Everyone is weighing in on Paul Graham’s recent essay on economic inequality, and now it’s my turn.
You can’t prevent great variations in wealth without preventing people from getting rich.
This is the kernel around which Paul’s essay is built. He argues that the ability to get rich fuels the startup model of innovation, and that startups are crucial to our prosperous future.
That’s up for debate, but I’m not even going to touch it. I take more issue with another quote.
The great concentrations of wealth I see around me in Silicon Valley don’t seem to be destroying democracy.
Paul is hopeful that we’ll build a world where wealth inequality has little impact on democracy.
The problem is, there’s no possible way to do it.
In a monetary system, cash is a proxy for work. Work is required to turn raw materials into valuable goods, which are exchanged in markets for money. Once obtained, cash can be paid to others for work to be done.
In a democratic system, political power is obtained by developing a platform that people will vote for, then convincing people to vote for it. Doing this requires huge amounts of work. Generally speaking, the more work you do, the more success you will have.
Money lets you pay for this work. The more money spent, the more work will happen. And in our complex world, it’s impossible to prevent it being done.
When a person has vastly more money than you, they have vastly more political power. Economic inequality leads to political inequality. There’s no way around this. It’s a fact.
Last Friday, Hillary Clinton visited the Bay. She held a fundraiser in the City and a reception in Palo Alto. It cost $2,700 to attend and share your views with a presidential candidate. The reception was hosted by a VC.
Consciously or not, Paul’s compromise is to trade our political equality for economic prosperity. This is something we should never do.
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