[Hongwei]

Sorry but I strongly disagree with your assertion that building a business is a zero-sum game. At the basic level, a farmer who sows a field and harvests a crop is making the world one harvest richer, and no one poorer. Ditto for the carpenter making a table or mechanic fixing a car. PG addressed this long ago: http://paulgraham.com/gap.html

Scientists turn money into knowledge. Entrepreneurs turn knowledge into money. It's a virtuous cycle. Scientists lament that they don't get their "fair share" but it's wrong to blame innovators, better to reevaluate their own economic strategy. What if we had private research institutes turning out cutting edge research? Or vertically integrated ones that commercialized their own discoveries, like Spacex?

[eloff]

Value and compensation aren't necessarily coupled. Think of school teachers. It's clearly an incredibly valuable job preparing the next generation of society, but pays a miserable wage before the intervening of unions, and still not great even with that.

But there's more teachers available in the labor market compared to demand than computer programmers, so the latter command a much higher salary. Even though I would say many deliver much less value to society.

Or negative value like Facebook engineers. Sorry, I couldn't resist that cheap shot, and I do believe Facebook is a net negative for society.

[jfengel]

I'm not even sure it's true that there are more teachers than programmers. But the pool of money for paying programmers is large and expanding, because we can easily calculate the value they produce, while the monetary value of teaching is harder to measure.

It doesn't help that teaching is presented as a "caring" profession, that you do for the love of your charges. Teachers don't threaten to jump to a different school district for more money, and when they campaign for more money, they're presented as not caring about the students. Nobody expects programmers to have any loyalty, so they get to demand money.

I would love to have schools fight to get the most talented teachers, instead of settling for "any woman who likes kids". (Those "caring" professions are usually ones associated with women.) I'd love to see school systems compete with software companies and research institutions, and to have school districts run by the people who might otherwise run Fortune 500 companies. But that won't happen without money, and until we start deciding to pay for it, we're going to get a lot of mediocre teaching.

[bosie]

> because we can easily calculate the value they produce,

I am not trolling but I would really, really like a citation on this. I hear this sentiment so often but nobody ever produced that calculation. Would be great (or maybe not ;)) for negotiations going forward.

[jfengel]

I mean it in the simplistic sense that we can sum up the revenue of the software industry. That's not really a complete calculation but it's clearer than trying to measure the value add of teachers.... even though it's arguably more.

[bosie]

well, the software industry is filled with non-software engineers. and if you go with the revenue angle, what do you do with companies that don't produce "value" (i.e. product doesn't sell)?

[jfengel]

It wasn't my intention to claim that it could be calculated exactly. It was my intention to point out the distinction between software engineers, where there's a bottom line somewhere to be counted, and teachers, where the bottom line is effectively impossible to calculate.

This isn't about how much programmers are worth, but about why it is we get away with paying teachers so little while programmers are paid so much: their contribution to a corporate profit. The details are beyond the scope of the post.

[hutzlibu]

"and to have school districts run by the people who might otherwise run Fortune 500 companies"

What bothers me with this "race for the best", is that there is a finite amount of people running fortune 500 companies.

My main problem with the school system is that even good teachers can't teach their full potential with all the outside constraints regulating their classes.

[yellowapple]

> At the basic level, a farmer who sows a field and harvests a crop is making the world one harvest richer, and no one poorer.

Not quite true; the farmer using that land to grow crops is externalizing an opportunity cost onto those who might use that land for something else, e.g. for the carpenter's workshop or the mechanic's garage. Same with the water consumed by those crops. With these natural and finite resources, there very much is a zero-sum game, since your use of that resource is at everyone else's expense.

This is something Graham entirely misses in his article: the wealth, contrary to his core assertion, does flow from a common source, specifically land. The wealthy, in turn, are such specifically because they happened to be the ones able to control that land at the exclusion of everyone else. This was the basis of Henry George's advocacy for a land value tax.

"But YellowApple," I can already hear, "${ARBITRARY_FAANG}'s wealth ain't tied up in real estate!" Au contraire. Their software is developed in offices that consume land. Their hardware is built in factories that consume land. Their hardware is further constructed from materials extracted from that land. It's land all the way down, and the company externalizes those opportunity costs on everyone else. That is where the injustice in their wealth lies; it is unjust for them to reap the benefits of that land without adequately compensating the rest of society for the opportunity cost the members thereof now bear.

[Turing_Machine]

> Same with the water consumed by those crops.

Every drop of water on Earth has been "consumed" many, many times over. It doesn't just get used once and then disappear.

There may be localized shortages of water (e.g., in California), but that doesn't mean that the Earth's water overall gets "used up", in any meaningful sense.

[yellowapple]

That ain't what I'm saying. Every inch of land on Earth has been "reused" many times over, too. That doesn't change the fact that there's a finite amount of it, and the possession of any quantity of it is at the expense of everyone else needing it. Same goes for water; yes, the water itself doesn't magically disappear, but of the 1,386,000,000 cubic kilometers of water on this planet, if you're storing a trillion of those km³ for yourself in water tanks, that's a lot less that other people can use.

That is: as defined above, consumption ≠ destruction, but rather consumption = possession.

(This ain't even mentioning the distinction between actual potable water v. water contaminated with salt or outright toxins - and the resulting labor and energy costs of converting the latter back into the former. It also ain't even mentioning the labor and energy costs of moving water from where it's abundant to where it's scarce.)

[Turing_Machine]

>If you're storing a trillion of those km³ for yourself in water tanks

All the water tanks in the world don't add up to a trillion km³. Not by many orders of magnitude.

> the resulting labor and energy costs of converting the latter back into the former

The sun does that for free, and has done for billions of years.

[yellowapple]

> All the water tanks in the world don't add up to a trillion km³. Not by many orders of magnitude.

You're missing my point: that hoarding water is at the expense of anyone else who needs water. One milliliter, one gigaliter, doesn't matter; that's still less for everyone else unless and until it is released, and during that time the mere storage of that water externalizes an opportunity cost on everyone else needing that water.

> The sun does that for free, and has done for billions of years.

Right, because the sun magically drops all precipitation into lakes and rivers, and not a drop of it into the oceans. I'm sure the sun has some sort of tracking system that realizes which molecules of water come from where and puts them right back whence they came, right?

[Turing_Machine]

> You're missing my point: that hoarding water is at the expense of anyone else who needs water.

Someone with a water tank in (say) Seattle, Washington is not "hoarding water" "at the expense" of someone in Addis Ababa, Ethiopia, because there is no practical way of getting the "hoarded" water from Washington State to Ethiopia. If the Seattleite doesn't "hoard" that water, it's going to run straight into Puget Sound. It's not going to somehow appear at a tap in Addis Ababa.

> Right, because the sun magically drops all precipitation into lakes and rivers, and not a drop of it into the oceans.

Now you're just strawmanning. Of course a lot of it falls on the oceans. But enough of it falls on land that the hydrologic cycle continues, as it has for billions of years.

I think fundamentally you're just wedded to the the idea that water gets "used up" in the same sense that, say, oil, gets used up.

It doesn't.

[_jal]

> Sorry but I strongly disagree with your assertion that building a business is a zero-sum game.

It isn't either/or. Nearly all businesses do "create value". Nearly all businesses also compete for a limited supply of customers, because nearly all markets can produce more outputs than are needed.

The ratio between the two matters a lot to the character of the company.

[Hongwei]

I agree with you completely. There are certainly rent-seeking businesses that do not create value (or net value?). And the majority of businesses are competing in (disrupting) existing markets.

Even if they don't increase total consumer spending by offering better products and winning market share, they do increase consumer _wealth_. I'm glad I can buy a 65" 4k TV for as much as my parents paid for a 15" CRT 20 years ago, adjusted for inflation.

That's the median outcome. Then you get outliers like the sewing machine that greatly increased the productivity of vast amounts of workers, making those users much richer and society wealthier because clothes got cheaper.

I find it disingenuous to claim, as the OP did (perhaps unintentionally), that innovators are bad faith actors playing a zero sum game. Surely that's the exception, not the norm. Just as there are bad actors in academia and any other profession.

[walleeee]

> I find it disingenuous to claim, as the OP did (perhaps unintentionally), that innovators are bad faith actors playing a zero sum game. Surely that's the exception, not the norm. Just as there are bad actors in academia and any other profession.

I didn't intend to claim bad faith. As you point out there are surely bad actors in any field. More common, I think, is the (most likely subconscious) Lippmann effect: "We are peculiarly inclined to suppress whatever impugns the security of that to which we have given our allegiance."[0]

[0]: https://www.theatlantic.com/magazine/archive/1919/11/the-bas...

[dzolob]

>>Even if they don't increase total consumer spending by offering better products and winning market share, they do increase consumer _wealth_. I'm glad I can buy a 65" 4k TV for as much as my parents paid for a 15" CRT 20 years ago, adjusted for inflation.

I think this depends of how are you calculating the cost of things. In this day in age, misery wages and huge negative externalities have more to do with cheap clothes and appliances than the sewing machine, imho. The later mostly contributed on how many of them you can make by the second, but you still need farms of people to work them.

[eloff]

It's not fixed though. You may think the market for cars only has so much demand, but if you can make a car cheaper, demand goes up. This is one of the most fundamental laws of microeconomics (the non bullshit part of economics.)

There are definitely some zero sum games, I'm not disagreeing with you, just pointing out a nuance. The market for eyeballs/attention is zero sum. Netflix famously thinks of its competition as everything outside of Netflix including "real life."

[galaxyLogic]

> Netflix famously thinks of its competition as everything outside of Netflix

Is that true or just marketing? Is Netflix seriously competing against every other type of industry? How could it survive if there was nothing but Netflix? Or are they so megalomaniac that they are trying to take over the pharmaceutical industry too? And agriculture? And military? I can't believe.

[walleeee]

I don't think building a business is zero-sum in principle. Your point about a farmer creating value is well taken. Our present measures of economic value are notoriously short-sighted though (i.e., willing to ignore hard-to-quantify externalities); did the green revolution create value? It vastly improved yield, but if we don't make serious changes in the next 50 years, it will destroy the viability of agriculture. Value creation is rarely unambiguous.

I would also argue that many VC-backed startups are more about finding unexploited niches or catabolizing existing sectors of the economy than creating new material wealth.

[Hongwei]

I agree with you that current market incentives do not capture externalities like environmental harm. (eg. soil erosion, in the case of a farmer who doesn't rest his fields)

I hope to convince you to hate the game, not the players. So that we can focus our efforts at the root cause. And to take a measured approach: it's not all bad. I'd rather have our current quality of life (in Canada) than to live in a pre-industrial world in the longhouses of the Aboriginal Peoples who used to live where I do. It seems romantic, but I'm sure I'd be a terrible hunter. I choose to believe that human progress will continue to solve the problems we face, in time. Because historically we always have. Let's root for more Elon Musks instead of hating on the average capitalist.

[walleeee]

Where have I implied I hate the players? I certainly don't, nor do I think everything is terrible. I'm sorry it came off as such.

> I choose to believe that human progress will continue to solve the problems we face, in time. Because historically we always have.

This is where we disagree, I think. I don't see good evidence for this. I hope I'm wrong and you're right.

[Hongwei]

I hope so too :) And fair enough, thanks for the the kind discussion, I didn't mean to put words in your mouth.

[walleeee]

Likewise! No problem, friend

[threatofrain]

There are only two ways civilization gets more stuff, and that’s by either by making the current amount of material go twice as far, making twice as many homes and phones, or we mine it out of the earth.

[Turing_Machine]

Yes. The "pie" (while certainly finite) is nonetheless immensely bigger than it was in even 1980, much less 1880 or 1380.