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Billionaires Build

paulgraham.com

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Re: Billionaires Build

#561

Post by amelius »

mightybyte wrote: post #385
drewrv wrote: post #235

This essay uses a weak straw-man: the only way to become a billionaire is by exploiting people I think the "principle of charity" or "steel-man" criticism of billionaires isn't that every single billionaire is directly exploiting people. It would be closer to something like this: The problem is that our society has feedback loops that make it hard to escape poverty, and feedback loops that let the wealthy amass more…

> the only way to become a billionaire is by exploiting people Here's a slightly different take on this idea: The only way to become a billionaire is to use leverage. I think this is a much more defensible argument. You can't become a billionaire by yourself. You have to have some mechanism of leverage to magnify your impact. Hiring employees is a form of leverage. Using a computer is a form of leverage. Putting your…

Using leverage is one aspect. Another is persuading people (e.g. to invest in you), and this game can be dishonest. And in our system winner-takes-all holds: even if you are only 1% better than anyone else, you receive the full 100% of rewards.

One route to becoming a billionaire seems to go like this: you persuade a group of investors to make a pile of money that's so big that you can corner a market. Which is often true. But is it fair to the people already in this market? And is it fair that it makes you a billionaire?

Re: Billionaires Build

#563

Post by pdonis »

curun1r wrote: post #330
throwaway09223 wrote: post #259

Earlier quoted context omitted.

This isn't a straw man, it is an extremely common belief and it deserves to be addressed and debunked. My social media is stuffed to the brim with people posting exactly this sentiment. It is true that there are other, more reasonable beliefs.

I think Paul is fundamentally not understanding the argument behind “billionaires exploit workers.” It isn’t that billionaires are fundamentally bad people or that they’ve accumulated their wealth through misdeeds. But what it is is that it’s basically impossible to accumulate that amount of wealth through work. Instead, you have to be able to capture the difference between the value of someone else’s work and what y…

> it’s basically impossible to accumulate that amount of wealth through work

Not at all. I have no doubt that Jeff Bezos, for example, works very hard. The difference is not whether or not a person works, but what they work on.

Another poster upthread (mightybyte) suggested viewing this in terms of leverage: how much is the impact of your work magnified? I think this is a very fruitful way of looking at it; see my post upthread in response.

Re: Billionaires Build

#564

Post by edoceo »

josephg wrote: post #546
centimeter wrote: post #480

Earlier quoted context omitted.

Heritability studies suggest this is much more strongly mediated by genetic factors (such as IQ and time preference) than social factors.

Sure; but this trend doesn’t rely on upbringing alone. The children of two collage graduates have collage graduate genes and a collage graduate upbringing. It’s no surprise they’re (we’re) overrepresented in collages.

Collage(sic) graduate genes?

Genes are determined before college. And education doesn't change genes.

Re: Billionaires Build

#565

Post by travisoneill1 »

camgunz wrote: post #282
breck wrote: post #221

Earlier quoted context omitted.

I think there's an important point here. Bill Gates wouldn't be a billionaire if he didn't build amazing things, but he also exploited at scale the unjust IP ("ImaginaryProperty") system, which was a critical part of achieving the scale Microsoft achieved. Startups like Airbnb and Lyft likewise have built amazing things, and would easily make their founders 100' millionaires, but there is a point where to reach a cer…

It's less "your product is exploitative" and "you underpay (exploit) your workers for their labor." Bill Gates didn't write Windows 95. Steve Ballmer didn't write Microsoft Office. But they owned stock in a company that employed people that did (and all the various other labor that goes into building software products). Why did they make so much more money from it than the people who were more directly involved? This…

But what about the value of having A tell you what to build? If A = Jeff Bezos, B/C/D, who would just be making a $150K salary at some other company, are now multi millionaires. The difference in value didn't come from their work, which is much the same as it would be for some other company, but by being told what to build by the right CEO.

Re: Billionaires Build

#566

Post by BurningFrog »

criddell wrote: post #447
rufus_foreman wrote: post #444

Earlier quoted context omitted.

>> However he does pay less taxes than his secretary No, he does not. He claims he paid $1,850,000 in federal taxes in 2015, do you think his secretary earned that much, let alone paid that much in taxes? In addition: “In 2019, Berkshire sent $3.6 billion to the U.S. Treasury to pay its current income tax,” Buffett said in his annual letter to shareholders. “The U.S. government collected $243 billion from corporate i…

> No, he does not. A quick googling suggest that he pays a lower tax rate than his secretary.

Which is a very different claim.

Re: Billionaires Build

#567

Post by jessaustin »

dcolkitt wrote: post #542
oblio wrote: post #243

Earlier quoted context omitted.

Well, expand that category to include every billionaire and also everyone above 100 million, as an arbitrary figure that most people will never make throughout their lives. I imagine that percentage will go up immensely.

Two thirds of wealth in America is owned by the bottom 99th percentile, i.e. households with less than $12 million net worth.[1] A near majority of wealth is owned by the 90th-99th percentile, i.e. households with between $1-12 million net worth. By far the biggest source of wealth inequality is the division between the top and bottom 50th percentile, who have essentially zero wealth. The uber-wealthy may be rich on…

That seems like a confused way of saying that those who are at least millionaires have 80% of the wealth.

It's much easier for a billionaire to hire lobbyists to protect his latest exploitative venture than it is for some dentist to do so. That's why the 1% held 30% of the total thirty years ago and they hold 40% now. That is a dark trend.

Re: Billionaires Build

#568

Post by mightybyte »

pradn wrote: post #414
mightybyte wrote: post #385

Earlier quoted context omitted.

> the only way to become a billionaire is by exploiting people Here's a slightly different take on this idea: The only way to become a billionaire is to use leverage. I think this is a much more defensible argument. You can't become a billionaire by yourself. You have to have some mechanism of leverage to magnify your impact. Hiring employees is a form of leverage. Using a computer is a form of leverage. Putting your…

You are turning a moral judgement ("exploiting") to a more mechanical expression ("using leverage"). For critics of billionaires, the moral judgement is the whole point. Whether the "billionaire problem" belongs in the moral realm or in the dispassionate realm of math or economics is an ideological choice.

I'm intentionally trying to separate the moral and the mechanical for the purpose of understanding--both understanding the structure of the way the world works and how we can make it better as well as understanding the arguments of those for whom it's ideological.

(See also the sibling comment to your by pdonis.)

Re: Billionaires Build

#569

Post by robswc »

arrosenberg wrote: post #472
imgabe wrote: post #369

Earlier quoted context omitted.

> That, however, is a strawman. Nobody suggests that at all. People who support more progressive taxation point to things like the New Deal and the strong progressive taxation coupled with public investment in infrastructure and education that propelled the United States forward. You're making that exact argument in fancier words. "strong progressive taxation coupled with public investment in infrastructure" implies…

Maybe the government has enough money, maybe it doesn't. It's the structural disparity that Jeff Bezos' wealth represents that is the problem. His wealth also gives him disproportionate power to shape the incentives of the government, the economy, and the media narrative. Taxation is the proper remedy for breaking this power. We won't know what's possible until we stop letting barons write the laws.

>Maybe the government has enough money, maybe it doesn't.

This is exactly the problem I have with this "taxing the wealthy will fix it" arguments.

What happens if it is the latter? What happens if taxing the rich doesn't fix it and actually makes things worse?

>His wealth also gives him disproportionate power to shape the incentives of the government, the economy, and the media narrative.

Disproportionate to what?

>Taxation is the proper remedy for breaking this power.

Why?

>We won't know what's possible until we stop letting barons write the laws.

Again, what if "what's possible" is worse?

Its not some "what if" either, its literally happened.

https://en.wikipedia.org/wiki/Swedish_financial_transaction_...

Same exact line of thinking too. They figured if they taxed "the rich" they would get more money. To this day they have probably lost untold amounts because it essentially killed their markets. You would have to do some modeling but all else holding true, they've missed out on decades capital gains taxes that just don't exist anymore because of that FTT.

Re: Billionaires Build

#570

Post by dredmorbius »

davidivadavid wrote: post #538
dredmorbius wrote: post #494

Earlier quoted context omitted.

My principle point is to show that labour theory of value is not inherently or originally Marxist as is often presumed or implied. My own view is that the entire value discussion is tremendously muddled, confuses multiple issues, and is used to justify or support any number of spurious or specious arguments, generaally over policy. The marginalists mistake price for value . Most orthodox economics does likewise.

I'm curious what you mean by that, because it seems to me the exact opposite. Orthodox Economics 101 introduces consumer surplus precisely to separate price from value.

That would be a more correct view.

In much debate and discussion I see "market value" substituted for "value". Often the implication is a vague one, as withmuch equivocation. pg's argumentventures there.

Keep in mind that Smith, Ricardo, and Marx each commit this error, including in the Smith passage I quoted. So do the Marginalists, or at leaast most of them.

Mariana Mazzucato may be an exception. (I've just discovered her, still going through her work.)

https://www.ted.com/talks/mariana_mazzucato_what_is_economic...

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