RE: What Paul Graham is Missing About Inequality

Summary

The web content critiques Paul Graham's article on inequality, suggesting that internet start-ups like Uber and Airbnb may not inherently contribute to GDP growth and can negatively impact traditional industries and workers.

Abstract

The author of the web content acknowledges the previous article's thorough rebuttal of Paul Graham's views on inequality, commending the use of economic theory and examples. However, the author raises concerns about the economic impact of internet start-ups, questioning whether they truly enhance GDP or simply redistribute wealth and opportunities. The author argues that while founders of companies like Uber, Airbnb, and eBay become wealthy, their business models may lead to exploitation of workers, increased risks for service providers, and revenue losses for traditional sectors such as taxis, hotels, and retail stores. The author also cites Forbes' analysis that the sharing economy, exemplified by Uber, could potentially decrease GDP.

Opinions

The author believes that the current narrative around internet start-ups overlooks their potential negative impact on the economy and workers' welfare.
Uber is seen as enriching its founders while its drivers face financial strain and traditional taxi drivers experience reduced earnings.
Airbnb is recognized for creating additional income for property owners but also introduces new risks and potentially harms the hotel industry.
EBay and Amazon are noted for shifting sales away from traditional retailers, leading to discount-driven competition and less revenue for brick-and-mortar stores.
Social media giants like Google, Facebook, and Twitter are criticized for diverting advertising revenue from traditional media, affecting the livelihood of creative professionals and agencies.
The author suggests that the sharing economy, as analyzed by Forbes, may not contribute to GDP growth as positively as assumed, with Uber as a case in point for potentially lowering GDP.

RE: What Paul Graham is Missing About Inequality

Thanks for a great article. You didn’t just edit Graham’s article, you completely rewrote it, plugging all the holes in his logic with solid economic theory and examples to substantiate your points.

There’s just one area that requires a little more explanation. Could you point out a successful internet start-up that actually increases our GDP, and is not just a zero sum game? Here’s my take on these media darlings:

UBER: a few guys get rich with their idea; drivers wear out their own cars, pay their own gas and insurance to make $13 an hour; and, full time taxi cab drivers are making less money.

AIRBnB: a few guys get rich with their idea; renters and homeowners make some extra money (good) while taking on risks (fire, theft, accidents, lawsuits); the hotel industry loses profits and in turn cut back on staff.

EBAY: a few guys get rich with their idea; flea marketers have a better way to sell the stuff they find in garage sales; the money comes from shoppers looking for bargains, which means less revenue for traditional stores.

AMAZON: basically the same as EBAY, except flea marketers are replaced by businesses who are forced to sell at greater discounts.

GOOGLE, FACEBOOK, TWITTER, PINTEREST, INSTAGRAM, etc: a few guys get rich with their idea; advertising revenue flows to these social media sites instead of traditional media companies (print, radio and TV); less interest in great creative for ads (data driven marketing is the new thing), so less revenue for creatives, ad agencies, production companies, etc.

Even Forbes provides a similar analysis of the macroeconomic effects of the sharing economy arguing that Uber will lower GDP.

Keep up the great work. Maybe you will redefine the meaning of “WTF?”