Economic Inequality

Excellent comment. If you have time to reply to my comment, answer any point you disagree on, that'd be much appreciated!

(my comment starts with "With this comment I'm answering both PG's post and an answer to his post that can be read here: http://cryoshon.co/2016/01/02/a-response-to-paul-grahams-art...)

If the premise is correct, the countries with high levels of income equality (I sorted this table by CIA GINI, as it seemed to have most data points https://en.wikipedia.org/wiki/List_of_countries_by_income_eq..., and it came up with Slovenia, Hungary, Denmark and Czech Republic) would overtake countries with low income equality levels (and that obviously happened when you look at the bottom of the table with Lesotho, Botswana and Sierra Leone, but it's still lacking dominance over US or Canada or China startup scene).

Things that come to my mind on why it's not happening

* social expectations change, as more people are simply looking to fit into the societal demands in brave-new-worldy kind of way, there are fewer "rags-to-riches" stories and less media attention paid to entrepreneurs

* financial reasons - countries at the top of equality list don't seem to have a lot of free capital floating around looking for high risk. No venture capital volume to speak of, so the few options left are either through academic or government grants (Germany's Fraunhofer Institute is a good model here) or some foreign entities with bundles of cash looking for higher ROI.

* taxation reasons - under US tax code investing in startups from a taxable account is interesting (as an asset class) mainly because it's taxed as long-term capital gain, and the shareholder can choose the timing of the tax event (it's only taxable when sale of securities happened). With taxation rules changed, investors will re-crunch the numbers to judge the potential ROI as compared to risk, and perhaps some other asset classes (commodities, real estate, emerging market bonds, energy) will look more attractive.

As a side note, when people mean "income inequality" they typically imply better and more universal access to things like food, housing, health care and education. Perhaps the focus should be on making those cheaper and accessible, making the income portion irrelevant. I.e., if someone suddenly had that extra income, what would they spend it on, and why can't we make that cheaper?

They fined Amazon daily because they were found to be in violation of the law that protects the bookseller's guild against deep discounts.

Last I heard, Amazon responded by paying the fine... And continues to pay the fine, because the value of the French market still exceeds the fine.

Are you really surprised that countries with high levels of inequality (Lesotho, Botswana and Sierra Leone) aren't doing that well in innovation compared to the ones with low inequality (Slovenia, Hungary, Denmark and Czech Republic) ... ?

That map of inequality around the world is very interesting, thanks for posting, it totally confirms my point. For me the conclusion looking at it is straightforward, countries that have high inequality are overwhelmingly shitholes, sorry to say, and high innovation rates per capita are not coming out of them. On the other hand countries that have low inequality seem to me to be the ones that on average have high rates of innovation per capita.

At worst the data is inconclusive and low/high inequality doesn't have an effect on innovation (which means we can go ahead and be socialist if we want, it won't hurt!) -- and at best it indicates that low inequality and a healthy middle class generally favors innovation (which means we should be socialist to stimulate progress!). Anyone disagrees with this?

For the idea that "free capital floating around looking for high risk isn't available in low inequality countries" .... I would say, well give incentives to high-risk investors, and/or spread the risk more. This is what the state/government is good at, spreading risk on lot of people, taking on risky business, big challenges, borrowing money, etc. As you pointed out, there is already such an incentive in place in the US. Btw, isn't that technically speaking a form of "socialism" and "government interventionism"? That's good, there's nothing wrong with doing that if it works. I'm not sure this is a big problem, worth voting neo con for. I think socialism might even deal well with that problem. I'm not sure socialist countries have problems with investing in startups. More data welcome.

The idea with socialism and interventionism is to tweak the current system, capitalism, to make it work better. Capitalism was already in the first place an idea to make everyone's life better through cheaper products. It's pretty clear that there is an evolution of political systems throughout history and as someone has pointed out earlier in the comments, taxation in the 20th century was an improvement on capitalism that helped create more wealth for everyone, while keeping innovation going at an increased rate, and avoided revolts and revolutions that were common in previous centuries at the same time.

An interesting metaphor: I think it's a good metaphor to say that exponential tech progress is the result of the interaction between 1) smart people that invent and discover, 2) investors excited by profit 3) middle class buyers ... If this is correct, increasing any of these 3 things will improve the output, i.e. more innovation.

According to neo cons, the bottleneck to improve in priority is 2) investors excited by profit. Which is important indeed, but I don't think it's the bottleneck currently. It might be the least urgent of the three. It might be that the 3) middle class and 1) more smart scientists and engineers are more the bottlenecks currently.

It's possible also that no matter what we do at this point the exponential curve will continue unaffected. What controls that curve exactly? One thing Ray Kurzweil notes about all the exponential tech trends is that they are very steady, continue unaffected during periods of war or peace, growth or recession. So could it be that those 3 "ingredients" that generate "tech progress" don't matter that much? I.e. that we already have enough of the 3 and there is no bottleneck? Kurzweil states that more existing technology leads to more possible combinations, thus more possible innovations (which I think is in rough terms the "law of accelerating returns" if I'm not mistaken). It's possible that law alone is sufficient to generate the exponential curve, and that we are not even near a bottleneck on any of the three factors mentioned.

So in the end, it might be that there is a bottleneck in one or more of the 3 ingredients, or that we are not even close to a bottleneck on any of those 3 ingredients, and in that case, we do what we want. We can be socialist or not, and the tech trend might still continue unabated.

In any case, I think 1) more engineers and 2) more middle class are the things we should focus on, if there's a bottleneck. That's my impression. I think it's our best bet. Happy to hear other opinions.

I'd like to hear other people talk about exponential tech progress and see if they believe there more than 3 ingredients and how they think it can be accelerated more besides just the law of accelerating returns.

More data about tech progress would be great, to see if in some cases something can slow it down, or accelerate it more (besides just a paradigm shift).

I was trying to tell you that there is a difference between what someone thinks about something's value and the actual value of that thing. It's called subjectivity and objectivity and I feel like your first comment in this thread sounds like you imply that there was no objectivity. The absolut is a special case of relativity: coffee is absolutely disgusting, even if it subjectively seems to taste relatively fine to some, they all agree that it was disgusting at first, hence it's called an aquired taste.