> the only way to become a billionaire is by exploiting people
Here's a slightly different take on this idea:
The only way to become a billionaire is to use leverage.
I think this is a much more defensible argument. You can't become a billionaire by yourself. You have to have some mechanism of leverage to magnify your impact. Hiring employees is a form of leverage. Using a computer is a form of leverage. Putting your software on a large number of cloud computers is yet an additional form of leverage. The question of whether one is exploiting their employees is a worthwhile question to ask, but it is a completely separate (and much more polarizing) question. I think that leverage is the core kernel of truth lurking within this question.
You are turning a moral judgement ("exploiting") to a more mechanical expression ("using leverage"). For critics of billionaires, the moral judgement is the whole point. Whether the "billionaire problem" belongs in the moral realm or in the dispassionate realm of math or economics is an ideological choice.
For this (me) critic of billionaires (the possibility of being one, not the humans who are), it’s not ideological. It’s based on an analysis of leverage (like GP’s comment), where the levers are necessarily some mix of advantage/privilege (feedback loop as discussed all over) and exploitation (not solely as a moral issue, but that issue is inescapable). It’s impossible to be/become a millionaire without access to, and activating, those levers. I don’t care about the moral character of the humans this analysis addresses. I care about the opportunity and moral failure it imposes on others.
I don't know if you intentionally switched from billionaire to millionaire, but it seems entirely possible (and even somewhat common) to become a mere millionaire by actions and careers that most would consider virtuous combined with sound saving and investing strategies. I don't know if my parents are actually millionaires or not, but if not, they're not far off and they were both public school teachers whose parents were blue collar steel mill, coal miner, and in nursing. Those are not careers marked by the excessive use of exploitive leverage by the employees.
Your parents used leverage as well in “investing strategies”. By putting your money in the stock market, you’re using the leverage wielded by all of corporate America.
No that was definitely an autocorrect misfire. Becoming a millionaire is accessible to most of the mid-upper middle class in the US. It does still press on the same levers, but increasingly in ways that are opaque to a the people entering.
if someone considers making a billion dollars to be some form of social theft, then making a million dollars by giving $100,000 to a fund manager .. may also constitute social theft for that critic.
Theft isn’t a word I used. I intentionally used the words advantage, leverage and exploitation the way I did for a reason.
Using your example, a billionaire doesn’t hand 1,000 more dollars to a hedge fund manager and get 1,000 times more wealth amplification. They hire a team of accountants and lawyers to do 1,000 times that base amplification each.
Making 100k and having a stock based retirement plan is an open drainage from the wealth factory, it definitely has access to the same levers, but it’s effectively the equivalent of a pension, just managed in the marketplace according to marketplace rules. That earning category is basically the automobile manufacturer lead/plant manager of our generation, the only difference is there’s more people who get that slice. People in this role largely don’t have the capacity to even think about increasing their leverage, they just get “benefits” and call it a night.
People who become billionaires have an entirely different approach. Their work is split between using whatever leverage they have access to, and whatever affords greater leverage. It’s mathematically the only way (given current dollar valuation) that you can get that many dollars.
I'm intentionally trying to separate the moral and the mechanical for the purpose of understanding--both understanding the structure of the way the world works and how we can make it better as well as understanding the arguments of those for whom it's ideological.
The term "using leverage" is often used in a creditor / debtor relationship. But it's funny how the term works because in that setting "using leverage" is usually associated with the debtor being the exploited one in the relationship.
More generally, in a given exploitive relationship it's not always obvious who is exploiting who.
Yes - perhaps PG should have added qualifiers along the lines of "YC originated billionaires" versus attempting to cover all billionaires that have ever existed. It seems somewhat naive to say that every person with a billion in their bank account has built something and always is the best allocator of capital.
Oil and Gas billionaires leverage the fact that society hasn't figured out how to factor in negative environmental externalities. Consumer Staples billionaires leverage their supply chain monopolies and labor monopolies.
The original tech billionaires leveraged their early knowledge of computers/internet. Web 2.0/3.0 billionaires leverage the fact that society hasn't figured out how to appropriately regulate stuff that's similar but slightly different from their old school regulated counterparts (i.e. Uber, Airbnb).
In general, leveraging technology capabilities seems less exploitive than leveraging human/environmental resources/lack of regulation.
As a follow-up thought - perhaps when Forbes makes its Billionaires List, instead of a basic sort ranked by on net worth, Forbes should incorporate Environmental, Social and Governance (a.k.a. Triple Bottom Line accounting) like factors similar to those starting to be used for Equity investing [1] and do a final ranking based on ESG x net worth.
> In general, leveraging technology capabilities seems less exploitive than leveraging human/environmental resources.
I see what you're getting at here, but I don't know that I completely buy it. Case in point: privacy. I guess it depends on how one defines exploitive.
That's a good point - it should probably include exploiting "lack of regulation" which digital privacy could fall under broadly. I was generally thinking of "tech" in the semiconductor, computing aspect which while perhaps has some negative environmental impact and can develop monopolies; generally doesn't exploit other humans, etc..
Absolutely any action could be framed as exploiting the lack of regulation against it, from getting milk at the grocery store to shipping electronic waste to third world countries for sketchy disposal. So that's not such an effective philosophical razor.
I'm using a generalization of the mechanics definition of "leverage" (https://en.wikipedia.org/wiki/Lever). A mechanism by which a small input can result in a larger output.
No, the lever is amoral, the way it is wielded is the result of moral choice. Using debt as leverage enables people to own their own homes. Using technology as leverage enables goods and evils: widespread communication, widespread surveillance, wealth inequality (being discussed here).
> OK. By that definition leverage is a wonderful thing everyone should use!
Sure. But even setting aside whether the ability to use it is evenly distributed, the availability of resources to be leveraged definitely isn't, so the rich get richer even with relatively passive strategies.
I would say that slavery absolutely fits into this broad generalized definition of leverage that I am using. Here is another example:
In the case of the founder, as I have mentioned, hiring someone gives them leverage. But conversely, a person taking a job with a large company gives the employee leverage. For instance, as a Google software engineer, you have the ability to command huge amounts of computing hardware that Google has at its disposal. Different roles may have varying degrees of ability to leverage the corporation's scale to their purposes but it's certainly a very real thing for many roles.
The problem with this definition is that slave owners didn't think that there was anything morally wrong with owning slaves. If they objected to slavery then why would they keep their slaves?
Wall Street originally was built to trade shares in corporate plantations.
Many plantations did not get going with ethnicity-based slave labor, it was voluntary indenturement as a result of extreme inequality relative to the royal shareholders of these non-free-enterprise corporations, i.e. economic slavery as a foundation for the lowest-class labor force to begin with.
It's a slippery slope from there, keeping them down on the farm.
Don't forget the American colonies were founded by (royal) multinational corporations for the benefit of multinational corporations.
But B.Franklin and those guys came along and wanted independent non-royal corporations, and the next thing you know, it's the USA on the Eastern Seaboard with its well-developed ports and united plantations.
And they were trading shares right there in Manhattan, on that previously underutilized street with the characteristic old wall.
Otherwise not much had changed from how they did it in London, or it would have been an even more difficult transition.
Imagine what it was like under bondage when a downturn or business model failure pressured a worker to tend 5 acres instead of 2. When 2 was already quite tiring and not very rewarding.
And with the shareholders up on Wall Street having financial control, when the market comes back nicely the shareholders recover even more nicely if little or none of the prosperity is intentionally returned to the now much-more-productive & hard-working laborers.
Simply because the system is made to extract from bonded laborers, and they are the lowest-hanging fruit when shareholder returns need to be maintained during a downturn.
Wall Street volatility gives some of them the chance to rinse and repeat each time before their big wigs get repowdering.
For real major upsets or windfalls the banks can go further and adjust the terms on their notes to most strongly leverage the situation.
The mint can change the value of its legal tender notes in response too, so far only periodic devaluation for the dollar, no two-for-one splits in your favor or anything like that for you wage-earners even in the best of times.
If every citizen were generously issued two new dollars for every old dollar you had in liquid cash at the time, you can expect to continue working for the same dollar pay as before and have the same debt payments to minimize upset, but who would benefit most anyway?
Don't even think about a reverse split which is severely in your disfavor by comparison.
Better get accustommed to what a dollar won't buy any more now, a change in value either way and you'll be worse off.
Turns out dilution of certificates is the most effective if not expedient way to overcome liberty & justice for all.
If you're going to be a billionaire anyway, build something with real value added that's more than worth it for as many people as possible, with enough success to completely commit to avoiding significant negative consequences.
That's what billionaires are supposed to be there for.
None of that fake stuff.
Gag me with a silver spoon if you can't build anything real of widespread benefit, plus avoid negative outcomes with all that money.
Something that would help would be more benevolent billionaires willing to pay whatever it takes to bypass our current crooked political parties. There simply still exists the same need to admit only the most ethical to Washington (or preferably a new capitol) before Wall Street can be expected to deviate from the plantation model these parties sustain.
Looks to me like pg has built YC to be more worthwhile than not, even if every company has not created value itself.
One measure of success is the increased number of opportunites for upcoming entrepreneurs to have an open-ended upside if they are ambitious and can build a scalable system.
Often this can be leveraged to exponential growth by wise application of capital, without the need for involvement of destructive greed of any kind.
Depending on where in the food chain the food for growth comes from, some businesspeople are bound to make better billionaires than others, especially if they can avoid harmful wealth extraction from the most vulnerable workers and populations, and substitute responsible value creation with resulting widespread prosperity instead.
Works best when you build something people really want and always give them more than their money's worth.
"force" or "coerce", but more "civilized", generally more related to using indirect pressure, probably based on manipulating some larger system.
Think how a mobster in a movie might use it, "we leveraged the pictures of the cop to get warning of any raids". Same meaning, just about things that are legal.
> I think that leverage is the core kernel of truth lurking within this question.
I like this idea, because it focuses the ethical/moral/policy question on something that seems to me to be much more tractable: what kinds of leverage should society allow you to use, and to what extent?
Using leverage is one aspect. Another is persuading people (e.g. to invest in you), and this game can be dishonest. And in our system winner-takes-all holds: even if you are only 1% better than anyone else, you receive the full 100% of rewards.
One route to becoming a billionaire seems to go like this: you persuade a group of investors to make a pile of money that's so big that you can corner a market. Which is often true. But is it fair to the people already in this market? And is it fair that it makes you a billionaire?
IMO, for this context, leverage is within the realm of individual incentive vs. pressure, not that you "leveraged" your DB's guarantees for worry-free scaling.
Here's a slightly different take on this idea:
The only way to become a billionaire is to use leverage.
I think this is a much more defensible argument. You can't become a billionaire by yourself. You have to have some mechanism of leverage to magnify your impact. Hiring employees is a form of leverage. Using a computer is a form of leverage. Putting your software on a large number of cloud computers is yet an additional form of leverage. The question of whether one is exploiting their employees is a worthwhile question to ask, but it is a completely separate (and much more polarizing) question. I think that leverage is the core kernel of truth lurking within this question.