This isn't a straw man, it is an extremely common belief and it deserves to be addressed and debunked. My social media is stuffed to the brim with people posting exactly this sentiment.
It is true that there are other, more reasonable beliefs.
It is true that there are other, more reasonable beliefs.
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?
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...
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]