wealth distribution

let’s return to a recurring fixture in the startup/tech space, paul graham. previously I noted the idea of building up a mental model of some worthy personalities over time. if you have suggestions of people to follow over time, please engage with me on twitter @plantimals.

my first encounter with graham was in 2005 when I heard a podcast recording of a talk he gave at oscon about startups. one of his opening riffs was on the topic of wealth distribution, or more specifically, the distribution of innovation. his point was that an uneven distribution was not in itself a good thing, but the sign of a good thing. that if everyone were equally innovative, it would not be so because everyone was thomas edison, but because there are no thomas edisons.

that brings us to the present and graham’s most recent essay “how people get rich now”. he compares the most recent forbes 100 richest people list to one compiled in 1982, the key difference being the proportion of inherited wealth. 60 inheritors from 1982, down to 27 in 2020. graham suggests this is due to a resurgence in startups. wealth was trapped in a small number of hands due to the channelization of most US industries in the mid-20th century, but those monopolies are being disrupted by new businesses.

it may still be the case that the overall distribution of wealth is not more even, that the gini coefficient is going up, but this is a sign of a good thing, that being the rebuilding of economic dynamism. the differential in wealth is a sign of people trying and succeeding in building new businesses. if it weren’t happening, we’d have a more uniform distribution, but a dead economy.