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Comment by curun1r | Hacker News Reader

I think Paul is fundamentally not understanding the argument behind “billionaires exploit workers.” It isn’t that billionaires are fundamentally bad people or that they’ve accumulated their wealth through misdeeds.

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.

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This is basically the labour theory of value and ignores the value of capital and organisation.

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.

99% of people who invoke the labour theory of value misunderstand it. Welcome to the 99%.

Oh I understand it(well sort of because even Communists can't agree), I've read all theory about Labour theory of value.

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.

Comments like this are useless, bc you're declaring someone is wrong without any explanation of (a) why they're wrong, and (b) what's actually correct.

The result is that I have no reason to believe you, or to even understand your point. Because you've essentially made no point.

Please don't post snarky dismissals to HN. If you know more than others, the best way to respond is to share some of what you know, so the rest of us can learn. If you don't want to do that or don't have time, that's fine, but in that case please don't post. Letting the internet be wrong about everything is the primary survival skill we all have to work on anyhow.

https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...

https://news.ycombinator.com/newsguidelines.html

Sorry, as you know it's a contentious issue and we get tired of repeating the same information. Then again, I'm sure you get tired of repeating yourself too.

Sometimes snarky dismissals are appropriate. Trying to hold everything to some academic standard of discourse is implausible when we have deliberate bad actors pushing disingenuous arguments that - by this standard - must be repetitively exhaustively deconstructed time and time again.

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.

Actually snark works quite a bit better in academic discourse, where the communities are smaller and more cohesive. It doesn't work well in large, open internet forums like this one, where it basically just triggers an avalanche of tedious and ever-worse behavior. I'm not making a moral point—rather an empirical one about this particular type of internet environment. Here's a related explanation from a few weeks ago if anyone cares: https://news.ycombinator.com/item?id=25130956

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.

It is unfortunate flagging censors the posts. Was interested to get more context in the thread and instead it’s hidden entirely.

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.

One thing to remember about online communities is that size is by far the most important factor. Things work very differently at different orders of magnitude. If you know of a community of HN's size or greater (millions of users a month) where snarky dismissals have helpful systemic effects, I'd like to know what it is, because I don't currently believe that's possible.

As for flagging, what thread are you referring to?

What's disingenuous is assuming people who disagree with you (and who present supporting arguments) are knowingly bad actors. Actually, they're much more likely to be normal people with sincere beliefs.

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

Never suggested everyone who posts shitty arguments is doing so disingenuously. Just suggesting there are many who do.

That's certainly the case. But the internet is basically stateless. No matter how many times you've explained something in the past, statistically speaking you're always talking to an audience who's never heard it before. Since it's neither nice nor effective to punish people for that by venting one's frustrations at them, the only thing that really works is to patiently repeat oneself and manage the frustration internally.

> ignores the value of capital and organisation

it doesn't. that capital was built by labor.

And indeed those workers who get paid, can save and invest that money to enhance the productivity of other workers and get a return. Generally the higher risk of losing the money, the more return you can potentially get. Some of those workers will hit the jackpot and get a great return.

Is it morally wrong?

the labor theory of value isn't a theory of morality. if you don't believe that exploitation is wrong, then you're free to use the LTV to maximize exploitation, which is what many ex-communists have done to great success in places like south korea, vietnam, and china.

LTV drawn to its logical conclusion leads to exploitation of every worker almost by definition. It is the core of the market economics = exploitation argument.

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.

yes, one might make a moral judgement that exploitation is a tendency of capitalism, if one believes that people who control more capital have structural power over those who control less or no capital, thus narrowing the viable subjective preferences in a way that is "bad".

but ltv on its own provides no such judgement, it simply describes the material relationship.

LTV on its own shows very little predictive value in the real world. Which is why it isn't used.

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.

Leaning on the predictive power of "the dismal science" isn't a strong base to argue from.

I agree with that predictive ability is important but I have seen no evidence that marginal economics has predictive ability. You yourself even say it "explains and models" which is not the same as predicts.

> And indeed those workers who get paid, can save and invest that money to enhance the productivity of other workers and get a return. Generally the higher risk of losing the money, the more return you can potentially get. Some of those workers will hit the jackpot and get a great return.

> 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.

That is, if you assume the labor theory of value is true, then UK-Al05's criticism is wrong, so the labor theory of value remains unrefuted. That's... not a very convincing argument.

The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities.

-- Adam Smith, Wealth of Nations, Book 1,Chapter 5 https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/...

Adam Smith's labour theory of value hasn't been used in modern economics. And has tons of problems with it. That and Ricardos version is probably the basis of the Marx version. They we're the popular interpretations at the time and he was probably inspired by them.

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 principle point is to show that labour theory of value is not inherently or originally Marxist as is often presumed or implied.

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.

Really? Because value and market price are separate things in marginalism.

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.

It may depend on who you talk to, but Isee much equivocation between concets of price and value, in both micra ('wealth creation" / 'wealth creator") and macro (GDP) domains.

But yes, costs, price, and value are three distinct, though connected, concepts.

You have to understand most writing is aimed towards the layman, so they use market price as a proxy.

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.

I'm curious what you mean by that, because it seems to me the exact opposite. Orthodox Economics 101 introduces consumer surplus precisely to separate price from value.

That would be a more correct view.

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...

Separating value and price is 101 of marginal economics.

There couldn't be consumer surplus without it. I don't know how you could be marginalist and believe market price = value for user.

In theory. In practice just about every quantitative method or metric used to measure social welfare or individual well being falls back on price. And since our culture has a fetish for positivism and anything that looks like “math” those are the fixed assumptions that guide our decision making.

The fundamental principle of marginalism is, er, marginalism: that the derivative of supply or demand functions is what determines market price (not to be confused with "value", though it often is). The marginal cost or value.

Okay, so pg posits that the people he finds and helps to become billionaires get there because they have some special insight into a solution to something people need.

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?

> deserves to own a billion times more of a vote in how our society is run

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.

Your vote helps dictate how some of the rules of society change and how some chunk of society’s wealth gets spent. But your money is how you vote on how everybody else in society spends the most precious resource they have: their time.

Yes, the point is that democracy can exist in more places. For example in the workplace or even within certain supply chains (such as food production).

> deserves to own a billion times more of a vote in how our society is run than the average person.

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.

The average American might make 60k; the average person makes more like 2. The billionaire also doesn’t have an income of a billion a year, he has an accumulated net worth of a billion. Median wealth is measured in thousands of dollars. And the numbers on the left half of that distribution are very low indeed.

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.

That analysis is not inherently dependent on the labour theory of value. You can frame it that way, but value need not come into it at all. Business owners are capital owners; they have power which arises from the fact that they own a business. They can offer jobs, which everyone needs, but no individual employee is necessary to them. It's a buyer's market, and as a result, the business owner has a lot more power to set wages. This leads to the bulk of the money flowing up to the business owner.

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.

Nothing is stopping anyone from starting a competing business, and offering a better deal to the workers.

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 is stopping anyone from starting a competing business, and offering a better deal to the workers.

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.

> 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

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?

If I were especially wealthy, sure. Ultimately, the only way we can judge our actions is by their consequences. If I'm a middle-class person, giving another middle-class person extra cash won't benefit them much more than it hurts me. If I'm wealthy, the situation changes; I need each dollar substantially less than other people do.

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 analysis is not inherently dependent on the labour theory of value. You can frame it that way, but value need not come into it at all. Business owners are capital owners; they have power which arises from the fact that they own a business. They can offer jobs, which everyone needs, but no individual employee is necessary to them. It's a buyer's market, and as a result, the business owner has a lot more power to set wages. This leads to the bulk of the money flowing up to the business owner.

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.

> 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.

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.

You left out a key part in this simplified formula - you pay $X and make $Y from the work, and you do this for N people. If you leave X and Y the same and scale N down to like 50 or 100 employees, you have a good old hard working American business that's creating solid working class jobs. When you scale N up to an almost inconceivably large number (Amazon has over a million employees) you get an owner with an inconceivably large fortune.

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

> 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.

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.

So make laws to prevent monopoly, rather than making size/employee count based.

You would be some sort of metrics to say when something has become a monopoly wouldn't you? Why can't company size be such a metric?

> So make laws to prevent monopoly, rather than making size/employee count based.

Yes. That's generally what "no billionaires" policies are focused on. But "market power" is still a useful consideration.

Or that business with a million employees could just return a greater share of the wealth to the employees instead of the owners, thereby avoiding triggering the marginal tax

“Return”? The employees never had it in the first place. Amazon runs on razor thin margins on the retail side so I pay $50 for a keyboard that cost them $45 wholesale + $1 to store + $3 ship + $0.20 labor for the 10 seconds employees interact with it. That 80 cents of profit goes into the business and is used to expand.

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.

Hmm, that's weird. I've never seen a more expensive online store than Amazon. All the small online shops I've visited offer lower prices for identical products. They also generally have a better selection within their niche so you don't end up overpaying for products that are way more capable than you need. It's also much easier to find products on those small online shops thanks to aggregators like geizhals.de

Meanwhile searching products on Amazon is still a shitshow and it's generally not possible to disable third party listings.

The Beatles did not exploit the labor of people pressing their records to become wealthy. Those same people pressed records for other artists who did not make it big, or even fell flat. Their labor input was exactly the same.

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?

So let the beatles pocket their billion, and we'll collect most it back at the end of the tax year. How's that?

Thievery.

Taxation isn't thievery.

That depends on why the tax is applied.

> So let the beatles pocket their billion, and we'll collect most it back at the end of the tax year. How's that?

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).

"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"

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.

> This implicitly assumes that "the value of someone else's work" is independent of the context in which that work is done.

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.

> Not really, since no one is arguing that this worker-capital relationship should change.

Maybe this would be better stated as "...since many of us are not arguing that...".

The vast majority of capital is owned by very few people. What makes you think it's an efficient allocation ?

> 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.

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').

Bezo's wealth comes from his shares, which he had since the beginning. 20 years ago, anyone who worked at Amazon could have used a small fraction of their wages to buy Amazon shares. If they had, they'd be millionaires. However, that's a risk that only already rich people are willing to take.

Tell that to Amazon warehouse worker making $10-20 an hour that instead of putting food on the table, roof on the head of his family, he should have bought Amazon shares. Bezo is epitome of what’s wrong with America and American “capitalist” system.

New Amazon workers aren't the ones who made it a trillion-dollar company. The older ones were. By your standards, the only way Amazon could compensate them fairly is to pay workers in Amazon shares and force them to hold it.

> New Amazon workers aren't the ones who made it a trillion-dollar company. The older ones were. By your standards, the only way Amazon could compensate them fairly is to pay workers in Amazon shares and force them to hold it.

Something like mandatory equity contributions to the company pension fund would probably work.

How?

$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.

My view is that "creating" a billion dollar company is a misleading description. I view it more as "capturing" a billion. 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. I view these people not as pioneers pushing us forward but as lottery winners. Why should the lucky one on top capture most of the value? The people like Newton and Einstein who actually had revolutionary ideas were not even close to billionaires.

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%.

>Why should the lucky one on top capture most of the value?

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

>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.

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.

>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.

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.

> 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.

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.

> Facebook brought a vastly better user experience that seems mundane in retrospect but it won because it was so much better.

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.

Bezos is not a billionaire because he pays people less money than what he is able to capture from their work. He is a billionaire because he owns a lot of shares in Amazon, and Amazon is a trillion dollar company.

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.

The expected monetary value of the average software engineer’s work working at Google is much higher than that of the same engineer working at a small company, launching the same product. The difference is the leverage provided by the structure that is Google - the audience, brand, machinery, etc. The software is important, but so is the massive built-in audience.

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?

> It is the company’s structure accounts for the majority of the value created by that engineer’s work.

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).

> But what people are saying is that the narrative that billionaires built their wealth themselves is false

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’s basically impossible to accumulate that amount of wealth through work

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.

“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.”

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?

Say an engineer is working on Google’s ad platform. In an alternate universe, he is working at Bing, producing code of identical quality. The economic outcome of this identical unit of labor output is dramatically different.

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.

> Paul would never fund a founder who wanted to divide all profits among employees.

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.

Great post! Agree 100%

> 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

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.

This ignores any effects of market power. Amazon is not bargaining with its workers in the way that you are bargaining with Alice for her apple - a lot of these workers have very few other options to sell their labor. And sitting at home and not working is a false choice in today's America. That inequality in pricing power helps maintain the gap between wages and marginal revenue production of labor - and as OP says, that gap at scale is what makes a billionaire.

OP's argument was that capturing value itself is bad. But I suspect you don't check to see if your apple sellers have plenty of other potential buyers before buying apples. If nobody else is buying, then the seller lowers the price until the market clears, and you get a bargain. Lucky you.

That's true, I generally don't care about the welfare of apple sellers, and I'll take a deal when I see one.

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.

We are indeed far from the original argument that billionaires and creating value are bad. But I respect your right to petition the government to bring back housing projects and welfare cheese.

> and as OP says, that gap at scale is what makes a billionaire.

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.

> The Google founders are billionaires and their company has nothing to do with paying for cheap labor and up selling 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.

I've heard it phrased that no one every sees a Ferrari drive by and wonders how many dishes they had to wash to get the cool car.

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