Why do startups necessarily increase economic inequality? I agree that they do now, but is it impossible to have the good of startups without also increasing economic inequality?
Out of the usual reasons people encourage you to either found or work for a startup, "get rich" is not the primary motivator, and "get richer than other people" certainly isn't. (To claim that "get rich" implies "get richer than other people" is to invoke the pie fallacy, which Paul Graham debunked recently.) "Change the world," "have more freedom / creative control than a traditional job", etc. are, and those don't seem to require economic inequality.
"For nearly everyone, the opinion of one's peers is the most powerful motivator of all—more powerful even than the nominal goal of most startup founders, getting rich. [...] Even if you start a startup explicitly to get rich, the money you might get seems pretty theoretical most of the time. What drives you day to day is not wanting to look bad."
If you want to imagine startups not causing economic inequality, one approach is a radical restructuring of society, probably involving heavy taxes, as I suggested in a comment previously. But another simple one is to have more people do startups, and to explicitly invest primarily in people and communities that don't have other easy routes of getting rich.
Well, sure. But there's a couple of levels of "get rich": "make enough money to be self-sufficient," "get so much money that you have not yet envisioned what you might do with it," "get into a minority of rich people."
The first one seems like an extremely common motivator, yes. The second one sometimes; the third one unlikely. But the first one does not require economic inequality; the second one might, and only the third one does.
This is what I find puzzling about pg's claim to be in the business of creating economic inequality. Sure, he's in a business that happens to have that effect now, but that hardly seems like a core requirement of the business.
(And this doesn't even address the fact that "startups do X" is sort of circular. Could non-startups, e.g. small businesses that stay small, do X just as well? Or better, because they don't have the failure rate of startups? If we are no longer able to have them run by people motivated by getting rich, is the good done by startups less likely to happen?)
I don't think that is correct. For example, a startup could make its founder a billion dollars, but if hundreds of millions of people are able to raise their incomes because they became more productive as a result of using that startup's product, then overall inequality would decrease. Does Coursera lower or increase inequality? I would argue it lowers it in the long run.
I just read "The Refragmentation" (I hadn't read it previously), and I had read the original essay on economic inequality previously.
Neither of these essays seems to discuss the good of startups in relation to economic inequality. All they discuss is the inevitability of startups, or really technology, increasing economic inequality. And "The Refragmentation" explicitly points out that a society can put a stop to this via high taxes.
(That said, it is late and maybe I didn't fully understand a sentence somewhere.)
Comments
Why do startups necessarily increase economic inequality? I agree that they do now, but is it impossible to have the good of startups without also increasing economic inequality?
Out of the usual reasons people encourage you to either found or work for a startup, "get rich" is not the primary motivator, and "get richer than other people" certainly isn't. (To claim that "get rich" implies "get richer than other people" is to invoke the pie fallacy, which Paul Graham debunked recently.) "Change the world," "have more freedom / creative control than a traditional job", etc. are, and those don't seem to require economic inequality.
For instance, Paul Graham writes in http://paulgraham.com/mit.html :
"For nearly everyone, the opinion of one's peers is the most powerful motivator of all—more powerful even than the nominal goal of most startup founders, getting rich. [...] Even if you start a startup explicitly to get rich, the money you might get seems pretty theoretical most of the time. What drives you day to day is not wanting to look bad."
If you want to imagine startups not causing economic inequality, one approach is a radical restructuring of society, probably involving heavy taxes, as I suggested in a comment previously. But another simple one is to have more people do startups, and to explicitly invest primarily in people and communities that don't have other easy routes of getting rich.
"Out of the usual reasons people encourage you to either found or work for a startup, "get rich" is not the primary motivator"
in my experience with startups and founders, that is the absolute central motivator, to the point that it is utterly laughable to deny it.
Well, sure. But there's a couple of levels of "get rich": "make enough money to be self-sufficient," "get so much money that you have not yet envisioned what you might do with it," "get into a minority of rich people."
The first one seems like an extremely common motivator, yes. The second one sometimes; the third one unlikely. But the first one does not require economic inequality; the second one might, and only the third one does.
This is what I find puzzling about pg's claim to be in the business of creating economic inequality. Sure, he's in a business that happens to have that effect now, but that hardly seems like a core requirement of the business.
(And this doesn't even address the fact that "startups do X" is sort of circular. Could non-startups, e.g. small businesses that stay small, do X just as well? Or better, because they don't have the failure rate of startups? If we are no longer able to have them run by people motivated by getting rich, is the good done by startups less likely to happen?)
Is it impossible to have the good of startups without also increasing economic inequality?
Yes.
This is discussed in detail in the original essay and in The Refragmentation essay here: http://paulgraham.com/re.html
I don't think that is correct. For example, a startup could make its founder a billion dollars, but if hundreds of millions of people are able to raise their incomes because they became more productive as a result of using that startup's product, then overall inequality would decrease. Does Coursera lower or increase inequality? I would argue it lowers it in the long run.
I just read "The Refragmentation" (I hadn't read it previously), and I had read the original essay on economic inequality previously.
Neither of these essays seems to discuss the good of startups in relation to economic inequality. All they discuss is the inevitability of startups, or really technology, increasing economic inequality. And "The Refragmentation" explicitly points out that a society can put a stop to this via high taxes.
(That said, it is late and maybe I didn't fully understand a sentence somewhere.)