Let me preface this response by saying that I do not think Paul Graham is some kind of California-based Jesus, despite the fact that I am in the startup game myself. I also have my own issues with his essay.
In spite of these facts, I also have some issues with your rebuttal. My biggest problem is your example of Candy Crush. You lament (correctly) how extreme inequality can lead to negative market effects, but use a mobile game as an example. Candy Crush Saga did not become so valuable because of a small group of billionaires, it became valuable because it has been installed five hundred million times, according to Wikipedia. It was not Paul Graham or Wall Street that decided Candy Crush should be valued so highly. It was every one of the millions of people that downloaded it and played it. Of course, that may include Paul Graham — I don’t know what he has downloaded on his phone.
It’s also slightly strange that your essay contains both the sentences “determining value is how plutocrats create value” and “95% of startups fail.” Surely, if investing in a company created value, that figure would be much lower? I don’t doubt that venture capitalists have some influence on what products make it to market, as well as how markets perceive those products, but ultimately no amount of funding will make a terrible product nobody wants successful. Just look at New Coke, Segways, or any one of the hundreds of other products that have flopped, despite huge venture backing.
Your point about automation also appears misguided. It’s well-known that automation can cause short-term job loss, but automation has (historically) been a huge net positive for the human race. If you truly believe that “If X causes suffering for the majority, then X is what the majority of us should be addressing,” you’d be almost required to be a supporter of increased automation. Automation, like most technological development, provides gains to the majority
Let’s take farming as an example. Jobs in agriculture used to make up 41% of the United States economy. As of 2000, they made up 1.9 percent. In spite of this, agriculture has had a steadily increasing trend of productivity. Some farmers may have lost their jobs, but that has allowed people to spend far less on food. In 1960, a household could expect to spend just under 18% of their income on food. Today, that amount has dropped to just under twelve percent, freeing up almost 6% of the average household’s income for other activities.
While it is unfortunate that people lose their jobs due to innovation, the net result is almost always positive. Besides, not all of those people will lose their income permanently. People are very good at adapting.