I would say that the really simplified version is that there are essentially two different ways how people get rich. (1) By creating value; and today individuals are able to create incredible amounts of value thanks to technology. (2) By taking value from other people, using force or fraud in a wider meaning of the word;
Sure, but does rent-seeking really explain the increase in inequality since, say, the 1950s or so, which is what most folks tend to be worried about and what’s discussed in Paul Graham’s essay? I don’t think it does, except as a minor factor (that is, it could certainly explain increased wealth among congress-critters and other members of the ‘Cathedral’); the main factor was technical change favoring skilled people and sometimes conferring exceptional amounts of wealth to random “superstars”.
I don’t know. Seems to me possible that people like Paul Graham (or Eliezer Yudkowsky) may overestimate the impact of technical change on wealth distribution because of the selection bias—they associate with people who mostly make wealth using the “fair” methods.
If instead they would be spending most of their time among African warlords, or Russian oligarchs, or whatever is their more civilized equivalent in USA, maybe they would have very different models of how wealth works.
The technological progress explains why the pie is growing, not how the larger pie is divided.
There are probably more people who got rich selling homeopathics, than who got rich founding startups. Yet in our social sphere it is a custom to pretend that the former option does not exist, and focus on the latter.
If instead they would be spending most of their time among African warlords, or Russian oligarchs, or whatever is their more civilized equivalent in USA, maybe they would have very different models of how wealth works.
If you look at the Forbes list there aren’t many African warlords on it.
There are probably more people who got rich selling homeopathics, than who got rich founding startups.
Which people do you think became billionaire’s mainly by selling homeopathics? Homeopathics is a competive market where there no protection from competitors that allows to charge high sums of money in the way startups like Google produce a Thielean monopoly.
If you look at the Forbes list there aren’t many African warlords on it.
It seems possible that African warlords’ wealth is greatly underestimated by comparing notional wealth in dollars. E.g., if you want to own a lot of land and houses, that’s much cheaper (in dollars) in most of Africa than in most of the US. If you want a lot of people doing your bidding, that’s much cheaper (in dollars) in most of Africa than in most of the US.
Money has more or less logarithmic utility. So selling homeopathics could still bring higher average utility (although less average money) than startups. For every successful Google there are thousands of homeopaths.
That depends on your goals. If you want to create social or political impact with money it’s not true.
Large fortunes get largely made in tech, resources and finance.
… or whatever is their more civilized equivalent in USA
I think the generalized concept is ‘politicians’. And yeah, that sounds likely. But I would say that it is a problem that the ones who make the rules and the ones who explain to everyone else what’s what all live in an environment where earning something honestly is weird is a problem. That there are some who are not in such a bubble is not the problem.
Oligarchs are the level above politicians. You can think about them as the true employers of most politicians. (If I can make an analogy, for a politician the voters are merely a problem to be solved; the oligarch is the person who gave them the job to solve the problem.) Imagine someone who has incredible wealth, owns a lot of press in the country, and is friendly with many important people in police, secret service, et cetera. The person who, if they like you as a wannabe politician, can give you a lot of money and media power to boost your career, in return for some important decisions when you get into the government.
This requires a good investigative journalist with good understanding of economics. Which I am not. I could tell you some names for Slovakia (J&T, Penta, Brhel, Výboh), which probably you would have no way to verify. (Note that the last one doesn’t even have a Wikipedia page. These people in general prefer privacy, they own most of the media, and they have a lot of money to sue you if you write something negative about them, and they also own the judges which means they will win each lawsuit.)
I am not even sure if countries other than ex-communist use this specific model. (This doesn’t mean I believe that the West is completely fair. More likely the methods of “power above politicians” in the West are more sophisticated, while in the East sophistication was never necessary if you had the power—you usually don’t have to go far beyond “the former secret service bosses” and check if any of them owns a huge economical empire.)
I am not even sure if countries other than ex-communist use this specific model.
Ah, well, that’s a rather important detail.
I’m not saying that your model is entirely wrong—just that it’s not universally applicable. By the way, another place where you are likely to find it is in Central and South America. However I think it’s way too crude to be applied to the West. The interaction between money and power is more… nuanced there and recently the state power seem to be ascending.
Sure, but does rent-seeking really explain the increase in inequality since, say, the 1950s or so, which is what most folks tend to be worried about and what’s discussed in Paul Graham’s essay? I don’t think it does, except as a minor factor (that is, it could certainly explain increased wealth among congress-critters and other members of the ‘Cathedral’); the main factor was technical change favoring skilled people and sometimes conferring exceptional amounts of wealth to random “superstars”.
I don’t know. Seems to me possible that people like Paul Graham (or Eliezer Yudkowsky) may overestimate the impact of technical change on wealth distribution because of the selection bias—they associate with people who mostly make wealth using the “fair” methods.
If instead they would be spending most of their time among African warlords, or Russian oligarchs, or whatever is their more civilized equivalent in USA, maybe they would have very different models of how wealth works.
The technological progress explains why the pie is growing, not how the larger pie is divided.
There are probably more people who got rich selling homeopathics, than who got rich founding startups. Yet in our social sphere it is a custom to pretend that the former option does not exist, and focus on the latter.
If you look at the Forbes list there aren’t many African warlords on it.
Which people do you think became billionaire’s mainly by selling homeopathics? Homeopathics is a competive market where there no protection from competitors that allows to charge high sums of money in the way startups like Google produce a Thielean monopoly.
It seems possible that African warlords’ wealth is greatly underestimated by comparing notional wealth in dollars. E.g., if you want to own a lot of land and houses, that’s much cheaper (in dollars) in most of Africa than in most of the US. If you want a lot of people doing your bidding, that’s much cheaper (in dollars) in most of Africa than in most of the US.
On the other hand the African warlord has to invest resources into avoiding getting murdered.
Yup. It’s certainly not clear-cut, and there are after all reasons why the more expensive parts of the world are more expensive.
Money has more or less logarithmic utility. So selling homeopathics could still bring higher average utility (although less average money) than startups. For every successful Google there are thousands of homeopaths.
That depends on your goals. If you want to create social or political impact with money it’s not true. Large fortunes get largely made in tech, resources and finance.
I think the generalized concept is ‘politicians’. And yeah, that sounds likely. But I would say that it is a problem that the ones who make the rules and the ones who explain to everyone else what’s what all live in an environment where earning something honestly is weird is a problem. That there are some who are not in such a bubble is not the problem.
Oligarchs are the level above politicians. You can think about them as the true employers of most politicians. (If I can make an analogy, for a politician the voters are merely a problem to be solved; the oligarch is the person who gave them the job to solve the problem.) Imagine someone who has incredible wealth, owns a lot of press in the country, and is friendly with many important people in police, secret service, et cetera. The person who, if they like you as a wannabe politician, can give you a lot of money and media power to boost your career, in return for some important decisions when you get into the government.
So, can you tell us who employs Frau Merkel? M. Hollande? Mr. Cameron? Mr. Obama? Please be specific.
This requires a good investigative journalist with good understanding of economics. Which I am not. I could tell you some names for Slovakia (J&T, Penta, Brhel, Výboh), which probably you would have no way to verify. (Note that the last one doesn’t even have a Wikipedia page. These people in general prefer privacy, they own most of the media, and they have a lot of money to sue you if you write something negative about them, and they also own the judges which means they will win each lawsuit.)
I am not even sure if countries other than ex-communist use this specific model. (This doesn’t mean I believe that the West is completely fair. More likely the methods of “power above politicians” in the West are more sophisticated, while in the East sophistication was never necessary if you had the power—you usually don’t have to go far beyond “the former secret service bosses” and check if any of them owns a huge economical empire.)
Ah, well, that’s a rather important detail.
I’m not saying that your model is entirely wrong—just that it’s not universally applicable. By the way, another place where you are likely to find it is in Central and South America. However I think it’s way too crude to be applied to the West. The interaction between money and power is more… nuanced there and recently the state power seem to be ascending.
Except that, well, you know, in Soviet Russia the politician is above the oligarchs :-D