Comment by AndrewKemendo | Hacker News Reader

Comment by AndrewKemendo | Hacker News Reader

PG needs to get out more because his economic arguments are way off. Perhaps SV is a magical land where money just falls into your lap but for the rest of us in the real world it's a knock down drag out fight.

Increasingly you win not by fighting to get control of a scarce resource, but by having new ideas and building new things.

This is insane - nothing has fundamentally changed that makes scarcity no longer a primary driver for competition. The metrics for all startups etc... are scarce resources, namely cash and labor. Even if you assume that there is a glut of startup cash, the process proves that VC/Angel dollars are still scarce. Maybe that is a narrow interpretation of that phrase though.

Maybe he means that instead of "capturing" real goods like real estate, or oil or something like that which would be more apt for the "scarcity" title, the economy is leaning towards "knowledge" jobs. This just shows me how extremely disconnected from reality PG is.

The reality is that the world that he lives in (technology dev/VC etc...) rides on top of the cutthroat international game of resource dominance that he ignores. The real estate, energy and hardware resources that underlie the technology market are absolutely fixed pie games (when analyzed from production/consumption standpoint) where the most ruthless win.

Very disappointing that one of the start-up world's "thought leaders" has his head so high in the clouds he can't see his foundations.

No, it's not insane. PG is saying you can create stuff much more easily and with much less friction. Building a website or app and even scaling it out is commodity which can enable you to easily create stuff that didn't existed before. This means you no longer have to live in a world where your only option is to be hyper competitive to grab a slice of market. Games are no longer zero-sum games.

This is true in many ways. I know too many people who live off by doing some creative work such as writing blog posts or making cool but specialized apps. I however don't think it can be generalized too much at this point because there is a huge factor of luck involved to successfully make a living by creating wealth. Most people have to rely on traditional competitive businesses for their employment.

No, something has changed and PG understands it while you don't.

As http://paulgraham.com/wealth.html explains, what you are missing is that what people really want is wealth, not money. And wealth is things of value created by people. As productivity improves, we can create more wealth. One form of that wealth is that we can make more efficient use of fundamentally scarce resources. Which admittedly does not increase them, but does decrease pressure on them.

The aggregate effect of these trends over time is truly remarkable. See https://www.youtube.com/watch?v=jbkSRLYSojo for a vivid demonstration of how remarkable it is.

The price of really valuable goods (housing, education, health care) is steadily rising. Cheap trinkets in the form of silly websites, iPhones etc. are just a distraction from the fact that the majority of the population is worse off than 20 years ago.

According to http://research.stlouisfed.org/fred2/series/MEHOINUSA672N the median US income adjusted for inflation is up over the last 20 years.

The median worldwide income is up a lot more, but I do not have an easy graph for that.

That's household income, women started entering the workforce in the 70s so that many households started becoming two-income. Male median income is flat.

Didn't you just say that 'money' is not the same as 'wealth'?

Modulo a few not incontroversial assumptions, inflation adjusted monetary income is a proxy for real wealth.

The inflation adjustment is supposed to proxy for all the various utils your dollars (or shekels or yuan or rupees) can buy.

In practice, most people will accept this at least for a base point of argument as alternative measures tend to be even more controversial. Even those who have profound issues with money, price, value, inflation, wealth, and more. Such as myself.

The standard of living the US achieved circa 1968 / 1974, is unlikely to ever be matched again anywhere on earth by a large nation. The minimum wage at the time was equivalent to roughly $35-40,000 per year today.

A big part of the reason for that, was every US competitor got destroyed in WW2. The US inherited an open runway, and acquired over 50% of all global manufacturing at the peak accordingly.

As major countries, like Britain / France / Germany / Japan got their feet back under them, that competition drained the easy income and wealth off the top of the labor force in America. The rise of China, Brazil, India, etc and the opening up of the Soviet bloc has further stressed the US labor market, by increasing competition.

The peak that you're referring to that America has been coming down off of, was temporary and would not normally have existed had it not been for WW2. It was a fluke.

That massive concentration of income and wealth the US acquired due to WW2, has been gradually redistributed due to competition. People in Estonia, Norway, Finland, Denmark, Sweden, Norway, Czech, Slovakia, Brazil, China, Australia, Canada, etc. etc. have seen massive increases in their standards of living the last 40 years.

The standard of living the US achieved circa 1968 / 1974, is unlikely to ever be matched again anywhere on earth by a large nation. The minimum wage at the time was equivalent to roughly $35-40,000 per year today.

The highest (adjusted for inflation) minimum wage in the US was in 1968 and comes out to $10.71/hr in 2013 dollars [1]. That's about $21,500 per year.

Where did you get the $35-40K number?

[1]http://money.cnn.com/interactive/economy/minimum-wage-since-...

> Very disappointing that one of the start-up world's "thought leaders" has his head so high in the clouds he can't see his foundations.

Money does tend to allow one to become disconnected from reality.

I sometimes talk with my sons about, for example, the way resources are modeled in various games. I think most modern Americans are pretty oblivious to the resource base. I don't think that means pg is entirely wrong. More information does very often mean you can do more with less in terms of physical resources. Doing something more intelligently does very often mean, for example, you can grow more food on less land, you can fit more people into the same square mileage, and so on. So it isn't entirely an either/or situation here.

But I did upvote you, because I do think a great many Americans really are oblivious to where physical goods come from in reality -- to the agricultural roots, the geological roots and so on of everything we consume, every single day.

This is a great point, largely because PG and his friends have had nothing to do with those advances.

Major AG firms like ConAgra and Monsanto have had more to do with those advances than anyone else and by every definition those firms and their executives are "mean."

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