What Paul Graham Is Missing About Inequality
Tim O'Reilly

I do not care if someone else makes $100 Billion as long as he did not steal it. When wealth is stolen from the people in the middle or at the bottom, then we have a problem. And yes, we have a problem. Wealth theft is pandemic.

Trillions of dollars of wealth was destroyed with the Subprime Mortgage scams, and we lacked the decency as a nation to admit that the Crash of 2008 was due to criminal behavior. It was simple fraud and deceit. One example, rating a junk value security as having the highest rating is fraud and every person who played any role in the fraudulent rating of the bundled mortgages should still be in prison. But, none were prosecuted due to the Doctrine of Too Important To Prosecute.

When people work for years to own a home, their wealth has gone into that home. Similarly, pension plans are a device to hold people’s wealth until they are too old to work very hard. We allow criminals to loot those forms of wealth by destroying the housing market and BKing pension plans. ERISA, which started to protect employees, was turned into a scam for employers to fleece employees through fraudulent benefit plans with the US Supreme Court giving immunity to the criminals. see for example Pilot Life Ins. Co. v Dedeaux, 481 U. S. 41 (1987)

Today, we are allowing Wall Street to run the same Subprime Scam but this time it is with securitization of future rental income. Mathematically, it is no different from Equity Funding or Subprime. All three are variations on the same scam to steal wealth from others.

The tech sector ignores these crimes and how they devastate people’s lives. They ignore the problem because they cannot see it. They live in a different universe. The idea that no one has invented a program to catch the scam with securitization of future rental income looks like a moral failure. Or, maybe it will be a moral failure once the smart guys realize what is happening to others. It does not even require a very smart program. For example, LA cannot have a housing shortage when its population is not growing. If there is no increased demand for housing, why are prices increasing?

Rather than ask this simple question, people assume that rising rental rates must be due to higher demand. I do hope Silicon Valley realizes the fallacy in that reasoning. It is only one step removed for people to see that with 7/10 of 1% population growth due to excess of births over deaths, there is no increased demand for housing. Infants and old people who are living longer do not create a demanding for more housing.

The demand comes from speculators who buy properties in order to sell the future rents to Wall Street investors who will feel safe buying the investment vehicles because they can also buy Credit Default Swaps on their bundled future rents. Sound familiar?

This current scam is stealing billions of dollars from regular people by forcing up the cost of homes beyond their value as Living Space. It is no different that robbing a guy of 15% of his pay check each week. It is also destroying cities by the misallocation of funds away from all types of infrastructure to make a few real estate speculators vastly wealthy while making everyone else poorer.

But none of the geniuses in Silicon Valley can figure out how to write a program to uncover such fraud?