this but it's worth considering that it might not be.
More importantly though, it's not a precise tax plan it's intended to show the absurdity of the outcome we currently have rather than show a particular way out. That the answers are often "but there would be loopholes" rather than "having people amass much more wealth is inherently good for us all" is telling.
Edit - though, they do. They already do. Not at the same level but they do let the government take their money.
And also, how else would they increase their score on the next level?
But that would be a lie since most of that money/value was created by other people, most likely their employees.
Second, the only way you can argue they created more value than the founder of the company is in aggregate. But they also likely made more money than the founder in aggregate. A company tries to pay employees based on the value they bring. If a CEO makes 10,000,000/year, it's probably because the company thinks that CEO is worth it (adds more value than that). So it's silly to point out that the 1000 engineers below him add more value in aggregate. Why, yes.. they also get paid way more than 10,000,000/year in aggregate.
And if the CEO/founder flat out owns the company then all this talk is irrelevant. It's theirs. They can do what they want. If they hired people to build the company for them and the people agreed, good for them. Sounds like a beneficial negotiation for both parties.
Edit: I'm not necessarily arguing for or against the existence of billionaires. That's a tough problem that I don't think I know the answer to. I'm just saying that pointing out that "employees add the real value to the company" is a dumb argument.
Secondly, it’s just laughably wrong to suggest that a “company tries to pay employees based on the value they bring”. Employees are paid what they need to be paid in order to get them to work there. No more, no less. A sweatshop worker might bring much more value than the cents they are paid, and a programmer might bring much more value than their 100K salary would suggest (see e.g. no-poach agreements between Google and other big companies).
(Seriously. Cite on economist that claims that “company tries to pay employees based on the value they bring”.)
And risk is irrelevant to the question of value. If someone wins a billion dollars, should we thank them for their hard work if they donate it to charity? Maybe for the money, but it would be misleading to conflate speculation/gambling with work.
You are so fundamentally misguided that it’s just laughable.
Since Forbes is the default scoreboard perhaps when it makes its Billionaires List, instead of a basic sort ranked by on net worth, Forbes should incorporate Environmental, Social and Governance like factors similar to those starting to be used for Equity investing [1] and do a final ranking based on ESG*net worth.
Consider for a moment what privileges would have to attach to this sticker, in order for the billionaires to let this through Congress. Definitely they would still want to have control of dominant cultural narratives, and they'd still want to write all the laws, and those of them who appreciate fabulous personal possessions would still appreciate those. The administration of this sticker would be quite complicated...
People who created enormous value in the past were rich but not filthy rich and that was not their goal in the first place. Most of them were happy enough to be paid back in respect, recognition, credit, fanfare, veneration etc..
What people are you referring to? I've read a fair amount about the gilded age robber barons and such. They were definitely not content to be paid back in "respect, recognition, fanfare". In fact that is more of a distraction and nuisance, and occasionally a liability or danger. The sorts of business practices used in the past to amass and keep wealth make anything today look like kiddie stuff.
What is your definition of filthy rich?
Rockefeller's net worth was about 2% of US GDP. IIRC, that's still a record.
If Bezos sold all of his stock in Amazon, well, for one he'd certainly be worth a lot less fairly rapidly as the stock collapsed based on his massive sale of it.
He's taxed on the sale of his stock as far as I understand it, although the capital gains tax should presumably be higher than the tax on earned wages.
It seems sensible that when you're putting hours in, you'd get taxed at a lower rate than someone whose money made them more money.
But... if Bezos has 10 million shares and they're worth 100 billion dollars, do you... take his shares away even if he's not selling them just because his assets are worth more than a billion dollars?
I think it's fair to say the current state of affairs where his employees are working at barely livable wages and getting carted away in ambulances from his warehouses is certainly untenable.
At that point the federal government needs to step in and say that these places aren't paying these workers enough to live a comfortable lifestyle and support a family.
It's too bad the extremely wealthy are also so able to pervert our systems of governance through lobbying efforts which they can afford.
You can't use the stock based wealth without asking it, unless you take out a loan with the stock as collateral.
Even a crappy government, which is widely known to be one of the least efficient ways to manage anything.
What's the percentage of multi millionaires or billionaires that are involved in effective, life changing philanthropy for large swaths of people?
I chalk up China's governmental competence to the number of scientists and engineers involved in their government. It may be authoritarian and a bit of a nightmare, but unlike the majority of other governments in the world you have a few decision makers in there who have some clue how the world actually works. Most other government are run by lawyers, career bureaucrats, delusional ideologues, or leaders who inherited their position either officially via some line of succession or de-facto via institutional nepotism.
There are some of all those categories in China's government, but there are also apparently enough people who actually know how to do things in the real world.
Only a small percentage of billionaires do incredibly valuable things, but those who do are doing things that I can't imagine the US government of today ever doing. The US government would be having meetings to schedule the meeting to discuss the meeting schedule, or fighting over culture war issues.
I think that the government has been sabotaged. Intentionally impairing it's functions to justify the critiques of functionally.
"I want to make the government small enough to drown in a tub"
"Government doesn't work, elect me and I'll prove it"(that one's a joke but conveys the point)
This might be a relevant story I read today on China.
a lot of people would disagree here, see the (correct, based) coup of the aus govt over the judiciary allowing them to at will deport migrants, or the controls on going outside in australia
0: https://newrepublic.com/article/159662/libertarian-walks-int...
IMO it's not reasonable at all past a certain point to continue to amass this kind of wealth that is a by-product of a broken system driven by exploitation, a system in this stage clearly set up for the rich to get richer while those struggling remain stagnant at best.
It's also not a stretch to suggest that Jeff Bezos or Bill Gates have created over 100 times more value than Rowling. Their roles are more nebulous, but they certainly did something better than their competitors. Microsoft Excel alone possibly has possibly saved trillions of hours productivity.
Or at least I'd consider it to have more priority, than J.K Rowling amassing few more millions herself.
I wouldn't have such big issue with Billionaires, if there weren't so much suffering from the exploited population.
Under the original US Constitution, Harry Potter would be public domain by now.
- Edited by other people - Printed by other people - (Films were) directed by other people - Characters in the films were played by other people - Distributed by other people
If there was no J.K. Rowling, we (admittedly) wouldn't have the stories. But the same is true of all of the other moving parts in the media business.
No-one is self-made.
Zuckerberg went to a high school, current tuition cost of which is over $57000 a year.
Warren Buffett's father was a congressman, his grandparents owned a retail business. Buffet was sent to an Ivy League school.
Beyond this, Kleiner Perkins did not give Jeff Bezos millions in VC back in 1996 because they liked him. He was around then, but they were too. As well as the employees shipping out books then. As well as the employees shipping books out now. Kleiner Perkins gave money then, anticipating the exploitation of Amazon factory (and non-factory) workers now. The company was not built with Bezos as some Atlas figure. It was built by millions from Kleiner Perkins in 1996, and by the exploited people doing the work there every day.
Bezos was given billions for successfully doing this. It does not waive away the expropriation of surplus labor time of those who work there.
It's like looking at an Olympic gold medal winner and saying "Oh yeah, well of course they broke the world record in the 100-meter dash. They were born with genetic predisposition for the sport and they had the best coaches and their parents got up at 4am to drive them to practice and..." Well, yeah. But a lot of people might have those advantages and not achieve anything with them.
Sure, Zuckerberg went to some fancy prep school. So did all of his classmates. None of them started Facebook. There's lots of other Congressmen who have kids. None of them are Warren Buffet.
But claiming that being "self-made" is something that doesn't exist because the extremest outliers had unusual circumstances (this is surprising for some reason?) ignores all the people who make more modest success largely by their hard work and ingenuity.
My second thought is that it wasn't a mistake.
It's a poor way of organizing a functioning and well integrated society. One that is only maintained by the continued purchasing of political power. It's an anti-democratic system where the primary distribution of power is determined by birth lottery.
We're in an era of our species and collective intelligence where we can imagine much better ways than this, but for many with that power their primary objective is keeping it.
If your model of big business is that it's a tool for exploiting workers, you'd expect the opposite of this dynamic. Instead the economics is pretty clear that most large firms create synergies that empower individual workers to produce much more than they'd be capable of individually or in small, informal organizations. As a bonus, the sizable bulk of this productivity surplus accumulates in the form of higher wages to the workers themselves.
Big business accomplishes this by consistently applying the best practices in organizational management[2]. In contrast small business tends to be much more sloppily managed with a lot more decisions made haphazardly, with many more decisions being made for individual gain rather than the good of the organization as a whole.
If anything the balance of the evidence would make a much stronger case that small business is really more exploitative than big business.
[1] https://www.jstor.org/stable/117089?seq=1 [2] https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.24.1.203
What I'm guessing you're referring to is median household income. Which is a quite different number than mean worker income. The former has stagnated relative to the latter primarily because a massive number of prime-aged workers, in particular young men, have dropped out of the labor pool.[3]
Why that's happened is an entire question all on its own. But one thing is clear, the reason for it certainly can't be big businesses exploiting labor, because by definition the unemployed aren't working for anybody at all.
[1] https://www.statista.com/statistics/243846/total-compensatio... [2] https://www.bls.gov/opub/btn/volume-6/below-trend-the-us-pro... [3] https://www.bls.gov/opub/mlr/2016/article/pdf/labor-force-pa...
https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
Mean wages have closely tracked productivity metrics. Median wages have fallen relative to mean wages. That strongly implies that the issue isn't decoupling between wages and productivity, but faster growth in the output of high-skilled workers relative to low-skilled workers.
This is confirmed by the empirical research[1], which shows that 61% of the divergence between median wages and productivity has come from income inequality between workers. Only 25% has come from rising corporate profits.
[1]https://www.epi.org/publication/ib330-productivity-vs-compen...
Does rent seeking count as productivity?
This is how it works with idealized new products. With highly competitive fields it is more zero sum, in that you take some pie from your competitors. But that's still good overall as it's adding value and making the market more efficient.
The only true zero sum game is the market for attention and why I despise social media companies. Everybody has a fixed amount of time, you can only grow that pie by adding more people.
If I provide enough value to buy a thousand lifetimes worth of food and sit in my castle with it while people outside my moat starve - am I not selfishly hoarding that food?
One has to balance harvesting eggs com the golden goose with not killing it or driving it away.
Taxing just billionaires specifically wouldn't do much as there aren't many of them. It would have to be a broader tax of some variety.
Billionares could be taxed more as a penalty of parking their money in a safe fiscal heaven and it is very doable if a concerted effort is made.
Certainly not all physical stores are unnecessary, but it may not be the case that society is better served by brick and mortar stores than Amazon (and similar), despite lost jobs and (temporarily) abandoned commercial space. It may just be progress moving forward.
These things aren't necessarily as contradictory as they may seem on the surface. The full life cycle of many successful tech startups is to make something people want, attract a large user base, have an IPO and become billionaires, and then (when it comes time to generate the revenue that the investors were expecting when they invested in the first place) throw the users under the bus in favor of the real customers, whoever they are. Often marketers.
The early phase, where the company is simply providing users with the best product they can make and seems to be making the world a better place is often a mirage that disappears as soon as they switch to a revenue-maximization mode of existence.
I don't think it has to be this way; probably plenty of people have become billionaires and treated their customers well at the same time. It's just a common thread with many of the very high-profile tech company "successes".
Paul Graham deals with founders at the very beginning of their endeavors when idealism is high and strongly correlated with success. At that time it isn't exactly clear where their companies will be in twenty or thirty years.
I think that you may be able to become a billionaire without exploiting people, but it's like playing on the high-difficulty mode. In other words, it's easier to be "successful" (from a monetary point of view) when you don't care about others. It's also easier to be successful coming from a privileged background. What's more, there can be a correlation between only knowing privilege and not caring about others, which perhaps leads to the number of billionaires who exploit people (double-advantage).
But it's all very complicated. Sometimes a modest background is an advantage in that you have less to lose, and can provide unique insight in connecting with people. Or a modest background can lead to a survival-of-the-fittest or harsh-world mentality, which leads to the exact opposite, which can also be an advantage.
At any rate, I've chosen to play on high-difficulty mode, for better or worse.
My early life, I grew up and had middle to upper middle class all around me. In my late teens and early twenties, there were times I had to scrounge my cushions and rummage through my car to find enough change to eat a meal.
We live in a society where everyone has access to a computer—personal or local library. We have all the information we need to bring (the majority, but not all) ourselves up from poverty to lower middle class or even middle class.
It’s my belief that it boils down to a few things: - self learning - dedication
Self Learning: if you must, pirate the crap out of all knowledge you need to get your family in a stable place. You need a textbook, you can find an older version; need a research report, find it online; you need.... just go find it and get it. If you don’t know how to find it, learn how to find it. If you don’t know where to start, ask someone. Just do...
Dedication: it’s so much easier to just come home do what you need to do with the family and then sit down and watch tv or do something that’s not going to progress you. It’s not fun and your mind will fight you every step of the way, but what’s more important to you? The show that’s on in an hour or the stability of your mind and family? Don’t look for those immediate returns, yet rather look for those returns that pay off in a year or two or 5. As i said, it sucks, but what’s more important?
One thing I’ve noticed over and over again is the difference between being raised in middle class or upper middle class vs poverty is the view of the work place—I’m not saying this is true for everyone, but just what I’ve observed over time. - Middle class and up: not as scared to talk back, speak your mind, or challenge their opinion to your bosses or colleagues. - Poverty: fearful of doing the aforementioned
I, for some reason see this as one of the largest issues with advancement as it propagates to not just the work life, but also the personal life too and thus creates a fear of challenge—it’s better to go with the status quo than to break out.
How can this change? Learn learn learn and then go find a place where you can apply your new skills and then just keep learning instead of doing the easy thing...
Thoughts?
This is almost impossible to do if you were raised in a household of abuse or food scarcity, or where your network doesn't contain any well educated individuals. Basically it works for...middle class people.
In short: trickle down economics is being pissed on and calling it rain, and "just work harder" blames people for their station and expects them to be extraordinary just to have a reasonable life. It's essentially blaming the poor, the easiest way out possible, with nice gloss on top, and it's total and utter bullshit that papers over the systemic forces acting against all workers - let alone those just scraping by.
But if you don't, well, what are you supposed to do? Your relationship to work is what it is because you can't afford to lose your job, and you were raised in an environment where others feel that way. Your ability to come home and learn things, rather than "sit down and watch tv or do something that's not going to progress you" is severely impacted if your mental health is already suffering. Your ability to even imagine what you can accomplish is affected by having no examples that you've witnessed in real life.
You can, of course, chalk all of this up to personal responsibility. But the alternative view, backed by science, is that being raised poor impacts all of these things and more, and that's a matter of how the human brain works. In the aggregate, it's not a matter of personal responsibility.
I know my generation has free access to almost all of human knowledge online, I know hard work and study can pull me out of this hell. I start every day hoping to do just that, but my accomplishments remain depressingly few regardless. Honestly, it's even getting worse over time, I was a far brighter and gifted kid once. I live in fear of how much smarter some of my peers are getting and I can't catch up.
It's like, every time I try to escape this mess, I fall back to a predetermined state of idleness. Most of the blame is on me; I was actually given some good opportunities to better myself by teachers who cared, I was a step away from scholarships at private schools and studying abroad etc. and I blew it all away. I never worked hard enough. Some of my failures may just boil down to luck.
Still, it is sad to think (with hindsight) how much different everything could've been, if my starting conditions were just a bit better. If I had been given a nudge in the right direction at challenging moments, instead of having to rely on self-study and self-help. If my parents had made me play an instrument, learn math earlier, read more books or make friends. God, it would've been so much better had I known somebody who had already done the things I wanted to do.
Breaking out of the loop is very, very hard without help. It is like the Münchhausen Trilemma. Anyway, I hope this comment is not inappropriate for HN, I just have nowhere else to vent. Sorry.
I’m glad that you know you have limitless resources (libgen is your friend).
If i may make a suggestion, change the way you talk. Instead of saying, “i hope” say “I am” be more definitive about your statements and after awhile, you’ll notice a change in your thoughts.
Here’s my favorite saying, “you’re not going to change until the pain of change is less than the pain of staying the same.”
I did a 6 year stent at community college and then failed out at uni. I had a menial until 27 or 28 years old. I was a failure at life at this point. I decided to read the entire Learning Python book (>1200 pages) because I’m not a smart man, but I thought that by reading that stupid thing, I’d learn something at least (should have picked a few other books looking back). While reading that book and having the menial job, I started having these ideas... hmm... I could automate this for this department or I could do this... i could do that... blah blah... that led me to another role at that company. I kept learning that programming thing and then somehow got a job at a better company, making decent money. Kept studying and two years later, I finally a software engineer that’s leading initiatives at the company I’m at.
My full advice:
- Don’t be scared to ask questions
- Ask more questions
- Learn whatever interests you. You’ll wonder, but at some point down the road, something will click. Could be a few months from now or a few years, but just keep learning whatever tickles your fancy.
- Don’t be scared to admit you don’t know something, but just make sure that you know it the next time you see the person.
- Be curious
- Workout. This is one of the most important things. How can one feel good about oneself if they don’t take care of their body. I’m not saying gotta have the best body or diet, but just get some workout in—sports, gym, classes, yoga, hiking, something.
I got my best break of my life, which lead to everything good I have accomplished today at the gym. I overheard a conversation someone was having with a person I knew at the gym and I found it interesting. I asked for an introduction and that was that.
Don’t be scared to reach out. Go to events and meet new people. Talk to random people who you think would be interesting; talk to people who are working on interesting stuff at coffee shops, etc...
You’ll be fine if you have passion.
There's 'ugh' field, procrastination, fear, mental health problems, and so forth that impedes folks.
Growing, however, is all about academics, with a side dish PE. Nobody taught anybody how to deal with procrastination, how to deal with emotional problems, and so on. Or how to ask for help. Or how to deal with paying bills and taking responsibility.
Once we are in the real world, you either learn the rules of society or you don't. You sink and swim on your own 'merit', and that's not including the general lack of support society has for you.
Really, how do society expects people to function with no instruction manual? Or worse, that we are all making up shit as we went along with our lives?
This requires some threshold level of intelligence.
It requires knowing that it's possible and not making stupid decisions along the way that inhibit it. You're less likely to be exposed to knowledge of how or where to start when no one inside your network is successful.
There are some issues with learned behavior (children from poverty that eat one marshmallow in the test because they've learned adults are unreliable and one now is better than the promise of two later). People from poverty tend to spend money quickly when they get it because having it is scarce/rare and there's learned behavior to use it right away.
I think a lot of the arguments from the left that "it can't be done", "social mobility doesn't exist", etc. are both wrong and really harmful because it confuses people into thinking they can't improve their situation when they can. It takes away agency.
I think the truth is messier though and not everyone has the capacity to do this and our society is definitely skewed for intelligence, but arguably so is any society with living things that need to adapt to their environment.
The solution is probably some sort of complex policy and iterating on it to try and make things better and protect the lower bound of society, but that's boring pragmatic neoliberalism and doesn't really rally the troops. People prefer to argue the extremes.
I think the key is you can protect the lower bound of society without taking from the rich or disincentivizing wealth creation and growth, but I also think wealth inequality in a society when it comes from wealth creation and growth is not that big of a deal and we want to reward this kind of thing (less true when it comes from other places like inheritance). Basically protect the lower bound, don't worry about capping the upper bound. Worry about inheritance and leveraging wealth into political power.
Tyler Cowen's book makes a pretty good case for growth in this kind of way being the best way to help the most people the fastest: https://press.stripe.com/#stubborn-attachments
I think that gets less attention though because it's easier to 'hate the rich' than it is to focus on policy issues that affect the lower bound.
And luck especially with respect to your health and the health of those around you. It's harder to invest in yourself when you are a primary caregiver to a relative.
It's this argument that makes me wonder how anybody can be opposed to some form of universal health care. I heard somebody ask this question once and it's stuck with me: how would you organize society if you knew you would be reborn but have no idea into what situation.
When you live in poverty, there is no such thing as peace or thinking about the future. You are trying to cope minute-by-minute with hunger, abuse, fear, and limitless insecurity. You know someone who is in jail, someone who has been shot/stabbed/murdered, and plenty of people who did all the right things and still failed to make it out. In a nutshell, there's no such thing as tomorrow when you hope to die in your sleep.
Self-fulfillment is at the top of Maslow's hierarchy. Until society provides for all the needs beneath it, having access to the internet isn't going to make a damn bit of difference.
It’s been proven in several studies that income is linked to happiness.
The stabbed, jail, etc... you mentioned... yeah, I’ve seen that first hand a few times, know many people who have gone to jail and are still in it for a myriad of reasons. Seeing & having that stuff around you doesn’t mean you grow poor.
I did the 6 year community college plan; I failed out of college and by every metric on my academic record, I should be a complete failure, but hey, I’m not!
All the issues you of poverty and how crippling it is, I completely agree with, but what you don’t understand is that it’s all a decision. It’s a decision to live how you are or seek a return that will be realized down the road at some unknown point. I understand what I just said would be extremely difficult for someone who would be in that current situation, but it doesn’t deny them the ability to seek that reward at some point down the road.
As I’ve said, it’s all a choice on what to do with your time. The fight within is the most difficult thing anyone could ever face, but face it one must to change.
One of my favorite sayings is “you’re not going to change until the pain of change is less than the pain of staying the same.” Basically... one must hate oneself so much that it would be easier to change than to live another day as one currently does.
Wanna guess how I changed? I hated myself that much.
And from you're own admission you "had to scrounge for change" a few times... I know people who nearly starved to death as little children. In fact there are starving, begging kids out on the streets all over the city I live in.
It doesn't sound like you have any familiarity with the type of extreme poverty that hundreds of millions of people on Earth live through, for whom it is clearly not a choice.
I can say that I have been fortunate enough to not have ever been at that level of poverty and should probably adjust my statements accordingly. Looking back, as i wrote that, I most likely had just the States in mind and other Western countries, not societies that are considered 3rd world.
For those, I cannot fathom the issues they face nor will i even attempt to speculate as that would be just foolish of me.
Then yes, these habits about how to treat the work place get passed onto kids. And it takes a lot of mental work to relearn things deeply ingrained in you from childhood. This is the second issue, where it would take generations for the bad effects to actually disappear. There are no quick fixes to systemic issues.
I completely agree that in roles where you are at the bottom of the totem, you can’t talk back since one is replaceable at that level. However, it’s not about speaking up at that job, rather leanings the skills needed to get another job where you’re not at the bottom of the totem.
I was in this position and I despised it.
I’m not saying it’s easy; I’m not saying that the internal fight to watch tv/relax instead of the more difficult task of studying/learning will ever stop, but what I’m saying is that there are tools available to everyone who asks for it.
What I’d love to know more about is how can one change their outlook in a systematic way? How can people who don’t have the notion of they can be more, be more? How.... so many questions.
Yes, someone from poverty can overcome these issues with a combination of effort and luck. But it’s hard to do, and many either don’t try or fail. This is a waste of human potential, where someone who maybe could have done better given a better starting environment loses out just due to the circumstances of their birth. Anyone who could have had a billion dollar idea and ends up hurt by their circumstances is a loss to us as a society. The tools are available for everyone who asks for it, but many are born such that they’d never trust the system enough to ask for it.
I guess I would phrase it as the difference between “their is societal mobility, in that people from any start can improve their lot” and “there is societal mobility, in that people from any start have equal opportunity as those born at the top to be successful.” America has the first, but is very far away from the second. I doubt it’s actually possible to reach the second completely of course, just get closer to it.
In the end I agree. How we actually fix this is full of so many questions. As far as America is concerned, I believe the “right to work” laws that allow firing without reason probably deeply increase the fear of those at all levels of the totem pole, but especially those close to poverty. Of course that’s just one of many issues, and repealing those laws creates economic inefficiency in making it hard to fire poor performers. Which has worse side effects is debatable, and there are endless questions indeed.
Opportunity is the biggest differentiator among the rich and poor.
Intelligence is fairly evenly distributed in our society, being poor doesn't mean you are dumb and lazy it means that you haven't had all the opportunities that a rich person has.
These opportunities are from simple things like individual tutoring, vacations and time to relax, to being able to fly across country to take an unpaid/underpaid internship, to having mentors. It also means more complex opportunities like living in better areas with a greater chance to meet like minded people and having better/more dumb luck.
Opportunities among the poor aren't equal either. A rural poor kid has less access to things than the equally poor kid that lives in the big city. These things include industry outreach, better libraries, museums, concerts, better schools, all around greater access.
Rather focusing solely on educating and motivating a populous, we should also be figuring out how to provide better opportunities for our citizens. Instead of H1-B's we might be better off forcing companies to hire kids that didn't go to a small select number of schools, or to hire people from middle America, or just incentivize them to hire and train Americans.
Further we could expand our broadband infrastructure, provide a computer and internet to every person in America who doesn't have access to neither.
I want society to take care of the weakest. I don't want anyone to ever end up without a basic roof over their head and food on their plate, regardless how bag their decisions are. I want children to have the opportunity to advice greatness, even if they come from poverty, or worse, their parents suck.
At the same time, fort myself, I don't want to ever have to use any services offered to people in need. I want to give know to society than I give.
I think it's necessary for us to have this split view for a healthy society.
Further, personal push for success relies on grit and smarts. Also luck, but it only makes sense to think about that to the extent you can influence it.
Public policy on three other hand is about statistics and we cannot ask for better people.
Anyone screenshotting being blocked by anyone is definitely trading in fashion.
Back then tech was exciting and new. We were changing the world.
Now we have changed the world. Mobile is king, web is emperor. We’ve won.
Tech is to 2020 what finance was to 1980. And VCs are seen as the big baddies.
People don’t join this industry for the love of nerdy tech anymore. They come because it’s where ambitious people go.
Our recruiting/interviewing process would be criticized nowadays as completely bias-ridden. We sent teams of just-graduated first-year people back to their school's career fairs, built relationships with career offices at those schools, and just basically would have people walk around and be outgoing and try to just chat with interesting students and see if they wanted to join a cool tech company in NYC with cool people. Our interviews were mostly gut-feel after talking to someone about whatever and doing a very simple many-to-many-linking-table exercise to see if they could visualize simple data relations in their head. We didn't even test coding skills, for the most part.
I dunno if it would surprise anyone, but those teams actually were, by far, the most diverse teams I've worked on in my career in terms of age, gender, and race (not to mention socio-eco background). We invested heavily in training people on the job and building culture together internally. We ended up being merged into a larger entity by our parent company and the culture was utterly demolished, and everyone quit around the same time.
I just don't see what context would attract these sorts of people back together at a tech company nowadays. If you find something that isn't a startup founded by rich brats trying to completely fleece slightly-above-average engineers in secondary-market cities with 10-yr-old market rate salaries, and isn't a big tech company ruining society, completely driven by political-insider-donors-- ahem, sorry, I mean investors -- please let me know also!
Find those laws, and develop a startup that can break them or exploit loopholes, and you've got your next startup of 2009, in 2020.
There's probably room in environmental regulation, maybe there's a minimum amount of toxic waste you have to dump for it to be regulated, and you could create an "uber for toxic waste" where people could pick some up from a pollution-heavy plant on their way home from work and take it home to their toilet to dump in.
Sky's the limit if you want a 2009-style unicorn.
It's simple to lose touch. You did what the youth are doing a decade ago; hell, you're still in the game, albeit in a much different role. The world shifts around you, but you are so rich and powerful that people in your personal circle either don't see it themselves because of their wealth and power, or would NEVER point out your shortcomings because they need access to your wealth and power.
In other words, assigning that statement - die a hero or live long enough to become the villain - says, to me, that he hasn't actually done anything wrong. That it's not his fault, he's just been around so long that tastes have changed. He's the victim, is what I read there.
I would argue, though, that it is his fault. He's out of touch with the world as it is for people just starting out, AND he's made the mistake of believing his view is the view, right and proper.
No idea what all that means in this context, but there it is, I guess.
Now we have changed the world. Mobile is king, web is emperor. We’ve won."
You must be young.
The difference between 1999 and 2009 was an order of magnitude greater than 2009 to 2019.
This is your personal growth journey, not really an objective thing.
Professionalization marches on. Exponentially.
Even then only maybe 1/3 of Americans had consistent Internet access, but everyone was talking about it. 'The Matrix' films remember are about hackers.
Then the metastasizing with mobile, which really took root post 2010 when even poor people around the globe became connected.
I think AI, in the long run, won't be the thing we look at, it will be the internet itself.
In 500 years, I wonder if even Television or Radio will be remembered as 'a thing' - they were foundational and transformational, but only for a few decades until the internet took over.
The mishmash we have now, may resemble whatever it is we have in 1000 years. Protocols, sources, viewing tech will all change, but I think that it will actually kind of feel similar. It won't have the orthodoxy of 'TV Channels' with 'set program timings' etc..
Then the fundamental greed driven changes happened, and here we are with an AOL situation again.
So the difference between 2005 (or 2009) and 2019 is greater, and it is for the worse. A lot of programmers are backstabbing and greedy creatures now who pretend to be good but are only after money and power.
I'm not talking about startup founders here, it is the corporate programmers who are insufferable now.
But this I'm afraid is a little bit of mythology from those who were there at the time, and have/had a certain view of what the 'web ought to be'.
In the 'big big picture' - the web blew up between 1995-2005 in the modern world, and then blew up on a much bigger scale with mobile afterwards.
US is only 5% of world population. Europe not quite 10%.
Our view of 'what the web ought to view' I think has some legit elements, but I'm not sure if they're representative of what real material value is.
The world is big.
Just the mere presence of the web - in all it's incarnations - is a very powerful thing.
It's still roiling and people are still coming online and it's powerful.
I actually don't think Amazon retail (i.e. sans AWS) is an important artifact in the big picture.
If only considering the WWW impacts, then sure. In the physical world, however, it's definitely an important artifact, considering how much it's upended things for brick-and-mortar (at all scales) and the whole supply chain / fulfillment / logistics realm.
(And note that "important" should not be taken to mean "beneficial" here; it's already important to the history of these sectors in the same sense that giant asteroids are important to the history of Earth-based life - that is, outright destructive of the current landscape, but might very well result in new opportunities in its wake)
That tweet is actually pretty amazing though: pg discovering practices 37Signals has been using for a decade.
Make something people want that can evolve into a commodity, ensure only the inventor can profit (e.g. with IP protections), and architect your business such that returns scale independently of operation costs.
I doubt people have built successful companies, and become 'billionaires' by building something people do not want.
A company that exploits its users won't generally do well, but that doesn't mean that it doesn't exploit its workers, which is generally what politicians mean here (see Amazon, for instance. Or, since Facebook was brought up in the article, their content moderation team)
I accept the fact that the market and law allow for this to happen, but I don't have to respect billionaires for it.
As PG is likely on the cusp of "billionairehood" this essay follows his typically cathartic & open writing style - one part personal reconciliation, one part insight
After selling viaweb in 1998 PG's options probably looked like ->
-=> Option 1 "Hit the beach"
-=> Option 2 "How far can we take this"
-=> Option 3 "What can we give back"
Very early stage investment is an exercise in patience.
The genesis of YC (after giving a "free" talk at Harvard around startups) says PG first chose to keep going and combined it with a desire to be helpful to other entrepreneurs
YC has had huge wins before, PG is a very wealthy man.
But nothing on the scale of what YC will collect from AirBNB and Stripe in the near future
In 2020 these essays being seasoned with a "billionaire" flavoring is not disconnected from that coming windfall and PG's need to reconcile
I for one am looking forward to watching PG navigate his continued transition
I would be personally surprised if along the way he didn't launch an improved and more actionable "Giving Pledge" like organization for his final act
Extracting value sort of works to some degree in some situations, such as mining (at least until you have ruined the environment and your unsustainable practices are coming back to bite you). But whether you are a "self made billionaire" or inherited it, you have to fundamentally be a good steward of value to at least some degree or things soon look like the dystopian outcome in the movie The Lion King after the hyenas ally with the bad guy lion.
Billionaires can only exist as long as billionaires create more pie than they keep -- though certainly it is reasonable to be concerned about exactly where that dividing line should be such that their customers/users/whatever phrase you desire to use here get sufficient value that they don't feel taken advantage of and screwed over. It gets easy for wealthy people to demand more without really intending to be assholes and get it because they haven't really figured out that the aggressive tactics that worked to make them rich are no longer appropriate now that they are rich because of the power differential that was created in the course of getting wealthy (money being rooted in power, not the other way around).
If you want "evidence" that billionaires fundamentally must provide some degree of real value, I am happy to point you to Theranos and Elizabeth Holmes. Theranos was valued at $10 Billion and went to zero valuation overnight after it was discovered the entire thing was a con job.
Counterexample, the children of billionaires provide no degree of real value.
AirBnB is of course a total homerun, but surely there are other companies like Stripe, Cruise, DoorDash, Dropbox, Gitlab etc... that have equivalently good reference points for how founders should think. I'm curious if there is something that sets the ABNB folks that much apart in that sense.
For many, this is a hard pill to swallow. Here's one way to judge it more objectively. Replace "billionaire", with something more neutral: "pro basketball player", "amazing musician", "prolific writer".
The arguments tend to make a lot of sense in other categories, but our natural inclination rebels on Billionaire. This is a great sign that something is off
One defining quality is that billionaires need to scale work that often involves management. In this case consider prolific basketball coaches, or generals in war.
The reason I shy away from including politicians, is because their m.o is starkly different: it’s all about status.
Either way, I think your argument is weak. “Sure you feel this away about billionaires. But change ‘billionaire’ to something different and your feelings change.”
Well, duh. That’s not even an analogy. You’re just literally changing the subject of the sentence. Billionaires are super different than writers in ways that are relevant to this discussion.
Most people have a natural bias towards billionaires. To remove the particulars of the essay, to look at it with fresh eyes.
Yes, indeed it changes things, and no one change will map completely. Do this a few times though and a clearer sight comes through
And founders are not?
Some founders are at that level, and frankly, more important to society than most athletes or musicians.
MLB pitchers make $10's of millions of dollars a year, far more than most of our top talent.
But the children of billionaires are (almost) all obscenely wealthy.
Consider - the children of musical prodigies are likely to be more musical then average. The children of billionaires are likely to be more entrepreneurial than average - both are likely to be wealthy - neither are likely to be as prolific — I.e a child making an even more successful business, or being a better musician - over a few generations, both are likely to revert to the mean. In some countries this is not true of the wealthy, but in America this is particularly true
Is that true though? You made a big claim, without backing, to support your other claim.
That isn’t a good path to finding the truth. It only exposes hidden biases and assumptions.
And that's the fundamental difference between the child of a musician v. the child of a billionaire. In order for the musicians' child to be a prodigy like one's parent, there's still considerable training and practice required. In order for the billionaire's child to be a billionaire like one's parent, the child simply needs to wait for one's parent to die.
That is: the passing down of musical aptitude through multiple generations requires each generation to put in approximately the same labor as the previous. The passing down of material wealth through multiple generations does not.
The descendants of American billionaires might suck at sustaining their advantageous positions right now, but that's only because America's upper class is relatively fresh, still full of bourgeois "new wealth" instead of aristocratic "old wealth", and lacking practice with migrating from the former to the latter. In a century or two (barring intervention to return wealth to the proletariat) I'd expect the American upper class to get into that groove of wealth consolidation, like how things evolved in Europe (and hell, if the US follows the same trajectory as the Roman Empire we might even end up with the same sort of feudal society in some places).
Let’s think on that a bit. Consider, if a parent is a musical prodigy, it’s akin to having a fantastic coach at an early age. They can teach you hard-earned insights, help you make the right choices, introduce you to the right people. This makes achievement considerably easier. It’s not as different from financial transfer as we think.
> In a century or two (barring intervention to return wealth to the proletariat) I'd expect the American upper class to get into that groove of wealth consolidation, like how things evolved in Europe
As long we live in a free-market society, I think this will be hard to do. Main reason: it is extremely difficult to invest well in the long-term. You can see this by how prized top investors are. Unless one invests well, in a free market society their wealth gets eaten up.
Europe avoids this through a highly regulated society — social mobility in and out of the upper class is extremely difficult there.
It’s certainly possible that the u.s will lose their position as the bastion of free markets — but whoever picks it up will become as powerful, and most people will start to immigrate there.
Even a low percent gain over the long term is very, very difficult. You can tell this by noting how much endowment managers get paid.
In the words of those Screen Rants pitch meeting skits: "It'll be easy, barely an inconvenience!"
The easiest and most surefire form of investment out there is in land. There's a finite amount of it, so while on local scales values will fluctuate, on an aggregate scale the value of one's total land holdings will increase indefinitely as demand increases (which it will, both from a growing global population and a growing global economy). Land ain't especially liquid, but on long-term scales that ain't really a problem.
Until we as a society pull some moves out of the Georgist playbook and tax land value, the rich will always be motivated to consolidate that wealth into land control, and will be able to hold onto that wealth at the expense of everyone else.
...not really. Take it from a musician: performance ability and teaching ability are not as interconnected as you're implying.
And on top of that, even a fantastic coach can't really do much if the one being "coached" has no interest in learning something, or in practicing what one learned.
> As long we live in a free-market society
We don't, and arguably never have. A free market is pretty difficult to achieve when you have existing players motivated to hold onto that wealth and prevent competitors from unseating it.
> social mobility in and out of the upper class is extremely difficult there.
You think it's significantly easier here? Especially with wages tanking relative to cost of living for all but the upper class, I don't see this fixing itself any time soon without one heck of a course correction. We ain't that far off from a European-style regulated society (and indeed, political discourse in the US seems to be pushing for it).
I don't think Zuckerberg, or Bezos are necessarily bad people, but they are the beneficiaries of a bad system, which squeezes work and wealth from poorer people and sucks it to the top.
Some of Amazon's warehouse employees have to pee in bottles to save time. You dont think that is bad and Bezos should do something to stop that?
It's not that people set out to exploit people and as a result they become billionares. It's that their focus on their goal allows exploitation to happen as a by product. It's not that Uber set out to exploit drivers, it's just that get their business to scale they had to lure drivers in with big incentives, and then in order to make their business viable they had to then force their costs down to the point where drivers are paid less than the cost of vehicle maintenance.
It's just a bizarre primary school understanding or morality where there's a group of "Good" people and "Bad" people.
I've come to the conclusion that to be a CEO you have to wear these blinders and have faith that overall your company is a positive good for the world. That means that when you have a low performing employee you have to fire him even though you know that it may cause terrible consequences for him and his family.
In the case of small bookstores, they think it is enough to toss books on the shelf and wait for people to come browsing. Well, I can now browse from bed.
This is a little glib. There's nothing most of these small business can do.
EDIT: forgot to add, I suspect there are many things small bookstores could do in terms of building a local community (in-person and online) of people who love books, improving discovery options for new books from that community, that kind of thing. So maybe they should be doing that i.e. “do things that don’t scale” to try and delight their users more than amazon does, in a way where their lack of scale is an advantage?
Even big businesses facing Amazon have done very little to compete.
This again, is glib.
To suggest that you somehow know all these vendors have 'not tried anything'.
How about lobbying government to subsidize their business like the US Government subsidizes delivery? Or the VAT tax breaks that Amazon gets? Or the fact that Amazon is dumping merchandise on the US by selling for negative margins, paid for by profits out of AWS?
A local bookstore has 6 staff. They have no power.
https://www.businessinsider.com/jeff-bezos-amazon-history-fa...
As book store owner, I really think it's an irrational decision to invest heavily in fighting Amazon. You're chances of success are pretty slim.
As for big businesses ? Well, there's Walmart, Target.
In the end, the e-commerce industry is a place where most of the market share would be controlled by a few large companies. That was clear from the beginning.
Then they need to do something that cannot be scaled. Being a general bookseller can easily be scaled.
There are two happy people in this story and one unhappy one. But the fact that there is an unhappy one doesn’t seem like nearly enough to me to decide it shouldn’t have played out like it did.
Does it seem like enough to you? If not, what other common element would this story have to have to decide it shouldn’t have happened?
As an example: we killed tons of movie rental businesses by switching to Netflix. Life is much better now for everyone who isn't a movie rental store owner, which is almost everyone.
Small business doesn't mean good business and big business doesn't mean bad business. What matters to me is the net effect, and in most cases with Amazon, the net effect is very positive.
The same is true for Google, Uber, and Facebook and most big tech successes. The ratio of bad:good is just worse for some of them than for others, making it harder to judge.
The small businesses you say were exploitative is because they were the only shot in town. i.e in a monopolistic position.
multiple small businesses result in a robust economy. if one goes bust there's plenty to keep providing a similar service. MSB's enable other auxiliary business look at Japan | German's economy for an example - mutliple suppliers etc. more employment. Guess the jobs the masses work at amazon - drivers, warehouse workers.
What amazon, provides could've been easily provided by a standardized api connecting different small merchants. some industries already do this - a flower shop needs roses, it can easily contact another flower shop to get roses to it's customers. everyone wins.
netflix yeah was a net positive. it's content so end of day, it was going to be aggregated in Ben Thompson's terms.
Uber is good for me as a consumer. But is it good for the driver, for the environment. if the US had robust public transportation, Uber wouldn't be necessary.
They provide dignified employment (as opposed to invisible work in a warehouse), they encourage entrepreneurship, they increase the tax base of a locality (by ensuring money stays within a local economy), and they contribute to local culture, community and character.
Amazon killing small businesses has sucked even more of the life force out of small towns, and that’s sad because said towns were already shellacked by the death of manufacturing.
It’s hard to argue with Amazon’s excellent customer experience, but the externalities involved are nontrivial and IMO outweigh the benefits.
I would also claim that keeping taxes in the local economy, while a very worthy goal, does not require the presence of small business. Big business can be made to support local community and culture. Just because the Walmart headquarters are outside of my small town, doesn't mean they don't have to pay a percentage of their earnings from the local warehouse to that community.
Also, minor grammar nit, you may have meant to use "shell-shocked" instead of "shellacked", but shell-shocked wouldn't fit the context you're going for either.
Amazon is substantially worse on most (if not all) of those metrics.
But, the second, more negative thing is that a lot of the inefficiencies removed by these companies were in the form of livelihoods for many people, or adherence to various regulations and laws that was a lot easier to omit with IT in the middle. Examples would be the Mom-and-Pop retail stores going out of business or Uber breaking taxi regulations.
Like you said, Bezos didn't set out to bankrupt Mom&Pop, it was just an unfortunate side-effect of using IT. The thing that I think pg is missing is that projects where this happens are exploitative to a degree, and is why they get rightfully criticized.
I think it's even more simple than that. It's a failure to realize that everyone is the plucky hero doing things with good intentions in their story about themselves, and that others don't see him as he sees himself.
So despite there being a world where the society is becoming increasingly unequal, where the average American struggles to feel financial security and those born without access to education or the right geography (or, perhaps, who just aren't as bright or ambitious) are merciless casualties of a "meritocracy" that excludes them, PG feels like he can't be the bad guy because he can't pinpoint any specific situation where he did something "wrong".
His only fault, perhaps, is being a massive beneficiary of a system that is profoundly and deeply unfair and getting more that way every day, and he's not able to see that as something he's at fault for.
So I have some sense of empathy and understanding for his perspective. But I think he would benefit greatly from really trying to dig into understanding what it might be like not to share his perspective and vantage point, as well as to do a better job understanding how different the world is for people now than it was in the early 1980's when he began his professional life.
If some unfair system exists, and you didn't do anything to create it (it existed before you were born), and you don't do anything to make it worse (and maybe occasionally try to make it a little better)... and the system massively benefits you... are you at fault? Why?
In two of those three cases, you are at fault (or continually become more at fault, more precisely, as the ratio of "how much it existed before you" shifts).
If you replace the word fault with "responsibility" or even a more neutral "influence" it's much more obvious, I think. You would clearly have less responsibility than the person advocating for said policies, but more than the person fighting them more vigorously or more effectively.
Nobody looks back and says "boy, I'm glad there were all those people who occasionally complained about Windows in the late 90s," they look back and respect and value the people who built alternatives instead.
We punish people who do bad things. We don't punish people who have neither helped nor done anything bad. We might we wish they had done better, but wishing and enforcing are very distinct mechanisms.
https://www.washingtonpost.com/technology/2020/10/22/uber-pr...
I'm sure many would not consider themselves exploited and prefer to be contractors, but I'm personally skeptical that the breakdowns of this opinion are as reported by the companies.
Even the idea that Uber drivers themselves wanted to keep their contractor status is questionable given that they collected those statistics via polls in the driver app. There is/was legitimate concern that Uber et al would collect that info and retaliate. There is no recourse for this on the workers’ behalf because they don’t have a union! This is a TEXTBOOK example of why gig workers need to be given the right to collectively bargain. Now, thanks to prop 22, overturning its provisions needs a 7/8 majority in the state legislature. Aka, not gonna happen, and that’s by the design of some really cynical lawyers.
More generally, the prop 22 campaign is an indictment of the referendum process, and how easily it can be abused in the absence of sensible campaign finance laws.
https://ballotpedia.org/California_Proposition_16,_Repeal_Pr...
Is it possible that maybe the voters actually have their own opinions regarding these ballot propositions? So maybe Californian voters think that drivers should have the right to decide for themselves whether to work with Uber or not?
The choices were 1. the previous system where drivers were purely contractors, 2. the AB5 world where the vast majority of them can't work at all anymore but the ones that remain are full-time employees, without the flexibility that attracted many of them to this work in the first place as opposed to, say, getting a job at a traditional taxi company, or 3. a compromise where the work stays fundamentally the same but pays more in many cases.
Most of the people I saw opposing prop 22, which I'm guessing includes the above commenter, and certainly included the legislator behind AB5, were just bystanders who viewed it as yet another a philosophical showdown of unionized full-time work vs anything goes exploitation. Even though that framework is a poor fit for the details of this particular situation.
The people with skin in the game saw it differently, the details actually mattered to them and they voted accordingly.
> overturning its provisions needs a 7/8 majority in the state legislature.
Given that prop 22 overturns a law that had recently been passed by the current sitting legislature, there wouldn't have been any point to doing it if it could just be immediately repealed by the same people. Prop 22 can be still be overturned with just a >50% vote by a future ballot proposition.
Why do people keep lying that AB5 had a requirement for people to be full-time employees? I know in many office-based work environments, there is a strong preference for all regular (non-contract) employees to be full-time employees, but that’s not true in lots of industries, and there is nothing in AB5 that requires people working in conditions which it defines as employees rather than contractors to be full-time.
The bigger point though is there would still be major limitations on flexibility even if Uber/Lyft was able to offer every driver the option of full or part-time. They still wouldn't be able to set their own hours, only work a few weeks here and there with no predictable schedule, sign up and start working immediately with minimal overhead, etc.
I mean, it's a small sample of course. But the effect size was large.
Only after the ride shares corps spent over two hundred million dollars misrepresenting Prop 22. That's one fifth of a billion dollars... to write themselves a law. [1]
Asking in good faith, do you genuinely believe what you wrote above?
[1] https://www.wired.com/story/200-million-uber-lyft-write-own-...
Taxi drivers have always been undocumented and much poorer than the people they were driving. Uber didn’t change that, and nobody needs permission to boss a poor person around - go to a restaurant, send your kids to school, shop, you will be bossing poor people around. The remedy is immigration and labor law reform, that is something Uber actively worked against - and won! They care because the economic gain they are concentrating comes from people driving below minimum wage because they lack documents or work authorization.
It had nothing to do with lures or whatever, everyone knows what the deal was. Cars could require no maintenance and people would still be screwed. Uber shut down its self driving car unit and none of that shit mattered. Nobody is out there designing cars that are cheaper, we already have $1,000 used cars, in fact all the effort pours into cars that are way more expensive. Uber blew a lot of money on incentives as long as Lyft does and vice versa, and people just drive for both and none of that shit mattered.
The difference I’m trying to illuminate here is, a permanent subclass of undocumented worker is enshrined in the law. The difference between a W2 and 1099 employee is enshrined in the law. Uber spent a fortune maintaining the status quo, not creating a new one, they did not write those laws.
Personally, I believe, like those guys in the 2006 Borat movie who wish they owned slaves, that people like this status quo, and that Uber could have spent 1/10th the money campaigning for Prop 22 and it still would have passed. People like cheap shit. They enshrine the divide in the law. Bernie Sanders was assailed by the NYTimes for his most divisive opinion, that if people are willing to work below minimum wage they will get the job, and that the government has enshrined that arrangement through immigration law - you’re just not seeing how deeply vested the average person is, not just Travis Kalanick is, in an exploitative status quo.
Meanwhile we type this all out on iPhones. Would you rather they cost 5x as much? I don’t know, if phones cost so much more, if you could ban the exploitation of Chinese labor for real, 50% of the ultra high paying jobs of HN readers would cease to exist overnight. It would be like a pandemic hit software, instead of just Main Street.
This shit is complicated, you can certainly point out that billionaires are bad people, but we all benefit from exploiting someone somewhere, and the road to justice will often visit the people who promote it. And maybe that’s why you and I aren’t out there protesting but those other people are.
What you're talking is a much more interesting conversation to be having. How can we tweak the rules to avoid misaligned incentives? And would it actually be better to end the so-called "exploitation" if it would mean killing most of these jobs altogether, when the allegedly exploited people actually have an ok quality of life and are doing this work because they like it better than their alternatives?
In this case, being a good CEO means making decisions that are worse for your workers over time. The world is set up in such a way to bias you towards that conclusion unless you work against it.
Does that mean you’re evil if you don’t? Or if you minimize your responsibility? Perhaps. But it’s still complicated. Thinking of the world as a massive weighted graph of wants, needs, and goals can be a helpful model.
A couple of thoughts...
New, billion-dollar business are, many times, transformational. Amazon, Uber, AirBnb, DropBox and Stripe all transformed the market they profit from. For sure, it is difficult if not impossible to foresee how the business activities will impact the general population et al. Without foreseeing that impact, it's also difficult to mitigate the impact that the billionaire may genuinely have a moral reaction to. Is it not the nature of the beast to grow as fast as possible, damn all torpedoes, while investors and boards of directors push the business leadership forward? Running at an all out sprint means you have no opportunity to identify these moral slights, let alone address them. Perhaps the boards of directors needs a 'Moral Consequence Committee' to keep an eye on it on behalf of the CEO. I am not asking that rhetorically, by the way. Give it some thought.
The second thought is that in order for the business to prevail, it must provide real value to many, many customers and make their world a better place. Uber transformed the taxi experience and yes, may have wound up in the 'vehicular maintenance arbitrage' business for a while, but anyone with faith in market capitalism should believe that this will eventually balance out and Uber and its drivers will reach a mutually acceptable compensation level.
Why is it frustrating? PG discussed an important topic I found to be very relevant in the business world to this day. Being exploitive is praised in most if not all business schools! Cut throat, shark, shrewd, it’s even depicted in movies Wolf of Wall Street, the Founder (McDonald’s), greed is good...
No self made billionaire, at least in the last 100 years, was ever portrayed fairly in movies or history books!
Even Carnegie Mellon!!
Whether existing billionaires exploit is a separate point.
If the other comments put you off, read it anyway and skip the billionaire bits.
I think what underlies the outrage in this and similar threads is simple: people expect everything anybody says about "billionaires" to be bad. If someone breaks the rule, it doesn't matter what they say; the response will be just this outrage. And if they're a billionaire themselves (or classified by the audience thereas), woe betide. This is not complex conversation—it's ritual behavior.
I'm not arguing against wealth redistribution, siding with billionaires, lacking empathy for what people are living through, or anything of the sort—quite the contrary. I'm just observing that the conversation manifesting in threads like this has a distinctive quality: it is basically our version of feces-hurling in primates, and I'm curious about how weird that is and how weird it is that its weirdness goes unnoticed.
Namely, that individuals will decline to participate in exchanges where they would benefit, if another individual would benefit inequitably. I think you sell short the systemic advantages by framing it as "Feces-hurling"; namely that it may serve as an important societal and evolutionary pressure, for instance, as [1] suggests improved social cooperation.
Some of the comments on this thread even touch on this, although I'd frame it a bit differently, with comments such as "many people find the existence of a billionaire implicitly unfair." Namely, judgements of morality, economics, society aside, one has to be rather stoic to feel _no_ envy when comparing ones own lot to the life and resources being a billionaire enables, so that it would trigger a "lizard brain" instinct seems entirely natural. (and again, similar to you, trying to keep this argument-free WRT the contention around that and making a meta-observation, one may disagree as to how justified or sensitive one should be to this feeling, I'm just pointing out "I can understand it on a very pragmatic level.")
We may be agreeing loudly here, my response is primarily to addressing your stated surprise, as well as try and paint the cause and effect in a more... detached? perspective, to better contemplate its nature and incentives.
[0] https://journals.plos.org/plosone/article?id=10.1371/journal... [1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4451566/
He doesn't believe "the only way to become a billionaire is by exploiting people", and his argument is persuasive. I tend to agree! All those characteristics he's interviewing for are positive, and I think he's a great billionaire scout. Most of the rich people I know got there in ways that don't seem exploitative.
But, he does believe "people who make a lot of money have a moral obligation to use it for the common good", and... isn't that a contradiction? If someone makes their first ten million, and keeps earning more with no clear plans to allocate it to the public good -- are they ignoring their moral obligation? Maybe not yet. What about a multi-billionaire who, years down the road, still hasn't signed on to something like the Giving Pledge? How can we defend the morality of that person?
This does not follow. You could just as easily argue that this means you are bad at predicting billionaires. YC is 8 for 1000 in the billionaire prediction game. Maybe that is good enough to claim expertise, but I think you have to actually make that argument and not assume it.
If the key to becoming a billionaire — the defining feature of billionaires — was to exploit people, then I, as a professional billionaire scout, would surely realize this.
This does not follow. First, "if this was true, I would know" is not an argument. Second, if exploitation is necessary, but not sufficient, it might be essentially useless as a predictor while still being universal among billionaires.
Billionaires are keeping the society this way.
I would say yes, and I think many (perhaps not here, given the type of person who frequents this board) would agree. They would observe that while Jeff had some ideas and provided some direction, that the vast majority of the work was done by others far more talented than he in their specific role. That he happens to live in a society that routinely grants the spoils disproportionately to the organizers and not those performing the actual labor is the central critique of capitalism highlighted by Marx and to which I think pg is actually alluding, even if he doesn't realize it. This "profit" is not a surplus, and the difference between the price charged for a commodity or service and that paid in labor (less any costs in materials) is seen as inherently exploitative. I think people can reasonably disagree about the degree, there is of course value in the organization of labor and materials to provide a product or service, but wage disparities of 100 times? 1000 times? I find this to be indefensible.
That isn't obvious considering the concorde failed.
But its quite possible that they could get something certified and theoretically sellable but not have something that the economics make any sense for airlines to actually purchase, much less such a clear case that international airlines are generally compelled to do so.
> The ones who become really rich are the ones who keep working. And what makes them keep working is not just money. What keeps them working is the same thing that keeps anyone else working when they could stop if they wanted to: that there's nothing else they'd rather do.
Here he completely misses the point, which is that exploitation has very little to do with an individual's intention and everything to do with systemic dynamics and incentives in the way these companies operate. It was probably not Travis Kalanick's intention to exploit drivers, but Uber's business model incentivizes the company to pay drivers as little as possible, which they do. A similar dynamic plays out with nearly all capitalist enterprise, which makes the intentions of founders mostly irrelevant.
"Their exploitation usually begins with their own cofounders, which is disastrous, since the cofounders' relationship is the foundation of the company. Then it moves on to the user..."
At no point in this entire post does PG address what "exploitation" really means in the Marxist sense — Marxist economics being at the heart of most of discussions about wealth accumulation — which focuses on the exploitation of labor and the ways in which technology can enable or accelerate capital accumulation to the detriment of regular workers.
What's so startling about PG's posts on these subjects is how unseriously he takes the opposing view. He clearly hasn't done any work to understand people's concerns about income and wealth inequality (which is not just coming from "politicians" as he characterizes it). There are probably better arguments in favor of billionaires, but Graham doesn't know enough about the ideas he's arguing against to imagine them.
If this is the level of intellectual rigor governing Silicon Valley today, it's no wonder we keep seeing boondoggles like WeWork and Theranos propped up by silly investments. Disgraceful.
I guess DoorDash and Instacart are accused of participating in the exploitative gig economy. Airbnb is accused of circumventing hotel laws (is that exploitation?)
The other 7 on my list are pretty okay though, right?
But if you actually scroll through the list of them, https://www.ycombinator.com/topcompanies/, most seem beneficial to society
Reddit's incentives are aligned towards a similar addictive loop as Facebook.
Stripe, Cruise, Dropbox, Gusto, and Gitlab are pretty unassaible IMO, though.
Stripe = Eat the gift economy and replace it with monetized capitalism.
Cruise = Mass unemployment for truckdrivers, plus inevitable computer-controlled accidents.
DropBox = Oh noes, your files belong to a company and you don't have physical possession of them anymore.
Gusto = [...I'm having a hard time here, people still need to get paid and ADP sucks.] Maybe "encouraging people to start businesses who would be better off in stable employment".
Gitlab = Think of all the potential copyright infringement!
The question is - which negative things do you want to believe? And how do they compare to the positive things the company does? It takes a minimum amount of effort to dream up something bad about a company's core value proposition, but that's not the whole company, unless you put blinders on.
It's as important to have thought about where you need to focus and and the consequences of not addressing it, as knowing what the potential upside is for the idea.
This is one of the sentences in the essay that most reveals Graham's reductionism. A person can become a billionaire without any desire to exploit someone and still the conditions resulting from the success of their organization can, and often do, result in exploitation. Even a brief study of organizational behavior reveals that all organizations do damage, some more than others. We don't need to keep defending organizations. They can handle their own defense. Individuals, on the other hand, are far more vulnerable.
I wouldn't be too kind to the less-than-ethical techniques that AirBnB did use to capture the initial users. [0].
... AirBnB also used a (admittedly suspect) email campaign to inform posters of vacation rentals on Craigslist how easy it was to post on AirBnB too.
[0]: http://fullstack.it/blog/growth/airbnb-craigslist-growth-hac...
> Which means the conversation during your YC interview will have to be about something new: either a new need, or a new way to satisfy one.
I'm fairly sure they also look for a moat don't they?
And what people want is ways and means to satisfy one of the ‘seven sins’ : “Pride. Greed. Lust. Envy. Gluttony. Wrath. Sloth.”
Facebook satisfies all the seven urges to sin.
https://youtu.be/1e8VZlPBx_0?t=2814
There are universal human traits that have negative impacts on people over the long-term but are craved during the short-term. These are like legal drugs. If you can use a few of these traits and tie them to an addictive feedback loop, then you probably have a product that's successful (and totally evil). It's concerning that some of the bestselling books in the startup bubble are about how to create these addictions in people.
It would be nice if there were more tools and systems companies for helping humanity grow. I guess most modern day big companies are like a mix of the two. For every major social network there are usually some awesome engineering tools that get open sourced. It's harder to create a tools only or systems only kind of company but they're definitely nice since they expand the way we all think.
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It’s crazy that so many of these companies with billionaire founders have thousands of employees who are not billionaires, nor have a meaningful stake in the decisions the company makes. Wonder what that’s about.
At a company / systemic level, if say Musk or Bezos fail right now, their companies might be at risk and that can lead to thousands of people unemployed. But they already reaped the fruits high reward you're talking about.
And a LOT of people take the risks you're talking about, since new businesses are started everyday. But we're talking about billionaires in this context, and the current crop took a risk that the general population would consider it negligible.
Just because these companies have built amazing products that people want doesn't mean they still don't actively take advantage of their own employees. It isn't black and white.
If I dump all my time and savings into founding a company and it fails, will my employees bail me out and help me get back on my feet?
Second, the point here is that PG is misapprehending (or deliberately obfuscating) what people mean by “exploitation.”
When Marxists talk about exploitation what they mean is that employees (workers) are not paid the full value of their labor. This is usually explained away with “risk profile” by capitalists, as you did above, but most employees don’t have a choice to accept a higher risk profile in return for getting paid the full value of what they produce.
Would it be nice if employees were given options to wiggle fixed comp to adjust to their own risk profiles - so they could choose more guaranteed pay with less risk, or more possible upside with more risk? Sure, absolutely. But I don't see how that should be a requirement, nor do I think companies not offering part-ownership are doing something wrong.
And I don't understand why employees would ever be compensated for the "full value of their labor". When you work for a company, your labor generally only makes sense within the context of the larger organization. Could that context explain the differences between what employees produce for the company, versus what they are paid?
This is a good point. I've never understood why people who claim the full value of their labor is being stolen bother to involve themselves with the purported thieves at all. Why not work independently and take the "full value" of your labor for yourself?
The answer is of course because your Vue.js skills (or what have you) are not very valuable on their own without the whole organization; being capital, management, customers, suppliers, etc...
Would it be increasingly easy to convince yourself that it was actually all just you? Not the employees, not the hand full of high producing employees, certainly not the infrastructure provided by the government and society that enables wealth collection.
No, it was all the efforts of the Billionaire. I mean, you do have a billion dollars to prove it...
Full disclosure: Not a billionaire
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If billionaires build, they have to build something. That something should have value. Throwing money at creative destruction à la WeWork isn't building value but Adam Neumann sure made out well as did BenchMark.
> the only way to become a billionaire is by exploiting people
needs to be revised to a keener straw-man in your very next paragraph:
> the key to becoming a billionaire — the defining feature of billionaires — was to exploit people
Here he's swapping necessary-but-not-sufficient for definitionally-equal-to.
If you sell stuff or services to people, you have to pay for that stuff or services, unless you create them yourself out of thin air.
If you pay some people for stuff or services and then resell them to other people, you could:
* sell them for less than you paid
* sell them for whatever you paid
* sell them for more than you paid
* you bought in bulk but will sell small
* you did a bunch of work to make the stuff/services available
* you did a bunch of work to find customers
* you did a bunch of work transforming the inputs
In the case of anyone who makes US$1B or more by selling stuff/services that other people produce, I think it's fairly clear most of the time that they have exploited those other people: that is, their profit (vastly) exceeds the value of the work they themselves did.
A better first-order approximation to reality, is "Billionaires Exploit".
A second order approximation is that Billionaires exploit a) the political system by funding politicians indirectly so they will implement policies that enhance profits, b) poor employees by paying them a wage they cannot live on without government subsidies while keeping them in precarious arrangements to avoid union benefits and c) natural resources by avoiding costs which should be inherent [ eg. defer cost of redressing carbon pollution and recycling ].
Paul meets the best kind of proto-billionaire - innovators who aspire to _make_ something useful, or at least something that people want - and perhaps doesn't get to interview the appalling idle-rich dynasty billionaires who inherit obscene wealth, and cannot spend money faster than it grows.
We should not be congratulating Gates on investing money in Vaccines - we should have taxed him properly and used that money to fund vaccines/healthcare and climate initiatives. Then perhaps the 15 copies of windows 'tax' - which I paid for but never used because I installed linux - would be distributed democratically.
Look around.. what part of the world is not on fire ? Startups are not the solution to our current evils. I would suggest that we have abandoned the fair rules that governed our economy, and our democracies, weakening our systems and institutions - and this has put us in peril.
Covid is merely a kick-the-tyres test before the real game of climate change, and we have failed that test. The pandemic has exposed dire systemic weaknesses. If one 9/11 per day of aunties dying is not enough to wake us up, will the permanent melting of the ice caps even be noticed ?
Printing digital cash to prop up stock prices is a great way to get us through a pandemic induced economic shock, but we need to learn from this quickly, and rebuild our institutions - a free market works only if people can trust that the rules of the market are fair. We must rapidly align the engine of enterprise to our global survival : tax the uber-rich brutally, spend it wisely in the war on climate change.
I take issue with this. I'm quite certain of the things I work on, but have not been able to execute due to lack of funds.
This lack of execution means no revenue.
No revenue means I'm struggling to fund things myself because I know how valuable the equity I'd have to give away would be worth.
The best, and most confident founders aren't going to be in a rush to trade equity for ANYTHING, EVEN if the revenue isn't there yet.
Airbnb spamming forums early on, sketchy marketing techniques, avoiding commercial regulations that hotel has to go through for good reasons and displacing genuine local rent seekers is not exploitative then maybe the bar is high enough for YC.
Should the founder have to think about whether the idea could potentially be exploitative or he just needs to think about what is good for the users aka not exploiting the tourists?
Many people took loans to buy airbnb to aggressively rent them. Criminal activity go through roof with tourists in the neighborhood. You don't know who your neighbors are because they keep changing. It doesn't feel safe to let your 10 year old son out for many.
Drugs, garbage on the road, covid hot spots. Hotels also have to pay taxes which airbnb avoids. Price in the area goes up for locals. People move out to surrounding areas and have to commute more.
Anyway, there’s basically no evidence for any of what you’re saying, especially the crime part. The one not-yet-peer reviewed paper trying to show Airbnb’s causal effect on rents found a $9/yr increase (1), which is laughably, hilariously small - it could not possibly be playing a significant role in rent pricing in the biggest markets, and the researchers specifically excluded the possibility of AirBnb reducing supply. And this factual criticism is the one you actually omitted!
(1) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3006832
Hotels have to have commercial liability insurance. Hotels have to maintain certain levels of fire safety, and food sanitation, etc.
So no, it is not just rich people renting to rich people. In many cases it is rich people using the platform to avoid regulations which prohibit exploitative renting to poor people.
And the corporation which enables this actively hinders investigations. Because Airbnb is also getting a cut of these rents.
I have nothing but empathy for someone who can’t drive and cannot afford normal housing in the same place they receive services. I totally understand how some of those people would choose to have fewer services and leave, or god forbid be homeless.
But do those people you’re describing, who actively login into AirBnb - if they didn’t get something they paid for in-platform, or if the listing is lying, are you saying Airbnb doesn’t come through? It almost certainly does. A giant corporation is honestly better equipped to go to bat for a wronged customer simply because it has the money to provide a remedy and a case manager does not - the case manager must get all remedies from the richest institution of them all, the government.
Personally I believe Airbnb should just design a high minimum rental cost and ban all transactions that are too cheap. But I wouldn’t describe Airbnb as exploiting these people, they are obviously victims of landlords?
I'm so glad someone finally said this, I wasn't sure if I was the only one with the same theory about inequality and it is articulated well here. It's "cultural inequality", inequality of cultural capital.
Glossing over important aspects to either feel good about themselves or to project as do-gooders is not going unnoticed.
All the above is very loose of what he said and I honestly stopped paying attention to his posts and barely remember the details now. Someone else likely can make many corrections to what I wrote above. But honestly the plight of the billionaire gets even less empathy from me right now given what people are living through in 2020.
I had my guesses then, and as his posts have become increasingly conservative I’m more confident than ever that I correctly identified the subtext of his words.
This is btw another theme of the later batch of his pieces, implying what he's saying is valuable because he's such a maverick, has strong "wake up sheeple" vibes
Any statement that has the word "only" in it is guaranteed to be wrong. I wonder if PG worded it this way intentionally (straw man fallacy).
Most people agree early employees should get more equity. This doesn't address whether startup founders are hoarding equity for themselves and their investors instead of fairly rewarding early employees.
There are basically 5 ways to accumulate a billion dollars in America: 1) Profiting from a monopoly 2) Insider-trading 3) Political payoffs 4) Fraud 5) Inheritance
Others would disagree that this is exploitative because they believe that wages should be set by the market.
It's clear that workers are not compensated for all of the value they produce, and that the excess value goes to owners. The disagreement is whether this is exploitative. Leftists argue that it's not fair for owners to capture value without contributing any work. Rightists argue that capital is a scarce (i.e. limited) commodity, so owners deserve to be compensated for providing capital. Who you agree with is up to you to decide.
Pg's blog post strawmans "exploit" because he uses a different definition of exploit than leftists use. This might be because he misunderstands leftism, but the cynical believe that he is deliberately strawmanning them for his own gain (since pg benefits from capitalism). A more honest blog post would examine whether value going to owners or founders is exploitative or not.
Nowhere did I state that all leftists are communists. In fact, seizing the means of production is also a socialist idea. One key difference between socialism and communism is that communism abolishes all private property in addition.
In leftist circles in the US, leftism colloquially refers to people who advocate for some form of social democracy, with most leftists supporting at least socialism. Those who support more center-left policies (like Keynesian economics and the welfare state, without advocating for socially democratic programs) are called "liberals," not leftists, despite the fact that they are left-leaning (in the US's sense of left-leaning).
https://www.washingtonpost.com/outlook/2019/09/12/stop-calli...
> Moving left doesn’t necessarily make one “more liberal.” At a certain point, the traveler leaves the province of liberalism for one that is more correctly identified as socialism, radicalism or leftism.
https://theconversation.com/the-difference-between-left-and-...
https://www.reddit.com/r/Ask_Politics/comments/6xlxpa/whats_...
> Leftist: They believe the free market system is inherently flawed to favor the rich and powerful and believe that the government should either work within the framework of the market system but heavily regulate it and pay for more social services and welfare through higher taxation on the rich and corporations (social democracy) or abandon the free market all together in favor of socialism.
> Liberals are socially liberal and typically believe in democratic capitalism and the welfare state.
> Leftists typically believe in socialism and are against the ideas of capitalism.
This is something I woulda liked to read but I felt it took a weird direction.
I would like to make a minor note: the thing that politicians sometimes say is, "that the only way to become a billionaire is by exploiting people". Not "setting out to exploit people", not by trying to be Snidely Whiplash the professional mustache twirler. The statement is about effects, not intentions.
Henry Ford started out building cars, not controlling people's lives. But that's kind of what he ended up doing (https://jalopnik.com/when-henry-fords-benevolent-secret-poli...). Andrew Carnegie wanted to make steel but also got the Homestead Strike (https://en.wikipedia.org/wiki/Homestead_strike) (involving the Pinkerton Agency mentioned the other day).
But look at some of the names mentioned in the article:
* Apple started to make computers and related gear, and did so very successfully. On the other hand, it might be reasonable to see Steve Wozniak as exploited, not to mention the other early employees. And then there was that Foxconn thing....
* Mark Zuckerberg did indeed want to "engage online with his college friends". He did not start out wanting to dick around with democracy as we know it.
* Larry and Sergey certainly wanted to search the Internet. But then they bought DoubleClick, one of the most loathed companies on said Internet, and turned it into one of the world's largest cash cows, primarily using their ability to collect information on everyone, everywhere.
* AirBnB absolutely, positively did not set out to violate hospitality laws and do weird things to real estate worldwide.
* Paul Graham, of course, got started by selling Viaweb for $49 million of Yahoo stock. Viaweb had 21 employees at that time (https://www.nytimes.com/1998/06/09/business/company-news-yah... anyone know how the other 18 people made out? And that leads me to YC itself, which gives money to start-ups in exchange for...something, and which helps introduce start-ups to other investors. Which has never, ever, in the history of the world resulted in exploitative relationships. (I'm being sarcastic. It's not hard to find companies whose founders have been forced out by investors, much less other kinds of interference.)
Which is why Paul's argument about billionaires is a strawman. I firmly believe him when he writes, "[Working because there's nothing else they'd rather do], not exploiting people, is the defining quality of people who become billionaires from starting companies." And I believe that "Y Combinator certainly sees founders whose m.o. is to exploit people." They exist, and I believe YC rejects them. But none of that has anything to do with the path from there to billionaire-hood. There is a billion decisions between founding and billionaire-osity, and some of them, historically, involve stepping on someone.
Because Paul doesn't seem to want to acknowledge that, I get worried when he writes about "I think they start from the feeling that it's wrong that one person could have so much more money than another. It's understandable where that feeling comes from. ... The mistake they make is to jump from feeling bad that some people are much richer than others to the conclusion that there's no legitimate way to make a very large amount of money." Money is power, but I suspect Paul would be less happy (publicly) making that statement with the substitution. (And of course there's legitimate ways to make large amounts of money; the powerful define what is legitimate.)
This is getting too long, so I'll just end it with some snark:
Here is a very American statement: "There are certainly some people who become rich by doing bad things. But there are also plenty of people who behave badly and don't make that much from it. There is no correlation — in fact, probably an inverse correlation — between how badly you behave and how much money you make." Yes, right up there with "I'm a temporarily distressed billionaire myself": money is correlated with morality.
"Can you imagine a better way to destroy social mobility than by telling poor kids that the way to get rich is by exploiting people, while the rich kids know, from having watched the preceding generation do it, how it's really done?" -- I'd imagine poor kids already know about exploiting people. They just don't have the contacts to do it correctly.
You don’t. Owning a large company in a capitalist system is inherently exploitative. Simply owning a large company and taking surplus value from a large number of people is exploitation.
Who are these large number of people? Customers or suppliers? In socialism, customers are usually held captive because of limited suppliers. In capitalism, suppliers are usually held captive because of fierce competition to get customers. Neither sounds inherent exploitation by the entrepreneur.
Let's say that every worker was paid for the full value that they produced. That would mean that the profit of every company was $0, because the workers got all the value produced. How many companies would we have? Probably not very many. Risk my capital to start a business, for a return of $0? Yeah, no. I'll pass. So will most people.
And that would mean that we wouldn't have the things that large businesses produce, from computers to airplanes to vaccines.
Even for the workers, is that a net win? I don't think so.
I have little money but I write an amazing book and it sells to millions. Each books takes, say, $5 to print, and yet I sell it for $15. Therefore I end up wealthy from this endeavor.
Did I exploit the people who chose to buy my book? The people who printed it?
Raising billion dollar funds and living off of the carry while you pump and dump the next monopoly is a much better life than "building".
Even the "builders" like Google and Apple are moving away from building and are starting to embrace rent seeking.
YC looks for founders who understand users and can make what they want.
Understanding users is hard. That is why Facebook and google data collect.
Making what they want is technically challenging. That is why intelligence is required.
His problem was being a horny brat. I am pretty confident Hot or Not would not have passed muster with Jessica Livingston.
Also even if he had shown Paul Graham the earliest Facebook numbers, the partner panel could very well just say those numbers were faked, which the Friendster people purely out of spite would say, and what would they do, call a college freshman about how much she uses Facebook?
These are terrible examples in the context of the article.
Apple's computers, originally, led them to the brink of bankruptcy, and it wasn't until 20 years later when they started selling consumer electronics that they blew up, and Wozniak had little to do with it at that point.
The other two don't actually make money from the products mentioned, but by flat out exploiting people's ignorance regarding online tracking and advertising.
Woz's designs were very much a huge part of that.
Should "exist" be replaced with "exists" in this sentence? If you wanted to use "exist" I think you'd have to use a helper verb like "should [exist]". Is there a name for the grammatical feature where someone omits the "should" and uses the conjugation that would go with it?
I get the retro-appeal this has, but user-friendly it is not.
Indian IT industry is an exemplar;
TCS/Infosys/Wipro/HCL make money by selling software engineers, not software to clients in US/EU;
https://archive.vn/ecCtN Rishi Sunak's wife is richer than the Queen
They're running https://en.wikipedia.org/wiki/Pyramid_scheme with tacit support from Law makers :(
Usually, HN is the space where his essays are most heavily defended.
I am not sure where the bitterness comes, and to be honest, I would like to know. We are reading the same essays.
More and more I am starting to think that people who are decrying pg's writing should come clean and say whether or not they've started a business, and if so, what was the outcome. The outcome isn't as relevant, but I bet there are very few people out there who have reached, lets call it "Fuck You" money through running their own business who would read this essay and go "Hah he's so out of touch he doesn't even see it anymore" and toss some link about Dunning-Kruger or whatever.
For people who are in the business of making money through getting shit built, I think what he's saying will resonate just fine. But then again it's one of those things where the people who need it the most are the least likely ones to take it, and vice versa. It's akin to the "It's a good problem to have" crowd when you say how you're sick of dealing with clients on the phone even though you have a 200-person company, and they look at you sideways because they have no idea why you are complaining.
He's talking about billionaires and interviews in this one, and he starts off saying how the two threads are connected. But what he's really talking about is building-a-business-by-convincing-people-you're-not-full-of-hot-air.
And unfortunately, when I see people tearing his essays apart, their ramblings strike me as nothing but hot air.
I think it's HN who is out of touch more than pg is, because I don't think the vast majority are here to build businesses whatsoever.
Would be easier to just talk about what he's actually talking about, then.
That's mostly what tipped me off to not take his words at face value but to interpret them through his lens as a VC and someone who is trying to communicate business ideas (ideals?) to people who, I would at least hope, aspire to create a business of their own. Whether it's a million or a billion, it doesn't matter. Nearly everything he talks about applies to "lifestyle businesses," which is I think partly why YC offers some small bit of money to get the ball rolling rather than go gung-ho and throw massive amounts of money at people. I don't know if this has changed, I don't think it has. Obviously it doesn't hurt to get a leg-up from the counsellors and whatnot that YC provides through their alumni program.
I am not sure if he's spoken about it but I wouldn't doubt that one of his philosophies is that a diverse number of businesses can grow to a reasonable revenue (where the founders are happy and working away at it) with a bit of money to start with, and that way YC doesn't have to spend a fortune early on and everyone walks away happy even if YC doesn't turn a sizable profit. Some kind of a threshold where YC feels anything above that means they're pissing money in the wind and their ROI isn't any better, but at the same time they're helping the founders as best as they can.
So you have to take the times he talks about being Ramen Profitable and talks about building a Billion Dollar Business and find the underlying threads tying it all together.
pg can't tell you exactly what, how, when, where, why you should be doing the thing you need to be doing to build a business. His words sound like platitudes most of the time to me personally, which is why I take the side of "the people who need this the most won't take it, and vice versa", because the person who started a business and is profitable didn't have anyone like pg telling them this sort of stuff. Would someone read his words before starting anything and be inspired to? Perhaps, but it's a long journey and counting on such flimsy motivation to keep you going is to me silly.
For some, certain things might be common sense. For others, not so much. Plenty of founders, even those with serious business experience, still have it ingrained in them that "if you build it, they will come", and they neglect every other aspect of business. Yes, I'm talking primarily about engineering types. This essay is to remind you to focus on the users, and the rest will follow.
Aside: I'm grateful for the Startup School library. I think it's a great resource. It's got a nice mix of obvious and non-obvious advice in there. When people disparage pg's writing, they should take a moment and see what his company has built for people who wish to create a business before declaring him out of touch.
Elaborate on it then.
Look, not even 'prole defenders' agree with this. You don't have to be exploitative to be a billionaire, it's simply a byproduct. There are only several thousand billionaires on earth and you'd be hard pressed to find any one of them without some sort of scandal involving their workers or consumers.
Pinpointing what is 'objectively' wrong with a subjective essay is hard, which is why most people are attacking the subjectivity itself, and I think that's healthy to do.
If you're going to build a business and you hope to make money, you're going to have to EXPLOIT inefficiencies in markets, competitors, customers, processes, conventional modes of thinking, and so on. Doesn't matter if the business is making you a dollar or a million or a billion.
And also, this whole "scandal involving workers or consumers". YC's portfolio has plenty of companies who are making a killing with revenue who haven't had to do this.
Patrick Collison is a regular poster on here. Go ahead and tell him he's exploiting people and he's scandalous with workers and consumers. I'd like to see someone go to one of the successful YC alumni and say directly at them half the shit you people spout out into the nether.
As I have mentioned in a comment to the throwaway account in this thread - I sincerely think a lot of commenters on here either have no experience or no ambition in starting a business, never mind getting a healthy revenue stream. Hell, I wonder what the percentage here is who got as far to having to talk to clients.
I have a dim recollection of an article many years ago that Y Combinator asked applicants a time when they gamed the system and the answer to that was on of the most correlated to success. Like saying you knew some technology that you didn't on a resume or selling some product that you hadn't built yet. They framed it as a positive. Finding opportunities and using them to your advantage. But a negative framing would be that they were looking for people that exploited whatever advantage they oculd find.
Are you sure you didn't just come up with that example yourself to suit the narrative? Until you know what all selected companies chose as an answer for that, aren't we just guessing as to what quality they were looking for?
To be clear, I'm not accusing you of making it up, as my memory of it is dim too, I just can't remember examples being given like lying on a resume.
https://news.ycombinator.com/item?id=1197674
There was also a quote from someone in yc saying that the question wasn't really that important (probably why it got removed).
I guess ‘hacks’ are what we call as ‘loopholes’ in tax audits. This is how I understand hacking. Every system has its strength/weaknesses and boundaries. As long as we can rearrange the system from within the boundaries by exploiting the available strengths/weaknesses to create an entirely different model/system/agenda qualifies as a ‘hack’.
I don’t expect anyone to answer that truthfully, but the ability to come up with a convincing and impressive response would score major points for creativity.
But is it even worth parsing this out? Income inequality is real, capitalism is fundamentally exploitative at its core, end of argument. YC's interview process is... not at all relevant.
> I'll tell you how it's really done, so you can at least tell your own kids the truth. It's all about users. The most reliable way to become a billionaire is to start a company that grows fast, and the way to grow fast is to make what users want.
There's a second part, and it's "hoard the profit by under paying the workers who built your company." Sometimes there's a third part, and it's "corrupt your government and lobby against tax rates that threaten your wealth."
Billionaires build, let's stipulate. They also hoard money for themselves while others desperately need it. It's not any more complicated than that.
In many ways that could be seen as how you can exploit people
It's a completely different morally.
I mean, you can't hold airbnb responsible for either the housing crunch or any part of the homelessness crisis. They just created a system that allows landlords to cash in on high-return short term rentals. The negative externalities created by the mass adoption of their platform cannot be landed on their moral accounting. It's totally obvious.
Making snap judgments about people seems to be one of his major personality flaws. Steve Jobs had the same flaw, so it's clearly not professionally debilitating, but it is reprehensible nonetheless.
2. YC could make the process less fickle and far more objective by having each startup get interviewed for 10 minutes by each partner, rather than in a high pressure groupthink session. It would cost no more of their time.
And of course, they could also just increase the time and interview just as many startups as they want. YC partners could treat it like a real job with hard work, rather than act like lazy VCs.
Anyone who has interviewed people knows that first impressions are often wrong, and yet YC bases their decisions entirely on first impressions, which is both funny and sad.
3. It's likely that YC's success is based on their much-more objective application process, and the interview is random noise in the process. It is probably even worse than random noise and YC might be 2-10x more successful just by eliminating the interview stage.
4. PG has no true idea how other YC partners make their decisions, it's likely to be very far from his own process, making his advice inaccurate and harmful to founders.