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Economic Inequality

paulgraham.com

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Re: Economic Inequality

#41

Post by 11thEarlOfMar »

To me, income inequality means: The rich get richer, the poor get poorer.

But that is not the situation. In reality, the situation is: A rising tide raises all boats.

The global pie is getting bigger because GDP is growing faster than the population:

- GDP Growth since 1999 ~2.5% annually [0]

- Population growth since 1999 ~1.3% annually [1]

- % of world population living in extreme poverty has more than halved since 1999, 29% to 10%. [2]

Meanwhile, the wealth of the top 10 wealthiest in the world has grown at a rate of ~4.5% since 2000 (not adjusted for inflation) [3]

So perhaps a more accurate depiction would be: A rising tide raises all boats. But it raises some faster than others.

[0] http://www.indexmundi.com/g/g.aspx?c=xx&v=66

[1] https://upload.wikimedia.org/wikipedia/commons/1/13/World_po...

[2] http://ourworldindata.org/data/growth-and-distribution-of-pr...

[3] https://en.wikipedia.org/wiki/The_World%27s_Billionaires#200...

Re: Economic Inequality

#42

Post by asift »

dominotw wrote: post #34

> pie fallacy: that the rich get rich by taking money from the poor. I've read this in other pg essays. But I've always wondered if there is some truth to that 'fallacy' and if shouldn't be simply dismissed with an absurd and simplistic example of generating wealth by fixing an old car.

He accepts that this is true through various forms of rent seeking behavior. He even explicitly condones such forms of wealth creation.

Re: Economic Inequality

#43

Post by kbatten »

fivedogit wrote: post #2

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.…

My take away was the discussion about poverty, specifically "I'm sure most of those who want to decrease economic inequality want to do it mainly to help the poor, not to hurt the rich." So I don't think he based it on a false premise.

also

"When the city is turning off your water because you can't pay the bill, it doesn't make any difference what Larry Page's net worth is compared to yours."

Re: Economic Inequality

#44

Post by bko »

jrlocke wrote: post #13
rst wrote: post #4

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…

Exactly. There would still be sufficient economic motivations for startups and startup founders in a world where startup founders were taxed at a 75% rate.

Perhaps, but as the higher the tax rate, the higher the greater the incentive to avoid taxes. As PG mentioned in his essay, when the marginal tax rate was at 90%, there was a lot more tax avoidance and lavish, wasteful benefits companies offered their employees in lieu of wages (health care, housing, first class flights). If the tax rate were high enough, the government would actually bring in less revenue as there is more avoidance but it would also have negative externalities like padded expenses, people fleeing the country, shell companies, etc.

Re: Economic Inequality

#45

Post by aaronbrethorst »

orangecat wrote: post #39
jrlocke wrote: post #13

Earlier quoted context omitted.

Exactly. There would still be sufficient economic motivations for startups and startup founders in a world where startup founders were taxed at a 75% rate.

I'm not sure about that. Work your ass off for four years, successfully exit with equity worth $4 million, and you only keep $1 million? That's about what you could have made at Google.

This is the case for any and every startup today, which is why it can be a mistake to work at one, unless you're doing it for reasons other than the theoretical future value of your equity.

Re: Economic Inequality

#46

Post by braythwayt »

I don’t think “income inequality” has much to do with the rich getting richer, especially startups.

I think the concern has to do with whether those same startups make the poor, poorer. Some do, some don’t.

I believe that Github, for example, makes it easier for the world’s poor to become richer. Amazon or Walmart, on the other hand... Some of these disruptive industries make a lot of people poorer by driving businesses into bankruptcy.

Same with the “sharing economy” claptrap, that turns jobs into piece-work subcontractor relationships. All this stuff may be perfectly defensible, of course, but but I don’t think anybody will complain if GitHub’s founders get stinking rich. I think the complaints are about those industries that take huge amounts of investment funds, run at a loss to drive existing businesses bankrupt and drive people out of work.

To the anti-capitalist, that behaviour is not about creating value, it’s about taking existing wealth and using it to make a lot of people poorer.

Re: Economic Inequality

#47

Post by collyw »

bsbechtel wrote: post #11

I've always thought a good question to ask on this subject is "If you could do something to make the wealthiest 50% wealthier, with 100% certainty that it would not negatively affect the bottom 50%, would you do it?"

Personally I believe that wealth inequality affects many of the negative aspects of our society, so its hard imagining it not affecting the bottom 50%.

Re: Economic Inequality

#48

Post by [deleted] »

danharaj wrote: post #35
[deleted] wrote: post #27

Earlier quoted context omitted.

[deleted]

Do you think no labor can occur unless someone owns its product? I mean, that's the implicit conclusion of bourgeois ideology, but it's ridiculous when made explicit.

[deleted]

Re: Economic Inequality

#49

Post by pluckytree »

GavinMcG wrote: post #33
jacobolus wrote: post #8

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 195…

On that note: the most offensive economic inequality isn't the 1% vs. the 99%, which successful startup founders would find themselves on the wrong side of. It's more about the 80 individuals with more wealth than half the world's population [1] – which, yes, does include "startup founders" such as Gates, Ellison, Bezos, Zuckerberg, Page & Brin, etc. But the vast majority of successful startup founders aren't in this…

Why is that more offensive? What if they were all startup founders or created companies that made profound and positive change? At what point is the cross-over between being reasonably and unreasonably wealthy? If they have too much money and give most of it away, is that better than continuing to create new ventures that could make a difference?

This economic inequality feels similar to racism. Why should a very wealthy person be pre-judged to be worse than others without knowing the whole picture? You seem to be singling out startup founders as being OK, it’s just the others that are bad?

Sure, income distribution is unequal, but it doesn’t have to turn into villifying those at the top of the heap.

Re: Economic Inequality

#50

Post by [deleted] »

pluckytree wrote: post #49
GavinMcG wrote: post #33

Earlier quoted context omitted.

On that note: the most offensive economic inequality isn't the 1% vs. the 99%, which successful startup founders would find themselves on the wrong side of. It's more about the 80 individuals with more wealth than half the world's population [1] – which, yes, does include "startup founders" such as Gates, Ellison, Bezos, Zuckerberg, Page & Brin, etc. But the vast majority of successful startup founders aren't in this…

Why is that more offensive? What if they were all startup founders or created companies that made profound and positive change? At what point is the cross-over between being reasonably and unreasonably wealthy? If they have too much money and give most of it away, is that better than continuing to create new ventures that could make a difference? This economic inequality feels similar to racism. Why should a very wea…

[deleted]
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