Attack Inequality, Kill Startups
The redoubtable Paul Graham has a new essay posted, “Inequality and Risk.”
In a bit of a departure from his usual focus, this essay examines the unintended but inevitable consequences of attempting to get rid of economic inequality.
“Economic inequality” is one of those terms which “frames” a debate. After all, who can be against “equality?”
Yet Paul shows in with clear, inevitable logic that trying to get rid of economic inequality kills startups.
Here’s the chain:
Get rid of income equality ==> Take money from the rich
Take money from the rich ==> Decrease the willingness to take risks
Decrease the willingness to take risks ==> Kill startups
Kill startups ==> Decrease growth in new technology and new jobs
“I don’t think many people realize there is a connection between economic inequality and risk. I didn’t fully grasp it till recently. I’d known for years of course that if one didn’t score in a startup, the other alternative was to get a cozy, tenured research job. But I didn’t understand the equation governing my behavior. Likewise, it’s obvious empirically that a country that doesn’t let people get rich is headed for disaster, whether it’s Diocletian’s Rome or Harold Wilson’s Britain. But I did not till recently understand the role risk played.
If you try to attack wealth, you end up nailing risk as well, and with it growth. If we want a fairer world, I think we’re better off attacking one step downstream, where wealth turns into power.”