There are few people in technology more infuriating than Y Combinator’s Paul Graham, who earlier this month dropped a brilliant summary and analysis of the ongoing refragmentation of modern societies, followed immediately by a blinkered, muddled, wrong-headed essay on technology’s role in economic inequality.

It’s a bizarre piece, almost reading as an attempt to back away from some of the logical implications of his refragmentation essay. The response from his fellow tech VCs was remarkable, and far from laudatory:

Mark Suster was moved to write:

Yes, income inequality exists and yes it’s a natural consequence of capitalism and other forms of government are decidedly worse than capitalism […] But the celebratory nature of today’s conversation felt tone deaf and seemed to ignore the rules that get bent in favor of those with resources or born into privilege […] There are a lot of things the go into the advantages of Silicon Valley and the tech ecosystem. The starting point is often the birth lottery […] It really pains me when smart people are both tone deaf and color blind.

Y Combinator alumnus Seth Bannon concurred:

High levels of inequality are a problem  […] it’s necessary to call out a straw man argument PG appears to be making […] It’s quite hard to see how some of the most popular proposed policies to reduce economic inequality would hurt startups […] there are an abundance of studies that show that reducing economic inequality (even through redistributive means) actually boosts overall prosperity/

Granted, not all of the responses were intelligent or helpful:

…which, hopefully, is why Graham wrote a simplified version which “leaves no room for misinterpretation.” But a lot of very smart people understand what he’s saying perfectly well: they just think he is completely wrong and astonishingly tone-deaf. As my old friend Bill Hanage put it in email, “[Graham’s] biggest flaw is a failure to apply the same criticism to his own opinion as he does to others.”

Graham writes, in the no-room-for-misinterpretation version, “economic inequality per se is not bad.” This itself is more than arguable. Would it be just fine if a thousand people on Earth held all the wealth, while the other 7 billion were left penniless? Both extremes of economic equality are, to put it mildly, suboptimal. Where is the sweet spot? Where exactly does one cross the line into “bad”? How can we be sure that we’re not already past it?

More importantly, even granting that “economic inequality per se” is not necessarily bad, technology’s acceleration of economic inequality will exacerbate our existing, deeply unfair, inequities. It is outright delusional to imagine that Silicon Valley startups form a pure meritocracy. The wealthy and well-connected — and, yes, the white and male — get disproportionately wealthier; the poor, the unlucky, and underrepresented minorities remain disproportionately less successful. It’s easy to handwave that this is no big deal, and will magically work itself out in the long run, if you benefit from those inequities. It’s a whole lot harder if you don’t.

“Startups are on the whole good,” Graham writes in the “simplified” version of his essay. But one can make a strong case that things which increase today’s skewed, unfair, and often exploitative version of economic inequality — including startups — are not necessarily “on the whole good.” Yes, you can also make a strong countercase (based on trickle-down technological wealth, and/or, more interestingly, the notion that new tech / new businesses will work against existing inequities.) But it is by no means the slam-dunk tautology that Graham seems to think it is. To many people, any force that makes an unfair system even more unfair actually seems pretty awful.

I’ve been writing about tech’s contribution to inequality for quite some time now. I concur that increased economic inequality within societies will be an inevitable outcome of technological progress. But technology is also a great reducer of extreme global poverty — or, put another way, tech will increase inequality within societies, and reduce inequality between societies. I absolutely agree that on the whole, the long-term outcome is a huge net gain (although I’m worried about the medium term.)

But I don’t believe that intensifying the inequities of today’s society will be anything but a negative, albeit one much outweighed by the development and promulgation of better technology for everyone; and I believe that, as a society, we can powerfully influence just how much inequality we’re talking about here.

There is a lot of data arguing that economic inequality is bad for all of us: “Countries do get happier when they get richer, but only if they share the wealth,” according to a new paper. The New York Times reports: “living in a community with high income inequality also seems to be bad for your health.” The Ford Foundation is so convinced that inequality is bad that it has decided “to work on inequality and nothing else.”

I’ll close with a quote from Hanage again: “Finally, and the most important thing for my money — the case against inequality can be made in a purely utilitarian way. If you want a well educated workforce for your startup staff, you are more likely to get it from a more equal society.” Indeed. A less extremely unequal society is better for everybody, and, very possibly, better for technological progress. Especially if those inequities are not built on the cruelties of history.

Featured Image: Gasketfuse/DeviantArt UNDER A CC BY-SA 3.0 LICENSE

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The Cruel Inequities