Paul Graham has accidentally explained everything wrong with Silicon Valley’s world view

Two sides of the same coin.
Two sides of the same coin.
Image: Reuters/Robert Galbraith
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I’ve been asked by a bunch of people today to comment on this essay “Economic Inequality,” penned by self-described “essayist” Paul Graham, who is also the subject of a poem I recently wrote titled, “Paul Graham is Asking to be Eaten.

When my friend Danilo asked me to respond to this, I said that the essay was too vapid and lacking in substance to critique. I can distill the essence of the entire argument to: “Don’t hate the player, but don’t hate the game either. Hate yourselves, stupid poors, for not getting VC funding to start a company.”

Danilo then offered to pay me $500. And I said that I would think about it. And then the day wore on and more people wanted to know why this essay infuriated them so much. So I said, Oh hell.

Here goes.

Paul Graham is one of those plutocrats whose thirst to be recognized as a thought leader among his peers is obvious. For Paul Graham, Silicon Valley Ideology is the ideology America should run on, and ergo, being a puppet of Silicon Valley Ideology, Paul Graham thinks himself a political genius.

Right. Yes. OF COURSE.

About 80% of his essay about economic inequality is a thinly veiled condemnation of poors who Paul Graham thinks are too stupid to understand why the rich are wealthy. They are stupid, he says, because they demand wealth redistribution as a means of addressing poverty rather than attacking poverty itself. Sillies!

He offers these hopeless poors a corrective, modeling himself as a legitimate wealth producer who is different from those dirty Wall-Street rent-seekers.

Which is half true.

Wall Street is full of dirty rent-seekers whose recklessness has destroyed the American economy over and over again ever since Ronald Reagan deregulated Wall Street. The comic wealth that came as a result of that deregulation has allowed Wall Street squeeze to bad financial policies from politicians caught in a campaign-finance chokehold.

For all the money that Gates, Thiel, Musk and Zuckerberg personally have to mess around with, even collectively they could not come close to achieving economic and political havoc on par with that perpetuated by Goldman Sachs, Morgan Stanley, and Bank of America. Not even close.

So I will throw Paul Graham a bone for recognizing that in terms of scale and impact on the American economy, Wall Street is definitely the bigger concern.

But my guess is that what probably infuriates you about Paul Graham’s essay is his tacit contention that startups create wealth. This is not true.

First of all, the vast majority of startups fail. Every venture capitalist knows this. Those pesky things, for the most part, just eat money and more often than not actually destroy wealth.

But the second reason why you should not allow yourself to think that startups create wealth is because of how they are funded.

What actually happens is wealthy people like Paul Graham fund startups because they think these things are valuable. Through venture funding, rich people legitimize startups. Thus, they confer value upon the startup. They then use their ridiculous money and connections to “advise” and “mentor” those deemed worthy of capital so that they can use this capital to build a future people like Paul Graham expect to see.

What Paul Graham never dissects in his essay is that people like Paul Graham simply take it for granted that they’ll be the ones to decide where capital goes.

The rest of us poors are just along for the ride.

In his singular defense of Silicon Valley Ideology, Paul Graham would have you believe our entire economy should run on startups. I think Paul Graham believes this is democracy. This ability to start a company, he assumes, is equally accessible to everyone, and this presumed equality of opportunity legitimizes gross wealth inequality. If some people are rich, it’s because they were driven to do what you are too lazy to do.

Never mind if you don’t actually want to run a startup because you’re a nurse and you believe saving lives and caring for people adds value to society. Screw you, really.

Graham never addresses how a startup economy would put men like Paul Graham in positions of plutocratic authority, since the majority of us are deprived of startup capital without first submitting ourselves to the judgment of people like Paul Graham. It might not be overtly rent-seeking, but it’s definitely not democratic.

We should worry about an American future that would first have to pass through the judgment filter of men like Paul Graham.

Grown men who think like this:

Obviously, inequality is bad because it makes men like Paul Graham think they’re geniuses. Just like inequality is bad because it allows Donald Trump to think he knows how to head a sovereign state with unparalleled nuclear weapon capacity.

Inequality is bad because it allows men like Paul Graham to read a Joseph Stiglitz book and think at the end of it that he has our whole mess sorted out. The solution to poverty is as transparent as starting Google. Come on! Figure Google 2 out already.

We, as a people, determine what is and is not of value mostly through what we believe to be legitimate and worthy of significance. And in late capitalism, we have all basically agreed to allow the market to dictate what is and is not of legitimate value. (This is what social critics recognize as neoliberalism.)

But what the market deems valuable is not necessarily aligned with what is ultimately good for us as a society, or even what we want. Because under conditions of extreme inequality, the market is biased toward people who have lots of money, at the expense of virtually everyone else.

And nowhere has this axiom been proven true to such a comical degree as in Silicon Valley.

Most of us outside of Palo Alto have no idea how a product as stupid as Peeple gets valued at $7.6 million while a fourth-grade teacher can’t pay off her student loans and pay rent at the same time. But according to Paul Graham, those creepy Peeple women created value, whereas that school teacher is just a loser. Or ask a nurse who saved, like, three lives today what her salary is, and then go ask what the guy who made Candy Crush Saga what he got paid for it.

Wealth creation is legitimately contested in America. We don’t all agree that Candy Crush Saga has added anything of value to our society. Some of us might even argue that Candy Crush Saga took value away from America. In fact, that’s exactly what I’m arguing.

But man, that Candy Crush guy got off with a lot of value, didn’t he?

Candy Crush Saga placed its value at over $7 billion ahead of its initial public offering in 2014. According to that same market, a human life is valued at anywhere from $129,000 to a few million. This means Candy Crush Saga is worth more to society than the combined value of thousands upon thousands of human lives.

Yeah, this logic seems fine. Legitimate wealth creation.

Because that’s where this stupid game gets you. You end up going to absurd lengths to rationalize mediocre ideas because they happen to make tons of money instead of questioning a system that confers so much value on to stupid things. To stay consistent, you have to defend the logic that the women who founded Peeple contribute more value to society than thousands of fourth-grade teachers.

That is not the future I want, so I really have no choice but to insist that we resist. We need to come to terms with the fact that the market we call God is a sick and twisted deity, indeed.

In essays like this, men like Paul Graham are trying to impose their warped interpretation of value upon the rest of us. He assumes people who are not rich are not driven, and so he ignores in this odd little essay the probability that the poors are poor because they are busy being driven at enterprises that people like Paul Graham think are valueless.

Like childcare. Or science. Or academia. Or education. Or really any industry that Paul Graham says shouldn’t have unions, because they should be crushed beneath the black boot of market efficiency to create value for people like Paul Graham.

For him, a better future is one where a team of eight guys makes billions of dollars with an invention that replaces thousands of people currently earning livable wages with automation. If those people lose their jobs, they’re just collateral that got in the way of progress. This is a bizarre way of saying that the only thing keeping people poor is their inability to capitalize on their future obsolescence.

Yes, sitting down to predict one’s own demise is a lot to ask the vast majority of struggling Americans who just want to get through their workday so they can feed their kids and maybe afford rent. And yet, a millionaire is asking this. Without irony.

Because he needs to legitimize his wealth inequality.

People don’t all agree that people like Paul Graham actually add any value to our society. Market-based legitimacy is contested by those of us who think it absurd that Candy Crush Saga is thought more valuable a contribution to the world than the combined value of eight African nations.

But we don’t get to hold a market-based future up for democratic election.

And so, people like Paul Graham don’t want the rest of us to question how undemocratic a market system is under conditions of extreme wealth inequality. They need to win the legitimacy contest so that Americans don’t vote to tax the crap out of them. And so they write essays with the implicit premise that we are one nation under market and that all their wealth, coming from the market, is thus earned.

Hammer, nail, nail.

As a cultural sociologist, I can’t agree any more with Paul Graham when he says: “If we want to fix the world behind the statistics, we have to understand it, and focus our efforts where they’ll do the most good.” But as a cultural sociologist, I also find it laughable that Paul Graham thinks startup cultists like him should be excused from our scrutiny of the inequality engine.

As if venture capitalism isn’t still capitalism.

They measure their legitimacy by the number of people who slavishly retweet their every opinion and how quickly they can get other wealthy people to rally the wagons in their defense every time they say something shallow and problematic.

Because determining value is how plutocrats “create” value. This is their business.

For now, it works. There are millions of people in America who agree that the only thing worth pursuing in life is profit and that the market is a fair indicator of value and worth. And thousands of them are Zuckerberg-hopefuls reading this stuff, getting baked on naked neoliberal ideology, without ever so much as a rebuttal.

Because money determines legitimacy, and don’t we all know it.

I agreed with Graham at the start of this meandering essay that finance deregulation is definitely driving the poverty machine. If Silicon Valley is Venus in the universe of inequality, then Wall Street is the sun. But that’s not to say we should just ignore Silicon Valley. Because what I love about it is that it’s always at risk of exploding spectacularly.

Yes, for now Silicon Valley hums on the Soylent-libertarianism of a cabal of rich, white guys who write essays about how women should never have gotten the right to vote. But that’s not to say that the next person who makes billions might not have a completely different perspective on how the future should work. They might not agree, for example, that a startup economy is the basis of democracy.

They might believe market success is a fairly ridiculous barometer for measuring societal value. Instead of calling their army of capital-jockeys to go out and crush unions, their tweets might look something more like this:

If X causes suffering for the majority, then X is what the majority of us should be addressing. Anything else is a stupid waste of time.

They might point out that people like Paul Graham defend their wealth by insisting that they can see value where others see none because they are good at convincing people there is no value in anything except in what they are funding.

This person might then choose to use their market-based influence to disrupt the legitimacy contest, if only to point out that capitalism is really a complete circus of fraud anyway. They might simply delight in reminding Paul Graham and his friends that the people’s symbolic guillotine is always close at hand.

And they might — just for the fun of it — write an essay like this one, simply because they find it insulting for a plutocrat who fancies himself an essayist to think “attacking poverty” is a sound policy edict and not just clear evidence of a rich guy’s mediocre talent.