(2005-08-29) Graham Inequality Risk Corruption

Paul Graham on the connection between Wealth Inequality, Risk Management, and Corruption. I realize Start Up-s are not the main target of those who want to eliminate economic inequality. What they really dislike is the sort of wealth that becomes self-perpetuating through an alliance with power. For example, construction firms that fund politicians' campaigns in return for Government Contract-s, or rich parents who get their children into good colleges by sending them to expensive schools designed for that purpose. But if you try to attack this type of wealth through economic policy, it's hard to hit without destroying startups as collateral damage. The problem here is not wealth, but corruption. So why not go after corruption? We don't need to prevent people from being rich if we can prevent wealth from translating into power. And there has been progress on that front. Before he died of drink in 1925, Commodore Vanderbilt's wastrel grandson Reggie ran down pedestrians on five separate occasions, killing two of them. By 1969, when Ted Kennedy drove off the bridge at Chappaquiddick, the limit seemed to be down to one. Today it may well be zero. But what's changed is not variation in wealth. What's changed is the ability to translate wealth into power. How do you break the connection between wealth and power? Demand transparency. (Transparent Society)

Here's another piece with more of a focus on Wealth Creation as the result of Innovation. If I had a choice of living in a society where I was materially much better off than I am now, but was among the poorest, or in one where I was the richest, but much worse off than I am now, I'd take the first option. If I had children, it would arguably be immoral not to. It's absolute Poverty you want to avoid, not relative poverty. If, as the evidence so far implies, you have to have one or the other in your society, take relative poverty. You need rich people in your society not so much because in spending their money they create jobs, but because of what they have to do to get rich. I'm not talking about the trickle-down effect here. I'm not saying that if you let Henry Ford get rich, he'll hire you as a waiter at his next party. I'm saying that he'll make you a tractor to replace your horse. (Economic Development) In the comments he defends the short attention he gives to whether Executive Compensation is tied more to Crony Capitalism than performance. It would be interesting to take the 100 top-paid CEO-s in some year and evaluate their performance (of course, who would make that call?). And notes that Sports Star (Spectator Sports) compensation is related to the Monopoly power of the leagues, which increases the power to charge more for tickets, TV Advertising, etc. I Commented a couple times.