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The Refragmentation

paulgraham.com

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Re: The Refragmentation

#441

Post by MichaelMoser123 »

>Not everyone who gets rich now does it by creating wealth, certainly. But a significant number do, and the Baumol Effect means all their peers get dragged along too. [23] And as long as it's possible to get rich by creating wealth, the default tendency will be for economic inequality to increase

My question is: significantly more wealth seems to be generated by big corporations by means of financial 'instruments' rather than by value creation; is that correct?

Also this lecture [1] says that scientific and technological breatkhroughs are much harder to achieve these days - because all the shallow fruit is already taken and it costs more to digg deep. Now doesn't that make value creation harder for the coming decades? (for example the PC revolution was based on breakthroughs in physics/semiconductors/electronics - these will be harder and harder to achieve)

So it is hard to tell which one will dominate for the near future: value extraction by means of financial trickery (my guess is that this makes society more hierarchical, and the top of the hierarchy will try to enforce equal standing for the lower ranks) or the possibility of real value creation (this one would create a chance for a wider audience) ?

[1] Collapse of Complex Societies by Dr. Joseph Tainter https://www.youtube.com/watch?v=G0R09YzyuCI

Re: The Refragmentation

#442

Post by justinhj »

tim333 wrote: post #358
justinhj wrote: post #344

Consider one ycombinator company,Uber. Do they generate wealth? From the point of view of a NYC taxi driver they are directly taking both the customers and the value of the drivers medallions. In return,uber drivers work giving 1/3 of their earnings to a company because that company built the software and lobbied the governments (presumably eventually) to allow this new form of public transport. It doesn't seem any d…

Uber is not a ycombinator company. To me they add value through the app.

Thanks for pointing that out, that was just an assumption on my part that turned out to be false.

Re: The Refragmentation

#443

Post by andrewjl »

I wonder if multinational corporations are the last bastion of 20th century centralization.

In a power law driven world, players that make better long term decisions will ultimately rise to the top and dominate their markets. This is not something most multinationals are known for. (If so, then this process would likely play out over several decades.)

Re: The Refragmentation

#444

Post by cma »

kobayashi wrote: post #351
TheOtherHobbes wrote: post #223

Earlier quoted context omitted.

>He mentioned the example of Apple and IBM, And on that, as on so much else, he's more than a little wrong. Apple and Microsoft simply couldn't have happened without the mega-corps - not least HP, but also IBM, and Fairchild and its spin-offs - which only existed because of post-war military and civilian "socialist" state support for technology. By the mid-70s that support had been influencing economic policy for mor…

>Companies like Apple do not happen in a pure deregulated neoliberal market paradise because markets don't have the kind of strategic intelligence that can fund projects like Whirlwind, TX-0, and the original Arpanet - all of which are essential steps on the road to making an Apple or a Google. While I can agree that private entities/markets lacked the capability to fund transformative projects during most of the 20t…

> As of May 2012, SpaceX had operated on total funding of approximately $1 billion in its first ten years of operation. Of this, private equity provided about $200M, with Musk investing approximately $100M and other investors having put in about $100M (Founders Fund, Draper Fisher Jurvetson, ...).[47] The remainder has come from progress payments on long-term launch contracts and development contracts. As of April 2012, NASA had put in about $400–500M of this amount, with most of that as progress payments on launch contracts.

40-50% of funding from NASA contracts. Yes, this isn't necessarily the same as a direct subsidy, but, in fitting with the article:

"Many of the mid-century oligopolies had been anointed by the federal government with policies (and in wartime, large orders) that kept out competitors."

Re: The Refragmentation

#445

Post by cma »

shawn-furyan wrote: post #150
hoorayimhelping wrote: post #129

Earlier quoted context omitted.

The last paragraph was the whole point: > I worry that if we don't acknowledge this, we're headed for trouble. If we think 20th century cohesion disappeared because of few policy tweaks, we'll be deluded into thinking we can get it back (minus the bad parts, somehow) with a few countertweaks. And then we'll waste our time trying to eliminate fragmentation, when we'd be better off thinking about how to mitigate its co…

> he most you can do is take from people at one end and give to people at the other end But he argues before that point that tax rates and tax receipts are very weakly correlated. This would seem to be a limiting factor governing how effectively a government can flatten inequality through wealth redistribution.

Seems more like a confusion over how much income to the top comes from wages vs. capital gains. Looking Graham's own income sources, he should have pointed this out.

The capital gains rate under Eisenhower was only 25%, while the top bracket was 91%.

And the corporate tax rate under Eisenhower was only 50%.

Very few of the great sources of dynastic wealth in America were built by accumulating wages under normal income rates.

Re: The Refragmentation

#446

Post by coldtea »

MaysonL wrote: post #287
coldtea wrote: post #169

Earlier quoted context omitted.

> Starting one's own business meant starting a business that would start small and stay small. And what's wrong with that? Besides it being false of course. If anything it's more sustainable and more productive (as these business MAKE something, don't just eat VC dollars or at best sell ads) than today's "startups" model, which is based mostly on a speculative bubble + ad money. All the thousands of major companies,…

Or start small, grow to a modest, profitable size, and be sold. A friend of mine recently retired (in his 40s or 50s) after selling his high-end catering business for a few megabucks.

Yes. "FU money" is a surprisingly low amount compared to what some startup owners think they need to make (and suffer the lower odds for it).

Re: The Refragmentation

#447

Post by ignasl »

sawwit wrote: post #434
ignasl wrote: post #408

Earlier quoted context omitted.

This is exactly what he was saying. I just put it this way to show how absurd his idea is if we follow through with it till the end.

Nonsense, please quit that strawmanning. Reducing the pace of consumer technological progress to the benefit of more equality would very likely beneficial for humanity; and it does not imply returning to underdeveloped times (assuming it would reduce it significantly in the first place).

Oh of course you self labeled savior of humanity and self taught economist would know how much to reduce "consumer technological progress" and can decide for others what they need and want? Do we need internet? Cars? Washing machines? TVs? Drugs? No? Where to stop? If we don't stop we don't need anything and can go back to the trees and that's how this bullshit leftist nonsense works out logically if we follow through with it. You just hypocritically wrote that we don't need to consume and don't need to advance technologically with your computer. Ironic.

Re: The Refragmentation

#448

Post by mhb »

For those (few?) of us who read the endnotes at the end, it would be nice for the endnote numbers at the end to link back to the text. (In addition to the normal link from the text to the endnote)

Re: The Refragmentation

#449

Post by zanny »

three14 wrote: post #421
zanny wrote: post #416

Earlier quoted context omitted.

By definition of unskilled labor you imply only work done by physical action. If you really don't think you cannot replace the human arm with a machine, you haven't been paying attention for two centuries. How is that even a question? We could replace all unskilled work today , if all you are doing is removing mechanical components of labor. Remember, unskilled labor is "work to be done without training or certificat…

Certification is a red herring; assembly line workers have skills that I lack. I'm really only interested in jobs of that could be filled by the people who used to work in the Rust Belt, whatever you actually want to call that type of employment. Thought experiment: let's say a trend starts for everyone earning 6 figures in Silicon Valley to hire a butler and a cook. How many jobs would be created? How many have rece…

The fact you do not have significant pressure to have a butler or cook today is in large part due to automation making them effectively obsolete. Anyone hiring one is making the informed decision that they are cost ineffective at jobs your phone, roomba, and local tv dinner manufactuary or new-age restaurant where the foot is prepared by machine are more efficient at.

Re: The Refragmentation

#450

Post by TimJYoung »

TheOtherHobbes wrote: post #223
curun1r wrote: post #173

Earlier quoted context omitted.

> He's saying income inequality is a feature of technology allowing people to be paid their market value and that you can't 'fix' that. The thing that I worry about is whether this feature is destroying the conditions that allowed it to become a feature in the first place. He mentioned the example of Apple and IBM, which I see as illustrative in another way. Would personal computing devices have become popular in a h…

>He mentioned the example of Apple and IBM, And on that, as on so much else, he's more than a little wrong. Apple and Microsoft simply couldn't have happened without the mega-corps - not least HP, but also IBM, and Fairchild and its spin-offs - which only existed because of post-war military and civilian "socialist" state support for technology. By the mid-70s that support had been influencing economic policy for mor…

Great comment, especially the first paragraph. All one needs to do is watch the PBS documentary "Silicon Valley" to see how true this was. The space race was the driving force behind Fairchild and its many "children" that went on to become what is now Silicon Valley.
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