[sukruh]

I agreed with almost all of it until:

>My stance on this has probably shifted in a negative direction over time, primarily because of my growing awareness of how often technology is used for wealth accumulation. I don’t think capitalism will solve the problems that capitalism creates, so I’d be much more optimistic about technological development if we could prevent it from making a few people extremely rich.

What's wrong with people getting rich by producing goods and services, and selling these to willing buyers? People laundering wealth into undue political power, regulatory capture, erecting barriers to market entry ("pulling up the ladder behind them") are different problems than people creating wealth. Efforts on creating a just society should focus on the former - preventing wealth creation is not the solution to injustice. In fact, since people have vastly different abilities and inclinations for creating wealth, a just society is also one with vast wealth disparities.

Relevant PG essay: https://paulgraham.com/ineq.html

[bandofthehawk]

I don't think he's saying no one should get rich, just that wealth inequality is already too large and seems to be on a path to continue growing. I think most people would agree there is some point where there is too much wealth inequality, we just disagree on whether we're already past that point.

[analog31]

A world where massive wealth disparity does not produce a corresponding power disparity, at this point, is known to be hopelessly utopian.

[mola]

Wealth is power. When you have enough and the rest don't, it's inevitable you will use it for political power.

This obsession with anti government sentiment that Americans have gives them a blind spot for the fact the power accumulation in the hands of the few is the problem. Not government.

How exactly could you stop so called 'wealth laundering'?

[mfuzzey]

Some abuse of wealth for political power may be inevitable but some countries are a lot better at limiting it than others.

For example here in France the amount of money politicians can spend on campaigning is strictly limited (and reimbursed by the state for those that pass a certain threshold of the vote). I'm not saying that it's perfect or that abuse doesn't sometimes still occur (as the current court case involving ex president Sarkozy shows) but I think it does improve things a lot.

Contrast that with the American system where to have any chance of becoming president (no matter which party you support) you basically have to be rich. And where multiple lobbyists and special interest groups basically buy the policies they want...

[BrenBarn]

> What's wrong with people getting rich by producing goods and services, and selling these to willing buyers?

If you take this sentence and change "people getting rich" to something else (like "fomenting drug addiction" or "polluting the environment"), does anything change? Whether the inequality is a result of "selling goods to willing buyers" is a complete red herring. If that consequence is bad, it doesn't really matter whether it's a result of supposedly "fair" market exchanges.

Others have already pointed out that it's not really plausible to avoid the "different" problems you mention while still allowing unlimited wealth inequality. But aside from that, how do you know that the buyers are willing? What is the set of alternatives being considered to decide if a person is "willingly" choosing a certain product? It's difficult to even maintain the pretense of "willing buyers" in a "free market" when some individuals control a large market share. Miners living in a company town were "willing" to buy groceries from the company store in the sense that they needed to buy groceries, but they didn't really have any other options for how to express their "market preference".

Even if markets were free, there's nothing inherently good about a free market. What's good is a free society, where people in aggregate have substantive freedom to do what makes them happy. That goal isn't furthered by allowing a small number of wealthy people to pursue their goals while a large number of less wealthy people are unable to do so.

[x-complexity]

> If you take this sentence and change "people getting rich" to something else (like "fomenting drug addiction" or "polluting the environment"), does anything change?

False equivalency. It is possible to gain wealth without performing any of the listed/possible negative global effects. Furthermore, it is a backdoor towards injecting ideas of poverty being a morally positive position.

> Even if markets were free, there's nothing inherently good about a free market. What's good is a free society, where people in aggregate have substantive freedom to do what makes them happy.

Having a free society implies the freedom to exchange with each other with minimal restrictions. Not allowing people to do so runs opposite to the ideals of the stated intention.

--------------

All that being said, that *doesn't* mean that the current market's working as intended. What has been inherited is a complex tangled ball of national ideals, personal & corporate persuasions to governments for their own reasons/goals, & consistent global coordination failures when circumstances change.

But the outright banning of markets is equivalent to the banning of hammers, just because hammers are sometimes used to bludgeon people to death. It is ultimately a tool, and a very useful one in terms of signaling demand & supply.

[BrenBarn]

> Having a free society implies the freedom to exchange with each other with minimal restrictions.

I don't think that it implies "with minimal restrictions", any more than it implies the freedom to do anything else with minimal restrictions. In any case, a free society also implies a lot of other freedoms, and insofar as wealth accumulation interferes with those other freedoms, it's not adding to net freedom. An abstract "freedom from market restriction" is not useful if you don't have things like the freedom to eat or the freedom to sleep peacefully.

> Not allowing people to do so runs opposite to the ideals of the stated intention.

Not necessarily. Not allowing anyone to engage in market activity probably does; allowing everyone to engage without restrictions also does. The point is that markets don't have some magical special status as a component of freedom.

> But the outright banning of markets is equivalent to the banning of hammers, just because hammers are sometimes used to bludgeon people to death.

I'm not suggesting banning markets, I'm just saying that the mirror image of your position is also true: elevating markets to some mythical status and insisting that they are the ultimate litmus test of freedom is like saying that because hammers can be used to build houses, everyone must be allowed to use hammers however they please. Markets (just like everything else) are okay when controlled and regulated within their bounded role as a component of society.

[ericjmorey]

Money is a proxy for rights to resources. If rights to resources are not widely distributed, there are power imbalances that are no different than royalty. The majority of humans have rejected royalty in all but a ceremonial role in recent history.

[mmustapic]

> What's wrong with people getting rich by producing goods and services, and selling these to willing buyers?

They are not producing goods and services by themselves, but by having a usually massive workforce. We as a society are saying “ok, it is fine to keep the money if you work like that”.

On the other hand, we are seeing in real time what super rich people want in the end: power over the rest, not just money.

[xboxnolifes]

I don't particularly worry about someone making $100m dollars from their tech startup. I worry about how a few hundred Americans have more collective wealth than the majority of the country combined. And it seems that computing is really good at eliminating labor and consolidating wealth, further increasing wealth inequality and reducing worker bargaining power.

[jhrmnn]

In capitalism, power correlates with wealth. So wealth inequality yields power inequality. Too much inequality, and a society can hardly feel just. If we only could somehow fix capitalism so that wealth doesn’t correlate with power.

[bgnn]

If you genuinely want to know: read Karl Marx.

[ninetyninenine]

Rich people once they made their wealth creation move on society they no longer need to work. Their capital gains actually start increasing from the ownership of human capital. So they get richer and richer without contributing work. In fact that wealth gained without contributing and creating new wealth rises at a compounding rate. Simply owning enough capital your wealth will grow at speeds that far excel what a person earns doing actual wealth creation whether that means creating a startup or labor.

So if you no longer create wealth but your ownership of capital is growing at compounding rates then what exactly is happening? What’s happening is that you are siphoning and extracting wealth off of people who create wealth. You own human capital so you take a cut of it off the top and you use that cut to buy even more human capital which compounds your wealth ownership to even higher levels. This is how billionaires like Warren Buffett or other investors grow their wealth by simply investing rather then creating wealth.

Thus wealth inequality is not a result of wealth creation. It is an artifact of capitalism. In capitalism wealth is variable among individuals and it fluctuates. However once wealth accumulates in concentration higher then normal among one individual or several it hits that compounding growth factor and wealth starts going up at astronomical rates and these wealth owners start buying up more and more human capital until they own all of it and benefit from all of it without actually contributing work.

You can see this effect in y combinator. The owners of y combinator don’t actually do much work. They have so much capital that they simply can take a bunch of no risk couple hundred k bets until one startup becomes a unicorn in which they rake in a ton of capital from the growth.

Think of this like property ownership. A rich person can invest his wealth in property and contribute zero work to society and simply rent his property out. The rent from the tenant is from wealth creation aka labor and the rich person simply siphons it from the top without contributing additional work. The property owner uses that income to buy more property and the cycle continues until you have an affordability crisis of housing across the US and the world.

This growth continues unimpeded and uncontrolled until the wealth inequality is so extreme it doesn’t logistically work. This is direction the world is heading in today.

This isn’t the full story though. When you take away capitalism to solve this problem you invent communism. Communism was the result of Karl Marx noticing this problem that is fundamental to capitalism. That’s why he got popular because he illustrated the problem of wealth inequality and how wealth naturally becomes more and more concentrated among a few individuals without those individuals creating wealth.

Hence communism spread all over Europe but was ultimately a failure. The reason why it’s a failure is because communism lacks incentive. It turns out that wealth inequality is what drives wealth creation. Without the ability to be unfairly rich you don’t get the economic drivers that promotes wealth creation and thus communism keeps things fair but you don’t create wealth.

So no system is perfect. Everything has problems. Actually I take it back. There is a perfect system. See Scandinavia. Basically create a more socialist and egalitarian society while benefiting and extracting technological wealth from adjacent societies that are capitalist. Have the government own human capital of countries that are very capitalist then redistribute that wealth to its citizens so those people can live in a more just society while the rest of world can burn.

[borski]

> You can see this effect in y combinator. The owners of y combinator don’t actually do much work.

The YC partners who spend so much of their time helping startups are definitely doing work.

[ninetyninenine]

YC partners own capital right? I mean the labor they actually do doesn’t translate into the income they receive which is astronomically more.

Take for an example: a yc partner can take everything they know and train someone to do the same work and pay that person a much lower fixed salary. That salary represents work contributed, but a yc partner earns more than this. The majority of wealth gained from the yc partner does not come from actual work contributed… it comes from capital gains from growth.

I mean you can already see a logistical issue with capitalism by looking at a fundamental problem. A 747 is the result of thousands of man years of labor. Not one single man can build that thing. Not one single man can create enough wealth to create a 747.

Yet if one man can’t create enough wealth to create or trade for a 747 how do people become rich enough to own a 747? Of course it comes from siphoning wealth off of human capital. It is fundamentally unfair but unfortunately unfairness is the ultimate driver that led to the creation of the 747 in the first place. The idea of having an unfair advantage must exist to drive people.

[analog31]

Nobody needs to be rich enough to own a 747, in order to justify making one. In fact, I doubt there are more than a dozen individually owned jetliners in the world. All you need is for a lot of people to pool their wealth and allow it to be directed towards a common purpose. In turn, this happens because society provides entitlements (such as financial and corporate regulations, the money system, etc.) that allow great ventures to be formed and operate.

The entitlements are justified by a social theory, that the activity produces a net benefit for everybody. There may be pockets of unfairness -- no system works perfectly -- but no reason why it must allow unlimited unfairness. If it does, then there's also no reason why it can't be restrained.

[ninetyninenine]

>Nobody needs to be rich enough to own a 747, in order to justify making one

My argument is not about the justification to making or owning a 747. It's the justification for how is it realistically possible for ONE person to own enough wealth to buy a 747 EVEN when his own intrinsic abilities are not great enough to build a 747. This is orthogonal to society pooling together wealth and building a 747 AND orthogonal to the actuality of a wealthy person purchasing a 747.

At best a human can probably output the utility equivalent of 3 other human beings if that human has super strength or genius level intelligence. But the ability to make a 747 which takes thousands of man years to make? What sort fair exchange did the person engage in, in capitalist economy to generate that level of wealth WHEN at best his own output can only be 3x the average human? Obviously the exchange he made is fundamentally unfair.

The thing with communism is that it's unfair. You distribute resources equally, then actors who don't perform get an undeserved portion of wealth. Capitalism on the other hand is fair in the sense that the amount of effective effort you put in the more wealth you gain? Or is it? Then how come in capitalism you get entities that own enough wealth to buy a 747 when clearly the amount of work that person can output is obviously not even close to the amount of work used to create the 747 itself? That's the issue, and it's a small issue.

The bigger issue is that the person who has enough wealth to build a 747 has assets that will grow in compound. He will get richer and this will eat the world as what's currently happening in the actual world right now.

[martin-t]

Yesterday I had a very similar argument. Maybe I haven't been paying attention until now but this is the first time I see somebody else summarize it so clearly.

I've come to the conclusion that value (you call it wealth) is created by work. Yet the fastest way to get rich is to own already created value (a fixed amount) and use that to buy power/influence (e.g. buy a company) to take a cut from value created by other people over time (an unbounded amount).

IMO this one-time vs indefinite distinction is the core of inequality.

Currently, reward is based on capital invested, it should be based on work invested.