Economic Inequality

Usually pg's essays are spot-on. But this one, I feel, is based on a false premise: People aren't upset about startup founders getting rich -- in fact, society loudly applauds it. What people are upset about is legacy capital growing and growing and growing while the poor and middle class stagnate or even contract.

On this subject, I always think about farms.

Back in the day, it took ~100 people to work a large farm. Now it takes one (or a few) guy(s) with some machinery. All those farm workers aren't now out on the beach somewhere -- they've migrated to the city to drive cabs, etc. The wealth generated by this astounding leap of productivity went entirely to the shareholders of the John Deere corporation. (edit: Yes, cheaper food benefits everyone. I meant the share of the revenue generated by the farm going to its workers, vendors and shareholders. And the farm owners obviously benefited, too. Farmhands? Not so much.)

And that was great! Good for those speculators and innovators!

What I think most have a problem with is 7 generations later, the John Deere family (<-- edit:metaphor) still controls all that capital and pays taxes at 15% on capital gains while losing count of how many homes they own.

Central thesis (hidden a bit): "ending economic inequality would mean ending startups". So, who is the straw man who advocates completely ending economic inequality? Even left wingers in Europe (far to the left of anyone mainstream in the US) talk mainly of reducing it.

So, if economic inequality were substantially reduced, would there still be startups? I believe another piece of common advice in this field is that you should only do a startup if you want to change the world, not just to get rich...

Yes. This is a very strange article. When you think about what goes into the startup ethos, of independent hacking and really a passion for work, there's nothing antithetical about that and being turned off by massive income inequality in America. I, for one, would prefer to be an entrepreneur in a society that strove to make it harder for dynastic companies like Wal-Mart to accrue power.

The "polynomial curve" historical argument is naive and I would have expected better. Movement toward free markets has been precipitated on political intervention, c.f. the shock doctrine, and conservative moves to increase income inequality (repealing financial regulation, Citizens United) do not occur as a historical inevitability.

I am also weirded out by the "hunter" metaphor. The people fighting income inequality are not predators out to get pg's billions, they are working class people who can't afford healthcare or to send their kids to college.

Graham is arguing against an enormous straw man. Nobody is suggesting that we “prevent people from getting rich” or “end all economic inequality”. The most extreme proposals I’ve seen in America are ones like, “institute an unconditional basic income as an alternative to means-tested welfare programs,” or “allow every citizen/resident into a single-payer healthcare system,” or “go back to the tax structure of the 1950s–70s”, with higher capital gains taxes, higher inheritance taxes, and higher top marginal income tax rates, etc., plus a lot of proposals that seem to be pure common sense in a democracy such as “limit anonymous spending on political campaigns”, but nothing like a reprise of the French Revolution or early Maoist China or whatever Graham is on about.

>The wealth generated by this astounding leap of productivity went entirely to the shareholders of the John Deere corporation.

Nonsense. The fact that people can buy food for an insignificant portion of their annual income and were freed from grueling manual labor to pursue more creative endeavors is a benefit to everyone in society.