Paul Graham is wrong about inequality

&quot;I know the rich aren&#x27;t all getting richer simply from some sinister new system for transferring wealth to them from everyone else,&quot;<p>401(k)&#x27;s are a great example of shifting wealth to the wealthy. SS was used to fund general government spending, but nobody got directly rich from it. With 401(k)&#x27;s the financial sector can skim a vast pool of money from the middle class with a huge range of hidden fees. Toss in a 10% fee for pulling money out in an emergency and it&#x27;s surprisingly bad for younger workers vs simply investing money and paying the trivial cap gains taxes.<p>On top of that it inserted 100&#x27;s of billions of dumb money into the market which creates tones of opportunity&#x27;s to make money using HFT etc.

I feel like everyone is inadvertently proving PG right (even though I think he&#x27;s kinda wrong). His whole point is that &quot;inequality&quot; is too vague and broad of a term, and that we should speak specifically to things like poverty and tax evasion.

It&#x27;s hard to tell if Ezra is willfully misinterpreting the essay or just didn&#x27;t get it. Most concerning are:<p>1) In the entire long-winded complaint, there isn&#x27;t even a mention of the primary thrust of PG&#x27;s essay—while some income inequality is caused by rent-seeking and bad behavior, some is also caused by productivity inequality. Productivity is more unevenly distributed than ever, and the trend will likely become more extreme as technology advances.<p>2) Intentionally confusing the definitions of &quot;start-up&quot; and &quot;small business&quot;. Despite having acknowledged the that the meaning of the term was an issue, he still plowed forward and sited &quot;start-up&quot; statistics that were counting all businesses, primarily small businesses.

First: <i>&quot;Sweden, for instance, has a higher startup rate than America, and less income inequality — as do a number of other countries.&quot;</i><p>To the extend it can be measured, the metric that matters isn&#x27;t the number of startups (&quot;employer enterprise birth rate&quot; in the Sweden link). It&#x27;s the net value generated by them.<p>Second: <i>&quot;Would anyone choose the second world?&quot;</i><p>Yes, startup founders would. Because they can fix poverty with the value their startup generated.