She meant impossible in that one doesn't earn a billion dollars through work alone. The only way to get there is to set up a structure that extracts a billion dollars from a market (usually by building a structure that's more efficient but also generates externalities that are not borne by the person getting the billion dollars).
pg's reading of it is so blunt and misrepresentative that I'm nervous about what kind of content he's consuming.
Right, regardless of whether you agree or disagree with the point, PG doesn’t actually engage with it. He just says “compound growth + build something that people love”.
But the meat of the point is: if the economy is growing at 2.5%, how do you sustain 15% over 5 years?
Look, I’m a startup guy, I buy into the premise that it’s an intensely value-creating activity. But I think it’s self-defeating to pretend like the monopoly and regulatory arbitrage problems don’t exist.
I get that PG and his customers need to be able to cash out, but also, the monopoly rentiers make it more difficult for startups to compete by buying up competitors early and offering crazy salaries that make startups uncompetitive.
All that said, the subtext here is that PG is providing politicians with stories they can tell, nobody in this conversation is trying to describe reality in the most precise or honest way.
I don't think you are the target audience. Here's the direct quote, does that apply to you:
"You're young, and usually young founders should make something that they themselves want. You don't have enough experience yet to know what other people need. But at the same time your own needs are uniquely valuable, because your needs predict future demand. You're the age when people start using new things. Whatever you and your friends start using now, everyone is going to be using in ten years. Since your intuitions about other people's needs are usually a crap signal, and your own needs are an especially valuable one, you should usually listen to the second signal; you should make something you and your friends want.
Making something you and your friends want doesn't mean you have to build a consumer product. Maybe you and your friends are molecular biologists, and there's something cool that could be done now to DNA that everyone else has overlooked. Maybe you and your friends are into drones. The idea doesn't have to have a wide appeal. It literally just has to appeal to you and your friends."
"Just do whatever, don't mind other people. You don't need to focus on consumers, you can always sell drones to the military."
If your drone can deliver pizza, it can also deliver bombs. The latter always has demand.
> if the economy is growing at 2.5%, how do you sustain 15% over 5 years?
By growing better than the average?
How do you grow better than average?
By creating a product that people find valuable?
Yes, but the bigger picture is that what people find valuable and what is actually valuable diverge. Because what people find valuable is through the lens of their constraints: the regulatory structure of their country, the limitations of the human condition, inertia, the limited nature of time.
The most poignant example is tobacco. Tobacco is a net-negative product for the world. But many people find it very valuable, because it helps them with the stresses of their life and they have a biological dependency on nicotine. And so, it’s a multi billion dollar industry. But, for the world as a whole, it generates negative billions of dollars. Because of the health cost and the cost of lost work. If you did 10, 20 years early then that’s a lot of human productivity burned.
Of course, most products are not tobacco. But every product is tobacco a little bit, I think, in the sense that they merely move some money from externalities into the product. In that sense, it’s not all value creation, it’s value siphoning or moving.
Obviously externalities exist. I disagree with your tobacco take though. If someone knows about the health risks tobacco causes and still chooses to buy tobacco than the tobacco has created real value. Of course societal value can still be negative because of externalities, but externalities have to be external, a person making a decision you disagree with isnt an externality.
Im not going to disagree that externalities are everywhere though. The question is to what extent and if, after correcting for them, there are still products which create so much value they make their founders billionaires. I think the most obvious case for this are artists. JK Rowling sold her writing for over a billion dollars. The work was, as far I know, created pretty much solely by her. You can point to the book publishing system as a whole, but she has nothing to do with that. All she did was write some books and sell them to an already existing system.
Yes, for that particular person it has created value. But for the world, it has lost value. The value isn’t real value, it’s a type of debt.
You’re moving value later to value now, in the form of enjoying smoking.
Consider: if the conditions of our work were different, many people would not smoke. If nicotine didn’t happen to have a biological effect on the human brain, then nobody would smoke. The value created is only in the context of those constraints, and many more (including regulatory ones, which is why we see less smoking today).
I view it as a type of loan. Is loaning money a productive activity? Of course not, because no value is created, it’s merely moved. If the entire economy was just loaning money, then GDP would maybe go up but no value would be created. Smoking is a loan from the tobacco company. You get immediate relief, in the cost of more value paid back to society at a later date.
Consider: if the tobacco industry has sold 5 billion in tobacco products, but tobacco as a whole results in 20 billion dollars in lost productivity and healthcare, then the value generated is -15 billion dollars. In actuality the estimates are much worse, because typically models only consider healthcare cost, not suffering or lost productivity due to death. Suffering, too, has a cost. How well do people work when a loved one dies?
Make a product people really want.
That applies to fentanyl and tiktok.
Yes, and people keep paying ridiculous prices for the first and for ads for the second.
Perhaps you realize this, but the way the economy grows 2.5% is through lots of entities growing faster than that.
Growth comes from innovation, and innovators get rewarded with faster growth as non-innovators decline.
If so many entities are declining, why shouldn't I expect that my entities will also decline? Why should I expect them to be the ones that go up?
You don't. This only explains what was asked: how any entities can go up by 15% if the average is 2.5%. How to be the one to do that is hard.
I would say it slightly differently: The average rate of growth comes from the average of the successful and unsuccessful innovators and non-innovators.
> Growth comes from innovation...
I suppose it depends on how broadly you define "innovation".
Lots of companies grow because of, among other things: regulatory capture, regulatory arbitrage, questionable use of other people's IP, offshoring, misclassification of employees/contractors, profit shifting and transfer pricing, subsidized predatory below-cost pricing, dark patterns, aggressive collection and monetization of user data, acqui-hires to stifle competition, implementing high-switching costs to create vendor lock-in, round-tripping, channel-stuffing, business models that intentionally externalize costs, outright fraud.
Bill Gates' wealth grew much more after he left Microsoft than while he was CEO. Was that wealth earned through innovation? No. He simply owned something that became more valuable as other people labored to innovate.
So what? He owned the stock, he gets to share in the gains.
If we believed that the only people who should be morally allowed to benefit from asset appreciation are the people who actively work for that company, the entire economy would collapse.
For example, every pension fund, endowment, retirement fund, etc. are all invested in financial assets that they had NO role in. All they do is own something that become more valuable as other people labor and innovate! Shall we cast them as evil capitalists?
I don’t find “we need billionaires because 401ks” to be a compelling argument. We can build a different system.
AOC’s criticism is that “own stock, share in gains” is not the same as earning money.
Institutional innovation continues to pay off after you leave. You will make more over time if you build a company with a moat, if you set up a farm team system so your company can continue to innovate, if you eschew cash grabs in favor of solid customer service. If you take away the incentive to set up a continuous wealth generator, you will see founders spend their last year as CEO looting the company instead.
It is factual that ownership continues to pay after you are no longer laboring.
My position is that this is not a good thing.
When I build something for myself, a main goal is for it to work without my constant input so I can do something else. This is especially important for people who are capable of creating institutions. What if Elon Musk was stuck babysitting PayPal, or would lose all the payout from Neuralink the second he wanted to move on?
Also, a large share of the value I add to society is attributable to the person who set up the institution I'm working in. I work hard and am friendly but without someone setting up an organization that employs programmers usefully, the most I can do for you is fix your Wifi. I would vote to keep paying the builders after they leave.
If the value of MSFT tanked after he was no longer managing it, people would have said he didn't do a good job setting up effective systems.
No mention of Piketty or r>g?
Look, I know this is a tech forum and we don't claim to be good at the social sciences, but this is a central debate and r>g, the idea that the rate of return to capital tends to exceed economic growth over the course of history, is a major result from Piketty's Capital In The 21st Century that people interested in "grow the pie" vs "trickle down" really ought to be familiar with. Even if you disagree, you ought to be able to articulate why, and "the average includes winners and losers" ain't it.
"But life has improved, r>g couldn't have been true forever" -- last time the inequality bubble popped because of a great depression and two world wars. The capital was incinerated, metaphorically and literally. It's a cautionary tale and we should aspire to do better.
> It's a cautionary tale and we should aspire to do better.
Why is it a cautionary tale? Sounds like we should have a bunch of incinerations of capital, ideally let the capital mobilizers that are actually competent survive.
"Let's have more world wars" isn't a great thing to aim for.
I'm suggesting deflationary contractions, but okay. Note that deflationary contractions in 1930 sucked because we didn't have solid supply chains, modern agriculture, liquid asset markets turbocharged with rapid information interchange etc. Might be worth trying in the 20X0s
The populist blowbacks from that were a major cause of the second world war.
weimar republic created hyperinflation, in response to deflation, and so at best its a second order effect with a not so subtle intervening policy that was the primary target of the backlash
I thought it was monetizing fiscal deficits due to WW1 war reparations payable only in gold?
Yes, dnautics is confused. In the early 20s Germany hyperinflated to pay reparations, they subsequently became allergic to inflationary policy, and then when the deflationary wave of the Great Depression hit in the late 20s they were allergic to the correct policy response, so they let deflation bite, and a certain Austrian fellow rode that pain into power.
Eh, I'll bite.
I haven't read the source but for one, there wasn't really even a US dollar until 1935. When banks failed, and they did unlike now when they artificially don't, you lost everything. There was no FDIC. All of those mechanisms are artificial and serve to make the banking industry large and profitable.
Not to mention currency debasement, another aspect of the modern world that makes finance uniquely profitable and, really, white collar work existent in any major form at all. It's ingenious. Since capitalism is naturally deflationary, as competition removes all profit over the long term, let's interfere and make it so workers make less money every working day. Hence, in order to make even the same amount of money each year, one has to either rise in the hierarchy, or argue for raises, which is inherently risky.
Basically, before 1935, it was hard to accumulate that much wealth. It wasn't generally backed by any nation state guarantee. Real estate has always been a great store of wealth, but it has physical limitations. The world since 1935 is now a world of nation state wealth guarantees. The only reason this amount of wealth is allowed to occur, is because of it. We took a strange path since 2008, when the banks were not allowed to fail. Everything eventually comes to pass.
No.
I'm surprised someone who picked the name "engineeringwoke" has no love for FDR. He's the GOAT!
The largest bank in the US is #14 on the S&P by market cap. If the Federal Reserve is a conspiracy to make banks profitable, it is doing a poor job. More to the point: I challenge anyone who doesn't like the Fed and the compromise it represents (money printer exists, but is guarded from the politicians by a council of 12) to name their alternative. Hard money? Politicians can print? You picked "hard money." Let's go!
Everyone who learns about the Cantillon Pump thinks they would love to run it in reverse. This is because they don't understand that it does not run in reverse. It is not symmetrical. They underestimate the pain of a deflationary shock, where everyone (namely your employer) gets an incentive to not participate in the economy and then stops participating in the economy (namely by employing you). Rent and debt is still due, of course. This is the pain that inspired the USA to split from Britain (scrip/specie). This is the pain of the Great Depression -- you threw out that 1935 date like it was the culmination of a Bond bad guy plot, not the capitulation of a country tired of deflation. We even have the counterfactual: Germany, having just escaped the Weimar inflation, decided in 1929 to take the deflationary response to the Great Depression. It led them to a very dark place.
Returning to the USA: they weren't called "robber barons" because they failed to accumulate wealth. Capitalism does not guarantee competition (quite the opposite, strong property rights are the nexus of anticompetitive opportunity) which does not remove all profit over the long term, it squeezes it onto assets, which is where that unearned income we were talking about originates from. If you have ever heard or given a business pitch, attended a class in business school, or listened to a VC for 30 seconds you have heard some heinously anticompetitive scheme and their plan to leverage it for personal gain by turning it into an asset they own. Network effects, platform effects, two sided markets, returns to scale, etc etc etc. Usually they don't work, but when they do and you get a stock or a deed or a title to a money fountain (exploitation fountain, seen from the other side) you get to stack trillions while the competition spends decades trying to cross your capitalism-created and capitalism-guaranteed moat.
Yes, in recent times the money printer has been used to exacerbate inequality. But it isn't the cause of inequality -- certainly not if you look at what happened in the 1935: https://ceprdc.tumblr.com/post/87307310830/piketty-in-one-gr...
Turns out you can have an inflationary adjustment and unwind inequality and boost the economy at the same time, so long as you remember to tax the rich. FDR sends his regards!
You'd like Capital in the 21st Century.
> Capitalism does not guarantee competition (quite the opposite, strong property rights are the nexus of anticompetitive opportunity) which does not remove all profit over the long term, it squeezes it onto assets, which is where that unearned income we were talking about originates from. If you have ever heard or given a business pitch, attended a class in business school, or listened to a VC for 30 seconds you have heard some heinously anticompetitive scheme and their plan to leverage it for personal gain by turning it into an asset they own. Network effects, platform effects, two sided markets, returns to scale, etc etc etc. Usually they don't work, but when they do and you get a stock or a deed or a title to a money fountain (exploitation fountain, seen from the other side) you get to stack trillions while the competition spends decades trying to cross your capitalism-created and capitalism-guaranteed moat.
I made this point many times a number of years back and gave up. It's incredible how an entire message board of HN that supposedly is extremely pro market competition, seems to entirely be unaware (or just collectively puts it's head in the sand) that the #1 strategy that most VC backed firms seem to target is "figure out out as quickly as possible how we can get out of having to compete with others". And they do so under the name of "a moat".
Building a moat is one of the most anti-market actions that can be taken. You hear commenters post non-stop about the ills of communism as it avoids market competition, but somehow every seems to just gloss over or ignore the fact that moats are designed to do the same thing and cause the same issue. Terrible allocation of capital.
> This is because they don't understand that it does not run in reverse. It is not symmetrical. They underestimate the pain of a deflationary shock, where everyone (namely your employer) gets an incentive to not participate in the economy and then stops participating in the economy (namely by employing you).
If you think of inflation as money supply growth, or growth relative to gold, the economy has barely grown since 1971 when Bretton Woods was ended. However, the economy did grow in gold terms in the period beforehand. Why would that be? Is your theory from a textbook truly applicable or just a way of enforcing the current economic norms that heavily benefit nation states? If you force all assets to go up, you bleed your asset holders via tax as well. They don't want people to believe in ideas that could break their hegemony.
> Capitalism does not guarantee competition (quite the opposite, strong property rights are the nexus of anticompetitive opportunity) which does not remove all profit over the long term
This is a different conversation, regulatory versus monetary. It also weakens your r > g business book pseudoscience argument. I studied economics and finance enough, I don't need some cheap armchair economist slag.
> tax the rich
Nice, if I didn't need any more proof that this is just another diatribe based on another faddish idea about how to fix the economy. Wait, did I say that earlier? Something about how ideas can be used to control the bounds of policy, the Overton window.
FDR's results speak for themselves. Reagan's results speak for themselves. We could benefit enormously from shifting the Overton window back to FDR.
You still haven't explained why we should expect hard money to fix America when hard money broke America in 1750 and America and Germany in 1929.
Growth does not ONLY come from innovation. It can come from bad actor or even simply non-innovaive strategies such as acquistition (which can lead to monopoly, as capital tends to amass in large centers / the hands of the few, per Marx). Other bad faith / anti-competitive / non-innovative strategies include regulatory capture, lobbying, doing illegal things (and hoping to not get caught / paying a slap-on-the-wrist fine that would be impossible for smaller companies), etc.
There are extremely good arguments for why the act of becoming and remaining a billionaire is immoral and bad alone, without any need for you to have directly wronged someone else.
PG just completely misunderstands and hand-waves over this basic concept and makes the excuse that "hey we worked really hard and made an amazing product that people loved, we aren't harming anyone."
For one thing, founders and employees don't share equally in the high growth rate of the company even though at most a founder is working let's say 2x longer hours than a salaried employee. You can do nothing wrong but you're still taking more of your fair share by the basic structure of how the business is setup.
I think anyone who is running a successful company and doesn't have a path to converting to an employee-owned enterprise is immoral, especially if you have managed to capture $1 billion just for yourself while your median employee is just making market rate salaries, or maybe they happened to gamble on your stock options and have a modest nest egg about 1/100th-1/50th the size of your wealth as a founder.
So yeah, Jeff Bezos made $260 billion dollars, but an alternative that could have happened was "Jeff Bezos makes $50 million and every Amazon employee gets a much more fair share of the happy customers' money."
More importantly, if you have $1 billion in net worth, that means that you can choose to do anything with your life on a daily basis.
When I'm over here working my job in my cushy upper middle class life, it's still an objective truth that I need to be selfish in order to secure the future of my family. Nothing is guaranteed and we need to fend for ourselves. I can't stop working or the home finances collapse within months or a short number of years if I'm very lucky and have something significant saved up or my house paid off. I legitimately don't have the time or money to help many other people outside of my nuclear and extended family.
But when you have a billion dollars (and some people have hundreds of those and one person even has a thousand of those), that means you have no limit to what you spend your time on. You can do anything, and deciding not to work on capitalist endeavors anymore has zero chance of turning you destitute.
In other words, when you are a billionaire, what you choose to spend your time on says a lot about the content of your character compared to someone who is not that wealthy.
Paul Graham is out here giving speeches to rich kids at Oxford Union, but he could be spending his morning in the local soup kitchen or building homes with Habitat for Humanity. He could be mentoring people who are struggling to escape housing insecurity, or he could be working with advocacy groups to expand healthcare access and end childhood hunger.
He doesn't have to go to work every day like I do. But he is one of the people who has dedicated his life to capitalism, even after successfully taking care of his family for many lifetimes, and that says a lot about him.
I agree with most of what you're saying -- but just wanted to add some notes here: 1) founders should start companies where equity is distributed to the early employees much more evenly: this actually gives additional super-powers to the company since employee incentives are much more closely aligned with the vision of the founders (building something great that people love to use). 2) stop rewarding growth: there is nothing wrong with NOT growing 90% a month. The goal of most companies shouldn't be to grow or return maximum value to investors (or shareholders): it should be to provide a greater human good the markets will be willing to pay for 3) revenue growth also is not something to aim for: sustainable income growth is. 4) unless the billionaires start re-distributing their wealth -- history is not on their side. A revolution will happen: usually this is associated with the younger male population being unemployed (~15% is the magic number) and causing an uprising. The goal of most founders at this point should not be 'how do I get to 1 billion.' The massive unemployment caused by the AI revolution will cause a massive uprising. There is great danger I think if they do not figure out a way to re-distribute their wealth. Currently, the poor and middle class are taxed way more than the rich (as a percentage of their income): and from what I see are increasingly becoming more disgruntled with the situation they are in. Why in the world would anyone want to even be a billionaire in this situation is the question I want to ask?
> For one thing, founders and employees don't share equally in the high growth rate of the company even though at most a founder is working let's say 2x longer hours than a salaried employee. You can do nothing wrong but you're still taking more of your fair share by the basic structure of how the business is setup.
What is fair? Obviously hours worked is one metric to determine what is fair. But another way to arrive at what is fair is through negotiation. Neither the founders nor potential hires are obligated to work with one another. The only way it happens is if an early employee believes the compensation they are offered by the founders is fair. If it was unfair, they would presumably reject the offer outright.
Most people need money to eat. I don't know if you can ever really have a fair negotiation with an employer when "the rent is due" is involved. You know those companies that buy settlements from people in exchange for a fraction of their value immediately? You could say that this is a fair trade in an econ 101 sense that body parties rationally entered into a mutual agreement. But you could also notice that one person just got laid off and doesn't have enough money to pay rent and is therefore pressured by circumstance to accept extremely unfavorable terms because the alternative is homelessness.
If you’re an early employee at a startup, you almost certainly had other options for employment
I don’t think you can assume this to be the case, especially outside of the Bay Area.
My first startup was one where I was hired because I was young and cheap. I could be paid in free lunches rather than 401k matching and decent healthcare plans.
Big companies often pay better salaries.
There are plenty of people who would consider themselves extremely lucky to work at a startup, even for cheap. I know many older people working much worse jobs. I think it's fair to assume that most startup workers have other options, and that generally those options are worse.
Could you imagine this perception you describe playing into being underpaid?
Your last sentence you’re saying it’s fair to make this assumption that most other jobs are worse.
So that means if a non-startup offered you a better pay package your assumption and bias might steer you away and take worse compensation to do the same job.
I ask you this question because I made a similar mistake in my youth. I took a pay and benefits cut for a startup because it sounded a lot more fun. 6 months later and the company was going under and I was out of a job.
There are also plenty of employees who just didn’t get a job offer elsewhere. When I took my first startup job I didn’t have a competing offer.
I too have worked for startups that failed. And when I took those jobs, I had many thousands of alternative opportunities I could've taken instead that I considered to be worse, or at least not worth pursuing compared to the startup jobs. What's your point?
Here's an example that could help make my point: Glimpse is hiring a Security and Compliance Lead in New York City and is only paying $150K - $225K.
Meta is paying a Security Engineer (not a lead) $271,000/year to $347,000/year + bonus + equity + benefits across the following locations: Bellevue, WA, Menlo Park, CA, Washington, DC, New York, NY
I find it hard to reconcile that salary difference, and I think the only way to explain it is that startups offer dreams of upside like a smoky Vegas casino.
Working for Meta [1] is "boring" and corporate, but it's also objectively a better financial decision unless Glimpse becomes the next Uber. My point is that I am hypothesizing that tech culture encourages people (especially young people) to prefer objectively worse financial outcomes to do the exact same work at a more "exciting" startup company.
At the time you joined those startups, you considered those other opportunities to be worse, but I wonder if that was true or if that was perception? Of course, I don't intend to tell you that you were wrong, in fact I think it's highly likely you were right. I only mean to say that it's worth introspecting on the concept.
[1] Or insert any other large and slightly more ethical company, if we want to disqualify working for Meta due to its "evil empire problem."
Yeah, I mean, when you put it that way, I don't disagree with you. I think it's a matter of perception. What's better or worse will always be subjective. And there will always be gaps in the market where people make genuine mistakes, because of a lack of knowledge, or an error in judgment due to inexperience, etc.
But there are also genuine advantages that others simply might not see. For example, many would rather apply to work at a startup because it's an easier job to get than one at Meta, Alphabet, Amazon, etc., and not having to study as hard for interviews is a genuine advantage to some that's worth the money left on the table. Or for others, maybe they want a more casual work environment. Or others might just want startup experience because they hope to start a startup someday. Etc.
> Most people need money to eat. I don't know if you can ever really have a fair negotiation with an employer when "the rent is due" is involved.
Your definition of "fair" is questionable.
If you're negotiating from a position where you've taken on debts and rent that you can't afford to pay, and time has run out to the point where you're desperate for a paycheck as soon as possible, that's unfortunate. But that's not the fault of the person you're negotiating for a job with. Exceptional cases aside, 95% of the time that's likely due to your own risk-taking, neglect, poor decision-making, or financial mismanagement. And you had a "fair" chance to not get into that situation to begin with.
But regardless of blame, it's certainly not the fault of the counterparty in your employment negotiations in that you're in that spot. Nor is it their responsibility. Nor should we want it to be! What kind of system would that be, exactly? A brutal one where many more people fall through the gaps than would otherwise. A much better system is the one we have, where people pay taxes, and do so at higher rates the more fortunate they are, and that tax money goes into programs like unemployment, which helps people in exceptional situations.
What's so unfair about this, exactly?
Actually it's probably more 99.99% likely due to the family you're born in.
> What's so unfair about this, exactly?
We don't roll the same dices at birth.
No one's saying we roll the same dice at birth. That doesn't mean that people who are so desperate that they can't risk negotiating a job offer are 99.99% in that situation because of birth rather than decisions made subsequent to birth.
Especially because in America at least, over 200 million people are born middle class or above. An even lower class in America is doing much better than many other countries in the world.
At what point in your mind does personal accountability come into play? How prosperous does a nation have to be for people to have some responsibility for the consequences of their own actions? Or are people never responsible?
Regarding personal responsibility, at an individual's level it's your responsibility to improve your life, because that's the only lever you have and you don't have the time to wait for societal changes that take decades or centuries to arrive.
When we're discussing policy for our society however it's too easy to blame people for the choices they made so we don't have to think harder. The world's complexity is beyond what the humans brain can hold at any single time. Some people are dealt bad hands, born in a difficult family, born in a body that slow them down or drag them down. Some people make one bad choice (even something mild like a financially unprofitable carrer choice) at 18 because millions of parameters that played since their birth compulsed their brain to make that choice at that moment in their life. Not even mentioning meeting the wrong people. You can do everything well and cross the path of someone who breaks you.
Truly and without getting too philosophical,looking back and learning about people's stories I've come to realize that we have little agency and by the time we understand how the world works and what we should have done instead it's often too late to change the outcome drastically.
To tie it all back to the topic of this thread, the 19 year old who's been pushed by his parents all his life to get good grades, study well, get involved in the right extracurriculars, ends up at Stanford, starts a startup because that's what people do around him, is told to apply to YC, is accepted, is taken care of by YC, tell me how much is he responsible for his success?
I don't disagree with you. I think there's an even argument along these lines that we don't really have free will, since our initial biology and environmental circumstances aren't within our control, and yet every subsequent decision and choice follows inexorably from those initial conditions.
To me, this inspires empathy and care, and it's why I believe that society should have a very high floor. But discussions like these, and the current "eat the rich" zeitgeist seem to focus so much more on lowering the ceiling. Which to me is the wrong focus.
Not really? If the same value and wealth is being created - the redistribution of it raises the floor as well.
Capping the ceiling would be a tremendous mistake. It would eliminate the "if" in your scenario. The same value in wealth would not be created. You would be massively disincentivizing people to stay here and innovate, and that innovation would flow elsewhere or simply diminish.
Luckily, we've never actually capped the ceiling, and it's unlikely we ever will.
If there's no cap on a ceiling, is it fair or humanly okay when someone's wealth is Epstein-enough to own other people's lives? Wealth is a proxy for power, when someone has more power than legal systems or enough to swindle all of it, is that a better world?
There should be a ceiling or we reach the current state where accountability is nothing a million dollars can't buy.
Do you seriously believe the by limiting people's wealth, we'll solve problems like this? Humans used to have thousands of times less wealth than we do now, yet people still had power and influence, harems and slaves, cults and gangs.
Solve? Likely not. Improve? Of course. Policies that improve the state of problems even if they remain unsolved are good.
More than one million people die of TB annually. We have a cure for it. Elon Musk could pay for testing and treatment distribution for the entire world without noticing a change in his wealth.
A million people a year.
I feel like you should read about systems thinking. You're ignoring so many potential side effects, so much history, so many statistics, incentives, human psychology. The idea of capping wealth in order to try to prevent certain power imbalances like sex trafficking, is similar to firebombing your house to fix a leaky pipe. Not only would it mess up a ton of stuff, but it wouldn't even fix the problem.
I have never met a founder who was motivated, even in part, by the possibility of being a mega billionaire.
You can believe that’s fair. I don’t. I don’t believe that one party needs to be at fault for an economic transaction to be unfair.
I live in a country where “oopsy doopsy your insurance denied this so now you owe us 20,000” isn’t terribly uncommon and your employer can fire you without any warning or severance. “I need money for the rent this month” is not consistently some moral failing.
If the argument is going to be “I exerted negotiation leverage over you” I think this feeds into my argument about the immorality of the whole setup.
We might as well just say “I exploited my structural power over my employees and got a better deal for myself.”
Of course the employees agreed to the deal presented to them, what other option did they have? They aren’t like all these founders that have the luxury of being unemployed because their dad will pay the rent.
That’s another point I forgot to bring up entirely: PG also hand-waved over the quantity of billionaires from his accelerator that came from families of very decent means where they have the luxury of risking failure. The quantity of true rags to riches billionaires is extremely slim.
> Of course the employees agreed to the deal presented to them, what other option did they have?
What? The employees had infinity other options! They could have negotiated harder. They could have declined the job. They could have taken a job somewhere else. They could have taken the risk to start their own startup, and been in the founder position, instead of choosing to be in the employee position and getting the security and reduced stress that comes along with it.
> That’s another point I forgot to bring up entirely: PG also hand-waved over the quantity of billionaires from his accelerator that came from families of very decent means where they have the luxury of risking failure. The quantity of true rags to riches billionaires is extremely slim.
Over 200M Americans come from middle class backgrounds are above. YC also provides founders with the funds to pay themselves while they start their company. I did YC when I had almost $0 to my name and no well-off family to rely on.
youre not going to negotiate your way to 40% ownership of the company with a strike price of $0.00001
Then go start your own company?
you have completely drank the kool aid
Why do you expect outsized rewards without taking outsized risks? Companies don't start themselves.
I totally recognize what you’re saying. We have to be able to encourage risk-taking if we want to have innovation. I get it.
But you said earlier that YC pays founders for living expenses. What risk are YC founders taking?
In contrast, every startup I’ve worked at has offered equity in the form of options where I had to stake my personal finances just to own company equity. None of them granted shares to me as a reward for my labor. I was taking more of a financial risk than the founder of the company just to own a stake!
VC-backed Startups are much different than small businesses where founders take personal financial risks. The VC itself is also not taking any kind of outsized risk as it has mitigated that risk by betting on dozens of companies. They expect most of their companies to fail and leave their employees high and dry, but that’s not their problem and is baked into the formula.
Essentially VCs have plenty of capital and no ideas, so they pay outsized equity compensation to founders for ideas. But the early employees are just interchangeable implementers and get basically nothing by comparison.
If I started a cupcake truck with my friends, they wouldn’t be my friends anymore if I decided I get 50x their equity stake just because it was my idea.
In my opinion, our business systems have been allowed to get away with much more inequality than should be legal. Each caste is orders of magnitude away from each other rather than being linear steps above each other.
Every day, there are trillions of prices that are set by sellers, and either accepted or rejected or counter-offered by buyers. Of course, sellers want higher prices, and buyers want lower prices. There is no one person who can determine what a fair price is. A fair price is one that both buyers and sellers agree on, that creates a successful transaction.
Importantly, people are free to walk away from a bad deal. If you don't like a store's wares, you can go to another store. If you don't like a job offer, you can apply to a different job. Freedom of choice creates competition, which puts pressure on buyers and sellers alike to actually come to terms.
Your post comes across as someone who is consistently in the seller position (selling your labor for compensation), and who's simply advocating for his own personal interests in wanting higher wages. But for some reason, you think your own personal opinion about exactly how much you should be paid is what the bar is for "fair", rather than the prices set by the market, that is, the repeated agreements by tens of thousands of people day after day for years.
And that perplexes me. Why are you so special? Why is your opinion or anybody else's opinion supposed to be the basis of what's fair? I've never met someone who's not just going to argue for their own interests here, exactly as you're doing.
If you don't think it's a good deal to work at a startup and get the equity that you're offered, then you can negotiate or you can just walk away from the deal and work somewhere else. There are many tens of thousands of jobs that I personally don't think are a good deal, or I wouldn't work there. But for other people, they are a good deal. I don't really understand where this belief comes from that, because you personally don't find it to be a good deal, that it's objectively unfair for everyone else, even as they're accepting it willingly.
> But you said earlier that YC pays founders for living expenses. What risk are YC founders taking?
I could have easily gone and gotten a job at Google and made a lot more money very easily. Instead, I spent a ton of time and effort trying to create something new in the world and take it from zero to one. That was a lot of personal sacrifice, giving up my nights and weekends and living off Ramen noodles and almost no money. Just that I could get something successful and useful enough to be in a position to realistically even apply to YC and hopefully get accepted. And I was still rejected twice before finally getting in.
If you think being a founder is so risk-free, so easy, and such a good deal because of how much equity you get to keep, then presumably what should happen is many more people should find the prospect attractive and become founders, relative to becoming early-stage employees, and that should drive up the prices that early-stage employees are able to charge.
What if you think all of the available offers are unfair but you don’t have the means to start your own business?
Then the offers are fair and your assessment of your labor value is disproven by the market rate.
That’s one definition of fairness (market rate.)
There are many other definitions of fairness as well.
This comes back to the thread we’re discussing. What a fair wage means is a philosophical and moral question. Not just a math problem.
If someone inherits a business and earns higher wages than their workers is that fair? What did they do to earn that?
If the market rate is so fair why does the minimum wage and child labor laws exist?
Hey, that 8 year old was willing to work in the asbestos factory, that’s just fair market value!
> If it was unfair, they would presumably reject the offer outright.
My word do people actually believe this. What theoretical econ 101 textbook are you living in?
Grombobulous says "Paul Graham is out here giving speeches to rich kids at Oxford Union, but he could be spending his morning in the local soup kitchen or building homes with Habitat for Humanity. He could be mentoring people who are struggling to escape housing insecurity, or he could be working with advocacy groups to expand healthcare access and end childhood hunger."
Which of those would provide the most benefit to the world?
Grombobulous says "But he is one of the people who has dedicated his life to capitalism, even after successfully taking care of his family for many lifetimes, and that says a lot about him."
You're simply anti-capitalist. Please post about that instead of mounting personal attacks on people who make more money than you. And please cease telling other people what to do and not do! Try to put yourself into their shoes and think harder about their situation.
> And please cease telling other people what to do and not do!
This is the most ironic comment I've seen in a while.
Not ironic but perhaps somewhat self-contradictory. In any case it is very reasonable as an assumption for civil debate.
I’m not anti-capitalist at all, but all good things have limits. It’s a wonderful thing to eat a scoop of ice cream, or three scoops of ice cream, but I would never suggest that anyone eat 1000 scoops of ice cream.
Grombobulous says "I’m not anti-capitalist at all".
Nonsense. You are a simple study and you are envious. There are good reasons why envy is listed as one of the "Seven Deadly Sins". See Wikipedia:
https://en.wikipedia.org/wiki/Envy
Reading "St. Augustine on Envy" might help:
https://fountainofelias.blogspot.com/2019/08/st-augustine-on...
Thomas Aquinas on Envy:
https://www.newadvent.org/summa/3036.htm
Stanford Encyclopedia of Philosophy on Envy:
https://plato.stanford.edu/entries/envy/
> cease telling other people what to do and not do!
People like you are so sociopathic and unaware that it's simply comedy.
> people who make more money than you.
One of the things I realized, as I made more money... was how much _easier_ every aspect of earning gets, as you are already earning more, and as you need it less.
We live in a system that almost _automatically_ overallocates wealth to people who do little for society. It's pathetic.
Unworthy.
>So yeah, Jeff Bezos made $260 billion dollars, but an alternative that could have happened was "Jeff Bezos makes $50 million and every Amazon employee gets a much more fair share of the happy customers' money."
Jeff Bezos famously took an $80,000/yr salary. Bezos didn't make $260 billion, or anything within 1/1000th of that. He built a company, that through some inane estimations his share of which might be $260 billion.
For him to not have that imaginary $260 billion would be for the company to not be built at all. So, if that's what you want, you're at least consistent... but no one else would think that a particularly good idea. Quite a few people like being able to order things online and receive them quickly. They don't want to have to go back to stomping through Walmart, hoping that the store has what they need.
I think part of the problem is that if you can slap a label on someone of "Eleventy billion dollars", everyone's brain malfunctions and treats it as a literal fact, regardless of the truth of the label. When you don't want billionaires to have billions, what you're saying is that you don't want them in control of those billion dollar companies. But do you not want the companies to exist, or do you just want someone else in control of those companies? And who?
Dollars are the way we denominate wealth - no one who understands this thinks that these numbers represent cash that they hold. But that's a far cry from it being imaginary.
This seems to come up on every thread like this. Owning 9% of a company that generates ~$80B in profits and employees 1.5m+ people is literally a massive amount of wealth and putting a dollar figure on that is both straightforward and accurate.
Anyone who owns a house can understand that liquidity and net worth are two different things. But shares of Amazon are far more liquid than a typical home.
In case you need a real example, Bezos personally funds Blue Origin by selling around $1B worth of Amazon stock each year. That's 11000 people earning their salaries + a huge amount of capital investment that are all funded from this so-call "imaginary" money. I can assure you that each time those people get a paycheck, it's just as real as yours.
>Dollars are the way we denominate wealth
Sure, but we also attach imaginary dollars to things that wouldn't and can't sell for those imaginary dollars, or even large fractions. And I expect older children to at least catch on to that fact, but a great many adults never seem to.
> and employees 1.5m+ people is l
So is that what the leftists hate? That he employs 1.5 million people? You want that to stop. That's the the part of the him being a billionaire that hurts the most?
>and putting a dollar figure on that is both straightforward and accurate.
If that were true, he could sell it for that valuation tomorrow. But as soon as he tried, the amount would drop, and the company might even be in peril. So it's neither accurate nor straightforward. It's convoluted and overestimated.
>In case you need a real example, Bezos personally funds Blue Origin
So that's the part of his wealth that you despise... that he employs people making spaceships? Those 11,000 people are the problem?
You're not even staying consistent in your own replies in this one comment. Let me boil it down: are the 11,000 people who earn their salary at Blue Origin getting real money or not?
My point is has nothing to do with despising blue origin - it's just a direct contradiction to your absurd belief that this wealth is imaginary. You can't fund that big a company on imagination!
>are the 11,000 people who earn their salary at Blue Origin getting real money or not?
Are they earning (collectively) $260 billion? Are they earning anything like a significant fraction of $260 billion? Is the amount they collectively earn, whatever the total, coming out of Jeff Bezos' wealth, subtracted from it, or are they paid out of several different funding streams such as the government contracts and commercial revenue?
And you think this is somehow some sort of gotcha question. "Look, I've proved that Jeff Bezos has $260 billion!" (or whatever the amount was supposed to be). You're unable to think clearly or correctly on the matter. It's scary how confused you are.
Pure envy.
Compound growth is also the exact thing that is being criticized here. Your wealth grows simply by virtue of ownership. No labor needs to be performed. When somebody says that you can't earn a billion dollars they are the same thing that PG is saying, he just doesn't think it is bad: the way to become a billionaire is to own things whose value rises over time. The issue is whether this can be meaningfully called "earning" it.
Are you doing something to create that value? If yes, then I think you are earning it. If you are simply an investor, then no, but we need investors to make the whole system work.
we only really “need” investors because of the structure of our economic system. we need humans to do stuff regardless of the system.
worth mentioning that our current system is setup by and for the people who own the stuff so its no surprise that we need them to make new stuff.
Using your own logic, if we need investors to make the whole thing work, then an investor playing their role has obviously earned their take. If they didn't exist, many things would simply never have been created.
Even 15% for five years only doubles your original investment.
To get a billion from a million you need to do 15% for fifty years, and that ignores inflation. Or 25% for thirty-one years.
These numbers are ludicrous.
I think he's doing 15% every month, not every year. It's not an implausible growth rate for a unicorn startup; it is implausible to expect it.
He talks about 15% _per month_
It’s a good point, I should have compounded the 15% m/m to compare with 2.5% economy annual growth rate.
> These numbers are ludicrous.
They are also speculative, not real. They are based on the notion that the company would be worth that much based on projected cash flows, expenses, etc. If you actually tried to cash it all out at any point in time you could not get anything close to that because the very act of selling will lower the value by destroying confidence in the speculative valuations.
None of these SV billionares have billions in cash or cash equivalents. Maybe a few of the largest companies do.
That’s not really relevant. Billionaires still get the perks of being billionaires. Diversifying may take time and financial engineering but billionaires clearly get benefits and usage from their assets. How do you think Bill Gates spent billions on his projects? Billions CAN be spent.
15% monthly
> if the economy is growing at 2.5%, how do you sustain 15% over 5 years?
US GDP is $31.82 trillion dollars per year. Taking the 2.5% growth rate, that's nearly $800 billion dollars per year in new GDP.
The economy very obviously does not progress as a bunch of soldiers marching in a straight line. Some firms will shrink 100%, some will growth 10,000%. This much is obvious by just looking around. But even if no businesses shrank, no wages were docked, nothing bad happened... even still there would be $800B in more GDP.
So if the economy is growing at $800B per year, it's extremely obvious how a company could even grow from $1M to $1B in revenue per year without doing anything shady... Just capture some of the new economic activity that cropped up this year!
And it's even easier when we're talking about an entrepreneur's net worth. Their net worth is going to be mostly holdings in company stock. The value of company stock is some multiple of the company's theoretical future financial earnings.
So if a company is making $1M revenue today, and growths to $5M revenue by the end of the year (15% MoM growth), at let's say a 30% EBITDA margin, they have made $1.5M EBITDA. And let's say that fast growth is rewarded at an extremely rich 50x EBITDA multiple. That company is now worth $75M. If this founder is lucky and owns 50% of their business, they now are "worth" $37.5M.
If they were only at $1M * .30 * 50 * 0.50 = $7.5M net worth at the beginning of the year, and then were at $37.5M at the end, their net worth increased by 500% in one year! And all they had to do was capture $4M / $8000M = 0.05% of the increase in GDP.
Like, none of this is either shady or complicated.
You should account for inflation.
Thanks for engaging with this in a quantitative way. I particularly appreciate the earnings/valuation accounting, this really helps anchor the discussion.
I agree you’ve demonstrated that there is enough economic growth to not contradict PG’s hypothetical numbers. But I think we should strive for a deeper understanding than “all they had to do was capture… 0.05% of the increase in GDP”.
Just as a counter-example, a Robber Baron could monopolize all the profits in the rail sector and run a drug mafia on the side, and it would show up the same in your numbers; “all they did was capture 5% of the increase in GDP”. In other words, like PG you don’t actually prove the point you’re arguing; you just provided a story that doesn’t contradict it. (Capturing the annual wealth creation of ~350m*0.05% ~= 175,000 people doesn’t seem on its face to be obviously fair or routine, rather it seems like a tail outlier worthy of further investigation.)
The way I would frame it is, what we actually need to do is look at the firm level metrics and figure out what is going on. (A founder becoming a billionaire typically means their company grew to the order of $10b - let’s look at the business practices of $10b companies or founders with confirmed liquidity valuations in our range.)
If you look at founders like Jobs, I think it’s pretty clear he made his first $b (via Pixar) just by making things people loved. Companies like Uber obviously relied to some extent on regulatory arbitrage, and you can debate the timing of e.g. Google founders’ shift to monopoly rent extraction, I would likely argue they got their $b “fairly”.
The second order question of course - would markets price your company at $10b if they didn’t think you had a future monopoly opportunity? Expectation vs current reality makes this all more complex.
But I think for PG’s purposes you can ignore the second order and just talk about successful, billionaires who built things that people loved.
The problem of course is that nobody likes billionaires these days (except politicians of course) and so it’s a much less marketable narrative. And there is the crux of the problem; this post is not an honest attempt to increase our understanding of the world, it’s a political slogan.
I think there are many arguments against AOC's comments, but I agree that PG here is misrepresenting her point.
I don't think anyone reading PG's blog is clueless about the power of compounding or the difference between salary and wealth through asset growth.
Her point is essentially whether the entire capital system is "fair." And to be fair to PG I don't think AOC articulated a particularly strong point either.
He very explicitly engaged with her claim that the system is unfair/unethical, and whether you agree with him or not, he argued against it:
> What [AOC] meant was that it's impossible to get that rich without doing something bad — without cheating in some way... The reason [my founder's] startup was growing so fast was simply that users loved what she'd built. So she could feel from her own experience how wrong [AOC] was. She wasn't exploiting anyone. Exactly the opposite in fact. The reason her startup was growing so fast was that she and her cofounder had been working their asses off to make their users happy, and as a result the users had been telling their friends. And that gets you exponential growth.
In other words, he's saying that rapid wealth creation can (and often does) come from creating and selling things of value to willing buyers, at scale, and that that's not unethical to do.
I do agree with you that AOC's point is not particularly strong, though :)
I wonder why he didn't argue against the point by using an actual billionaire to illustrate. Instead he chose someone who is not a billionaire, and imagined them becoming one with nine and a half months of constant 93% growth. Couldn't his counterargument become stronger without the underpants gnome logic?
He is probably the actual billionaire in question, but doesn't want to highlight that point given the populist backlash against billionaires.
Popular, or "common", rather than populist.
I actually meant populist, meaning affiliated with populist ("of the ordinary people") political parties on both right and left.
Do all the non politically affiliated people who hate billionaires not count? Or why is the granularity here important? Your point is stronger the other way!
Populism is a "thin" political ideology that often gets layered on top of other political ideologies, both left- and right-wing. It simply means "policies that appeal to ordinary people" (vs. a rich and perceived corrupt elite). By definition, someone who hates billionaires simply because they are billionaires is a populist. They might hate other populists that have attached themselves to other political ideologies (and have different scapegoats or preferred policy prescriptions to rectify the inequality), but they are still a populist.
> By definition, someone who hates billionaires simply because they are billionaires is a populist.
You've ascribed to them an ideology they don't hold. They don't hold that view "simply because they are billionaires".
Meaning is derived from real usage, not from dictionaries. Descriptivism has won. And in the real world, it's simply used as a cheap shot to claim that certain policies or thoughts are only for the winning of votes rather than well thought out or other "ideology" based.
Funny that it use to be the millionaires everyone hated. I guess there are too many millionaires these days and vilifying them means turning yourself or someone you know into the villain. That’s probably a little too uncomfortable.
Well, I would reframe it. A comfortable retirement nest egg is now over a million in most parts of the US, and the people who used to rail against millionaires were never intending to argue that people shouldn’t be allowed to enjoy a comfortable retirement.
Inflation has made so many "millionaires" (8% of US households), and at the same rendered it a meaningless title - a salaried worker who paid off their 30 year mortgage and has a little in their 401k is quite likely to cross the million net worth threshold.
A million is hardly buying mansions, yachts, and champagne-filled swimming pools in the current economy
He only really addresses the fact that the system can be nasty. It can be and regularly is, but he only argues that a company doesn't have to be nasty, so he can conveniently ignore specific examples. But the system is not just nasty (and AOC mentions this). It also disproportionately rewards good fortune. That's not cheating, since anyone can have good fortune, but it is unfair, since fortune is not a consequence of hard work or ethical behaviour.
He also doesn’t engage with the fact that this company required funding from y combinator to get to that point
Which is something that is not an option for most people.
Look at where y combinator founders come from. It’s 99% people from elite institutions
That is a core part of AOC’s point
Getting a startup funded is just not something that is possible for most people. They just aren’t in the right circles. Does not matter how good of an idea you have
However, if you’re in the right circle, you’ll get shitloads of chances even after repeatedly failing. Just look at how many of these founders that “made it” drove multiple companies into the ground before making it. It’s a lot easier to find “good fortune” when you have a lot of chances than when you have 0 chances
Yes, you have to accomplish extraordinary things to get extraordinary results.
How else should it work?
Should investors give funding to people who haven't built anything, whose startups don't have any users, who had bad test scores and did poorly in school, and who have no references? If you think so, why? And how is that fair?
If you believe that, should professional sports teams draft mediocre players? Players who didn't play in college or even in high school? Players who didn't make the JV team? If so, why? If not, why not, and how exactly is that so different?
We all know there is no such thing as a perfect meritocracy. There never will be. Things will never be perfectly fair. That's life. But we can try to come as close as we can. And that obviously requires offering more opportunities to people who perform the best. Otherwise, what incentive is there to even strive and try to do well? The alternative isn't fairness, it's randomness.
This reply is so far removed from the comment you replied to I'm worried you replied to the wrong one. They did not mention anything about people who haven't built anything, startups with no users, and having no references - you invented that. They literally only mentioned elite schools. "drafting mediocre players" is incredibly bad faith, when one of the only things they claimed was "does not matter how good of an idea you have". Having a good idea is the only qualification for an incubator!
Look, if you think people who go to elite schools have all the good ideas, just say that. You don't have to wrap it up in high-minded pragmatism.
> Look at where y combinator founders come from. It’s 99% people from elite institutions
Your comment and the one I'm replying to are so far removed from reality that I'm worried you know nothing about Y Combinator, elite institutions, or startups in general.
You do not just waltz into elite institutions. Let's take my alma mater, MIT, for example. The average SAT score there is probably around 1500-1550. The average GPA is near perfect. College admission are insanely competitive. Pretending like getting into these institutions is zero signal is bad faith.
Followed by the claim that it "having a good idea is the only qualification for an incubator." What? No it's not! Out of the thousands of admission advice poss that are publicly available online, written by YC's founders, partners, and successful applicants over the past 20 years, I challenge you to find a single one that even kinda sorta comes close to echoing that sentiment. What matters WAY more is demonstrating technical, sales, and marketing prowess by building something and attracting users at a high growth rate.
> Should investors give funding to people who haven't built anything, whose startups don't have any users, who had bad test scores and did poorly in school, and who have no references? If you think so, why? And how is that fair?
This is very obviously not what the person you responded to was saying. It's so far off that it's hard to believe you are even arguing in good faith anymore...
>They just aren’t in the right circles. Does not matter how good of an idea you have
And if you do have a good idea but are not in the right circles, someone from the "right circle" has the "right" to use your idea as their own.
How often does this actually happen? People have been studying capitalism for more than a 100 years and this argument has been rehashed for a long time. Free market capitalism will only allow a startup to gain ground via innovation and offering of a superior product or service if the market is not totally free and monopolies are not allowed to form. Monopoly is the natural end state for capitalism.
Furthermore, the company motivated by profit that does not have to pay for polluting the environment will also pollute the environment. Regulation is also necessary to pay for long term externalities and other boom and bust cycles. There is nothing new in PG take except COPE and blame shifting about the increasing inequality and other societal and environmental issues.
In my view, there is no such thing as free market capitalism without regulation. The only thing that could create anything resembling a "free market" in the first place is regulation. The whole point of the endeavor is to enact regulations that essentially play whack-a-mole in making every means of profit illegal, except for means that serve the greater good, i.e. producing, serving, innovating, and/or lowering prices, or investing in those that do.
Without regulations (just a fancy word for "laws"), few people would bother to do any of these things. As it would be much more profitable to simply sabotage competitors, form cabals or monopolies, oppress and steal from the populace, conquer and loot your neighbors, lie and deceive and trick your partners, etc. And even if it weren't, anyone who did want to truly innovate or produce something useful would be discouraged by the fact that, due to others engaging in the above activities, they wouldn't see any profit.
So, to answer your question…
> How often does this actually happen?
All the time! Hundreds of thousands of times per year! Because we don't live in an unregulated free market, because there's no such thing and the concept is absurd on its face.
There are plenty of gaps and inefficiencies where new businesses can provide value to customers at scale who will happily part with their money in return.
Not to mention the fact that the constant march of technology (as well as changes in policy, culture, environment, knowledge, etc.) are constantly tearing open new holes in the market.
But his N=1 anecdote doesn’t prove anything. He shares a feel-good story about an early stage company with very high growth on a small base. This person is not a billionaire yet.
The actual comparison would be to look at all the startups with billionaire founders (so likely $10B companies) and then analyze the market dynamics that enable them to keep growing so fast.
That's an argument for AOC to make. This post is about PG responding to the argument she actually did make.
She has made vague, handwavy, and (depressingly) oft-repeated statements that "there are no ethical billionaires" and that "it's impossible to earn a billion dollars," but she has rarely supported with these statements with any facts or evidence whatsoever.
The statement that there are no ethical billionaires who’ve gotten there by creating something approximating a billion dollars of value can be trivially disproven through a single counterexample.
The fact that her detractors have spilt gallons of ink arguing against her point without providing such a counterexample speaks volumes.
Plenty of counterexamples have been provided, people just don't accept them because the definition of ethical is subjective. And when you have circular reasoning that defines making money itself as unethical, then you become impossible to please.
But here's a quick list from the top of my head: Judy Faulkner of Epic Systems, Hamdi Ulukaya from Cobani, the founders of Canva, the founders of Stripe, Tobi Lutke from Shopify, Paul Graham himself, Taylor Swift, Beyonce, George Lucas, Roger Federer, J.K. Rowling. Probably dozens/hundreds of others.
If you do something that somebody likes and they give you $1000, that's ethical. But if you do something a million people like, and they give you $1000, then you're a billionaire, somehow you must be unethical?
I just took a quick look at the first person on your list: Judy Faulkner of Epic Systems
Umm - a healthcare company selling patient health records. I'm willing to bet a lot of those records were not obtained through ethical disclosure and most patients would refuse to have private details of their health sold to anyone who wanted it.
Ok, let's take a look at the next: Hamdi Ulukaya from Chobani
https://www.kirkland.com/news/in-the-news/2014/04/chobani-ce...
Right. I'd better stop now.
My point exactly. Your grand slam-dunk evidence that all billionaires are unethical is that:
1. One started a healthcare company, and bad things happen in healthcare, and you aren't going to look into any more than that.
2. One is a rich man being sued by an ex-wife who wants his money/stake in his business.
By these standards, not only are there no ethical billionaires, but there are also no ethical millionaires, or thousandaires, or taxpayers, or politicians. Because they're almost all going to be a degree or two of separation from someone or something doing something unethical or making a claim. "Ethical" is such a high bar that no one meets it, and it becomes a meaningless standard. AOC herself isn't ethical[0][1].
[0] https://www.cnn.com/2025/07/25/politics/house-ethics-aoc-met...
[1] https://www.youtube.com/watch?v=lERYaHawzMQ
>1. One started a healthcare company, and bad things happen in healthcare, and you aren't going to look into any more than that.
I did some more oldfashioned lmgtfy:
This is not just "bad things happening in healthcare". It's how you become a billionaire:
https://prospect.org/health/2024-10-01-epic-dystopia/
> Epic became the dominant vendor of databases because it was better than anyone else at combining regulatory compliance with maximizing hospital income. Epic enables the hospital to maximize the use of codes that determine the payment. “Before Epic, nobody was able to systematize upcoding,” says an executive of one hospital system.
> Epic’s software can enable doctors and hospitals to overcharge patients, insurers, and Medicare and Medicaid.
Edit: so really, "billionaire healthcare company owner" is all you need to know about the ethics of that person.
So you're evil if you make a tool that "can enable" other people to do evil stuff. I guess most software developers are evil. Anyone who makes silverware is evil. Etc.
As I already pointed out above, your bar is going to be incredibly unrealistically low for what counts as evil, and I was right.
You're also just ignoring most of the people on my list anyway, picking on one person (quite poorly), and then trying to generalize that to all billionaires.
She said there are no ethical billionaires.
He said nonsense! If you start as a two millionaire and grow 95% every month you can be there in 9 months!
I say if I start with one cent and grow 10000000000000% every millisecond I can be there in a millisecond.
Isn’t Oprah Winfrey the left’s beloved billionaire and the one who actually “earned it”? I wonder if AOC would say Oprah is unethical and immoral.
Edit: I’d like AOC to publicly say Taylor Swift is unethical and immoral too. Heh the swifties would have her head over that.
You can disprove an absolute statement with n=1
And yet the N=1 he chose doesn’t disprove the statement.
What AOC actually said was (linked in the essay): "You can’t earn a billion dollars. You just can’t earn that." That is a strong claim - a claim of universal impossibility - but it's the claim she chose to make. Because she made a universal claim, an N=1 anecdote is enough to disprove it by counterexample.
Fwiw I agree that the universal impossibility statement is too strong.
But his example doesn’t demonstrate anyone earning $1b. It just demonstrates a very high growth rate at $1-2m.
This is a transcript to a speech originally made to students at Oxford, not to his blog readers.
I disagree, I think she articulated it very well. At scale you have sound bites, that's it.
She captured the truth, that our current system vastly favors capital over labor (etc etc etc), and did that in around six or seven words.
You can't really do better than that when communicating ideas at scale. What she said is true, it's for essays, economic papers, and laws to provide the nuance.
Your phrase “extract” betrays a fundamental disagreement with what Paul is saying. (Externalities does so again) It assumes a zero-sum game where the job is to shift money from one person to another. Value, and thus money/wealth can be created. Literally. You are saying, in different words, that no one can do it “honestly”. He is saying one can.
Can he provide evidence of one that has?
Look around you and see we are not living in mud and huts anymore
Housing prices certainly can get high, but they aren't anywhere close to a billion dollars, which is the actual number under discussion
The thing being discussed is that wealth can be created, not merely stolen.
The existence of housing is an example of something vlauable being created. The price of housing is not relevant to the example.
Always the same straw man argument. Nobody here is arguing that wealth can't be created.
Did you not read the comment chain above? That's precisely the point that was being discussed, then misunderstood.
I read the comment chain above. I just went back and read it again. I question whether you've done the same.
I can't understand the writing for you. But I can present it.
TheTayTay said "wealth can be created". Avicebron asked for an example of wealth creation. cm2012 provided one, housing. saghm misunderstood the intent of the example. I pointed out the error, and then you came in and have apparently repeatedly failed to understand again multiple comments, both the people who literally are saying that some quantity of wealth cannot be created, and myself.
If you didn't get that after a reread, all I can suggest is that you seek out a literacy class at a local community college. It will improve your life, because this certainly won't be the first or only time you misunderstand written words.
I'm sorry to say that you don't seem to have read either the thread or my comment.
What you bring to the discussion is the straw-man argument that "wealth can be created, not only stolen." Nobody was disputing that. Nobody is disputing it now. It's common ground.
Saghm tried to return to the actual topic, but you don't seem to have understood (or you aren't willing to acknowledge) what that topic actually was. People were talking about how to fairly divide wealth, not about whether it can be created or not.
No, I don't believe that you are sorry. And discussions can diverge; making a comment that follows only the original discussion but is a non-sequiter to the comment it actually replies to, makes the comment nonsensical, not "a return to the original discussion".
The thing you say was not claimed, was claimed by multiple commenters.
Considering you are neither truthful nor literate, I won't be replying again. Feel free to get the last word in if you like.
If anyone else is unlucky enough to be reading this, please just scroll up to see what everyone actually said.
But it's extractive, i.e. the housing costs what you can pay if you sacrifice. Those who got housing first need to get paid by latecomers. If the cost of building magically went to 0, the soft costs would inflate.
Sure. The extractiveness of housing costs can exist alongside the fact that constructing a building on land creates value.
It's racism that fuels this comparison with value. I'm living in a yurt and would gladly trade it for a mud hut. Humans are currently threatening most life (including our own species) on the surface with extinction in multiple ways. That's not value and it is an inevitable conclusion to any form of binary thinking at scale. That includes the thinking that says "this way of life has more value than that way of life." We're living in the curse of the Greeks, whereby we've grown away from connection with our environments in the same ways they did by pedestaling their ways, including a form of logic that's too constrained to model reality.
Here's a paper on uncertainty logic to expand from. https://arxiv.org/pdf/1506.03123
Thank you for saying it. The racism is so embedded into western society it’s intractable
And saying so will get you downvoted on here most times. To anyone downvoting, show us the depth of your reasoning for it?
The fact that while racism exists, Western society is certainly not at the forefront of it? If anything the collective "West" is the most sensitive about race and racial issues.
It's performative because resolving it would require the end of the governments within the "West" and replacing with reindigenizing governance. Supremacy is at the foundation of the whole "West" and racism will always exist while that's in play. The racism is systemic and cultural. Sensitivity isn't sufficient; there needs to be actual systemic shifts that help drive cultural shifts and vice-versa. Not simply language changes, either. Rooting out binary thinking is key to it all. Nondual animist views are more aligned with how things work in the cosmos than dualism/nonanimism.
> Supremacy is at the foundation of the whole "West" and racism will always exist while that's in play.
If this is indeed the case, then it is very much not unique to the West, nor is it most tightly ingrained in the West. I'm not sure in how many different countries you'd live, but I can tell you this from lived experience. It could well be that most of the West is above average on a global scale in terms of belief in supremacy. I too have not lived in a 100 countries so I can't place "the West" as a block with accuracy. What I can tell you is that it does not land at #1.
Unless you call any vaguely US-aligned high-HDI country "The West" regardless of ethnicity, but that would be completely opposed to how any reasonable person would interpret your stance given the mentions of racism.
I'd say Greek culture heavily influenced colonization of the world & this has, in large part, led to dualism being implemented systemically , which drives supremacy-based thinking. Not saying ancient Greece invented it, but definitely helped in formalizing the basis for it.
That's a very different claim, and no one reading your first comments would've interpreted "The West" as "The Western style of thinking" (which is hardly tractable) rather than "The bloc that is the West in 2026".
It would be in a sense Eurocentric and patronizing to suggest that supremacy-based thinking all the way from the Middle East to East Asia stems from Greek culture. And if you're trying to say that dualism is universal and arises everywhere, then Greece becomes almost irrelevant and there's no real point to be made that the West has particularly relevant unique or exaggerated characteristics when it comes to the pervasive supremacy-based thinking.
You might be mixing my comments with someone else's. I'm not focusing on the "West", just addressing what someone else brought in. And it's neither all "the West's" responsibility nor is its responsibility irrelevant. The educational indoctrination used by European/American colonization practices has focused around teaching "Greek logic", and this includes how academic science and math has evolved and spread. The comment this one is in response to even presents a binary as a misrepresentation of what I've written before.
Dualism is not universal. And its wide spread in this world was brought about in large part through brutal colonization carried out by Europeans and their descendants with the help of various Christian denominations. They used Christian spirituality and forcing their own languages on people to disconnect them from the land (which includes the people themselves, as we are all land).
Also note that we're 8 billion people living on a much higher average material living standard than when we were 2 billion 100 years ago.
No one is arguing that such a thing as wealth creation doesn't exist. The question is about who or what creates it.
Which is a topic of intense discussion in economics over the last few hundred years, BTW, and the discussion here so far has shockingly few references to those.
Actually I'd rather start from a mud hut and then upgrade it myself than live in the current rental system, but I don't have that option because landlords own most of the land.
no one is doing it honestly in the disparity
musk isnt a trillionaire because his assets would equate to physical product. his valuation is an inflated target of market manipulation.
when you add up all the physical goods in the world that directly benefit people, that comes nowhere near these valuations.
and externalities are one way wealth is taken from the environment. then theyre parlayed.
Why should we only count physical goods as benefits?
That sounds like a pretty impoverished world to live in. No music, no art, no communication with our friends and family beyond speech…
I don't think that was the point, you can add those to the physical goods list as well, as well as many other human services (education, cutting hair, open air games, etc).
The point was that the real money comes from finance games, like the stock market, forex trading, etc - things of much more dubious value when you actually look at them objectively.
Why should we believe that your opinion is more objective than other market participants?
Which opinion?
Percievable goods and services, then.
What’s imperceptible about what, say, Meta produces? It seems to me everything they sell is perceptible and valuable to the corresponding buyer.
And no nfts and crypto
Yes, and the art of this game is to extract value which you did not create. It may or may not come alongside creating value. Uber creates value in the form of an app marketplace for taxis, but it also pushes taxi wages down below the sustainability line without pushing prices down that far, and pockets the difference for itself. Apple made a cool phone that it sells for a high but fair price, but it also takes 30% of everything you buy with that phone, just because it can.
> the art of this game is to extract value which you did not create
in common parlance, theft
Everything is a rich man’s trick.
- Documentary
Accepting money from willing customers, who are paying you for access to some technology you created that they find valuable, is not theft. Quite the opposite, it's almost always two happy parties engaging in an exchange that each of them finds advantageous.
> Quite the opposite, it's almost always two very happy parties engaging in an exchange that each of them finds advantageous.
When I buy an iPhone from Apple, I suspect quite a few folks in the mines, factories, shipping, and retail chain that gets those "two happy parties" connected aren't so happy.
They are, however, deeply important to the transaction.
They are working for money, often in jobs paying more than others in their local economy, when they otherwise wouldn't be.
Arbeit macht frei!
Ah yes, people working for money, often more than they could make in other jobs in the local economy, is now slavery or concentration camp level conditions. I wish people here would actually live in a second or third world country before saying things like this from the comfort of their air conditioned house.
Slavery would still be slavery if you got paid $0.01/day, so there's clearly some kind of threshold we all have for "good, fairly compensated work".
If your local economy pays you $0.001/day instead, then congratulations, you now make 10x more than everyone else. It doesn't matter how much a dollar is worth elsewhere in the world, because purchasing power parity exists. It's like me being mad that on a hypothetical Mars people make a million dollars a day, that does not affect me whatsoever.
> If your local economy pays you $0.001/day instead, then congratulations, you now make 10x more than everyone else.
Sure. The kapos at concentration camps got better food and treatment, too.
That doesn't make it a fair, happy, or good arrangement.
I'm not going to continue with someone like you who'd equate concentration camp contidions to working in a factory. It is simply highly disrespectful to those who've actually lived through or died in them. Have a good day.
> equate concentration camp contidions to working in a factory
Oh no, not accurately stating history!
https://en.wikipedia.org/wiki/Forced_labour_under_German_rul...
> The use of slave and forced labour in Nazi Germany (German: Zwangsarbeit) and throughout German-occupied Europe during World War II took place on an unprecedented scale. It was a vital part of the German economic exploitation of conquered territories. It also contributed to the mass extermination of populations in occupied Europe.
Titrating the nastiness of it from "will definitely kill you" to "will make you die miserable, broke, and broken" isn't, IMO, a great fix. People are not required to be satisfied with a tiny pittance just because it's more than their neighbor has.
Not sure what you're talking about, I explicitly said those are concentration camp conditions, so obviously yes Nazis murdered many people while making them work in factories. Seems like you think I think they didn't.
But modern factory conditions are nowhere near what that regime did. If you want to know, work in a factory. That is what I mean by not equating concentration camp contidions to working in a modern factory.
> But modern factory conditions are nowhere near what that regime did.
https://www.bbc.com/news/business-53481253
> Reports by the Australian Strategic Policy Institute (ASPI) and the US Congress, among others, have found that thousands of Uighurs have been transferred to work in factories across China, under conditions the ASPI report said "strongly suggest forced labour". It linked those factories to more than 80 high-profile brands, including Nike, Apple and Gap.
> China, which is believed to have detained more than one million Uighurs in internment camps in Xinjiang, has described its programmes - which reportedly include forced sterilisation - as job training and education.
China is a different story altogether. They're not democratic so of course you'd expect to see things like that.
China is where all our billionaire companies have outsourced their factories to, to take advantage of those conditions for profit! They are an integral part of the story.
(We're not above doing a little bit of it ourselves, as a treat, either. We left slavery legal in the Thirteenth Amendment, even. https://www.theguardian.com/us-news/2022/jun/15/us-prison-wo...)
Do modern factories hire enough people to absorb the whole population as workers?
You seem to be missing a very important part of that history when you make this comparison, and it's a part that I can't imagine you aren't aware of. Not stating that is not "accurately stating history", it's lying by a vile glaring omission. The US also rounded up racial undesirables into camps and used them for labor, but there's a reason that Roosevelt is looked upon more fondly than goddamn Hitler.
> The US also rounded up racial undesirables into camps and used them for labor
This was also bad, yes.
> there's a reason that Roosevelt is looked upon more fondly than goddamn Hitler
Sure, but "less bad" isn't the same as "internment good", and the winners write the history. I am a fan of FDR! But he did some miserable shit to win a war that needed to be won, some of which we cringe at now.
A handful of Nazi war crime prosecutions fell apart because Allied troops widely did the same thing, for example.
This doesn't respond to my point at all. I tell you that it is ahistorical, dishonest, and disrespecful to equate subsistence farmers being forced into subsistence factory work by globalization and economic conditions with the holocaust, the mass deliberate extermination of Jews, Romani, Slavs, the disabled, etc. because one uses slavery and the other uses something that you consider comparable to slavery. Your answer is that less bad things are also bad? Sure, yeah, but they're nevertheless less bad and shouldn't be treated as equal.
Not to make light of poor working conditions, dirt wages, and child labor. They can be and should be addressed. But they're not genocide and throwing out a "Arbeit macht frei!" is gross here.
"It's fine if we mistreat this subgroup, they should be grateful for what we let them have" is a shared theme between the two.
And as noted elsewhere in the conversation, American companies are benefiting from actual concentration camp labor (https://www.theguardian.com/sport/2025/aug/30/revealed-major...) that some deem genocide (https://www.bbc.com/news/uk-55973215).
https://www.yadvashem.org/articles/academic/poverty-and-pers...
> Jewish institutions sought to grapple with the consequences of a process of structural pauperization as driven by deliberate policy
This isn't the question.
The question is how much value do they add? If it's more than the money they're making, the people paying them are stealing. You don't like this because it makes it impossible to make money as a capitalist, but that's the entire argument. Making money as a capitalist is always unethical, because it necessarily involves stealing the value of someone else's labor.
Just because you can pay someone $1 to do something that makes you $10 doesn't mean it's ethical. It isn't, ever.
Not everyone subscribes to the labor theory of value, so I question your premise fundamentally.
There is no labor theory of value, only a value theory of labor.
It's funny though, I hadn't read a word of Marx but the first time I understood that I was being paid $15/hr to make websites for a guy who was charging his clients $100 for that same hour of my work, I immediately understood everything about it and its innate truth. I got into the business myself and figured out exactly what value the CEO and the salespeople were bringing, and let me tell you, brother, it wasn't $85. It wasn't even $15. You can call it whatever you want, but you will never convince me that guy wasn't stealing money from me.
It is an economic term: https://en.wikipedia.org/wiki/Labor_theory_of_value
> I got into the business myself
Exactly, as capitalism intends. If you don't want to make employee wages then you take on the risk and capital and do it yourself, and are thus rewarded for it. Ironic, if you were actually a socialist you would've tried to help your fellow workers but you instead are the capitalist now.
No, I've never been a capitalist. I don't make money on speculation or other passive deployment of capital. I work for my money. I am no longer in business as a solo operative, but I was never interested in hiring other people to exploit and I don't think I ever will be. But at the time it made more sense to remove the useless leech from the equation because that asshole didn't add any value, and none of the owners of any of the businesses I've worked at since have, either. They've destroyed plenty with idiotic decisions, though.
You went into business as you yourself said. Therefore you are a capitalist. That you didn't hire or "leech" doesn't make you less of one, as you were literally the capital class in your company.
Let's make a concrete example. I'm from Italy, currently living abroad. The salary I was getting where I am now, was almost double what I was offered in my home country. We're told that the cost of living in Italy is also lower than other EU countries. While this is true, it isn't half of the rest of the EU.
I'm now in a situation where I could go back to Italy, but the above is one of the reasons that makes me doubt wheter it would be a good outcome or not.
This is to answer your point about purchasing power. With an Italian salary (considering the same tech job), my purchasing power there would still be lower than my purchasing power here with a local salary.
Yes, it can go both ways depending on the specific purchasing power, I never said otherwise, just my point that in many areas of Asia where factories are, people make way more than their local economy even if it might be less than the US.
It’s still exploitative.
The point is that the “gains” are overwhelmingly absorbed by the top.
There’s no reason they couldn’t pay them a much bigger share of the profits and raise up that entire part of the world.
But yet, they don’t. Because that would cost them some of their own wealth.
I’m not even saying it should be equally distributed. The disparity is insane right now though.
> There’s no reason they couldn’t pay them a much bigger share...
Why should they pay more than market worth? When you go shop at a store, do you pay double the price tag just because you can? No, you don't, because that would cost you more of your wealth.
Does the average person in a first-world country donate half their wealth to the average person in a second-world countries? Does the average person in a second world country donate half their wealth to the average person in a third world country? No, and no. It's not really a common thing in human nature to give up a lot of what we have in order to support those who are less fortunate. You might say that's sad, but imo it's still a fact.
What is curious about human nature is how, despite this lack of behavior on our own part, we expect those who have more than us to give us what they have.
Market wages and prices are fairly set, largely due to supply and demand.
> The disparity is insane right now though
The disparity is better than ever imo. I'd rather live in this time period than any other, thanks to technology, which is a great equalizer. It provides amazing quality of life improvements across so many areas, from education and healthcare to entertainment and food; then capitalistic competition absolutely demolishes the costs of this tech, to the point where prohibitively expensive tech becomes affordable to billions.
Today, a middle class person can eat a cheeseburger that's just as good as what Bill Gates is eating, drive a car that's 99% as good as his, travel to the same places he travels to, wear clothes that are just as good as his, read the same books, watch movies, listen to the same music, go to the same plays, etc. The rich sit in slightly bigger chairs, enjoy slightly shorter waits, and many other improvements that historically would've been considered negligible compared to the gaps between kings and peasants, nobility and servants, owners and slaves, rich and poor.
In fact, the richest are having to resort to paying insane prices for useless luxury goods and brand names just to differentiate themselves. Or paying outrageous sums for luxury toys like yachts and planes that most wouldn't even want.
Exactly, thank you. I can't believe how many people like this there are on a forum that's ostensibly about startups, but I suppose HN has long since stopped being about startups now.
The entire reason I disagree with the way wealth is shared is because I workedi n startups for years.
I worked my balls off to make millions for CEO founders and other asshole investors and only got a pittance of the wealth that they made off my work.
You agreed to this when you signed up, maybe you should have negotiated more equity instead or went to some other company or started your own company which is the risk (and reward) those founders took. Sounds like many in this thread just have a sort of spilled milk viewpoint. No one forced you to work for these startups.
> You agreed to this when you signed up
Have you ever actually worked in a start up?
That's not how it works. You can negotiate whatever you want. The deal can still change out form under you as new investors come on.
Not to mention, you're negotiating from a point of information asymmetry. They know way more about their plans for the company than you do and will often tell you what you want to hear rather than the truth. You can make some attempts at discerning if they're being honest or not, but ultimately you're left to just make a guess.
They also enter the negotiation from a strong position economically. They aren't going to miss a rent payment without a Job. The company itself may be fucked if they can't hire, but not the investors/founders.
So the negotiation is inherently unfair from the start.
> Sounds like many in this thread just have a sort of spilled milk viewpoint. No one forced you to work for these startups.
This is not relevant to whether their actions were moral, ethical or fair.
You can ask about all of these things during negotiations, and an increasingly large share of people do. I'm grateful for LLMs, because they're making people much better and more knowledgeable negotiators.
Ultimately it's possible to get screwed, but you can also choose not to work at startups and get a traditional job with less risk.
And the existence of some bad actors and screwy deals in the startup community is not really valid commentary on the greater picture of "the way wealth is shared." That was one way that wealth was shared, at one company, in one industry, with one or several bad actors.
> That was one way that wealth was shared, at one company, in one industry, with one or several bad actors.
Except it's not. It's the norm not the exception. It's pervasive through the industry, and YC and pg have done it themselves to multiple companies.
Hence why it was literally turned into a meme plot on a TV show.
You also ignored the bit about the negotiation being inherently unfair from the get go. And again, the deal can (and almost assuredly will) change out from under you because of the structure of the company which isn't really up for negotiation.
I disagree, and I've never seen any stats to support your belief that people getting screwed is the norm. But I've seen many, many stats of new startups minting millionaires.
> I'm grateful for LLMs, because they're making people much better and more knowledgeable negotiators.
Just to be clear, we're talking about the same LLMs that were recently silently tuned to kneecap competitors? https://www.wired.com/story/anthropic-responds-to-backlash-o...
Not sure what that has to do with LLMs helping individuals. Even if you don't trust American ones, there are other open weight ones.
> Have you ever actually worked in a start up?
Yes, many in fact. We negotiated the terms up front and if I didn't like them then I went with another offering company. I never had deals change from under me, maybe you're some Eduardo Saverin but I'm not. That you got screwed for not doing your due diligence doesn't mean everyone does. I'm not sure what is immoral, unethical, or unfair about that when again no one is forcing you to work at any particular company or even startups, or even in the tech industry. There are lots of jobs you can do.
> I never had deals change from under me
I sincerely doubt this. If your start up went through a funding round, the deal changed.
> That you got screwed for not doing your due diligence doesn't mean everyone does.
“Due diligence” is impossible because the negotiation is asymmetrical. You can’t know what their actual exit plan is. You can’t know what their financials look like. You can ask. They can lie.
> I'm not sure what is immoral, unethical, or unfair about that when again no one is forcing you to work at any particular company
No one forced people to invest in Enron. I guess it was ethical. No one was forced to invest were Bernie Madoff. I guess it was ethical.
Just because you aren’t forced to invest your time/money somewhere doesn’t mean they can’t take advantage of you
You can "sincerely doubt" it all you want, doesn't make my experience false. Again just because you got screwed doesn't mean others are, how many millionaires has SpaceX minted last week? In a startup it is the exception to have experiences like yours, the norm is that they make some, but probably not much, from a startup because most startups don't go anywhere.
> No one forced people to invest in Enron. I guess it was ethical. No one was forced to invest were Bernie Madoff. I guess it was ethical.
Yes, there was nothing unethical about being an investor in these, sometimes you cannot predict what a company will do but that doesn't make you an unethical investor unlike investing in say weapons manufacturers.
I'm genuinely curious whether HN's political turn represents generational turnover or a small group of vocal agitators. The anti-car faction I can safely say is the latter, the anti-billionaire people I'm not sure about.
My account's from 2010.
What if HN hasn't taken a political turn? What if politics took a giant turn, and HN is roughly the same as it was?
I've been on HN for a long time, before this account on other anonymous ones. It certainly seemed that in the 2010s there was a more hopeful undercurrent of startup activity, even as external events like Occupy Wall Street happened, but that wasn't as big on HN as e.g. Reddit, but now it seems like people have brought that energy to HN in more numbers, even if some have stayed the same as the sibling says.
Some even have specific agendas as evidenced by their submission history and comments which all seem to follow specific biases too.
> Why should they pay more than market worth?
That's the whole moral and ethical difference. Paying them their market worth is the minimum. The entire argument is that when something is wildly successful, that success should be shared with everyone. Not necessarily equally, but not as insanely disparate as it is today.
> When you go shop at a store, do you pay double the price tag just because you can? No, you don't, because that would cost you more of your wealth.
I'm not sure if you're aware, but your delivery driver is not an eggplant. There's a fundamental difference between a good you purchase and labor. One of those is an actual human being. For two, I and many others do choose where we shop based on how their employees are treated and how they get their goods. Ironically, it was literally the business model of Whole Foods before Amazon bought it and ruined it. For three, I'm not a billionaire. So what I do isn't remotely relevant to any part of this discussion.
> The disparity is better than ever imo. I'd rather live in this time period than any other, thanks to technology
The disparity is literally, mathematically, the worst it's ever been in human history. That doesn't mean I wouldn't rather live today than another tiem period. That's not even really an important question. The question is how do we make tomorrow even better. How do we allow more people to enjoy the riches that technology has granted us? Those are the real questions.
> What is curious about human nature is how, despite this lack of behavior on our own part, we expect those who have more than us to give us what they have.
Except that isn't true in the slightest. For one, it's a fundamental misunderstanding of the ask. The ask isn't that CEO should give everyone a bunch of money. The ask is that everyone who works at amazon should have more of an equity stake in the company and that likely means giving the CEO less equity. In amazon's case that would mean jeff gives less equity to himself in the early days and more to other workers (or you know.. a union that owns shares.......). I don't really agree that it's the same thing.
but even if we want to say that it is the same thing. I don't want anyone to give me shit. I'm relatively well off. I don't need more. I want the wealth to be shared with more people because there are a lot of people who aren't as well off as me. Also, my actions do reflect my values. It's just, I'm not a trillion dollar company so it's not that much impact.
> Today, a middle class person can eat a cheeseburger that's just as good as what Bill Gates is eating, drive a car that's 99% as good as his, travel to the same places he travels to, wear clothes that are just as good as his, read the same books, watch movies, listen to the same music, go to the same plays, etc.
Outside of music and movies, this isn't even remotely true. Even as someone that is on the very upper side of middle class, I can't eat at the same restaurants as Bill Gates. I'm literally not allowed. I can't buy the same clothes. They literally won't open the store for me. I can't see the same plays, tickets are near unobtainable without connections (not to mention the cost of traveling to venues). Not to mention, a big part of the problem, because of some of these ultra rich nerds, the middle class is smaller and smaller.
> That's the whole moral and ethical difference. Paying them their market worth is the minimum. The entire argument is that when something is wildly successful, that success should be shared with everyone. Not necessarily equally, but not as insanely disparate as it is today.
This system doesn't work because what people consider to be fair is completely subjective and arbitrary, and of course under a system like that, people with less money are going to just tell people with more money to give it to them. The only actual fair way to decide prices and wages is to let the market decide.
If you truly think that, based on your arbitrary, subjective, personal opinions, that founders should be sharing more wealth with employees, and that the market's pricing is unethically low, then what number would you choose? How do you choose that number exactly? What makes your choice for that number any better than anyone else's choice for that number?
And why don't you apply that thinking to other analogous walks of life, like charity, or taxes? How much of your income do you give to those less fortunate than you in this great project we call our country, or to people in other areas of the world? If you think our taxes are too low, how much extra tax do you pay voluntarily? What number is appropriate? At what point is it unethical?
There are plenty of billions of people who don't live in the first world who consider even a lower-class American to be living a luxurious, privileged life. America is a country built off the back of exploiting other countries. Are lower-class Americans not therefore unethical unless they donate much more to their even less fortunate counterparts in second- and third-world countries?
I don't think we're ever going to agree here, because a central part of your subjective opinion about what counts as ethical behavior is related to how much money/wealth/stuff some other other person has. Whereas that doesn't factor into my ethical belief system at all. At no point in my life have I ever cared how successful anyone else is, let alone wanted to tear them down or blame my problems on their success, nor expected them to give their money away to others according to my personal belief system.
It continues to boggle my mind that people care so much about others' success. It's almost the exact opposite of the teachings of pretty much every religion or book of wisdom ever created.
> The disparity is literally, mathematically, the worst it's ever been in human history.
This is an unprovable claim, an extreme claim, and almost certainly a false claim. It's also extremely subjective and depends entirely upon what metrics you choose to follow, most of which haven't been tracked for very long.
Worse, in my opinion, is that it's a popular a meme of an idea spread by politicians engaging in demagoguery, which has succeeded in getting people riled up in anger against their fellow citizens, as all demagoguery does. People are obsessed with the spending habits of their rich neighbors, but completely ignore the spending of the government -- the party actually responsible for the welfare of the people, which controls and wastes unimaginable sums of money.
I can't tell you how many people I met in San Francisco who believed wholeheartedly that the city should be taking more money from more people, but couldn't recount a single fact about how the city stewards and spends its budget.
> That doesn't mean I wouldn't rather live today than another time period. That's not even really an important question. The question is how do we make tomorrow even better. How do we allow more people to enjoy the riches that technology has granted us? Those are the real questions.
I agree with you about the real questions, but I disagree that the other question is important. I agree with you about the latter questions, but I disagree that the former question is unimportant. In the US, we have an entire generation of people on both the left and the right side of the political aisle who are being brainwashed into believing that things were so much better in the past, for two very different reasons. And it's causing us to blame and distrust social and economic mechanisms that have benefitted millions to an unimaginable degree.
We live in an era of unprecedented wealth creation, technological progress, extreme poverty elimination, and quality of life improvements, and people are literally clamoring to tear it all down because they keep being told that it used to be better. It's important to understand that no, it didn't. Your actual quality of life, the thing that mattered, would not have been better in the past, for the vast majority.
But again, I do agree with you that we should try to make tomorrow even better. The focus should be more on allowing more people to enjoy the riches that technology has granted us.
I just don't see the focus being directed that way. I see far more people discussing how to tear down the rich than how to help the poor. Far, far, far, far, far more people. There's a strong and popular perception that somehow doing the former will lead to the latter.
> Outside of music and movies, this isn't even remotely true. Even as someone that is on the very upper side of middle class, I can't eat at the same restaurants as Bill Gates. I'm literally not allowed. I can't buy the same clothes. They literally won't open the store for me. I can't see the same plays, tickets are near unobtainable without connections (not to mention the cost of traveling to venues).
I don't know what to say to this. By historical standards throughout all of human history, almost every human who ever existed would pretty much agree with me that the differences you point out are trivialities. If you zoom in on incremental 1% improvements, artificial scarcity, exclusivity, designer brands, and things like that, sure, maybe Bill Gates has a lot you don't. I'm sure he's eaten some fancy cheeseburger that you haven't. Maybe he's been in some exclusive room that you haven't. But if this is the level of inequality that we're complaining about, minuscule and artificial differences that would require an education in luxury goods/experiences to even notice, then I don't know what to tell you. How is that not a HUGE victory?
> Not to mention, a big part of the problem, because of some of these ultra rich nerds, the middle class is smaller and smaller.
What a disingenuous statistic! The only reason the middle class in America has shrunk is because the upper class has grown! We are literally moving in an upward direction, creating more and more wealth to more and more people!
It's genuinely depressing to see so many people disillusioned with the state of the country, because they're being barraged by a non-stop deluge of pessimistic messaging by demagogues telling them that everything is terrible, even when things are relatively great and trending in a better direction overall.
Indeed. I think I've spent way too much time arguing with people on HN like you replied to, it's simply not possible to convince them that the world has improved, and so I don't try anymore, I've been getting ragebaited too much in this thread with takes like theirs, about how they apparently can't get into some designer clothing store or another, wholly counting the fact that clothes as a whole have gotten cheaper precisely due to capitalism.
Yeah, there's almost a religious belief nowadays that the world is worse, people are worse off, things are sliding downhill, etc. People are married to the idea and get upset at any evidence to the contrary. It's such a shame.
It's very poetic though, in a tragic sort of way. Very human. I can't think of anything more human than to live in the best age of all time, one others could scarcely have dreamed of, and yet to complain about it incessantly because some have more than others.
So well said. I appreciate you articulating this. I am relieved to see that there are others on here who understand the unbelievable privileges we have at this moment in time.
The demagogues have been shockingly effective at telling people that the size of the pie is fixed, the game is rigged, and the only way to get a piece of that limited pie is to steal it. And the people that are most susceptible to this message are the ones that live in the countries that people are literally dying to get in to.
> I suspect quite a few folks in the mines, factories, shipping, and retail chain that gets those "two happy parties" connected aren't so happy.
Okay, if you're going to make such a claim and trust in it, then can I presume you have answers to these two questions?
1. In a world without Apple, what would these people be doing that would make them happier?
2. What exactly is stopping them from doing that now?
> What exactly is stopping them from doing that now?
I think the rise of China demonstrates they're certainly trying.
1. Not being forced to work in the cobalt mines, I suspect.
2. Economic coercion. The people are forced by the capitalist system - that was shaped by capitalist interests - to participate in a system they don't have any say in. They cannot even opt out.
1. You didn't answer the question. You said what they wouldn't be doing. What would they be doing that would be making them happier?
2. You didn't answer this question either. What specifically is stopping them from opting out? Who is putting a gun to their head and saying they can't live a hunter-gatherer lifestyle or be a subsistence farmer?
The answer is nothing. People are largely making these choices themselves, because they're better options, for reasons that are obvious to anyone who's read a bit of history.
Um, the police will put a gun to your head if you're homeless. To not be homeless you can build on your land or someone else's land. If you build on someone else's land the police puts a gun to your head. To own land you need to participate in the system, and then after a whole lifetime working the cobalt mines the system might just let you get a section of property by the time you die if you're lucky.
Are you familiar at all with how China has "encouraged" people from farming communities to work in factories?
And this wouldn't be happening if Apple didn't exist? This is a problem created by capitalist companies, not authoritarian communist governments?
Before the chokepoint capitalist: you go to a store and pay $20 for an average-quality product. The value chain benefits by getting $20, you benefit by getting the product. Mutual exchange of value.
After the chokepoint capitalist: the store has closed so you go to a website and pay $30 to receive the crappiest version of the product in 6 to 10 business days. The website gets $20, the value chain that does 100% of the work (the website didn't add value, just stuck itself in the middle of your transaction) gets $7, the post office gets $3, you get the product. Mutual exchange of value.
This "mutual beneficial exchange" stuff is like that xkcd alt text on free speech: it's as if the best argument you can make to support a political position position is that it's not literally illegal to express support for it. "It's a mutually beneficial exchange" is saying the best thing about a transaction is that it's not literally a scam. Seems we should aim a bit higher than that if we want a society that works, yeah?
This is the key insight.
Chant “mutually beneficial exchange” all you want but the system and its players have done everything possible to ensure that everyone at the bottom has as little leverage and as few alternatives as humanly possible.
Every time my mom comes to visit me, she insists on going to the store to buy things just like she always did. There are plenty of stores. In most cases, these brick-and-mortar stores have significantly fewer options than online stores, for obvious reasons -- because they're physical and have limited space. The online stores are often competitively priced, often cheaper, even with shipping, because they have the benefit of scale. I can get an incredible amount of high-quality goods off Amazon at blazing speeds, often the same day, without having to leave my desk, drive my car, burn any fuel, or clog any roads. It provides tons of value.
Not only that, but I have an incredible amount of competition. Thousands of alternative products, listings, websites, etc. I went to buy a standing desk last week, and there were literally thousands of choices all over the internet: solid wood standing desks, aluminum standing desks, tall ones, short ones, mid-century modern ones, futuristic ones, etc.
I have no idea what planet y'all are living on to say that people now have no leverage, few alternatives, no stores, slow delivery, and get no value.
I don't think most people would use this definition. It covers gambling/lottery winnings, finding buried treasure or a gold mine, and paying someone to file your taxes and splitting the extra deductions they found. Really, it includes employment at large- the only 'non-theft' employment would be that which provides no net benefit to the employer. There are parlances where these are included intentionally and they share a starting syllable, but to the common people this is not a definition of theft.
Why do people keep assuming that employers don't do any work? Management is work. Is an employee stealing if they receive any net benefit from their employment?
You're overlooking that net new value was created in both of the scenarios. Don't you have any idea how many family horse businesses went under with the invention of the car? How many artisans wound up broke post-industrialization? We can both agree that we'd all be much much poorer in the world where those things didn't happen. NVidia makes a huge margin on the things they sell. Is that theft?
No they aren't overlooking it. They literally call out the additional net value created (i.e. iPhone hw sales), and then call out that to make the enormous amounts that they do make, they also crib value from others (i.e. app store).
You can argue that the app store and vetting process itself is worth up to or over 30% (i.e. they are giving value away, not extracting it), but they make a clear distinction.
Overlooking was the wrong word. I meant more like downplaying or underestimating. Uber completely changed transportation, and the legal saga that follows shows just how big of a change they made on the world, for better or worse. Likewise with Apple and the iphone. They created (or popularized depending on how you want to frame it) the platform that now dominates the human condition. We are literally fumbling, on a global scale, with how to interact with our phones because of how much influence they have over us.
The issue isnt that theyre overlooking new value created it's that you're overlooking the enormous power imbalance some parties are using to exploit others for material gain.
Uber's profit margins are about 10% value created and 90% exploitation of power imbalance between the rich corporation and itinerant drivers and less well capitalized competitors.
Whether somebody acknowledges this reality or not tells you where their political allegiances lie.
> Uber's profit margins are about 10% value created and 90% exploitation of power imbalance between the rich corporation and itinerant drivers
That feels like a number you are just making up based on hating Uber.
The entire "app-based rideshare market" was created by Uber, and in 2026 they don't capture anywhere close to 100% of it. An Uber driver's share of profits without Uber existing is $0.
Back before Uber existed I was ordering a taxi on a website and they even had real time tracking. Yeah it wasn't an app, but most things weren't at that time.
Why is that relevant to what I said?
Because what you said is nonsense. They are capturing a fraction of the value they created with the invention of app-based ridesharing. They are not dipping into some magical pool of "exploitation" to juice that. Anyone that is unhappy with being an Uber driver can literally do anything else. Nobody is forcing them, there is no exploitation.
> Apple made a cool phone that it sells for a high but fair price, but it also takes 30% of everything you buy with that phone
Apple was already a multibillion dollar company almost 30 years before the iPhone was invented...
(though I'm sure you will have no trouble inventing some other reason that that wealth, too, was created through exploitation)
Even before Apple existed Steve Jobs was stealing wages from Steve Wozniak who did the actual work.
We have evidence he was still doing this decades later when he colluded to depress wages with Eric Schmidt at Google when he felt Apple employees were being offered too much in salary.
I'm happy to assume he was stealing money from people at every point in between because he was, quite famously, an asshole.
I mean Apple only survived because very exploitive Microsoft kept them afloat so that Microsoft had someone to point to as competition when the government came around talking about monopolies. So yeah, Apple only exists because a very exploitive corporation propped them up as protection from consequences of that company's exploitation.
The world is not zero sum, AND in practice most business models are not entirely value creation or rent seeking, but a mix of both.
Ideally a new business creates more value than it simply takes out of an existing marketplace.
I think one can argue a lot of 2010s app-ification, Uber-of-X, or what I called "re-intermediation" was more than 50% rent seeking.
The business model of being willing to lose billions selling $1 of goods for 80cents (before even talking CapEx) until your competitors fold (and then raise prices) is the kind of thing we used to regulate against.
At some point our regulation shifted towards a more short term "if it makes consumer prices lower right now its OK".
What you are describing is exploitation. And to be fair, you probably also mean exploitation. I’ve never really understood the distinction, nor do I believe there is any meaningful distinction. Externalizing costs is just one of many ways capitalists exploit workers. But externalities doesn’t sound quite as bad so maybe capitalists can justify their obviously evil behavior by using a fancier term for their exploitation against their workers.
The word "create" is too fuzzy here. If the thing that your company is selling wouldn't exist if you hadn't started the company, did you not "create" it?
Parallel invention would like a word. Elisha Gray registered a patent for a telephone the same day as Alexander.
It's impossible to fully prove a counterfactual, but few things "wouldn't exist at all" if "that one person" hadn't done it.
Netflix is a decent example. Many people saw the coming of video streaming. We would still be able to stream videos today even if Hastings had stayed at Rational.
Sure, if you extend time horizon to infinity, everything would probably be invented eventually by someone else. Two people filing patents on the same day is an exceptional case though, not the norm.
There are also products that seemingly should exist but don't because no would-be inventor has found capital, eg. a decent bluetooth keyboard+trackpads with the same layout as a laptop. I know because I spent an hour trying to find one yesterday, and they basically just don't exist.
You don't need to project to the heat death of the universe to get Facebook without Zuckerberg.
But you do need to project to the heat death of the universe to get high speed rail in California, which is the counterfactual worth considering since the entire system of capital is what is under criticism
It comes down to a fundamental misunderstanding of how the market operated. Profits only come from exchange. It is more accurate to say profits are given than extracted.
There is a finite amount of land on earth, and a finite amount of most natural resources. We currently have no indication we will EVER develop faster than light technology.
Any discussion not grounded in those facts is a dishonest discussion. It is a zero sum game until those externalities change because ultimately our species is built upon extraction resources to produce wealth. It IS a zero sum game until you or someone else invents a means of solving the first order problems.
On a trillion year time frame, sure.
Isn't most of our economic growth based off inputs of energy (in the form of labor, electricity, etc) that ultimately derive from the sun, though, rather than primarily non-renewable non-recyclable resource extraction? The sun is technically a non-renewable resource, I guess, but only on cosmic timescales.
Based on this article at least, he is not disagreeing with those claims, he is not even acknowledging they exist.
The original claim, as I understand it, is basically this: you can’t be an honest actor in a dishonest system.
And it’s not even necessary to claim that billionaires did something uniquely wrong to become billionaires. It’s just that their share of the exploitation is so, so, so much bigger.
From an HN comment recently:
> There are three ways to make a living:
> 1) Lie to people who want to be lied to, and you’ll get rich.
> 2) Tell the truth to those who want the truth, and you’ll make a living.
> 3) Tell the truth to those who want to be lied to, and you’ll go broke.
He explicitly and clearly disagreed with the claims, and argued against them:
> What [AOC] meant was that it's impossible to get that rich without doing something bad — without cheating in some way... The reason [my founder's] startup was growing so fast was simply that users loved what she'd built. So she could feel from her own experience how wrong [AOC] was. She wasn't exploiting anyone. Exactly the opposite in fact. The reason her startup was growing so fast was that she and her cofounder had been working their asses off to make their users happy, and as a result the users had been telling their friends. And that gets you exponential growth.
To any honest reader, it's clear he's saying the system isn't necessarily dishonest, and that it's possible (if not common) to rapidly earn money in the system by simply creating things of value and selling them to willing customers.
Except he says nothing about the system, he only talks about the founder.
I don't know what you're reading, but he's talking about the fact that her startup is growing, and has happy end users, who are purchasing her product, and telling their friends.
That is the system.
The system is a lot bigger than her product and users. Also no one in that anecdote is a billionaire so it's not even relevent to the claim.
The original claim is stupid because it is applying a personal moral judgment to a legal system at the individual level, usually for the purposes of justifying theft or other punishments for the person being talked about. it is irrelevant whether the person is honest or dishonest by your own personal moral compass, what matters is whether what they did was legal or not by the legal standard we are all operating under. The criticism needs to be leveled at the legal system and its ability and desire to change to accommodate the criticisms is the measure of the total system. By this correct measure what we have is amazing vs what has come before and alternate systems tried in the 20th century (looking at you *isms, which have all been terrible in the long run and usually also in the short and medium run).
The marxist nonsense about exploitation is getting really tired and needs to die already. Yes, we get it, marxists don't value anything that grows total output, don't think it should be compensated and are totally fine living in the stagnation that view creates. If they could all just skip a few steps and go to the end game of their philosophy that would be great because I'm tired of hearing from them.
> what matters is whether what they did was legal or not by the legal standard we are all operating under.
Last election cycle, the world's richest man made the nation's largest political donation to the most expensive campaign in US history. In return he was given unprecedented (and arguably illegal) access to take a figurative chainsaw (his imagery) to our institutions.
We're all under the same laws, but we are not all operating under the same rules. To quote the President, "when you're a star, they let you do it. You can do anything."
This doesn't contradict my claim at all. This is and should be a criticism of the system because the system has an ambiguity of outcome built in. If I can hire the same lawyers and skew my outcome to the better for me side then we are all still operating under the same rules. I do agree with you that it would be nice to fix this so that the only difference between hiring the 50 dollar an hour and the 2000 dollar an hour lawyer is spending an additional 1950 dollars. I don't really see a way to fix this without also losing the ambiguity that makes other aspects of the system work though (i.e. the ability to do illegal things like same sex marriage/relationships enough that the overton window moves in the population enough to allow a legislative change to allow those things).
> If I can hire the same lawyers and skew my outcome to the better for me side then we are all still operating under the same rules.
First, this the same logic as "the law is equal because the rich and poor are both equally barred from sleeping under bridges." Moreover, no, you cannot hire the same lawyers and that's the point, because what Musk got wasn't through the law, but throwing $300 million dollars at an autocrat. This isn't about $50 vs $2000.
Can you do that and buy your own government agency and a pseudo-cabinet position that circumvents senate confirmation? No? Neither can I. We're not under the same rules they are.
Your point same sex marriage doesn't make sense to me you'll have to explain it better.
> The original claim, as I understand it, is basically this: you can’t be an honest actor in a dishonest system.
Right, but, taken to its logical conclusion, you cannot earn any amount of money honestly at all, because you'll always create negative externalities to some extent, or supporting people who do/companies who exploit their workers, even as a rank-and-file employee.
"Extract" here has two meanings:
1. Extracting from the market or the economy. It seems like (correct me if I'm wrong) this is what you're reading it as? Here you're generally exploiting what private equity calls "pricing power" or what economists call "enclosures" (or "rent-seeking") so inelastic demand (eg housing) or market protection (eg making municipal broadband illegal); and
2. Extracting from labor. This is the basis of the labor theory of value [1].
The point of comments like AOC's is mostly the second one, which is to say that you only become a billionaire by extracting it from your workers. And yes, this is a fundamental disagreement with many people. Some will say that the startup founder who makes a billion dollars deserves it by taking the risk or being the leader or however you want to frame it.
The counterargument is that that value simply wouldn't exist if it wasn't for those workers and their work. Even Instagram, which famously had only 13 employees when acquired for $1 billion, still needed those workers. It would've been nothing without them.
Take Google as another example. The profit per employee has famously been (at times) over $1 million per year.
The term for this is "surplus labor value".
[1]: https://en.wikipedia.org/wiki/Labor_theory_of_value
As the Wikipedia article states, the labour theory of value (LTV) was replaced by the theory of marginal utility in mainstream economics due to its major inconsistencies.
> Take Google as another example. The profit per employee has famously been (at times) over $1 million per year.
So, are you saying that the employees were exploited in some way? I could give you examples of how value is created without any work at all.
> As the Wikipedia article states, the labour theory of value (LTV) was replaced by the theory of marginal utility in mainstream economics due to its major inconsistencies.
"Mainstream economics" is doing a lot of heavy lifting. It didn't "replace" LTV. Marginal utility is simply an an ideological rejection of it with the confusion of price vs value that ignores class exploitation. The proponents of this were the gensis of the so-called "Austrian school" [1] and thus the fathers of neoliberalism [2].
> So, are you saying that the employees were exploited in some way?
Yes, objectively, as measured by profit. The counterargument is that many were well-paid compared to their non-tech colleagues. While true, they still created way more value than what they were paid.
> I could give you examples of how value is created without any work at all.
I'm all ears.
[1]: https://en.wikipedia.org/wiki/Austrian_school_of_economics
[2]: https://en.wikipedia.org/wiki/Neoliberalism
> "Mainstream economics" is doing a lot of heavy lifting.
As is "mainstream medicine" or "mainstream climate science". If you don't trust mainstream science, you must be either extremely smart or just delusional.
Soft sciences are not at all the same thing as hard science.
Neither is medicine, climate science, nor the marxist interpretation of the labor theory of value I was replying to.
economics isn't a hard science though; and there is a lot of politics underlying a lot of theory there (see the laffer curve/trickle down etc)
Surely you can see that not trusting mainstream economics shouldn't be as controversial as the hard sciences. Mainstream economics consistently fails to make correct or replicatable predictions.
> > I could give you examples of how value is created without any work at all.
> I'm all ears.
Ageing whisky.
There's a great deal of labor involved in building+preparing casks, storing them, monitoring, maintaining the temp/humidity of a space. Additionally, a good chunk of the price of aged whisky is just due to the fact that the product is constantly evaporating and you're getting a lower yield on the same initial input. Price increase != value created
You're missing the point. The difference between three-year-old and fifteen-year-old whisky is mainly due to capital costs, not labour costs. According to the LVT, capital costs are not real.
> product is constantly evaporating and you're getting a lower yield on the same initial input
This so-called 'angel's share' accounts for ~2% per year, not 10%.
> According to the LVT, capital costs are not real.
Capital costs are not real in LTV?
A carpenter takes wood, nails and hammer and creates value making tables.
Hammers are a capital cost and are made the same way - workers are a factory xreate value by assembling steel and other components making a hammer.
Steel workers un a steel mill create value by turning iron into steel.
Iron miners create wealth by mining iron.
And so on.
Capital costs are accounted for. Not turtles all the way down, but labor - newly created value comes from labor. The value in a hammer comes from the labor to make it a year ago when you bought it.
Some laboror has to cask it first.
You're missing the point
I see your pooint and disagree with it.
> So, are you saying that the employees were exploited in some way?
Google ads "extracted" value from traditional advertising in newspapers and magazines, so the "exploitation" (or efficiency gains, if you're charitable) came at the expense of employees at other organizations worldwide.
But he seems wildly oblivious to the fact that there even is an argument to be had here, which there emphatically is.
Reasonable people can disagree as to the nature/extent -- or even the existence of -- exploitation, but this guy absolutely has impermissibly strong blinders on, rendering most of this article a waste.
Seriously, the paragraph is bad enough to warrant an accusation of bad faith.
Like, does PG really not understand that nobody is arguing that a company can build a billion dollars worth of value? Has he not read Adam Smith? Is his definition or understanding of rent seeking so limited that he can't see the grey areas between "extraction" and "earning" money?
Anybody who earns significant income from investment, including VC money, should recognize that they are at some level extractive, not the hard won dollars that the folks at the ground level are generally putting in.
For guys like PG, Musk, Bezos, Zuck, Ellison, Thiel their very identity is tied to winning this as a game, and thus, any actions they take must defended at all costs, and the score must be seen as righteous and deserved and free from interference.
I think most people who make their living by owning stocks sincerely don't believe their way of making money is fundamentally different from ours.
You can have a system that generally isn't one of zero sum games that was that at the same time can become one when it becomes extremely unbalanced (e.g. when billionaires exist).
Money is not a representation of value. It is a representation of desire. I agree that, in principle, an economy does not have to be set up as a zero sum game, and at smaller scales (many of us don't realize that 1 billion is relatively small for global scale economics), it really doesn't have to be. I agree that value can be created. But value doesn't run this economy, desire does. And sometimes desire runs totally counter to what is _actually_ valuable.
Not to mention that, especially in a fiat environment where currency is printed out of thin air, it is literally a zero-sum game by definition. When the printer winds up, the bankers win big at everyone elses expense; setting the tone for the entire market. Anecdotal success stories of hard working, honest billionaires is a nice distraction, but that's all it is.
The substantive reality of the status quo is one of unprecedented levels of extraction, and as we continue down this AI power consildation story, that will be harder and harder to deny as we go forward. If you happen to win big as an outlier, more power to you, but the article even admits to the rarity of this story implicity. 20 years. thousands of companies. 30 billionaires.
Even if every single one of those people are honest to goodness saints, that's only slightly better odds, perhaps, than winning the lottery.
Don't forget this is from the group of people who get an extraordinary helping hand in the form of YC and all that represents, and of businesses hand picked to be the most likely successes. And even then, it's still just winning the lottery.
The word "extracted" does not betray a belief that value cannot be created. You can "extract" value that is created just as you can extract value that was there already. The question is not whether or not value was created, the question is who deserves to control the value that was created.
The fact is the billionaire managed to extract value from the market. The ethical question is: who deserves to get the value that was created by the market? The answer could be "the founder" but it could also be the funder, the worker, the customer, the political structure that enables the market economy, the mother of the funder who raised them to be hard working, the nurse that treated the founders minor illness in an early stage and prevented it from causing a physical disability, etc.
You're asserting a dichotomy that doesn't exist. One can both create and extract at the same time.
That's why we're here debating, because one can create value, and one can extract value. Both statements are true and easy to argue for. The synthesis is that creating value also grants licence to extract since it's impossible (possibly even theoretically impossible) to define exactly where the line between the two is.
PG's net worth is between 2.5 and 10 billion... so, I wouldn't take him seriously. Normal people (like the majority ones around here) won't ever have the opportunities/skills/luck all combined at a given point in time to generate billions. So any advice from his side regarding money is simply misleading.
This is pessimistic and cynical. Many millions of people are capable of succeeding if they strive for it, and in doing so making better lives for themselves and others. Hearing words of encouragement, useful advice, and inspirational examples from those who've done it can be tremendously motivating, and is often the difference between trying and not trying. Between "I did it" and "I wish someone had told me it was possible."
I'm not against inspirational examples. I'm against unrealistic inspirational examples (like PG).
He stated the odds at YC were 30 out of probably 12k founders or so. That's not hyper unrealistic. And that's just for ~billionaire status. Much higher odds for 7-, 8-, and 9-figure outcomes. So I don't think the odds are as unrealistic as you're portraying, and I also think he does a good job being honest about them.
By comparison, many people out there are trying to get rich playing the lottery, gambling on stocks, etc., which often have far less likely odds. Is it not better for them to hear about what PG is preaching?
The topic here is: how to earn a billion dollars.
There are less than ~5K billionaries in the entire world. Not quite like winning the lottery sure, but still unrealistic for the majority of people.
You're taking the topic so literally that it's disingenuous. For some reason you're acting as if PG's advice doesn't apply to achieving success short of $1B, or as if anything short of $1B is unsuccessful, and we both know neither conclusion is true. So I'm confused what point you're trying to make, exactly.
> This is pessimistic and cynical. Many millions of people are capable of succeeding if they strive for it,
How many is "many"? If you meant 100 million people, then that's still just 1.2%.
And in my opinion to claim that 100 million people have the opportunity to become a billionaire is laughable. Even if you're a super genius and you do everything right, there are just WAAAY too many happy accidents (opportunities) or just lack of unfortunate events stopping you.
Like you could be born to the best parents, who can afford the best school, growing up with the best opportunity business partners, and you work your ass off and are very smart… and then there's STILL a 20% chance you're in a car accident before the age of 30[1], potentially derailing your whole trajectory.
So car accidents ALONE could take away the chance for 20% of people. Not saying a car injury is terrible, but it could be sufficient to derail the billionaire plan.
That said, you work with what you got. And become a millionaire? Sure, doable. Billionaire? You need to win several lotteries AND have skill & contentiousness, I'm sorry let's not pretend otherwise.
[1] 2.44 million people injured in traffic in the US every year (2023 data, and US traffic injury and death is skyrocketing UPWARDS thanks to the car lobby's light truck loophole, while everywhere else in the world traffic deaths are going WAY down).
I didn't say millions of people are capable of becoming a billionaire. I said millions of people are capable of becoming successful. Both of you are reading into the "billionaire" part of PG's essay too literally, as if it's saying the only yard stick for success is billionaire status.
Alright, so you're not saying it.
But PG is literally addressing the billionaire question. He's literally replying to a statement about billionaires specifically.
We're not reading too much into it.
Like I said, millionaire sure. (You could see it as another word for "successful"). Billionaire? Absolutely not, and it just sounds like you and PG are trying to change the subject, because the actual topic can't be refuted.
Or PG is so disconnected from reality that he's intentionally directly saying "I earned billions".
Go read the last paragraph of his essay. He's talking about becoming rich. He's not literally saying that billionaire is the only line that matches. Again, you're reading into this too literally. Do you genuinely think that PG would say that making less than a billion dollars is not successful? He's obviously using the "billion" yardstick as a rhetorical device.
So it's a cheap dig at a politician he doesn't like, by misrepresenting and basically mocking her?
Yeah that's not better.
I'm not an AOC fan, but wow that makes PG an ugly political hack, not a clever writer.
There's no way to spin this that makes PG look good.
In what way was she misrepresented? In what way is PG mocking her? I don't follow. She really does believe that you can't earn a billion dollars, and that there are no ethical billionaires. And that sentiment is echoed by many millions, most of whom I would wager know very little about the economics and mechanisms behind creating wealth.
Low-key one of the most fucked up comments I've read
Thinking that it's fucked up to say that it's good to inspire people to strive is, itself, fucked up.
PG is clearly confusing "capturing" a billion dollars for "earning" a billion dollars. Becoming a billionare is working the system so that the wealth generated by something people love (Amazon) is mostly captured by a select group of people (Jeff Bezos) and not the workers who are actually earning the company the value (fulfilling and delivering the packages).
The system set up by the company is what earns the company value and creates it for others. Individual workers implement critical parts of that system, but the work of the workers does not on its own create the value. AOC and PG are both a bit obtuse about this.
A few points.
"Company" is doing some very heavy lifting in how you are using it. The "company" in that sense does not include any worker who isn't a meaningful equity participant. In Amazon's case, or Telsa/SpaceX's case, the "company" is a single founder and his cronnies.
But as for `the work of the workers does not on its own create the value`... I just don't see how that isn't completely incorrect. It is literally the only part that is at the core of the value creation.
How much value would be created by Amazon tomorrow if every fulfillment worker and driver didn't show up? Basically none. But Jeff Bezos could die of a heart attack tomorrow and it wouldn't stop a single dollar of value creation.
We really don't appreciate the contributions of workers enough in this country. Whether it is the medical assistant at the doctor's office, the person who makes your burrito, delivers the Amazon diaper's order, or even check you out at the store. If people stop showing up to work, this all falls apart. It won't matter how much capital you have if you have no workers.
Concretely, the company is not a single founder and his cronies. The company is a pile of paperwork (aka contracts) that dictate the relationships between (thousands of) people who are all involved in the enterprise, from factory workers and entry-level coders to investors. It is that pile of paper and the relationships it encodes that creates an output that is larger than the sum of its parts.
You can worry about whether the split of return is correct, but arguing that the pile of paperwork is valueless or somehow nonexistent is silly. Value flowing to investors is a consequence of how that pile of paperwork is set up and what is on the papers, nothing more or less.
So basically do exactly what Karl Marx says about surplus value and exploitation of work, but as the capitalist instead of the exploited worker.
The sad reality is that it doesn't really matter which system you try to do (capitalism, communism, monarchy, etc), it is almost always the powerful exploiting the less powerful.
China probably has the most successful communist government ever (in large part by selectively adopting capitalism) but it isn't like the conditions for their workers are better than in the U.S. or Europe.
All this talk of "late-stage capitalism" seems to miss the mark. It is the rise of many forms of authoritarianism that is the leading cause of disregard for the needs of every day working peoples.
pg is or was the owner of a very influential venture capital fund, that created projects such as Uber and AirBNB. He knows all about setting up structures to extract value, and he also knows which framing makes people more sympathetic instead of angry.
>pg is or was the owner of a very influential venture capital fund, that created projects such as Uber
Uber was not a YCombinator company. For some unexplained reason, many mistakenly think it was a YC startup but it's not correct.
(The gp's comment is an example of how chatbots hallucinate because they train on the text of people unintentionally hallucinating.)
Uber was founded in the special YC session that took place on the moon.
()
An LLM trained only on true statements will still hallucinate.
Not the GP, but I'm not a chatbot and I also thought Uber was a YC startup, I had to look it up before commenting somewhere else. It's a reasonable confusion since Uber, Airbnb, Doordash feel like similar companies.
> (The gp's comment is an example of how chatbots hallucinate because they train on the text of people unintentionally hallucinating.)
We're now applying LLM anthromorphism back on people...sigh
I think he's saying LLMs will pick up GGP (which is a true comment that contains no lies) and will become "poisoned" to repeat the truth that YC funded Uber, instead of the sanctioned lie that YC didn't fund Uber. ;)
> he also knows which framing makes people more sympathetic instead of angry
I'm of the opinion that this skill atrophies substantially for billionaires.
The sad part about it, and one that has become a bit of a theme with his postings, is that pg stopped being intellectually honest in his online writings at some point over the last two decades.
His post here in particular violates the fundamental principles of HN in that he does not engage with the argument at all.
The argument isn't that it's impossible to become a billionaire legally, the argument is that it's impossible to become a billionaire in a moral way, though that's more of a problem of the system than it is necessarily one at the individual level. A just and moral system would assign the value being created in such a way that becoming a billionaire would be essentially impossible.
Yet pg never even acknowledged the possibility that that might have been the argument.
pg’s argument is essentially 1. Build something people want to buy 2. If you do, you can get exponential growth of people buying it 3. This isn’t inherently immoral.
There are many assumptions around this you could argue about, but he’s directly addressing the original statement (which was also simple, and did not explicitly include the assumptions either).
I agree they are talking past each other - a lot of this is more related to marginal cost differences than anything else imho (basically how leveraged the value of my labor could practically be).
1. That exponential is a sigmoid in disguise. Who knows if it'll top out above 1 billion?
2. If you don't have an unfair anticompetitive moat, you'll have competitors, driving your profit towards zero as usual.
1. Who knows that it will? The point is just that it’s possible.
2. This is one of the (many) side assumptions that are worth discussing.
> pg's reading of it is so blunt and misrepresentative that I'm nervous about what kind of content he's consuming.
Does this mean you haven't been following his twitter the past several years?
No I got off that trainwreck a long time ago
I wonder what she would say about professional athletes. Some of the top stars have made near a billion dollars in lifetime wages, as unionized employees. Hard for me to see who the sports stars are exploiting to get their wealth.
Of course she wasn't talking about athletes (or artists, etc), she was implicitly talking about the business / tech world. I guess she should have been explicit about it so people don't come out with arguments like this.
What's wrong with the argument? Do entertainers get a free pass?
Maybe the taxpayers who pay for those expensive sports arenas + the tax breaks that frequently shelter their owners/operators?
Nozick has a very interesting thought experiment about this. It poses a completely egalitarian world in which everyone has the same wealth and earns the same income. But there's a kid who's really good at dunking basketballs, and starts charging 5c to watch him dunk. Nobody is required to pay the kid, everybody does so entirely of their own free will. Things progress, and the kid now has 100x the wealth of anybody else. Nozick asks the question: is this something that a good society would try to stop?
and you answer is...? There is an interesting article about inequality and intentions behind it: https://www.overcomingbias.com/p/inequality-is-about-grabbin... ... what do you think about it?
I have an interesting thought experiment too. First everyone has the same wealth and earns the same income. But there's a kid who strings razor wire across a road and starts charging 5c to unhook it while you pass by. Nobody is required to pay the kid, everyone does so entirely of their own free will. Things progress, and the kid now has 100x the wealth of anybody else. I ask the question: is this something that a good society would try to stop?
Which one is the better allegory of modern capitalism?
It's somewhere in the middle usually. Kid gets a bunch of people to pool their money to build a new road that is more convenient and lobby the road authority to not build competing roads. Then puts up razor wire and tries to extract the maximum that the market will tolerate.
Nozick's thought experiment isn't about modern capitalism, which can be and should be trivially condemned without the work of gedankenexperimenten.
It's about how a utopian society could and/or should respond to changes in resource distribution, and how entirely consensual behavior and exchanges between people can still lead to situations that are problematic.
I think Nick's utopian egalitarian society would arrange for the amazing basketball player to have the job of playing amazing basketball, but the same income as everyone else. In exchange for playing basketball really well, he doesn't have to, say, clean toilets.
Making everyone have the same income means there is already a big infrastructure to manage how resources are allocated in this society - it already can't have been a free-trade system with currency that can be arbitrarily sent and received.
Now switch the paying 5c to buying endorsed sweatshop Nikes and owning hundreds of minimum wage paying franchises. Because that seems to be what the successful sports folks do.
I think the answer to your question depends on what you mean by a “completely egalitarian world”. Depending on the answer, I would ask: why does the kid desire to charge people to earn money in a society like that in the first place?
But yes, I think a lot of people would say there should be a cap on how much more wealth someone has compared to the median, for many reasons, such as the amount of political power it would yield him. The thought experiment uses a harmless activity for earning the wealth, but criticism of wealth inequality is often based on what happens _after_ the wealth is earned too. If in this example you will claim the world remains perfectly (socially) egalitarian and the kid will be benevolent, then maybe we can let him keep his wealth in the thought experiment. But that’s not the world we live in, and possibly never will be.
> but criticism of wealth inequality is often based on what happens _after_ the wealth is earned too.
IIRC, that's precisely what Nozick is nominally interested in exploring (although he really doesn't).
There at least 2 distinctions going on:
1. whether wealth is acquired with or without exploitation; Nozick uses consent as a proxy for exploitation, which is dubious but predictable given that he's a libertarian
2. whether there are ill-effects to (excessive) wealth regardless of how it was acquired
Besides indeed the taxpayer funded stadiums, policing and so on, the common man who gets a gambling addiction due to gambling ads being shoved in their face 24/7 while watching any professional sport. Those drive up the broadcast rights, which is where their wages come from.
Sports leagues exploit their monopoly power constantly. College football is the worst, but they all do it. If you watch a college football game you will see more ads than game. If there was a fair market competition people wouldnt watch these crappy broadcasts but since the college football teams all colluded to make their broadcasts shit together people dont defect. Athletes generally make around 50% of revenue from their league so they are taking advantage of the exploitation.
All sport stars making millions are making it because they are effectively advertising shills. How many of them are effectively getting paid for advertising shit food, like sugary drinks that humans are addicted to.
They aren't paid millions based on tickets to see them play, it's the advertising.
Why does building a successful business necessitate generating economic externalities? Many do, and that should be prevented, but many also don’t. And to say that those externalities are responsible for a majority of the business’s growth in all cases is just false.
I'm genuinely struggling to think of a sector of billion dollar business that doesn't rely heavily on externalized costs. I'm not trying to be difficult, but I can't come up with any.
Externalities exist in every transaction, it just means the value created or lost outside of the transaction.
So the reason you can’t think of any is because no economic activity exists with out them.
But externalities can both be positive or negative.
Externalities are positive if you benefit from them, and they are negative if you are paying for them.
In my circles we actually never use this word because it is basically just a fancy way to say exploitation that makes capitalists feel good about them selves.
If I had said 'exploitation' there would not have been engagement. At some point certain words and phrases become too much of a lightning rod to constructively use any more (Marxism, critical race theory, exploitation, etc...)
The positive and negative aspects can be different for different participants for the same externality. Externality literally just means impacts not captured in the transaction.
Exploitation is orthogonal. You can have internal or external value exchange that is exploitative. You can even have positive sum transactions that are exploitative.
It must be exhausting having conversations in your circles if you change the definition of all the words…
Some words are just useless pandering, and conversations become a lot easier when you omit them. Some theories as well like to invent stuff like epicycles rather then question the underling assumptions (e.g. of circular orbits with the earth in its center), when you start to question the need for such epicycles you may just discover that your underlying assumptions were just wrong this whole time.
It also allows you to just smugly run roughshod over any interesting conversation. If you _de facto_ declare that a word doesn’t have the established definition, then you can simply redefine it to mean something else to back up a vacuous point. Like saying that all externalities are examples of exploitation for instance. That can only be true if you quite literally declare it to be so.
As opposed to something like heliocentric solar system theory, where you don’t need to play word games to prove the counter. You just need to observe and collect data and use the same words to come to the correct conclusion.
I am simply not interested in economic theories which create excuses for the exploitation of the working classes. I see such theories as propaganda and I won‘t listen. The words I use in my circles fit just fine for that purpose. And I suppose the word “externalities” fit equally nicely for capitalists who don‘t want to know about the effects their behavior has on the workers who generate their vast wealth and funds their excessive opulence.
Education.
Do you have any company in mind (within the subset the argument refers to, so one that achieved >=15% monthly growth with sufficient consistency) without one or more worrying externalities?
Everything is extractive. Farmer plants seeds, partially sets the environment. The work is done by the seed/sun/soil/water. And so is every profession: labour or not. Most of the business are structured in such a way that someone can exploit them to make even more money. The whole vendors and b2b system is mutual extraction.
Looking through wages and trying to find a ceiling(by time/effort) on the value creation by a human is one dimensional at best.
The point of farming is literally to "extract the value" that something else creates.
> The work is done by the seed/sun/soil/water.
and the farmer collects. It's not that the farmer does nothing or deserves nothing. But it is precisely the same as the capitalist model: the capitalist sets the stage for labor to do the work, and then collects.
As others have noted, the central question is who gets to benefit from what is created and why.
> But it is precisely the same as the capitalist model
It’s only the same if you consider natural resources and human labor to be equivalent. To me, that sounds quite reductive.
From the perspective of the farmer re: natural resources and the capitalist re: human labor, they are precisely the same: an existing capability in the world that can be used to produce value that can be sold for more than that production costs.
Obviously when viewed from other perspectives, they differ significantly.
Understood, but you're removing the moral aspect of the capitalist's exploitation of labor from a discussion on why the capitalist gets to make a billion dollars and the farmer doesn't.
There is a difference between the work most do: working for an hourly wage, and effectively getting rich through capital gains.
This is what aoc is referring to essentially. It's practically impossible to become a billionaire through "regular" work alone that pays you a salary.
I'd argue that for all super wealthy people, their salary isn't the major factor in how they gained their net worth. Lets take Googles CEO, he makes 2 mict llion per year (the exanumber isn't that relevant here). With this salary it'd take him 500 years to earn his net worth. Again, completely different proportions to "normal" people earning their net worth through their job. And I'd argue you can do this for everybody with more than 100 mil. dollars.
It's funny that you bring up seeds, for some crops farmers' seed spend is 25% because of IP laws and consolidation in the sector.
Exactly. Just like the farmer, the billionaire harvests the labor of others, does not create the value themselves. That is AOCs entire point.
I think this is super interesting (because the answer is not at all obvious to me): What do you mean by "through work alone"? Can it only be work if I can map a human hour cleanly onto someone paying an invoice for that hour?
Yes. Investment gains are not work, inheritance is not work,capital appreciation is not work, winning the PayPal stocks lottery is not work.
> Investment gains are not work
Say, for example, my job is allocating capital across the S&P 500. My work is picking the stocks, the fruits of my labour are excess returns.
Are those excess returns not work? What are they?
> Are those excess returns not work? What are they?
Wealth extracted from a market, which is what the parent commenter said in the first place
What do you mean “extracted”? The wealth is sitting there in his 401(k) being risked through (highly) fractional ownership of various publicly traded business ventures.
I mean "not earned through work", as evidenced by your description of it "as as sitting there". Risk isn't the same as work.
Do you think “work” means literally “manual labor”?
Work means the creation of things. Clicking on stocks for your 401k is not working.
The counter-examples are so obvious it makes me feel that pointing them out wouldn’t actually help you understand reality
The counter-examples are so obvious you didn't feel the need to cite even one?
Please provide an example of how logging in to fidelity.com to see that today my net worth increased by a multiple of my annual salary constitutes "work". Define your terms so it's clear to readers.
Work implies the creation of value: physical artifacts, services, or more generally, stuff that adds to the world. Capital gails isn't work, you're getting money without adding anything to the world.
What is being “extracted” from what?
I described it as “sitting there” to contrast my viewpoint that in fact it’s not being “extracted” from anything as far as I can tell.
Some Nvidia employees are making graphics cards, that cost $1000, and use $300 of materials, and being paid $200. $500 is being extracted from the value chain at that point and some of that is going to you because you own Nvidia stock.
Ah, the labor theory of value. That makes sense.
It’s totally incoherent and unreliable as an explanation for an economy, but it explains the comments in this thread.
Did you reply to the wrong comment by mistake?
What would that $500 not being “extracted from the value chain” look like?
It would either be passed along the chain or it would not enter the chain.
Seriously, what does “passed along the chain” look like in your example?
Given to the people who create the value.
How is that distinct from the labor theory of value? In your model, who’s creating the value other than the labor?
Part of it is work, yes. But consider. How much is your take home as a fund manager with 100M AUM? How much is your take home with 10B AUM? The work is the same, yet if the take home is different, you've proven that your income is not in fact earned through work in a moral sense.
> The work is the same, yet if the take home is different, you've proven that your income is not in fact earned through work in a moral sense.
You could say the same about musicians and authors. Are they immoral as well?
Yes, the same is absolutely true for many other professions. And artists are probably more aware than most, at least on average, how much luck plays a role.
But note that I have been very careful not to call the fund managers individually immoral.
I fail to see the moral problem with being able to write a book that millions or even billions of people can enjoy. To me that's a feature, not a bug.
Work on your reading comprehension. The comment you're replying to specifically said they were not impugning the morality of artists or fund managers.
Making great art is wonderful, but it's certainly not "work" the same way that digging a ditch or answering tech support calls is.
Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith. [1]
I was talking specifically about the moral implications of books that can be read without any additional work from the author. This statement is about books, not authors.
> but it's certainly not "work" the same way that digging a ditch
I don't think so. Value comes from utility, not from toil.
[1] https://news.ycombinator.com/newsguidelines.html
It's nice to be nice. The strongest possible interpretation of your comment is that you're simply noting accurately that there is no moral failure in writing a great novel.
I agree, writing great novels is a wonderful thing and a moral positive.
Of course that is a feature, but at this point I have to suspect that you're willfully ignoring the point.
The moral problems begin when writing that book gives you extraordinary power beyond what is healthy for society (which is extremely rare for authors, of course; the discussion isn't really about authors, you just invoked them in an attempt to conjure a moral shield for the people who are the real problem).
And again, even that in itself is still not a moral failing of the individual. It's primarily a failure of the system in which the individual operates.
It does become a moral failing of the individual if the individual uses that power to perpetuate the system.
Are you good at picking stocks, or just lucky? How do you know?
Say, for example, my job is allocating capital across the roulette wheel. My work is picking the numbers, the fruits of my labour are excess returns.
Are those returns not work? What are they?
>Are those excess returns not work? What are they?
Normally you'd get a low percentage fee instead of getting all of the returns unless you got that capital for free (inheritance?), so yes, you are a worker compared to the person controlling the capital.
Say I dig a hole and then fill it back in and dig a hole and fill it back in and make a mud pie then throw it on the ground and then a stranger gives me $100. Is that work?
Winnings.
What if I build and run a SaaS?
The common argument would be that, unless you set it up as a co-op/full profit share or never hire employees, you're extracting value (exploiting) from what your employees' labor earned the company.
Missing from both sides of this argument, IMHO, is BATNA.[0]
[0] https://en.wikipedia.org/wiki/Best_alternative_to_a_negotiat...
So if one finds a way to do it and not hire people they actually earned the money by that definition? We presume that people at large would be ready say "Oh yeah, in that case: You earned that billion dollars for sure, nothing wrong with any of that, go you"?
Whereas: If they hire a single employee to help with, idk, responding to support tickets that would get them into "well maybe you did not earn it"-territory?
Because if that is the depiction we are going with: I have my doubts.
Reasonable thoughts. Folks have been arguing about this forever. Both sides - community-focused and individual-focused -- have reasonable points on the ethics and morals of what they claim. Both sides want claim to a split of the pie produced by the efforts of individuals.
Just like you're mentioning Obama's lambasted "you didn't build that" comments -- his point was completely valid, in that the individual profiteers didn't build the roads their products ship on, the energy infrastructure their cloud providers consume to host their digital footprint and logistics, etc. etc. But people pay for a large part of what they DO consume -- the cases where they don't are what we squirrelly and bookish economists call "externalities" (costs of production gotten too cheap/free). Trying to correct for every externality is a maddening and endogenous exercise in navel gazing -- but huge and easily seen externalities are not crazy to want to address (e.g., Erin Brokovich, pollution, etc.).
In your example of someone getting hired to field support tickets -- if that person weren't hired, the founders would spend all their time chasing down those tickets. So did the founder earn the cash, or did both people earn the cash despite one of the jobs being less favorable? If an egalitarian share is unwarranted, what is a reasonably fair trade? Why is an egalitarian share unwarranted? Etc.
The core question embedded in all these arguments are - what is a fair tax on the economy? If a government's policy encourages large economic growth for everyone, then perhaps it is good to fund it via tax with all the associated tradeoffs like crowding out, marginal decisions impacted, and so on. Getting it right looks like Scandinavia. Getting it wrong looks like Cuba / final days of the USSR. Ignoring it (on both sides of the aisle) looks like Venezuela and Argentina.
But there is no doubt that without the people who produce there would be no taxes, and a 100% tax would push everyone away from doing anything. This is why the way-too-simplistic Laffer curve argument seemed compelling in the 80s -- "unshackle the economy by lowering taxes."
I haven't kept up with pg (fairly or unfairly) since some of the techbrokings adopted Yarvinism as a goal, so I have no idea what he has said recently.
I thought the problem with Cuba was it being embargoed because the USA is jealous it didn't get some profits several decades ago.
This is one of their many issues, yes. They also have many bright sides that aren't covered in my <250 word response and miniscule relevant paranthetical aside.
>So if one finds a way to do it and not hire people they actually earned the money by that definition?
That's the fun part: they cannot make a billion dollars through their own work. It doesn't exist. Billions of dollars do not exist without either collaboration (extremely rare), or exploitation of others (see: every single YC company)
>Whereas: If they hire a single employee to help with, idk, responding to support tickets that would get them into "well maybe you did not earn it"-territory?
Would you have made that billion without the employee ? If not, you did not earn it. Would your company have gone under if you didn't have someone handling those support tickets, what percentage of the survival of the company is linked to it, and why didn't you pay them nearly that percentage ? Congratulations on exploiting your employee.
Do you have any examples of a singe company with only the founder as an employee that is worth a billion dollars?
Her point was being made about actual reality and not some hypothetical fantasy
To be fair, reality is a special case (and not always the most interesting one) of general principles.
With recent advances in AI, it may be possible for someone to build a billion dollar single founder company.
No.
Reality is reality. Her statement was based on reality.
Inventing some nonexistent fantasy where her statement is wrong isn’t a useful exercise.
Yes, it’s possible that in the future there may be some person that manages do be worth billions by themselves, but that doesn’t exist today so isn’t relevant to her statement
I appreciate you would really like people to agree with you here, but you've made your argument cage wrapped so tight you fail to recognize the people just outside who support a lot of where you want to be.
Working through a world where some condition proves true is useful to inform logical policy. It admittedly doesn't make for a sexy soundbite and is a lot harder to work through, but it has substantial use (1) to both justify the morality of a policy/action in the real world and (2) to anticipate a potential real world scenario where a single person makes a billion dollars in a SaaS.
Just because pg is `not even wrong` doesn't mean we have to be as well.
> To be fair, reality is a special case
Thank you, you made me laugh in earnest. This is one of the funniest things I've read today.
Building the SaaS is work, responding to customer support tickets is work; collecting rents every month on a capital asset you own is not work.
You can’t realistically make any money through work alone. Being paid for that work and being able to hold the value of that medium of exchange fully depends on the rest of us keeping an orderly society around you.
Your phraseology of “extract” suffers from the same problem as AOC’s. You’re conflating value creation with value extraction.
The problem with AOC’s argument is she’s recycling a 2008 talking point into a context where it doesn’t make sense. Financial entities making trillions moving money around raises questions about whether value is really being created. When I get three Amazon packages delivered to my house every day, there’s no question about value creation.
You’ve entirely misunderstood her point.
Her point isn’t that Amazon is bad because it’s a trillion dollar company
Her point is that Bezos is bad because he and Amazon could have paid that driver 10x what they make and still had more money than they could spend in 100 lifetimes
The distribution of the gains is absurdly weighted towards the top
> still had more money than they could spend in 100 lifetimes
How is that relevant to anything? There are intelligent criticisms of Amazon. But this is just a non-sequitur.
It’s absolutely not a non-sequitur.
The point is that his wealth is from exploiting labor out of greed.
He could take a smaller share and still be plenty rich and many more people would be much better off than they are today.
But he doesn’t. The disparity is so vast that it is arguably immoral or unethical. That’s AOCs point
If you want to make a point about exploitive labor practices, that’s totally valid. Explain how Amazon’s labor practices are exploitive. But Bezos having more money than he can spend in a lifetime is totally irrelevant to that. It’s not relevant to anything.
It's entirely relevant.
The entire point is that the riches borne of the success of amazon could have been shared more equally while not actually making a different in Bezos' or his families life.
The only difference would have been that his score on the billionaire leader board would have been slightly lower.
That fact is not only relevant, it's a central pillar of the point.
> The entire point is that the riches borne of the success of amazon could have been shared more equally while not actually making a different in Bezos' or his families life.
Why does that matter? What is the universal principle that’s at play here? Does this principle apply to everyone? Does it apply to you? People in my dad’s village in Bangladesh survive on $5/day. Under your principle, why do you get to spend 1,000x that on a vacation?
Can you also explain your math? You said above that Amazon could pay its workers 10x as much as they do now. Bezos’s share of Amazon’s net profit last year was about $6.9 billion. Amazon has 1.1 million delivery drivers and warehouse workers. So if Bezos’s share was nothing, those workers could earn about $6,300 more. That’s like 10-15% more, not 10 times more as you incorrectly said.
> Bezos’s share of Amazon’s net profit last year was about $6.9 billion
We're not talking about Bezos's profit share for one year. We're talking about giving the workers a bigger share of the profit. Ideally, there would have been a workers union that owned a significant number of amazon shares or some other similar structure. Then all workers benefit from the compounding growth pg is talking about in the article. However that didn't happen, because Bezos didn't want it to happen.
> We're not talking about Bezos's profit share for one year. We're talking about giving the workers a bigger share of the profit.
Those are the same thing, because you can only take Bezos's 9% of Amazon once. If you took all of Bezos's Amazon stock and put it in a trust for the workers, the profits from that would have amounted to $6,300 per worker last year. That's a nice bonus, but it's not 10x like you said.
I forgot Jeff's current amazon holdings are all teh shares in existence
This is “my job depends on never admitting how inequitable labor relations are” energy.
And I suppose these jobs that pays 10x would go to people that AOC approves of, i.e., preferably no Republicans?
Why do you suppose that? Did she say that?
What in the world are you talking about
It very obviously goes to the people working at Amazon. Political party has nothing to do with anything
His entire essay is just based on a purposeful misreading of the opposing point. It's a straw man. And if you look at his history it's obviously intentional and part of his usual style of argument.
The actual opposing argument is that it's impossible to create a billion dollar enterprise without a group effort, and for one person to end up with a billion dollars necessarily means that they made decisions within that enterprise that resulted in a lopsided allocation of resources at the end.
Period. That's it, and it's inarguable.
Every single aspect of the system is arbitrary and is a policy decision made by society. The basic building block, the limited liability joint stock company as a legal concept with some form of independent rights and entity status is arbitrary. Every lever, every part of the system, is created by people making decisions about how society is organized.
The people he is arguing with are basically saying "we want the system structured differently because this one is producing too much concentrated wealth." That's a political choice and an eminently reasonable one.
So if it's that simple, why would he feel a need to straw man instead of just addressing the actual argument? Well because he'd lose. The reality is is most people agree with this assessment of society and want it to change.
And by the way the question of how resources get split between labor and capital is the oldest and most central political problem in human history. To adopt a condescending tone while pretending to be ignorant of stuff you learn in the first couple weeks of any real study of politics or history, betrays the deception inherent in his essay.
> it's impossible to create a billion dollar enterprise without a group effort
George Lucas made a movie with a (small) group effort. But what made a billion dollars is his Star Wars universe which is almost entirely his creation.
It literally creates wealth for other people. If my toy sells $10,000 without Star Wars and $100,000 with it, did I participate in making George’s billion, or am I benefiting from it?
> means that they made decisions within that enterprise that resulted in a lopsided allocation of resources at the end.
What do you mean? Every good and service involves many people, but the degree to which they participate in its creation and risk vary. For example, a Farmer may create a more efficient way to grow food. Is the grocery store now entitled to a piece of the reward? They didn’t change anything, all of the improvement is the farmer side.
> George Lucas
Once again, lopsided allocation - George benefited from and is directly responsible for keeping the cost of labor low: https://www.hollywoodreporter.com/business/business-news/100...
Would he have been a billionaire without that? Who knows? But it definitely helped him get there.
I addressed that. The movies themselves are not the source of the wealth and yes the original was created by a group so small that theoretically Star Wars wealth could have been divided evenly and they would be billionaires.
If you say the original crew did not do all the labor required to make the franchise grow in the future (obviously true), you are now arguing different people have had incremental impact on creating the wealth, which is kind of the point.
I might be misunderstanding your point then.
Are you saying that he/the small group are solely responsible for Disney wanting to pay 4 billion for it?
Yes I’m arguing that the original crew created within the ball park of a billion in wealth per-head.
The Star Wars franchise earned a tremendous amount of money before the one-time Disney payout.
Jk Rowling and LeBron James are additional examples.
It's instructive that people like you pick people like LeBron James or J.K. Rowling to make your points.
The reason is that the conflict here is between labor and capital. And those two, at least in their primary roles, are labor, as a writer and an athlete. One of them is even a union member operating under a collective bargaining agreement.
They're just the absolute pinnacle top of anything that could possibly be put in that category.
But if I'm arguing that this is really about the division of of the spoils between labor and capital, and you have to resort to picking members of the labor class to make your argument then you have essentially conceded my point, which is that returns to labor are different than returns to capital, and returns to capital are much harder to defend. You didn't pick Bill Ackman for a reason.
Would jk rowling have been as popular without the marketing from her publisher? What about the work of the editor from the publisher?
> George Lucas made a movie with a (small) group effort. But what made a billion dollars is his Star Wars universe which is almost entirely his creation.
If that were actually true, how come we can't predict what the next Star Wars universe will be?
Same for pop songs etc. If it were actually about objective qualities of the creation, and not just luck, the next winners of the lottery would be apparent even before they hit the theaters.
There is null inherent quality in the Star Wars universe causing the billion dollar revenue. If George Lucas wouldn't have been there at the right spot at the right time, the dominant IP would simply have been something different.
If you have kids, you can directly observer what actually happens: The IP owners dump huge amounts of money into merch and product placements everywhere, resulting in them getting in contact with the franchise before they are out of their diapers. My kids came home from daycare roleplaying lightsaber fights without any previous contact with the franchise at our home. The trick is implanting the meme (in the original meaning of the word) into kids' brains before another meme can nest in there.
Inability to predict the universe does not mean the underlying mechanism is actually random. It means you don’t understand it well enough.
Well that conveniently makes your assertion unfalsifiable, doesn't it?
Your position is that any correct prediction or investment can be explained by luck. That sounds more unfalsifable to me - it sounds like you’re neglecting evidence, actually.
The bit about Lucas is obviously not true. The universe he envisioned does not sell itself, it was marketed, developed, painted and modeled, added to, kept fresh etc for many many years by a huge army of people. If the only Star Wars media that existed were the original film, or even the original trilogy, it would sell relatively little by now.
So if you were to assign value to the work to make a new Star Wars toy would you it’s (total value of Stat wars) * (number of people who have ever worked on Star Wars) / (number of people who worked on the toy)?
That’s absurd. Obviously they are creating incremental wealth and their particular toy didn’t make or break billions.
No, I'm saying that you can't attribute any significant percent of the value of a Star Wars toy sold today to George Lucas. If Star Wars had not continued after the 1980 films, these toys would not keep selling so much today.
The post I replied to allocated all of the monetary value of the Star Wars branding of a toy to George Lucas personally, which I think is obviously wrong.
Hmm, what about JK Rowling and LeBron James where the vast majority of their value is explicitly going to their publisher and they keep only a small percentage. Their tiny portion is a billion after everyone else takes most of it!
JK Rowling, the proofreaders, the reviewers, the printers, the marketing, the librarians... Everyone in that list is in effect getting stolen from by the publishers, yes.
in the same way that Lebron didn't go where with his own feet, he benefited from coaches, support, doctors, nutrionists & cooks, all dedicated to putting everything into this one man. Do you think merely being a freak of nature nets you a billion ?
Right, and even if we assume Lebron accomplished his entire basketball career by himself and that his salary is 100% “earned”, his salary didn’t net him a billion dollars.
Also the idea that playing on a basketball team is a good counter to the argument that everyone is on a team seems pretty odd for obvious reasons.
Are you sure the root of your concern isn’t that people differ in ability and value?
Can you quickly break down which players on the team are fairly compensated and which are oppressed by LeBron?
I'm the original poster in this sub-thread, and I didn't make any of the points you seem to have ascribed to me.
you’re only strengthening the argument that people deserve asymmetric compensation. LeBron and the NBA have a symbiotic relationship where both of them make more money because they exist. And I would guess the NBA made a lot more money than LeBron.
Are we not discussing this in the context of this parent message?
> The actual opposing argument is that it's impossible to create a billion dollar enterprise without a group effort, and for one person to end up with a billion dollars necessarily means that they made decisions within that enterprise that resulted in a lopsided allocation of resources at the end.
--
> And I would guess the NBA made a lot more money than LeBron.
And yes, in this case I believe the NBA is extracting asymmetrically, from Lebron and others.
Once again, the publisher gave her something like 5-10% of sales and kept 90% to cover those costs and she is still a billionaire!!! So is your real beef with the publisher?
Indeed. And once the publishers have paid their fair share, JKR also will, and she won't be a billionaire anymore.
Harry Potter became a billion dollar business after the movies and toys and so on were created - again, it takes waayyy more people than one to actually produce this amount of money. The initial idea that Rowling herself came up with is of course a significant part of that - but still only a small part of it, in the grand scheme of things.
It's also important to note that Harry Potter making billions of dollars also prevented any other similar books or ideas from making any large profits. The entertainment industry is very much a winner takes all industry. HP didn't hugely grow the children's entertainment market, it just outcompeted other works. This is extremely important to understand, because it directly implies that a huge part of the value is simply that media execs decided to bet big on HP instead of trying out many other possible properties. The money would have happened either way, more or less the same - they just would have been distributed to one or many other authors instead, if JK Rowling hadn't hit it out of the park. People would have bought a roughly similar amount of books for their children to read, a roughly similar amount of toys, would have taken them to a roughly similar amount of movies.
> What do you mean? Every good and service involves many people, but
Well yes. That is in fact exactly what I mean.
Of course it's arguable. You make it sound like founders perform some jedi mind-trick to take money from others. Here's what actually happens. Investors put in initial money because it's a win-win (they get an expected return, founders get starting capital). Employees join because it's a win-win (they get a salary, health, equity, other perks; founders get a workforce). Customers pay cash because it's a win-win (they get a product or service they want, the business gets money). At no point is someone being held down and forced to hand money to someone else.
I am making a meta-argument, and I do think that it’s inarguable.
My argument is this: the core disagreement here is about the allocation of resources between labor and capital.
I’m right. It is.
That doesn’t mean I have settled the argument about what those allocations should be which nobody has, it’s a core organizational element of politics.
But I think his argument is bullshit. It’s a purposeful misdirection because it refuses to recognize the terms of the discussion at all.
One can agree that they would rather see wealth more equitably distributed while also admitting that the current system of private property and capitalism is the most effective at broadly generating wealth.
You could say that, but you also don't have to concede it.
In fact, my argument would be that the more regulated, industrial-policy-driven economies of the recent past were better at generating wealth and improving society.
For the most part, the real conflict that we're having around these topics is about the reorganization of the economy that happened starting in the mid-1970s.
This change shifted the focus of the US economy to financial extraction and away from industrial policies, a role that we sold out to China for the benefit of our elite classes and the severe detriment of our working class.
I don't think pg would disagree that the politicians that discuss this want to allocate more resources to labor. But what he takes exception with specifically is the rhetoric used to justify this "reallocation." AOC's claim:
> “There’s a certain level of wealth and accumulation that is unearned,” she said. “You can’t earn a billion dollars. You just can’t earn that. You can get market power, you can break rules, you can abuse labor laws, you can pay people less than what they’re worth, but you can’t earn that.”
You can produce a motte-and-bailey-type argument where the "get market power" and "pay people less than their worth" are doing all the heavy lifting in that statement. But I think we can agree that she is very much tying the accrual of wealth to various kinds of villainy. That is what pg is taking on. And that matters because the common person would agree with the statement that you should be rewarded for what you create - if wealth accrual is all theft, that perception would make a much stronger argument for the reallocation of resources.
Health is not a perk but an inelastic demand: a threat to withhold health is a threat of physical harm, and a negotiation in which one party's physical health is on the line is quantitatively but not qualitatively different from a negotiation held with a gun to that party's head.
I do not understand your statement, maybe you can elaborate. If you are saying there should be a public option for healthcare, I happen to agree. Then we can have the standard discussions on how the government ought to raise funds for it. If you are saying that by negotiating terms of employment, any employer is intrinsically engaged in violence, that stance is pretty out there.
If those terms include the potential for predictable harms like lack of healthcare or housing if an agreement isn't reached, then yes, I think that is indeed an engagement in violence.
Now I'm not saying that the employer is necessarily morally culpable here — I'm sure most employers would like nothing more than to not have to worry about their employees' healthcare, and certainly I doubt many people enjoy having the ability to take it away. But it doesn't change the fact that it's impossible to have a real negotiation when inelastic demands are (potentially) unmet. Someone under threat of losing health insurance or housing is negotiating under duress, contrary to the comment I replied to.
There can be labor monopsonies but it is not a rule; I promise you that the key employees at a SaaS startup tend to have plenty of options.
This effect is very much not limited to monopolies, though it's certainly easiest to see there. There's no step change from monopoly to competitive marketplace though. If you believe it's the company's moral duty to provide e.g. healthcare then in a non-monopoly situation that culpability is divided, though not abrogated (and beware the bystander effect!). From the employee's perspective, the spectre of physical harm is a bit further off, but it will still colour negotiations.
It's especially insufficient to generalize the working of the entire system from an example of a market in which employees currently have enough power to not really have to worry about the prospect of physical harm because it would be disadvantageous to the employers to cause it. Even if we take the current state of the SaaS startup market as reliable (which it isn't) the original argument was not limited to SaaS startup employees, and in other industries (including ones that are a bit down the pyramid from the SaaS companies) things are a lot less rosy for employees.
A sole consumer of labor is a monopsony, not a monopoly (that would be a union). At any rate, the point is that there are many many employment negotiations that no reasonable person would agree to amount to duress. This is a counterexample to the idea that any negotiation of employment involves duress. I don't need to disprove the existence of any coercive employment. But SaaS companies are especially relevant since pg specializes in showing people how to become billionaires through SaaS. If earning a billion dollars implies some measure of coercion we should be able to find that in a SaaS startup.
Sorry, misread you — but you can substitute ‘monopsony’ into my comment and I think it still holds.
This is a ‘no true Scotsman’ so I don't think I can really respond to it directly. But I'll point out that my claim is not that some contracts bargaining for safety of life and limb are a form of duress but that all inherently are (to some extent). Especially when the other party's BATNA is ‘no guarantee of safety’.
Under this principle no human has ever been able to consent to anything in the history of the world. Certainly 99.99% of humans.
This would also imply that the best thing ethically is not to give people goods in exchange for labor because the simple act of interaction with them puts their housing and food needs under your responsibility.
No human can _100%_ consent to anything (… probably: free will is tricky). Coercion is a continuum, not a binary.
I don't really think that companies (or other parties in trades) bear moral responsibility for this inherently — a company that accepted every job applicant to try to meet their inelastic demands wouldn't last long, so the company itself is also under some duress even if it might like to. Trying to assign blame for complex distributed problems isn't really that simple. Your example in particular is a trolley problem, and I (personally) don't believe that pulling the lever makes you more culpable than deliberately choosing not to pull the lever.
But regardless of your chosen ethics, my point is pragmatic — while it's not correct to say that people take jobs only because they are under duress, it's also not correct to base arguments on them acting on their own free will based on their personal preferences. UBI experiments show significant changes in employee behaviour when inelastic demands are guaranteed to be met and negotiations pertain only to elastic quantities.
That's not quite true, the police hold me down and lock me in a cell if I don't hand money to a landlord.
They don't hold me down and force me to hand money to a landlord, mind, they just lock me in a cell if I don't, so maybe it doesn't meet your standard of proof.
You would get evicted at most. Even if you're in debt, bankruptcy does not come with any criminal liability. You'd have to do something much worse to receive jail time. And I'm not really sure what this has to do with startups, is the claim that the founders are in cahoots with landlords in the Bay Area to hold employees captive?
Being homeless is illegal in many countries, including the one where I live. If I am evicted because I can't pay rent, then obviously I also can't get a hotel room, and my existence is illegal
amusing that the most rational take on HN is immediately down-voted.
>Period. That's it, and it's inarguable.
No it's not, it's actually extremely easy to prove wrong: J.K. Rowling.
She ran the printing press and picked the camera lenses and stacked the books by the cash register and booked her own press interviews? Also who taught all the kids to read?
Why does she have to control the entire vertical process to earn a billion dollars? She sold her work and got paid a billion dollars for it. Who did she exploit? In what way were her earnings unearned?
That’s just back to my original point. Which was that every billion dollar enterprise is a collective or team effort and the only argument is about how the results get allocated.
Which is, as I pointed out, inarguable. No one is spawned alone in the woods to start their adventure independently of the society they are in.
PG says this in his post though. He says the people working for the startup whose founder he talked to are being compensated fairly and properly. To claim his post is a misreading you have to claim every billionaire wouldnt be a billionaire if resources were allocated correctly.
> fairly and properly
He takes that as a given but this is, in fact, the argument and you can't wave it away.
By doing so he's being disingenuous. The argument here is about who gets what. And the startup founder and its employees are not the only participants in the economy.
The revenue flowing in to his hypothetical startup is exogenous to the startup so you have to talk about where it's coming from, who's affected, and how that fits in with policy goals.
For an extreme but accurate thought experiment, imagine concluding your analysis of FTX by noting that their employees were "fairly and properly" paid and then moving on.
> The actual opposing argument is that it's impossible to create a billion dollar enterprise without a group effort
The other thing that we're often ignoring is that it's impossible to create a billion dollar enterprise without luck. You have to be at the right place at the right time.
For the most part only capital gets to roll the dice, but even before that it's a sign of the times that we take it seriously at all when people talk about "earning" a billion dollars. We could all do with a bit more humility.
> She meant impossible in that one doesn't earn a billion dollars through work alone
She meant it was unethical to do so. It wasn't about working alone or not.
I know we like AOC but the way people bend over backward for her is off-putting.
You could also interpret this statement in a way that has nothing to do with exploitation. A lottery winner doesn’t exploit anyone, but they don’t “earn” their money either. I’ve always thought of the founder path to a billion as a bit like a lotto game where you can shift the odds through hard work and natural ability. I don’t think this process necessarily involves exploitation (although it certainly could). You’d have to believe in the labor theory of value for that. And I’m not convinced that even Marx would, were he alive today. It was supposed to have a scientific basis, after all, and that evaporated a long time ago.
This is what pg said she said: "What she meant was that it's impossible to get that rich without doing something bad"
What you said she said: "The only way to get there is to set up a structure that extracts a billion dollars from a market"
Extracting does, in fact, imply "something bad". To extract is to take something for yourself without adding value. That is bad. Your language implies that the people who make that sort of money do not add, which is what pg is trying to refute.
I presume when it comes to filing taxes, PG is not confused and declares it as capital gains and not earned income.
Yeah he responded to a philosophical and moral argument with a math problem.
And an overly simplistic view of the math problem too. (Surely going from 1000 to 2000 customers is as easy as going from 10 to 20, right?)
I never understood why Joel Spolsky stopped blogging. His reason was basically (paraphrasing) that his business grew too big and mature for him to keep writing. It sounded nonsense to me by the time.
And now comparing PG's writing today and what he wrote 10~15 years ago, I finally get what Joel means.
Agreed, what a disappointment of an essay, encouraging a growth at all costs mindset and pretending that this growth doesn't involve/encourage bad side effects.
And a lot of these structures either involves a percentage cut or a security of some kind. And it's not new, it's copied.
He also glosses over the fact that the founder started with $2 million.
Paul Graham was at his best when he gave clear, experience-driven, action-oriented advice. But even then, his advice was flawed... advising people to do things like to discriminate against women and parents.
As he got a little older, he cut back on that pro-discrimination advice... that typical thing where he was able to recognize the problems with his bigotry only after he would have been on the other side of it.
As he has become ludicrously wealthy he has, unfortunately, lost all track of reality. He no longer engages with the practical or the real... instead he deliberately misreads a quote so that he can wrote a pathetic and defensive response to it that engages in bad faith. And because he is ludicrously wealthy, he is surrounded by a mix of yes-men, and other hyper-wealthy sociopaths. So none of them give him critical feedback.
Paul Graham has become useless to society. He is, fundamentally, just a mindless pile of cash.
Here is one oft-repeated quote: https://www.usatoday.com/story/news/politics/2026/05/12/aoc-.... Her statement is properly interpreted by pg.
I understood the phrase as emphasizing the "deserving" implication of the word earn. As in, it is not possible for a human to take actions such that the fair reward is a billion. Or in other words, if you got a billion you got more than it's fair. To emphasize: this does not necessarily mean that the way one became a billionaire is nefarious or evil. It just implies unfairness.
I'm not defending that interpretation, mind you, just saying it's a possible read of the phrase.
Well put!
Yes, I agree. You need to create a brand or to be a brand.
> so blunt and misrepresentative
You should read that as a self-preservation technique. The eager use of a strawman tells us PG heard AOC's words as an attack against him personally, his business, and his friends.
So the essay is not a reasoned retort but more an emotional self-defense to soothe a bruised ego. It's to assure himself that no -- in fact he did earn his wealth fair and square, and to imply otherwise shows a lack of understanding of how this all works. But I do love this essay because it does show just how emotional and irrational billionaires can be when their wealth and egos are threatened.
Plenty of us non-billionaires are glad PG wrote this article, because a lot a success-striving people are pretty grossed out by the lie that the only way to be a self made billionaire is to do something 'bad'.
That's a misunderstanding of the original argument. It's not about billionairs "doing something bad". The claim is that the only way to become a billionaire is to benefit from an unfair economic system.
So then if you're glad for it, what do you have to say about the straw man he presents? The sibling reply spells it out, but as a non-billionaire why are you willing to accept that argument?
A lot of success-striving people are pretty grossed out by absurd levels of wealth inequality as well.
Sure, some folks are going to be fantastically wealthy, that's OK to a large extent.
But, we're on the precipice of trillionaire's existing in a country where literally half of the population is functionally illiterate (yes, that's the USA), where the middle class is dissolving, and where we are approaching a feudal level wealth inequality-- and all this stuff is accelerating.
I mean, I guess it's not that bad. We still have a democracy. It's not like we have billionaires re-arranging political power and public resources for their pleasure and benefit. Oh wait, we do!
Yes, this is exactly it. One of the things I've found sort of interesting and unique about the current generation of asshole industrialist sociopathic technologists is that they're not satisfied with all their money and power. They somehow have decided that people have to like them for what they've done and treat them like the best most awesome little boys.
I wasn't there at the time, so I could be wrong. But I feel like their robber baron counterparts 100 years ago knew that they were hated and had some idea of why. And that's why they spent so much money on parks and buildings and colleges and everything else. They could see option B was the masses coming across their lawn with sharp implements.
> So the essay is not a reasoned retort but more an emotional self-defense to soothe a bruised ego.
No. It was to persuade future politicians not to redistribute his and his friends wealth.
She said you can’t earn it.
Everyday, people grind their own flour.
Then I build a mill, and allow them to use it in exchange for a part of their flour.
Is my wealth not earned?
You would not get a billion dollars from that. Someone else would see your mill and make their own mill. A thousand other people, in fact, if there was a billion to be made, so each would get a million, or less. The intense price competition would also bring your profits to near zero.
But if I were first and built them better, continually being at the forefront of mill construction, it might be enough to make 0.001% of my nation’s GDP for a few years.
In the US that would make me a billionaire.
> She meant impossible in that one doesn't earn a billion dollars through work alone. The only way to get there is to set up a structure that extracts a billion dollars from a market
Is "building structures" not work?
what kind of content he's consuming?
like other "entrepreneurs" its most likely self-affirming bullshit, cranked up to religious levels (cue any modern ayn rand equivalent)
That’s a charitable read. Remember she also thought that New York would “lose millions” if Amazon put their hq2 there. Just because she’s in congress you can’t assume she understands how building a business works.
Taking your interpretation at face value I would add that yes we call it “capitalism” not “laborism”.
From the article:
> She wasn't saying, of course, that it's impossible to become a billionaire. Obviously that's possible. Nor was she talking about the distinction between income and capital gains. She wasn't making a point about accounting. What she meant was that it's impossible to get that rich without doing something bad — without cheating in some way.
IMO, that's a pretty fair interpretation, given Warren's rhetorical history.
> ...one doesn't earn a billion dollars through work alone > set up a structure that extracts a billion dollars from a market
If we accept that interpretation (which I don't), in what way is the latter not "work"?
Why does it usually imply extraction and externalities? What are those for Taylor Swift and Michael Jordan? The actual "usual" things in common between these and e.g. Amazon are massive value creation for consumers, economies of scale.
Focusing on completely optional and often imagined "externalities" just reveals a certain mindset (one could find some for cases like Amazon, but bezos became a billionaire in 1998 so whatever Amazon does after that doesn't directly apply, unless the goalposts are moved).
An example I love is hollowing out of this or that. The fact that people wanted to shop at Amazon (especially in 1998) and not a local bookstore, like the fact that people want to go to a Taylor Swift concert and not your indie band's is not an externality, it's a skill issue.
If I vibe code an app, and make $1m, and people willingly paid me for it, who am I exploiting? How did I "extract" $1m from a market. Who did I take that away from?
I didn't even exploit my workers and make a margin on their labor. Please can someone who believes billionaires are evil explain this to me.
> pg's reading of it is so blunt and misrepresentative that I'm nervous about what kind of content he's consuming.
Guy wrote an essay criticizing “woke” on the eve of Trump’s inauguration and is now running interference for billionaires causing an affordability crisis.
If someone is out of tune enough they are probably just playing a different song.
So what does you practical utopia look like in real terms. What's the master plan beyond I don't like people making money from what people want? What does that utopia look like in practice.
> So what does you practical utopia look like in real terms.
When you hit a hundred billion in net worth, you get a nice solid gold plaque that says "I won capitalism", you get an attaboy from the UN, and we start taxing the shit out of wealth over that cap.
Adjust periodically for inflation. (Do that for minimum wage while we're at it.)
But these ultra rich people don't have a hundred billion dollars in a bank account, they just own a percent of a company. So what you're really saying is a person isn't allowed to own a certain fraction of a company once it reaches a certain valuation.
Sounds great to me.
I find these special founder-class shares that completely insulate folks like Musk and Zuck from their actual investors to be deeply problematic.
Yes, you got it!
It's because while for some people there may be jealousy involved, many more have realized or are now realizing how much power the ultra rich have, and how bad that is for our societies.
Once a company becomes large enough, it becomes so influential in society that control of it must be made more democratic.
I don't think anywhere has figured out quite the right way to go about it yet, but it's clearly the right goal. Some countries require employee representation on the boards of large companies.
And this would solve the problem how? Bill Gates owns less than 1% of his company, but now Microsoft under Private Equity is several times more evil, not less.
Why do you think that democratic control means private equity?
Why do you think state control is democratic
Do I think that?
What would actually happen is tax revenue would drop because the guy would hit the limit and quit followed by the company collapsing without anyone leading it. Commies will literally never learn.
> followed by the company collapsing without anyone leading it
Musk was AWOL running the US government for months without any apparent impact. Even after he got back to work, he's running enough companies he's clearly part-time on at least some of them.
Jobs died. Bezos and Gates stepped down. Things continued!
> Commies will literally never learn.
Yeah, they're goofy, for the same reasons the extreme libertarian anti-tax folks are goofy. Each pretends the complexity of humanity can just be waved away.
You really believe CEOs or business owners are single handedly holding billion dollar businesses together? Why don't these companies regularly die when they die or step down then?