RE: What Paul Graham is Missing About Inequality
Thanks for a great article. You didn’t just edit Graham’s article, you completely rewrote it, plugging all the holes in his logic with solid economic theory and examples to substantiate your points.
There’s just one area that requires a little more explanation. Could you point out a successful internet start-up that actually increases our GDP, and is not just a zero sum game? Here’s my take on these media darlings:
UBER: a few guys get rich with their idea; drivers wear out their own cars, pay their own gas and insurance to make $13 an hour; and, full time taxi cab drivers are making less money.
AIRBnB: a few guys get rich with their idea; renters and homeowners make some extra money (good) while taking on risks (fire, theft, accidents, lawsuits); the hotel industry loses profits and in turn cut back on staff.
EBAY: a few guys get rich with their idea; flea marketers have a better way to sell the stuff they find in garage sales; the money comes from shoppers looking for bargains, which means less revenue for traditional stores.
AMAZON: basically the same as EBAY, except flea marketers are replaced by businesses who are forced to sell at greater discounts.
GOOGLE, FACEBOOK, TWITTER, PINTEREST, INSTAGRAM, etc: a few guys get rich with their idea; advertising revenue flows to these social media sites instead of traditional media companies (print, radio and TV); less interest in great creative for ads (data driven marketing is the new thing), so less revenue for creatives, ad agencies, production companies, etc.
Even Forbes provides a similar analysis of the macroeconomic effects of the sharing economy arguing that Uber will lower GDP.
Keep up the great work. Maybe you will redefine the meaning of “WTF?”