A bunch of people just got “liquidity” this week in the Facebook IPO — a thousand millionaires, I think I read. And Zuckerberg’s number is just insanely huge.
Capitalism at work, right? God bless it.
I actually think so — notwithstanding the all too true Peter Thiel critique of “we wanted flying cars, we got 140 chars”. I mean has Facebook done any good for anyone that wasn’t possible with all the other stuff? Text messages, email groups; they didn’t even invent the status update.
But Papa Bear Paul Graham, the uber hacker these days, like a lot of hackers I think has a somewhat strange view.
Here is the sensible part, which he puts in his 2004 essay from paulgraham.com and his book Hackers & Painters called “Mind the Gap“:
A – technology creates wealth
B – if you let people keep most of what they create, they’ll make technology
C – technology’s wealth creation gives benefits to all of society
Great! A and C are pretty simple techno-optimist statements and everyone here agrees I’m sure. Jobs and Woz made a great thing, it made a fortune for them and it made huge value for the rest of us.
Maybe Facebook is an example of C. Not as good as Apple though.
B is just a basic thesis of capitalism. Don’t make taxes 100%. Fine. I mean it’s dumb to suggest Zuck should get taxed any crazy taxes just because he is super duper rich. There were risky scary moments along the way and the promise of spectacular wealth was an ingredient in why they all did what they did.
Here is the weird part, PG goes further to basically say, therefore worrying about “the gap between rich and poor” is a dumb thing. In fact it’s probably a good thing. If the rich are insanely rich, they must be creating huge value. He sounds like this mouthy, impolitic richie rich from Bain.
PG isn’t dumb and he takes on an obvious problem: technology isn’t the only way people get rich; for most of history people stole wealth. What about that? Corruption, bullying, intimidation wars, theft…getting rich “the old fashioned way”. (Recall hilarious SNL skit here.)
Continuing to not be dumb, he points out: but that’s pretty much over now. We mostly live in modern, rule-governed places and people don’t get rich through theft.
So the only way to get rich is via technology, and technology is both good for you and good for society, so let these guys get rich! QED.
This is totally crazy. And in another essay a few pages away, called “How to make wealth“, he says
There are a lot of ways to get rich, and this essay is about only one of them. This essay is about how to make money by creating wealth and getting paid for it. There are plenty of other ways to get money, including chance, speculation, marriage, inheritance, theft, extortion, fraud, monopoly, graft, lobbying, counterfeiting, and prospecting. Most of the greatest fortunes have probably involved several of these.
Or as he later refers to the line derived from Balzac, “Behind every great fortune is a great crime.”
From that list, here are the ones I think are still at work today pretty frequently, and great reasons to have non-zero taxes:
chance, speculation, marriage, inheritance, theft, extortion, fraud, monopoly, graft, lobbying, counterfeiting, and prospecting.
By the way, if there were a reliable, non-politically screwed way to exempt geniuses who give gifts to the world from paying taxes (like Jobs and Woz), I’m all for it.
Finally, the most important question: why do brilliant hackers like Thiel and Paul Graham lean so far towards libertarianism when they in fact choose to live in a social democracy and not in the easy-to-find state of nature countries like Zimbabwe or Afghanistan?
I mean, move! Take your Ubuntu Macbook and go find broadband in Tikrit.
Well, I know why they lean libertarian: these guys think they make their own destiny and therefore we all make our own destinies.
But they don’t really believe it. They need Palo Alto and New York to make their destinies.