Status, Wealth, & Power: Network Effects Demand a New Social Contract

Also:

> The rich get really rich, and the poor get poorer by comparison. Unfortunately, this has always been true. It is not an artifact of modern economics.

This is not true as far as I know. There have been times in recent history between the early ~1900 and ~1970 where the income gap decreased and worker protection increased. It was a time of stronger worker movements, unions, emancipation and policy aimed at the larger demographics of the public. The 70's mark a shift towards neo-liberal ideology in the western world.

The article is riddled with dystopian suggestions. There are some things I can agree with. For example I very much agree with the importance of workplace transparency. And there is also an underlying tone of empathy with the unfortunate, but it comes off as patronizing.

I think the biggest fallacy is to think that our societies are becoming more meritocratic almost by default (as assessed in the article). Ignoring whether that is a good thing or not, I doubt this is true at all or if it even can be measured objectively.

When you say democracy, are you referring to democracy the abstract philosophy, or the specific concrete implementation of "democracy" that we currently operate under?

Would you be open to considering a third option: a complete re-implementation of democracy from the ground up?

> Founders and investors, in particular, are uniquely unqualified to evolve the social contract because they have overwhelming financial interests.

Similarly, are are you referring to founders and investors in the abstract sense (a general methodology for organizing and funding the implementing ideas), or the specific types of founders and investors that have risen to the top, under our current implementations of democracy, economics, etc?

Would you be open to considering an alternative approach: a new kind of founding and funding of the implementation of an idea, one that is deliberately designed from day one to avoid the shortcomings we see today, as well as be ever watchful for the emergence of novel new shortcomings that may emerge?

They are the least competent group to be given power to shape any societal rules and contracts or to define how the humanity should look like.

You can't have a functioning democracy when you have militant organizations suppressing candidates who dare challenge the status quo.

If the labor market is a buyer market (employers picking employees) then trickle down can't work by definition because the labor market is already stacked in favor of the employers. They already obtained all possible positive sum benefit from the strategy.

If the labor market is a sellers market then trickle down could work in theory but a sellers market means we are in an economic boom/expansion so people are happy and don't need further interventions beyond a raise in the interest rate.

>But in a network economy, the means of production have shifted. It’s 10X more fluid, can create wealth at a much higher rate, decrease costs at a much higher rate, and the network can raise all boats.

Okay now things are getting stupid. Economic saturation (aka overproduction) is sort of perverse. When companies boost production (creating wealth at a much higher rate), demand doesn't necesssarily catch up with increased production. [0] What happens is that the increase in productivity allows you to employ less people. That means less people can afford the overproduction because they are out of a job temporarily. Demand is going down in the short term. This means we are overproducing even more products relative to demand, resulting in even more layoffs. Lots of stuff and nobody there to buy it. Lack of demand then results in lack of investment. The economic growth and productivity growth are slowing down...

[0] It may sound shocking but billionaires wouldn't be billionaires if they didn't spend less than they earn. Creating more billionaires or giving them more money is an effective way of decreasing demand and thus the potential for your economy to grow.

There's more easily refuted points too. The figured titled "How it will really go" is an apologia for the current system. In the last twenty years we have seen real material losses for the majority of people. Access to healthcare, education, and housing has shrunk. To put it simply, we have first hand evidence that there is not a rising tide lifting all boats.

What he does get right, he doesn't correctly consider the consequences of. Privacy will continue to be eroded in order to optimize network-effect oriented businesses. People will be forced into this because the current economic incentives will not change. There simply isn't an environment for anything else. What he fails to consider all of the rewards for this aren't incentivized in the system and therefore are easily cast aside once privacy has been eliminated. They may exist as carrots now, but without systemic incentives for them to exist, they won't last. His new social contract is based on a bait and switch.

As a whole it comes off as completely out of touch with the material conditions of everyday people. On the other hand, it's his job not to understand.

How much of this is due to wealth distribution and how much of this is due to human nature? eg, 60% of Millennials Earning over $100k Live Paycheck to Paycheck (https://news.ycombinator.com/item?id=27581105)

> We need new social contracts or we’re headed for some nasty conditions.

> And we believe it’s up to tech Founders, VC’s and employees to do something about it.

"Tech people, please build something that pacifies the masses, or they might rise up and take our money!"

Also, to claim that 'the rich keep getting richer' has always been true is misleading, it's far worse today than ever before because our monetary system has never been so decoupled from the underlying economic processes of value creation. This means our system is more unfair than it has ever been before. There is almost no correlation between skill and success; on the other hand there is a significant correlation between cheating and success.

The reason is that reforming gives the chance for the society to repeating the same pattern at a much higher level.

I.e., thousands of years ago, the long tail suffers in their body parts and basic livelihood. They might one day suddenly die from anything from disease, violence, starvation, etc. Now, the long tail suffers in comfort. One might be obseity, mental disorder, stress, etc.

And system in stagnation often degenerate, not just keeps in tact. The degeneration leads to breakdown of social structure and cultural norms, which eventually leads to chaotic conflicts.

With these, reform is the only choice.

It is more about that it “already is” and “will be even more so.”

It was mostly an argument in favor of democracy and some kind of redistributive system.

When you break a legal contract, you get sued in court. When you break the social contract, the mob rises up and kills you and everyone like you that they can get their hands on. So the rich and powerful had better treat it like it's a real contract, because it's what protects them. It keeps them in a world where they are the rich and powerful, and keeps them from a world where power is only fists and guns. The rich and powerful don't want that world; they want this one. So they'd better keep their side of the social contract.

We take this for granted today, but it was not always the case. Prior philosophy essentially held that the rulers had a God given right to power, and people had a philosophical duty to obey, no matter how they were treated.

There has been a lot of scope creep since the 1700's increasing the scope of government expectations, and deemphasizing the obligation to take action and revolt if you are not happy with the balance.

The original idea was very real politik, where people are only entitled to what they are willing to risk their lives fighting for.

A state is considered intact if the government has a monopoly on the legitimate use of force. A state can become predatory if they abuse that legitimacy, but other than that, if the government loses its monopoly, you have what is referred to as a failed state.

It's even voluntary in that you can expatriate. But to expatriate you must find another state to immigrate to, and if you don't like any of the social contracts available then tough luck.

“You need to give me free education because of our social contract”

Which really means “give me free stuff cause I want it”.

The Fed has too little power. It doesn't even have enough power to address all the macroeconomic problems that the congress is ignoring. Just think about it. We have to rely on the clowns in the government to make purely logic and rationally driven decisions relating to our economy when they are voted in for the exact opposite reasons. People vote based on emotion and ideology and that is how politicians have to think to win elections.

When you have a government that isn't even doing the bare minimum then yes you'll have to rely on a different institution even though it's not the job of that institution to solve the problem.

Honestly. I am tired of this. I am tired of people refusing to face reality, living in their little bubble and then blaming some guy named fed trying to extinguish a house fire with a bucket.

You have to raise the equilibrium interest rate. Either by raising inflation, lowering interest rates below the equilibrium rate, increasing borrowing or simply taxing money in bank accounts. I'd rather have a big inflation year that makes macroeconomics work again than endless stupid ideology.

The old social contracts worked in an older world, which didn’t have mechanization and labor was the source of industry.

Today, network effects mean gmail is free but the user is the product, and other configurations which would seem extremely odd in the 1800s.

The FED isn’t even the problem for what you are trying to resolve. I cannot understand why people tend to focus on it.

Federal power leaves no room for disagreement. At a state level, people have the freedom to move to another state.

Hollywood seems to reward a lot more than 10% of its participants. There are many thousands of people living middle-class lives as part of the movie business in Los Angeles and elsewhere. Much of their ability to do so is driven by the unions active in the entertainment industry and the protections they demand for non-superstar workers.