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Graham's _Inequality and Risk_

I've usually found value in Paul Graham's essays, even when I don't agree with him. However, his latest simply parrots the standard right-wing economic arguments.

http://www.paulgraham.com/inequality.html
Julian
Wednesday, September 21, 2005
 
 
I think he makes a good point. His essay is against the idea of "eliminating inequality", which is a fine thing to rail against IMO. It's just not the only point worth making.

However, he considers only one side of things. Who says that economic growth is the only thing we want? What about a balancing analysis of the wish to protect the vulnerable in a society, and a discussion of how to do that and it's implications on other needs?

IMO the whole stagnant socialism vs. capitalism often falls into this meaningless hole. It's like arguing for night vs. day. An ideal situation is some reasonable balance beteen the two.
revert my buffer
Wednesday, September 21, 2005
 
 
Similarly: I disagreed with the article, but I thoroughly enjoyed it.
Robert Smithson Send private email
Wednesday, September 21, 2005
 
 
It's the usual divide the world into two camps and pick a winner. The problem is those aren't the only two options.
son of parnas
Wednesday, September 21, 2005
 
 
I'm a bit ambivalent on this. I can see both sides.

1.  Technological progress is, in general, a good thing. It's a rising tide for all.  Even the poorest among us have access to free healthcare at the local emergency room. That care is far superior to what was avaialble just 100 years ago.

2. LOWER THE RISK
I agree that you need to reward
successful startups. Another solution is makng it EASIER TO START one.  By lowering the risk you lower the required reward incentive. BTW, that rising tide I mentioned has lowered that risk. (You can get the Microsoft Empower for $400/year and get all the MS software you want.)

3. NOT TRUE IN MY CASE
I personally wasn't motivated by a big pay off to start may company. I was motivated by doing something I enjoy and thought was useful (helping stroke survivors regain speech & language skills). 



GRAHAM'S CONTRADICTION

"If you made it so that people could only get rich by starting startups, people who wanted to get rich would all start startups. ... But I don't think it would have much effect on the distribution of wealth."

Sure it would. Higher tax on non-startup wealth. Use it to provide resources for startups, provide free healthcare insurance for startups, more funding for SCORE and other useful, legitimate resources for startups.


"People who want to get rich will do whatever they have to. If startups are the only way to do it, you'll just get far more people starting startups."

But, Paul, you said startups are GOOD. More startups is more good.

BTW, I'm a fiscal conservative and social liberal (I think that makes me a libertarian).  I don't agree with the simlistic notion of enforced equality. However, I think we need to provide a ladder up for everyone. The ladder is above the heads of a lot of folks who are never made aware there IS a ladder.

My friend Melanie teaches those peole (or did, until the 9th Ward in New Orleans ended up underwater).
Blog from a teacher in the poorest school district in New Orleans.
http://pleshblog.blogspot.com/
Mr. Analogy {Shrinkwrap ISV} Send private email
Wednesday, September 21, 2005
 
 
If Graham wants there to be more startups, I think the biggest thing we could do to encourage that in the USA is to provide universal healthcare like in Canada, Europe, and the other industrialized countries.

If starting a company didn't mean risking your health (and thereby your finances -- how much would it cost if you broke your leg without health insurance?) more people would do it.
Luke Francl
Wednesday, September 21, 2005
 
 
"Universal healthcare" is a happy phrase for "socialized medicine," which has been discredited.

I'm getting the sentiment from this thread that we should forcibly take money from other people to fund our own startups. Somehow, I don't think that idea's going to fly.
Impatient Send private email
Wednesday, September 21, 2005
 
 
I'm no fan of socialized medicine. I also don't favor taking from the rich and giving to my (or your) startup.

However, more startups would help the economy.  Healthcare is a big concern. I was lucky, my wife had a job with healhcare.  If she hadn't, it would have been scary.

And better resources for startups would be helpful.

Wait a minute... I'm a 10 year old established company.  On second thought, no more startups.
Mr. Analogy {Shrinkwrap ISV} Send private email
Wednesday, September 21, 2005
 
 
I remember something I read in a book by Erich Kästner long ago:

- I wouldn't like to be a bellboy. Bellboys die early.
- Are you sure?
- Have you ever seen an old bellboy?

The same applies to startups:

- I wouldn't like to work for a startup. They don't last long.
- Are you sure?
- Have you ever seen a mature startup?
Berislav Lopac Send private email
Wednesday, September 21, 2005
 
 
He harps on "economic inequality" by assuming that the improper solution is to make everyone equal. It isn't about every one being equal. It is about making sure the lowest people on the economic ladder have enough.

Now, if you want a real argument, try to decide what "enough" is.
Keith Murray Send private email
Wednesday, September 21, 2005
 
 
Universal healthcare has been discredited? Better tell the rest of the world.

Better yet, find one of the 40 million Americans without health insurance and tell them.

My health insurance is too expensive and sucks, but at least I have it. If I wanted to start a company, I don't think I'd be able to afford to buy anything but catastrophic coverage.
Luke Francl
Wednesday, September 21, 2005
 
 
>  "Universal healthcare" is a happy phrase for
> "socialized medicine," which has been discredited.

Discredited by whom?

A lack of health care has also been discredited by those who don't have it.

The comment on startups is exactly right. I know several people who are not leaving jobs for a startup simply because they need the health care for their family. Health care is also a burdonsome expense for a small company competing in the world market, especially when there's no rational reason for health care to be associated with a company. And you can't afford it on your own. So that leaves what?

We have a socialized military. We have socialized oil protections. We have socialized farmer proctection. We provide health care for government employees and old people. We have socialized fire, police, courts, and drug enforcement.

What you really are saying is you don't have the creativity to think beyong the either or of a market solution (which we don't have know) or a socialized system.
son of parnas
Wednesday, September 21, 2005
 
 
It seems that so many of us live in a world apart from the "have-nots" so we really don't know what it takes to stop the cycle of poverty.

I think there is not much that can help adults who get stuck in the poverty cycle.  We really have to start with the kids and judging by the number of children living in poverty in the US, we aren't doing much. 

I think it is true that you shouldn't simply take from the rich and give to the poor.  But surely, for societal good, giving to the children who do not have the means is the right thing to do.
sharkfish Send private email
Wednesday, September 21, 2005
 
 
"If starting a company didn't mean risking your health (and thereby your finances -- how much would it cost if you broke your leg without health insurance?) more people would do it."

If one can afford to quit working for a couple of years to build a start-up, one can also save enough beforehand to pay for a year or two of private catastrophic health insurance. The rates can be as low as $300/month.
MBJ Send private email
Wednesday, September 21, 2005
 
 
I live in a country which was trying to (at least nominally) get rid of inequality for half a century. How did it end? With a war.

In essence, there is only one way to end poverty: education. Also, keep in mind that poverty doesn't mean the same to everyone. Being homeless is definitely not the same thing in Alaska or on Fiji.
Berislav Lopac Send private email
Wednesday, September 21, 2005
 
 
You can't expect to improve a society, however good the intention, by simply taking from the haves and giving the have-nots.  Why is the "have" rich, did they bust their ass all their life to be a productive citizen and are reaping the rewards of that hard work.  Why is the "have-not" poor, did they drop out of school and get into a welfare cycle they are more than happy to continue?

I'm not saying all "haves" deserve what they have, nor that all "have-nots" are lazy good-for-nothings.  I'm just saying it's not as black and white "taking from the rich to give to the poor".  It's knee-jerk ideas like that that lead to things like ethnic cleansing, or racism.

It's an un-winnable debate that is as pointless as Communism.
Peter Ritchie Send private email
Wednesday, September 21, 2005
 
 
You can't always get INDIVIDUAL healthcare at a reasonable rate.

Insurance companies want to cherry-pick. They want the healthy people. And of course, no one wants to PAY for health insurance until they are sick. Catch-22.

You'll notice I'm arguing BOTH sides of this debate. I can see both sides of things.

The real problem, as noted above, is : what do people NEED?

Often, those that need the most and are working the hardest to better themselves ask the LEAST. So, you can't base need on the squeaky wheel volume. Conversely, the very wealthy have no idea of the challenges of the very poor.

And, yes, we have a greater chance of saving the improverished children than the adults. But guess who the children have as thier primary example: those adults. It's a cycle repeating itself.  I wonder how I ever got out.  (I spent may years of my youth living in a trailer park.)
Mr. Analogy {Shrinkwrap ISV} Send private email
Wednesday, September 21, 2005
 
 
"Why is the "have" rich, did they bust their ass all their life to be a productive citizen and are reaping the rewards of that hard work. "

I wonder what the wealthy children do with all that money they didn't earn?

Are they investing in start-ups?
sharkfish Send private email
Wednesday, September 21, 2005
 
 
I'm continually amazed that Graham is perceived as being at all intelligent.  The essay is sophomoric, no matter which side you fall on.
Mediocre Coder Send private email
Wednesday, September 21, 2005
 
 
Well, Paul Graham may wish to study the history of the tech he got his money from.

The internet? Subsidized by the "bureaucrats" he chooses to scorn. Computing? Again, the government. Lisp, that fancy language he loves writing about? John McCarthy certainly didn't invent it for a startup! It turns out that pretty much any fundamental tech was developed or deeply subsidized by the government before it became profitable enough to sell on a free market. And if the US government didn't, we'd still be trafficking in things like furs, following our comparative advantage.

In fact, speaking of Lisp inventor McCarthy, he was featured in an NYT article complaining about how Darpa is decreasing subsidies for basic compsci research!
http://www.csudh.edu/dearhabermas/basicres01bk.htm

"John McCarthy founded the Stanford artificial research lab in 1964, helping to turn it into a wellspring for some of Silicon Valley's most important companies, from Xerox Parc to Apple to Intel.

"'American leadership in computer science and in applications has benefited more from the longer-term work,' Mr. McCarthy said, 'than from the deliverables.'"
Tayssir John Gabbour Send private email
Wednesday, September 21, 2005
 
 
But Tayssir, would those projects have been profitable SOONER if they were supported by private interests?

I think that is what Graham might argue.
sharkfish Send private email
Wednesday, September 21, 2005
 
 
An interesting complement to Graham's essay is this recent post by DHH: http://www.loudthinking.com/arc/000509.html

Basically, too-large of a safety net discourages risk-taking in the form of starting businesses, generating jobs (because, of course, paying for that net involves confiscatory taxes on "the rich").
Jonathan Ellis
Wednesday, September 21, 2005
 
 
"I wonder what the wealthy children do with all that money they didn't earn?"

90% of millionaires weren't born to millionaire parents.

Personally, it doesn't strike me as fair to penalize the ones who worked for it (studies show that the rich, with few exceptions, both work much longer hours than 9-to-5, and significantly more risk) because you can't stand the idea of Joe Richboy who inherited it from his dad.
Jonathan Ellis
Wednesday, September 21, 2005
 
 
http://www.jmooneyham.com/your-true-chances-of-getting-rich.html

"Turns out inheritance of wealth is by far your best bet. Flip side? If you have no such prospects your chances of ever attaining riches dims substantially."

"So 69% basically inherit their wealth, 4.2% marry into it, and 26.8% make it in other ways."

After a brief search I didn't find what wealthy people do with their money. Looking at my friends who have become wealthy, most of them do nothing. No startups in their future. Given that most wealth remains inherited it's unlikely they risk it. It's probably in trusts and invested wisely.
son of parnas
Wednesday, September 21, 2005
 
 
Julian wrote:

<<<<
I've usually found value in Paul Graham's essays, even when I don't agree with him. However, his latest simply parrots the standard right-wing economic arguments.
>>>>

I found two problems with this statement. The first one is called "labeling". You've labeled Paul Graham as parroting right-wing economic arguments, and expected us to agree with you that it was thus wrong. Yet, you gave no arguments for why the article was wrong. A person who tries to convince others of something needs to reason his arguments from more basic, commonly agreed facts. Saying it is wrong because it's "Socialiastic", "Fascistic", or whatever is not enough.

The other and more serious problem is that you believe what Graham says is right-winged. While right-wing people often make such arguments, they are not the only ones. Libertarians, Objectivists, etc. also believe in Economic freedom, and yet they are by no means right-winged.

In fact, there are two axis to the political map: individual freedom and economical freedom. The Left seems to uphold individual freedom while supporting economical restrictions. The Right supports economical freedom while believing that individual freedom is not that important. Libertarians believe that both economical and individual freedom are important. There are also authoritarians who think that none are important.

Refer to this site for more information:

http://www.digitalronin.f2s.com/politicalcompass/

It is true that once upon a time there was a single dimensional political map until the Liberals diverged into Libertarians and the current Left which believes in economical restrictions. But now we have a two-dimensional political map.

You are not the only person who makes this mistake. Richard M. Stallman says in a Eurohacker interview with him ("http://eurohacker.mine.nu/issue2/a05.html") that Eric S. Raymond "is a right-wing anarchist", despite the fact Raymond is a self-proclaimed libertarian who rejects both the Left and the Right. In an IRC conversation I had on Freenode someone said that Objectivists are ultra-right-wing, despite the fact they are fanatical about individual rights.

I read that article by Paul Graham you linked to, and agreed with it completely. Graham has a point. One thing he missed I think was stating the fact that societies can become prosperous enough so even the poor will be relatively rich. For example, in some countries many poor people starve or used to starve to death. On the other hand, in First-world countries, there is an abundant food supply and as a result even the poor are well-fed. In the States and other countries, many Middle-Class people can afford to frequently travel by airplanes. Once computers were extremely costy and could only be afforded by large organizations. Nowadays much more powerful, compact and otherwise superior computers are common in almost every household.

These are all examples that while the economical imbalance is preserved, the economical well-being of everybody - poor and rich - grows.
Shlomi Fish Send private email
Wednesday, September 21, 2005
 
 
"But Tayssir, would those projects have been profitable SOONER if they were supported by private interests?"

Well, they ARE supported by private interests. ;) Not out of their own pockets, of course, but by the US public's. In other countries, the link is even more obvious than our Darpa system; apparently, Japan's MITI acts right out in the open to subsidize tech. The "Asian tigers" have their own systems.

Basic research is too costly for any profit-dependent entity to bear. Even mighty Microsoft can't fund blue-sky research, as I understand, instead focussing on profitable shorter-term results. So our system is about "socializing risk and cost, while privatizing rewards."

Certainly, tech is built and profits soar. But somehow, the average citizen didn't get anything from the deal. Wages at best stagnate while working hours increase. If wages or hours tracked productivity increases, we could choose 10-25 hour workweeks. Or work long hours for much more money.
http://swiss.csail.mit.edu/~rauch/worktime/

But it turns out that US citizens work among the longest hours in the developed world, often beating out even Japan. The 2004 Census Bureau shows that poverty has been increasing for the 4th straight year, yet somehow the rich are getting richer. The Wall St. Journal explains we're even LESS of a meritocracy than France, not to mention other wealthy nations:
http://online.wsj.com/article_email/0,,SB111595026421432611-IBje4NmlaJ4nZyqanqHaquEm4,00.html

If we were to believe Graham's argument, a true innovator like Einstein should've been motivated (and rewarded) by getting enough wealth to own Brazil. ;) Instead of writing long screeds calling capitalism "evil."
http://www.monthlyreview.org/598einst.htm

Now, it's all probably necessary. I'm told that a true freemarket economy was tried by Britain in the 19th century, and its failure was apparently chronicled in Polanyi's _The Great Transformation_. Perhaps that's our closest experiment. But our money does not go into public works spending, where it may be better spent.
http://www.understandingpower.com/Chapter3.htm#f9

So I honestly think Graham's time is better spent on the reverse Robin Hood of stealing from the poor to give to the rich. But of course, his priorities are up to him.
Tayssir John Gabbour Send private email
Wednesday, September 21, 2005
 
 
To clarify, when I said, "But somehow, the average citizen didn't get anything from the deal," I was writing rapidly. I meant relative to wages and working-hours. I mean, there's still use in getting sold back to us what we already paid for, as we all can imagine here on the net. ;)

And further, fundamental electronics-based tech funding probably is still much lower now, as the government subsidizes shorter term research, which established companies no doubt prefer. (Maybe Bush's anti-science policies may have something to do with this too.) While this might anger VCs, I expect many of them are satisfied by the government's biotech subsidies, which apparently is the new cutting-edge of the economy. (As many knowledgeable people seem to claim.)
Tayssir John Gabbour Send private email
Wednesday, September 21, 2005
 
 
>"Universal healthcare" is a happy phrase for "socialized medicine," which has been discredited.
Calling it "socialized medicine" was a slogan meant to prevent thinking about it. Same as calling something "democracy" or "terrorist." Those are trigger phrases who's sole purpose is to short circuit your thinking process to prevent you from thinking about them. It is an advertising campaign gone political.

Discredited? Only by the same people who spent the last 100 years claiming that tobacco was harmless.
Peter
Wednesday, September 21, 2005
 
 
$300 a month?

Crikey, healthcare in the US is expensive.

I was reading a bit in the Nat Geo about treatment for HIV in Africa.  Apparently the course of drugs to slow or stop it cost about $350.  Total.

But in the US, the same course costs over $10,000.  Go figure.

Sounds to me the promising 'get rich quick' startups in the States are in healthcare and biochemistry...

Americans, I recall it was quoted somewhere that you pay 15% of your income on healthcare.  This is crazy!  Good safe healthcare simply does not cost that much.

I've lived across Europe, in countries with national healthcare for all, and it is far better value-for-money.
new nick, new rep
Thursday, September 22, 2005
 
 
">"Universal healthcare" is a happy phrase for "socialized medicine," which has been discredited.
Calling it "socialized medicine" was a slogan meant to prevent thinking about it. Same as calling something "democracy" or "terrorist." Those are trigger phrases who's sole purpose is to short circuit your thinking process to prevent you from thinking about them. It is an advertising campaign gone political.

Discredited? Only by the same people who spent the last 100 years claiming that tobacco was harmless."

I agree. Here in the UK we have 'socialised medicine'. It's cheaper than in the US and everybody has access to it. Good old socialism (if that's what you think it is). We all pay for it. It's called taxation. How quaint.

Of course I don't suppose you'll ever be able to afford a nice centrally funded healthcare system in the US. Not with George Bush funding his deficit with tax cuts to his wealthy cronies, and an expensive war to pay for. And expensive hurricanes.

How is he ever going to reverse that deficit?

I sometimes wonder if America and it's people will ever wake up, so many of them just don't seem to have a clue. It's like they're in a dream.

Of course this is just old socialist twaddle.
Old socialist twaddler
Thursday, September 22, 2005
 
 
"$300 a month?

Crikey, healthcare in the US is expensive."

No, that's for catastrophic insurance with a high deductible ($1500-$2000 a year). If one wants a "good" plan for oneself, his wife and children, the cost can jump to $800/month or more.
MBJ Send private email
Thursday, September 22, 2005
 
 
I live in a ountry with socialised healthcare, and I AM a fan. In fact, I moved from UK to somewhere even MORE socialised, and I'm happy I did it.
revert my buffer
Thursday, September 22, 2005
 
 
""$300 a month?

Crikey, healthcare in the US is expensive."

No, that's for catastrophic insurance with a high deductible ($1500-$2000 a year). If one wants a "good" plan for oneself, his wife and children, the cost can jump to $800/month or more."

Bugger me! (er, it's an expression of astonishment, not a request). 800 US dollars (because not all dollars are American, remember) = 441 UK pounds. Struth!

My partner and I pay a fair bit in taxes, as did our parents, but I'd be surprised if that much of our taxes is going on our free-at-the-point-of-delivery healthcare system.

Here's a completely unscientific yarn. I have a cousin in Vancouver. She was over a while ago, saying how the car had broken down on the road. So her 9 year old son flagged down a car. She said she wouldn't have done that in the States. I asked why not? Because it's that much more dangerous. Why? Because the USA has no welfare, has never really cared about it's citizens and so is a more violent and dangerous country. So she said. I wouldn't know, I've never been to either Canada or the USA.
Unscientific yarner
Thursday, September 22, 2005
 
 
To be fair the free NHS in Britain is widely critised for huge waiting periods and apparently always in a state of crisis. The NHS is not equal to the level of treatment you get under provate healthcare.

The real way to measure healthcare is in the life expectancy of the country and the quality of life enjoyed by its citizens, and the US does pretty well in any survey I have seen.

Having said that a safety net of free healthcare is a great thing to have.

And none of this has anything to do with what Graham's article is about.
Sheldon Lavine
Thursday, September 22, 2005
 
 
"To be fair the free NHS in Britain is widely critised for huge waiting periods and apparently always in a state of crisis. The NHS is not equal to the level of treatment you get under provate healthcare."

Every large organisation is in a state of crisis, according to some people. The NHS is getting better, according to the people I know who work in it.

"The real way to measure healthcare is in the life expectancy of the country and the quality of life enjoyed by its citizens, and the US does pretty well in any survey I have seen." 42nd, behind many European countries.

http://www.os-connect.com/pop/p1.asp?whichpage=1&pagesize=20&sort=lepop

There are lies, damn lies and statistics. It would be interesting to see those stats broken down by income/race etc.

I don't suppose healthcare is the only thing that has an influence on life expectancy. Diet might have something to do with it. Just maybe. And of course if healthcare is a profit making industry nobody is going to be that interested in ill health prevention are they?

"And none of this has anything to do with what Graham's article is about."

Yes it has. He's pushing a relentlessly capitalist view of social organisation, under the old 'communism is an experiment that failed, we aren't all equal, rich people need incentives' blah blah blah. So an examination of whether capitalism really DOES work so wonderfully or not is perfectly on topic. And I say it doesn't. Somehow anything that wasn't right under the old communist regimes was the fault of 'communism'. Whereas the worlds leading exponent of imperialism, the USA, being unable to pick up it's own dead off the streets isn't the fault of 'capitalism'.

Still, I don't know why I bother. People either look around them, see and think, or they don't. There is no arguing with the US's moral, political, cultural, and economic hegemony. It will collapse, like other empires before it. I just hope it doesn't take too many of us with it when it goes.
We're all doomed
Thursday, September 22, 2005
 
 
I do find it astounding the logical hoops that people are willing to jump through in order to convince themselves that helping your brother/sister human out, on the macro level, is somehow wrong and immoral.
revert my buffer
Thursday, September 22, 2005
 
 
I think allowing private health care in societies with public health care would be great step in equalizing the inequalities by reducing the burden on the public health care industry, thus providing quicker access to health care for the "lower-class".
Peter Ritchie Send private email
Thursday, September 22, 2005
 
 
http://www.os-connect.com/pop/p1.asp?whichpage=1&pagesize=20&sort=lepop

Interesting stats. In Zambia, I'd be dead by now.
Berislav Lopac Send private email
Thursday, September 22, 2005
 
 
Life expectancy for black infants (2003) is 72.8 years compared to 78.0 years for white infants:

http://www.childtrendsdatabank.org/pdf/78_PDF.pdf

If black Americans were considered a country, their life expectancy would be 86th in the world, just before New Caledonia:

http://www.os-connect.com/pop/p1.asp?whichpage=5&pagesize=20&sort=lepop

Considering white Americans alone, they would be 29th in the world:

http://www.os-connect.com/pop/p1.asp?whichpage=5&pagesize=20&sort=lepop

In two minutes worth of research, I didn't find breakdowns for other racial or income groups, but I'm sure the results would be similar (prove me wrong).

So, as you can see, life is pretty good in the US as long as you're in a favored group. If you're not, it can be positively Third World.
Luke Francl
Thursday, September 22, 2005
 
 
The life expectancy for black Americans is even worse than some third world countries that are predominantly black.
--
Thursday, September 22, 2005
 
 
One thing that hasn't been mentioned yet is pharmaceuticals spam. If the US had a decent healthcare system in which a wide array of medicines were generally affordable, we wouldn't get nearly as much spam as we do.
Philip Prohm Send private email
Thursday, September 22, 2005
 
 
Luke, it would be interesting to see those same statistics further categorized by class and race.  i.e. is there a significant different in life expectancy between "upper-class" African-Americans and "lower-class" African-Americans?  Life expectancy can be race-related, class-related and/or habit-related (which can be affected by class).

My pardons to anyone who feels African-American doesn't apply to being black in the United States.
Peter Ritchie Send private email
Saturday, September 24, 2005
 
 

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