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Billionaires Build

paulgraham.com

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Re: Billionaires Build

#411

Post by mactrey »

winston_smith wrote: post #362
curun1r wrote: post #330

Earlier quoted context omitted.

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…

> you have to be able to capture the difference between the value of someone else’s work and what you pay them to do it This is the textbook definition for how wealth is created, and it's exactly what's supposed to happen in every transaction in the marketplace. You buy an apple for $1 and it brings you $1.10 in value. You have captured the difference between its value to you and its value to the seller, and the ten…

This ignores any effects of market power. Amazon is not bargaining with its workers in the way that you are bargaining with Alice for her apple - a lot of these workers have very few other options to sell their labor. And sitting at home and not working is a false choice in today's America. That inequality in pricing power helps maintain the gap between wages and marginal revenue production of labor - and as OP says, that gap at scale is what makes a billionaire.

Re: Billionaires Build

#412

Post by gorpomon »

No doubt most successful startups are built by selling useful things, not exploiting people, but as they grow and encounter new problems the exploitation happens. You don't _become_ a billionaire by exploitation, but it sure does help you _keep on_ being a billionaire.

Facebook, Amazon, Apple and others didn't start out exploiting people, but they sure as hell do exploit at at least some group of people now. Content moderators, warehouse workers, assembly line workers. It's not a neat and clean picture, a lot of those people would themselves say it's a job they decide to do-- and their agency shouldn't be diminished-- but the exploitation does exist and it is real. You at some point just have to listen to people, and enough people in this country are saying its systems are exploiting them.

Simply put: It would be nice to see Paul write an essay about how Facebook should treat their contracted content moderators better, rather than expend his mental energy retorting to a few progressive politicians. I too wish that those politicians understood tech a bit more, but there's lots of people who I wish understood lots of things better. This essay is mostly quite wise and thought-provoking, too bad his grievances color it.

Re: Billionaires Build

#414

Post by pradn »

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…

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.

Re: Billionaires Build

#415

Post by UK-Al05 »

smhost wrote: post #403
UK-Al05 wrote: post #397

Earlier quoted context omitted.

And indeed those workers who get paid, can save and invest that money to enhance the productivity of other workers and get a return. Generally the higher risk of losing the money, the more return you can potentially get. Some of those workers will hit the jackpot and get a great return. Is it morally wrong?

the labor theory of value isn't a theory of morality. if you don't believe that exploitation is wrong, then you're free to use the LTV to maximize exploitation, which is what many ex-communists have done to great success in places like south korea, vietnam, and china.

LTV drawn to its logical conclusion leads to exploitation of every worker almost by definition. It is the core of the market economics = exploitation argument.

Profit is simply value extracted from workers.

As opposed to the arbitrage of the subjective preferences of multiple actors. The modern interpretation of how value can just appear.

Those workers who got a return on capital delayed consumption now, for more consumption later. That's a preference. I don't think that's a bad thing. But you can see how over a long time it can generate massive inequality.

But I don't think the fundamental mechanisms of how this occured is particularly exploitive.

Where as LTV pretty much just says it your just stealing value.

Re: Billionaires Build

#416

Post by curun1r »

rahimnathwani wrote: post #358
curun1r wrote: post #330

Earlier quoted context omitted.

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…

"you have to be able to capture the difference between the value of someone else’s work and what you pay them to do it" This implicitly assumes that "the value of someone else's work" is independent of the context in which that work is done. The reason Jeff can pay someone less than the value (to Jeff) of that person's work is that, somewhere other than Amazon, that person's work would be less valuable. The reason is…

> This implicitly assumes that "the value of someone else's work" is independent of the context in which that work is done.

Not really, since no one is arguing that this worker-capital relationship should change. That the synergy exists is a good thing.

But the tax burden of the two groups is what’s at issue. On the one side, you have the “they built it, they should keep it” folks. On the other side are those that believe they built it on a foundation of societal investments and the work of others and should pay most of it back in taxes. No one is arguing that they didn’t built something of value.

> If you pay me $100, and I add exactly $100 of value to your business, then you're no better off than if you hadn't hired me at all

Ahh the refrain of the myopic capitalist. In your hypothetical situation, we’re all better off because I’ve gainfully employed someone, added purchasing power to the overall economy and added value to the world since, presumably, the customers who paid me $100 received something they value above $100. To whatever small degree, putting $100 in the hands of my employee who will then spend it also creates more purchasing power for my own customers as that money circulates through the economy.

This is one of the problems with such an individualistic view of capitalism...it utterly disregards benefits that are not directly seen by the individual. We don’t have to become socialist or communist to start to provide greater emphasis on the contribution of workers and society as a whole. We can keep the market forces that allow for efficient allocation of capital while putting policies in place that provide for those who aren’t at the top of hierarchies and whose contributions are less unique. This isn’t about preventing businesses like Amazon from existing, it’s about ensuring that the people who work for Amazon can live a comfortable and dignified life and that Jeff Bezos should only be fabulously wealthy instead of obscenely wealthy.

Re: Billionaires Build

#417

Post by cactus2093 »

bedhead wrote: post #378
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…

You are right about the feedback loops that make it hard to escape poverty. The most uncomfortable one to talk about is basic social network effects. Two people meet at some prestigious college and get married - are we shocked they have children who are predisposed for success? Besides from having god-given IQ, they are likely some combination of ambitious, punctual, respectful of authority, long-term oriented, hard-…

In your explanation I see the feedback loop that makes it easier for you and your children to stay out of poverty if you're already successful.

I don't see a feedback loop that makes it hard to escape poverty. Why did the high school dropouts drop out in the first place, and why does that make their kid more likely to drop out? Ideally their kid should still have access to public school education, with all the tools needed to go on to become successful themselves.

To be clear I'm not saying there is no poverty feedback loop, just that even taking what you've said about fundamental human preferences at face value it is not inevitable that it stay this way. We can improve our systems to make it easier for people to escape poverty. But this doesn't really have anything to do with billionaires. Many of the issues in these systems are not even for lack of funding, but inefficiently spent funding or other poorly designed incentives or bureaucratic rules that make things more difficult for poor people.

Re: Billionaires Build

#418

Post by ablekh »

breck wrote: post #405
ablekh wrote: post #399

Earlier quoted context omitted.

How is this relevant to the subject? Is this your counterargument to the core of what I wrote above?

I would agree with you about the "be careful" part. A wise quote is "If you want to tell people the truth, you'd better make them laugh or they'll kill you”. I believe in perspective too, and agree that perspective matters. But I also believe their is a common perspective (very hard to get at, that is the journey of scientists), and so at some point when you have enough data you can say "well there really is a black…

Fair enough. I'm glad that we seem to be largely on the same page on the subject, then. As for the "common perspective", I usually refer to that as consensus and, indeed, it is very hard - in some cases, I would say, excruciatingly hard - to achieve. Unfortunately, such is life ...

Re: Billionaires Build

#419

Post by jackcosgrove »

eschaton wrote: post #379
RIMR wrote: post #363

Earlier quoted context omitted.

No, it's absolutely a strawman. The exploitation billionaires create isn't direct. The problem is that Billionaires amass this wealth while people beneath them struggle. Jeff Bezos shouldn't be making 12-figure gains while his warehouse workers are on welfare. Those warehouse workers shouldn't be paying a higher tax rate than he does on their income. That IS an unquestionably exploitive relationship between a CEO and…

And if, say, Jeff Bezos hired his warehouse workers as employees, paid them an inflation-adjusted minimum wage (eg about $25/hr), and offered real benefits, he and his company would still be making massive profits. That’s what makes it unethical and exploitative: They don’t actually need to be paid so little or treated so harshly for the company’s economics to work!

Henry Ford paid his workers shockingly high wages for the time, which enabled them to purchase the cars they built. A mass consumer economy ensued.

Given the state of consumer indebtedness now, I think our economy is actually underperforming because there is not enough demand due to low wages.

The problem with Fordism is that if you are a manager, there are strong incentives for your firm to defect from paying high wages. If you are the only firm doing this, the consumer economy still hums and you have larger margins. If all the firms do this however, consumers' spending power diminishes over time.

Once the tide has turned, defection becomes a matter of survival as high wage firms become uncompetitive.

Someone like Jeff Bezos has enough market power and technology to turn the tide again like Henry Ford. But he chooses not to.

Re: Billionaires Build

#420

Post by ruined »

UK-Al05 wrote: post #415
smhost wrote: post #403

Earlier quoted context omitted.

the labor theory of value isn't a theory of morality. if you don't believe that exploitation is wrong, then you're free to use the LTV to maximize exploitation, which is what many ex-communists have done to great success in places like south korea, vietnam, and china.

LTV drawn to its logical conclusion leads to exploitation of every worker almost by definition. It is the core of the market economics = exploitation argument. Profit is simply value extracted from workers. As opposed to the arbitrage of the subjective preferences of multiple actors. The modern interpretation of how value can just appear. Those workers who got a return on capital delayed consumption now, for more con…

yes, one might make a moral judgement that exploitation is a tendency of capitalism, if one believes that people who control more capital have structural power over those who control less or no capital, thus narrowing the viable subjective preferences in a way that is "bad".

but ltv on its own provides no such judgement, it simply describes the material relationship.

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