Economic Inequality • Hacker News Board

Re: Economic Inequality

#431

Post by jondubois » Sun, Jan 03, 2016, 12:49 AM UTC

I don't agree with the point about the pie and the idea that startups 'create value'. I say this because I've been a 'victim' of YCombinator (and VCs in general) on two occasions. I don't mean to say that it's all VC's fault - I just want to make a point about how VCs can make a poor person's life difficult.

About 6 years ago, before Weebly came out, I was working on an open source drag-and-drop (user-friendly) content management system - I had spent 2 years on it (all my spare time) - I intended to offer it as a service eventually. Then I found out about Weebly (who got funded by YCombinator) - They had a huge well-funded team and so they were able to quickly develop a great product and they got massive traction. To be fair there were other competitors in the space, but they also had lots of funding - I decided that without funding, I could not compete with these products (in that space) and I so ended up just giving up my 2 year project.

Then I started working on a new open source project (3 years ago); in the area of realtime data; my plan was to build a tool which would improve how data is transferred between the database and the frontend client. Unlike my last attempt, this time, my open source project got a lot of traction; I later found out about Meteor (YC), then later Firebase (YC)... I'm still working on this new open source project though; I have decided to keep working on it forever (or until it becomes completely outdated) I intend to turn it into a service - I feel that no matter what I do, some great company will come out of YC to make all my work economically meaningless so I might as well keep going.

Basically YC is just churning out competition and putting huge amounts of money behind them. It's taking opportunities away from the poor, hard working engineers and giving them to the few lucky ones who happen to be selected by YC.

It's not just YC though, it's VC in general; the huge amount of funding that they give out creates an artificial barrier of entry for newcomers.

Basically the idea is that if you don't have a good social network, you cannot raise funding and if you cannot raise funding, you cannot succeed. If VC funding didn't exist, the system would be a lot fairer.

I think YC does select good founders, but they miss a lot of really good ones too and these suffer greatly.

If you're an investor, you should be mindful that for every investment you make, you're probably hurting someone else somewhere in the world - So make sure you're investing in the best of people (not just your friends).

Re: Economic Inequality

#432

Post by chroma » Sun, Jan 03, 2016, 12:51 AM UTC

jubalfh wrote: post #386

chroma wrote: post #366

Earlier quoted context omitted.

I don't think PG is attacking a straw man at all. In my career as a software engineer, I've run into a significant number of outright communists. Like most of us, they keep their political opinions to themselves most of the time. But occasionally, they let slip how they would welcome revolution. I don't want to name names or expose people who don't want to be exposed, so I'll just give one prominent example. Steve Kl…

What's wrong with being a socialist (or even a communist)?

I don't think it's an immoral position or anything, just a mistaken one. I covered why in my last paragraph:

> If there's any societal system that has been shown not to work, it's communism. That experiment has been tried so many times, in so many countries, with varying cultures, geographies, and levels of development... and not one of them was successful. Yes, capitalism has had failures, but at least it's had successes.

If your response to that is, "No true communist state has yet existed." Well… the same goes for a true capitalist state. The real world is full of implementations, not ideals.

When we look at implementations of capitalism, some are amazing successes (South Korea, US, UK, Canada, post-WWII Japan & West Germany, Taiwan, etc). Some are hellholes (the Belgian Congo). When we look at implementations of communism (The Soviet Union, East Germany, North Korea, China before Deng Xiaoping, Venezuela, Vietnam before Doi Moi, etc.), none of them are successes and many are hellholes.

I'm not an ideologue about this. If communism led to better quality of life than capitalism, I'd be fine with that, and I'd vote for communists. But the evidence is that it doesn't, so I don't.

Re: Economic Inequality

#433

Post by stefantalpalaru » Sun, Jan 03, 2016, 12:51 AM UTC

cko wrote: post #214

xiler wrote: post #102

Earlier quoted context omitted.

There's nothing wrong with someone getting rich provided they contribute a proportional amount of value to society. Problem is that since the post-WII period (also called the Golden Age of Capitalism) such rewards have been happening less and less [1,2]. In fact, I think reducing inequality is essential for promoting productivity. [1] https://en.wikipedia.org/wiki/Post%E2%80%93World_War_II_econ... [2] https://upload.…

But is it wrong for a rich person to hoard wealth, or to spend only on luxuries for themselves? Why do they have to "contribute to society"? I'm by no means wealthy, and at my age of 29 I've donated more money than many of my coworkers. And I'm all for a portion of tax dollars supporting the underprivileged. But when I read about Larry Ellison's yacht-racing hobby, I think to myself, "good for him." He can spend his…

> Why do they have to "contribute to society"?

Because we're in this together. Collaboration allowed us to thrive as a species. Greed and the "fuck you, got mine" attitude is what is going to ruin everything, starting with the ocean level rise in the near future.

Re: Economic Inequality

#434

Post by questerzen » Sun, Jan 03, 2016, 12:52 AM UTC

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…

There are two separate issues here and it is important to distinguish them clearly. PG is correct that there are two basic strategies for making money: rent and productivity. 1) rent, although it has a positive aspect (it helps to efficiently allocate scarce resources to where they are most valuable and provides an incentive to add scarce resources to the economy), provides an inherent redistribution of wealth which makes owners of capital richer at the expense of non-owners. Piketty etc. have noticed that capital owners have recently been able to gain a greater share of wealth. This is socially and morally a bad thing, especially when it keeps non-capital owners in a state of relative poverty. 2) productivity, in general, is more positive because it provides a net gain to the whole economy as PG points out. If the incentives to a small number of people are very high for adding productivity, then there is no particular problem with this. So in this sense PG is correct. However, this is largely irrelevant as the main problem is that productivity gains are predominantly going to NEITHER workers NOR entrepreneurs. Rather they are going to existing owners of capital. The biggest problem with massive wealth accumulation by founders isn't whether it was deserved, but that when people stop being productivity enhancers they become capital owners and CONTINUE to earn wealth excessively not due to further productivity gains but through rent. There are many solutions possible, but none of the sensible ones would affect new founders very much. PG can sleep easily on this account. The reason PG should feel "hunted" is not that he is a founder enjoying the rewards for benefits he has provided to society, but that as a successful former founder and now capital owner he is continuing to gain excessive wealth by extracting rent from his YC investments such as AirBnB, and even worse, helping PASSIVE YC investors to capture that rent also.

Re: Economic Inequality

#435

Post by noobermin » Sun, Jan 03, 2016, 12:55 AM UTC

nhaehnle wrote: post #290

noobermin wrote: post #174

Earlier quoted context omitted.

That still sounds like the pie fallacy. The idea is that wealth is not a global conserved quantity, but can be created by individuals. One need not "enlarge the pie" globally so that the poor can have more of it. It's more like the rich create more of it and the poor create/obtain less of it.

It's interesting that you focus on the individual when it comes to wealth creation. This is not random, and it predisposes you to believe that there is a pie fallacy going on when in fact there might not be one. The truth is that almost no wealth creation is done by individuals. There is a vast range of levels on which wealth creation is a shared enterprise and it would be boring to trot them out again, but usually,…

To you and foldr, I was only responding to his comment, that such reasoning still sounded like the pie fallacy. If you really need my personal opinion, I believed that wealth inequality is a problem before I read pg's essay because it seemed persuasive. I still disagree with a bit of it, but I don't like shutting off others' ideas due to my biases[0]. You make an interesting point though, the idea of how wealth is distributed after does have an underlying value judgement, as you point out.

To be fair to pg, he is responding to an often used argument that assumes wealth is a zero sum game rather than it being who gets more of the wealth created. He is right then to claim that given his values (and those shared by most people in America, remember, we still are center-right on most things) and within that moral framework where ownership determines who reaps the benefits, his logic is correct. However, with your values where it seems that benefits should go to those who invest more[1] should earn a proportional amount, it may be suspect.

[0] At least the ones I can identify.

[1] On second thought, many in America would agree this is a worthy moral framework. I do too.

Re: Economic Inequality

#436

Post by icebraining » Sun, Jan 03, 2016, 12:58 AM UTC

Apocryphon wrote: post #328

wildmusings wrote: post #297

Earlier quoted context omitted.

>but bringing the price down by simply ignoring laws and regulations their competitors are required to abide by. You're right, in a lot of cases (Taxis vs Uber comes to mind) the government has created these sub-optimal local maximums with its unnecessary regulations and industry protectionism. Technology is the big energy input needed to break free and move to a new maximum. When I use Uber, I get much more value th…

It certainly is possible to recognize that disruptive startup businesses provide value and quality over preexisting services, and criticize them for flouting laws that are supposed to protect their workers, and/or customers. It also is certainly possible to recognize that government overregulation has enabled rent-seekers to do great harm in staunching competition and establishing a low level of quality for consumers…

"The majority of drivers are classified as independent contractors, are not protected by core employment and labor laws, and often work under arduous and unsafe conditions."

Yeap, Uber is awful. Oh, wait, this is actually a report from 2007 describing the Taxi industry: http://www.nelp.org/content/uploads/2015/03/Unregulated_Work...

There's a lot of propaganda about how Uber is reducing the welfare of drivers, but it all seems based on some ideal of the taxi industry that isn't actually true.

Re: Economic Inequality

#437

Post by icebraining » Sun, Jan 03, 2016, 1:04 AM UTC

throwupper247 wrote: post #394

WalterBright wrote: post #369

Earlier quoted context omitted.

I love coffee. It is one of the great pleasures of life, like chocolate and strawberries. It provides positive value to me.

Hedonism is your ultimate phylosophical truth, is it? Strawberries are hardly as heavily industrialised as coffee, calling your relationship with a hot bevarage a romantic one is doubtful. I am as pessimistic as your logic is flawed. There are few things in live the brain is prewired to feel a need for. Coffee supplis the illusion of fullfilling two or three enssential ones of these, hunger and thirst and sleep, but…

Coffee supplis the illusion of fullfilling two or three enssential ones of these, hunger and thirst and sleep, but it doesn't actually provide the associated value.

You know, for many, that's a completely irrelevant factor in their appreciation for coffee.

And by the way, I'm pretty sure it does quench thirst, seeing as it's 99% water.

Re: Economic Inequality

#438

Post by twoodfin » Sun, Jan 03, 2016, 1:07 AM UTC

lisper wrote: post #104

rdtsc wrote: post #80

Earlier quoted context omitted.

He is defending what he is doing and what Y-combinator has been doing. One of the most important roles of a leader is to create vision -- build a story that explains and interprets reality based on it. In general, startup world lives on hopes and ideals. More so than other industries. Founders have to have a "burning desire to change the world". It could be building a better future, moving the technology forward, mak…

> He is defending what he is doing and what Y-combinator has been doing. But that is the straw man. Those of us who think extreme economic inequality is a bad thing do not think that YC is a bad thing, notwithstanding that it does contribute to economic inequality. The problem is not YC, the problem is that extremely rich people use their money to buy political power, which they then use to create laws that allow the…

which they then use to create laws that allow them to extract rents (by, for example, paying lower marginal tax rates than less wealthy people)

How is someone who pays 10x, 100x, 1000x the taxes of the median taxpayer "extracting rent"?

Re: Economic Inequality

#439

Post by twoodfin » Sun, Jan 03, 2016, 1:12 AM UTC

karlheinz wrote: post #327

The wealth that PG and his friends accumulate through app startups does not come from nowhere. The millions of dollars that make a handful of men rich depends on extracting value out of: 1) Government funding. GPS, the Internet, touch screens and the CPU. All funded by government research where the tax dollars contributed by each and every citizen is the investment capital. 2) Global cheap labour. Miners in Africa (m…

Can you ballpark for me how much more the government spent on the Internet than private industry?

Because I'm pretty sure it's the reverse by at least two orders of magnitude.

Re: Economic Inequality

#440

Post by drtz » Sun, Jan 03, 2016, 1:19 AM UTC

throwupper247 wrote: post #394

WalterBright wrote: post #369

Earlier quoted context omitted.

I love coffee. It is one of the great pleasures of life, like chocolate and strawberries. It provides positive value to me.

Hedonism is your ultimate phylosophical truth, is it? Strawberries are hardly as heavily industrialised as coffee, calling your relationship with a hot bevarage a romantic one is doubtful. I am as pessimistic as your logic is flawed. There are few things in live the brain is prewired to feel a need for. Coffee supplis the illusion of fullfilling two or three enssential ones of these, hunger and thirst and sleep, but…

I hate to continue on a tangent, but coffee is delicious and smells amazing and you'd have to be The Grinch to not enjoy the atmosphere in a good cafe. If you want some tangible benefits just throw in some sugar and cream.