This feels like the heart of that particular essay and displays a rather breathtaking misunderstanding of poverty, its causes and its inhabitants. This blames poor people for being poor.
How am I misreading this? I don't feel like I'm cherry-picking, I feel like I'm finding the theme of the text. If that's not it, then what is its theme? Its central idea?
From later in the same essay: "Louis Brandeis said 'We may have democracy, or we may have wealth concentrated in the hands of a few, but we can't have both.' That sounds plausible. But if I have to choose between ignoring him and ignoring an exponential curve that has been operating for thousands of years, I'll bet on the curve."
Again: this sounds like PG saying "In the choice between fostering political power in people at large and concentrating money in the hands of those who already have it, I'll choose the latter." What's there to misinterpret?
I thought this essay, without context, was very sweet. Life is too short. But read as a non-response to critics of the "Income Inequality" essay it takes on a callous tone.
> This blames poor people for being poor. How am I misreading this?
FWIW, I read it differently. I think Paul is saying that even if we had a world where everyone had a truly equal opportunity, in the sense of having similar (or at least adequate) childhood nutrition, intellectual stimulation, education, etc., there would still be variations in productivity between individuals that would result in different economic outcomes.
The second quote I read simply as saying that Paul doesn't think the tendency for wealth to concentrate can be stopped.
If you want to complain that Paul could have expressed himself better, I won't argue; I agree that was by far his worst written essay. And I suspect he is genuinely pained by the reaction it received. To whatever extent this new piece is specifically a response to that reaction, I think it's more hurt than callous.
That argument is still missing the point. Variations you will always have, but no guarantee that the same people would come out on top, unless you believe that the hardest workers happen to mostly come from well-financed backgrounds and caucasian gene pools. There are many people who work hard all their life and never make it out of the slums. Working hard is not a differentiator, it's what gets you a seat at the table. On the way up everyone works hard. Slackers don't even compete. The difference between those who make it to the top and those who don't is mostly not effort, it is opportunity, and good instincts to leverage that opportunity. In a truly fair world the people who came out on top would be an almost completely different set of people than those who are at the top today.
I feel like the criticism of the essay was not because of its content but its theme. It felt like a defense of the current system, whether taken narrowly as SV or broadly as global capitalism. This struck a nerve because most people in their gut know that the current system is fundamentally unfair and needs to be replaced by something better. It cannot be a good system that made it so that the set of people who own as much wealth as the poorest 3 billion all fit on a yacht, and not even a very big one. People got angry because they thought he was defending the way things are, even if his actual position was more nuanced.
[B]y helping startup founders I've been helping to increase economic inequality. If economic inequality is bad and should be decreased, I shouldn't be helping founders. No one should be.
I think this is ridiculous. Creating new millionaires is not increasing inequality. I don't know anyone who thinks that (not to say that Paul might not have run into a few people who think that way). The problem, as you say, is the profound concentration of wealth into the hands of a few multi-billionaires. I would say also, it's the fact that the middle class in the US is actually shrinking.
The fundamental way that the wealthy can help the middle class, while helping themselves at the same time, is by investing in new businesses that create jobs. This is precisely what YC is doing! This isn't increasing inequality but decreasing it. Not only are they creating jobs directly, they're also doing so indirectly, by teaching people -- even those who don't get into their program -- how to start startups.
Founders don't get rich unless they build a successful business. And again, I don't think anybody minds that they can get rich; after all, a lot of them then either start new businesses or become angel investors themselves. There's nothing wrong with any of this, quite the contrary, and if Paul really does run into people who think there is something wrong with it, this is what he should tell them.
I would go so far as to say that YC and its ilk are among the most creative, hopeful, positive things happening in the US economy today. Though I'm not involved with them directly -- I haven't even worked for a YC company -- I am very glad to have them here in the Valley, and I'm excited to see what they do in the coming years.
It's absolutely true that variation in productivity leads to a variation in income and it's also true technology acts as a lever and is increasing the variation in productivity between people.
At no point did PG say anything like what you claim it "sounds like" he is saying. The essay was an argument to attack rent-seeking, and other bad behaviors, but not the variation in productivity. It also argued that even if all rent-seeking were eliminated, there would still be variations in income because some people are far more productive than the average.
No. Productivity has nothing to do with income. You can be the most productive widget-maker in the factory. That doesn't mean you will make a lot of money.
Income inequality exists and has been growing because those at the top have been reaping the increases in productivity of those at the bottom. In fact that's the entire debate: employee productivity has massively increased since the 70s, but wages have not reflected this.
You are using a non economic definition of productivity, and he is using the economic one. In Economics, productivity is the value of what is produced, not the quantity.
Where you fall on pg's essay is defined by your answer to that question.
Edit: s/rents/returns/
A an example of rent collecting would be if he used his wealth to lobby for a law requiring all start-ups to have a license which an organization he controlled granted (and charged for).
Angel investing and venture capital are jobs that are also prone to the Peter Principle. What makes them different than many other jobs, especially angel investing, is that the person has promoted themselves to their own level of incompetence. Just because some (maybe many) angel investors are incompetent and don't contribute to wealth creation does not mean that none do.
His essay focused on one particular lever, technology. His original lever was technology. Now he uses other levers, economic capital, social capital and experience to create wealth. Extracting value from economic capital alone is rent seeking. This is what banks do with loans. Providing economic capital with advise on how to most intelligently make the most of the capital goes beyond mere rent seeking and enters the realm of wealth creating activities.
No it doesn't. A claim that most rich people are driven doesn't imply that most poor people are lazy. The portion you quoted makes this distinction clear: "Variation in productivity is far from the only source of economic inequality, but it is the irreducible core of it, in the sense that you'll have that left when you eliminate all other sources."
If we found a way to give everyone the same opportunities, there'd still be economic inequality. Is inequality what we should attack? It's probably better to attack the undesirable causes directly. The essay made this point clearly.
If it doesn't imply that poor people are lazy, then what does it imply? That the rich and poor are equally driven, and that something other than effort (luck, inherited wealth, etc) makes the rich rich and the poor poor?
He then weakens his claim even further, as quoted in the parent: "Variation in productivity is far from the only source of economic inequality" such that he admits doing something really productive is not the only source of inequality. So, there is really nothing in there that implies either of things you suggest.
"Most people who get rich tend to be fairly driven. Whatever their other flaws, laziness is usually not one of them. Suppose new policies make it hard to make a fortune in finance. Does it seem plausible that the people who currently go into finance to make their fortunes will continue to do so but be content to work for ordinary salaries? The reason they go into finance is not because they love finance but because they want to get rich. If the only way left to get rich is to start startups, they'll start startups. They'll do well at it too, because determination is the main factor in the success of a startup."
Since the skills necessary to succeed in finance are distinctly different from those necessary to succeed as a startup founder, I assumed that the essay was attributing success to the one attribute it specifically calls out: determination.
This is totally compatible with all poor people being in the second category, and no poor people being lazy (3rd and 4th categories).
(I disagree with his essay, but for different reasons than this.)
It really seems like one can either read PG's essay as a Randian screed or as poorly argued cant. I saw it as the former, but I can understand reading it as the latter.
Not quite. He's saying (in my reading) that even if you legislate away all the other sources of inequality (even to the point of wiping out all assets and giving each citizen an equal amount of cash to start anew), inequality would still arise due to differences in personal productivity / drive.
Seems true to me, although entirely irrelevant to the topic of real world inequality.
It really sounds like he believes this to be the cause of real world inequality, too:
"Most people who get rich tend to be fairly driven. Whatever their other flaws, laziness is usually not one of them. Suppose new policies make it hard to make a fortune in finance. Does it seem plausible that the people who currently go into finance to make their fortunes will continue to do so but be content to work for ordinary salaries? The reason they go into finance is not because they love finance but because they want to get rich. If the only way left to get rich is to start startups, they'll start startups. They'll do well at it too, because determination is the main factor in the success of a startup."
Slow down there. You can't just take the converse of any old statement.
PG is saying: IF ((starting equal) AND (differences in drive)) THEN (ending unequal).
You are saying that PG's statement is equivalent to: IF (now unequal) THEN ((earlier equal) AND (differences in drive)). Which translates to "Poor people are poor only because of laziness."
Furthermore, the quote you provide says: IF (rich now) THEN (probably driven earlier), which crucially says nothing at all about people who are not rich now.
That's as best as I can put it.
This is in the context of a hypothetical universe where "the only way left to get rich is to start startups." In that universe, PG asserts that the driven will do well, thereby creating inequality. Since we know inequality exists, some will have done less well, and "determination is the main factor in the success of a startup."
To go back to what you said earlier, this isn't directly relevant to real world inequality. But the essay posits this hypothetical world as a parabolic justification for economic inequality. The essay acknowledges that "few successful founders grew up desperately poor" but refuses to engage in any discussion of why. It will only examine a simplified universe, which allows the author to make implications about the real world and then hand wave any reactions away when others engage with those implications.
Huh? He said all the people at the top are not lazy. "All people at the bottom are lazy" doesn't follow from his statement.
What makes it a dirty rhetorical trick is, of course, that one can then reply to one's critics "ah, but I didn't explicitly say what you read into that".
1) Got rich and weren't driven.
2) Got rich and were driven.
3) Stayed poor and weren't driven.
4) Stayed poor but were driven.
pg statement says he's been exposed with group 2, which he highlighted. You seem to accuse him of implicitly highlighting group 3, and would prefer he implicitly (explicitly?) highlights group 4.
Is that the gist of the argument?
The statements "Most people who get rich tend to be fairly driven." and "Most people who are fairly driven tend to get rich." are not logically equivalent.
There really is severe suffering at the bottom of the economic scale here (SV/peninsula), and in my opinion it is the shared responsibility of those of us who have lots of options to figure out how we can help to relieve some of the suffering. However, I don't thing that needs to be the singular focus of every single discussion of economic inequlity, and I don't think it's productive to pan this essay for not really addressing that.
He did call those who disagree with Zuckerberg's letter envious losers, so how can you read something like the Inequality essay without that colouring it?
https://medium.com/@girlziplocked/paul-graham-is-still-askin...
@sama I think the reason you're surprised is that not being a loser yourself you underestimate the power of envy.
(in response to a tweet saying "It takes a lot for the internet to surprise me, but the general reaction to Zuck's letter did it")
As to the rest of your comment... I think you're reading something which takes an aggressive tone in promoting its argument, and mistaking that for a personal attack. There is quite a strong critique of the "startups create value" idea, beginning with the observation that they don't, really -- VCs confer value and legitimacy upon certain startups, and not on others. Which means that in a startup-based economy, such as the one pg argues for, pg and his friends would wield an enormous amount of power. In a true startup-based economy, VCs would literally be the central planners, signing off on which businesses can and can't be started (I mean, in theory someone in such an economy might privately have access to enough capital to get going without VCs, but the deck would still be heavily stacked against those people, and there aren't exactly a lot of them). And it is entirely fair game to question the motives of someone who has such a strong incentive to favor a true startup-based economy, which of course the essay does.
I don't see how he advocated a position that poor people deserve to be poor. He advocated a position where being rich is ok. These are two different things. It also focuses discussion on economics - eliminating mega-wealth should not be made priority, but the focus should be placed on poverty minimization.
He suggests that social mobility is highly correlated with non-laziness (whether expressed through hard work, not hard but smart work, natural curiosity, drive to tinker with stuff, or ability to deliver on a project started without letting the inertia set in).
That does not mean that poverty is correlated with laziness.
The only logical conclusion that follows is that laziness is not highly correlated with social mobility, e.g. people who are poor and lazy have not statistically been exposed to much social mobility.
I tend to read with a charitable eye, so I don't take the same meaning as yourself. But, he's chosen an expression that allows a lot of interpretation.
The way I read it, I assume we're talking about a cohort, and the point is, on average, the least lazy of the cohort will probably do better.
The least lazy people participating in a ponzi scheme get more money?
Obviously not, so what you're assuming and/or implying is that life is fair, that the rich deserve their success and the poor are lazy, which is exactly the point people are arguing, so you're begging the question.
Debate isn't always about winning. Sometimes it can just be a back and forth exploration of an interesting subject area. But you have to treat it that way.
It's pretty hard to misinterpret a lot of the things he wrote, though.
Thinking about this long enough makes large-scale democracy very scary because it operates in the same terms on the same media.