Back in my days as a denizen of Silicon Valley, we start-up types used to joke that Sand Hill Road in Menlo Park, California was the single most important street in the world. After all, for almost five decades that one-mile mecca of the venture capital world has helped fund every high-tech transformation of the global economy, from semiconductors, desktop computers, software and the dot com boom to social media, the cloud, the internet of things and the mobile revolution.
But just because many in the promised land between San Francisco and San Jose believe the sun shines out of its collective ass doesn't mean they are shedding any light on the questions of the day. And on no issue is that clearer than the causes and implications of America's record-high income inequality. That yawning gap between the rich and everyone else resulting from the stagnation of workers' wages, the erosion of the middle class and the winner-take-all earnings going to capital is putting the American Dream and American democracy itself at risk. And addressing those challenges does not constitute an attack on entrepreneurship or a genocidal war on the rich.
But to hear some of the Tech sector's best and brightest, that is exactly what it going on. Two years ago, legendary venture capitalist Tom Perkins warned that the critical spotlight being shone on the top 1 percent could be a precursor to a new Holocaust. As he put it in his Wall Street Journal screed titled, "Progressive Kristallnacht Coming?":
I would call attention to the parallels of Nazi Germany to its war on its "one percent," namely its Jews, to the progressive war on the American one percent, namely the "rich."
Now, just in time for New Year's Day 2016, the outspoken programmer and venture capitalist Paul Graham celebrated economic inequality in a piece by the same name. In it, Graham offered both advice and a warning to the poors. Boasting that "I've become an expert on how to increase economic inequality, and I've spent the past decade working hard to do it," Graham argued:
Since the 1970s, economic inequality in the US has increased dramatically. And in particular, the rich have gotten a lot richer. Some worry this is a sign the country is broken.I'm interested in the topic because I am a manufacturer of economic inequality. I was one of the founders of a company called Y Combinator that helps people start startups. Almost by definition, if a startup succeeds its founders become rich. And while getting rich is not the only goal of most startup founders, few would do it if one couldn't. [...]
So when I hear people saying that economic inequality is bad and should be decreased, I feel rather like a wild animal overhearing a conversation between hunters. But the thing that strikes me most about the conversations I overhear is how confused they are. They don't even seem clear whether they want to kill me or not.
Graham need not worry, in large part because he's giving himself far too much credit. As it turns out, he and fellow start-up entrepreneurs didn't have much of role in expanding income inequality in the United States. But to be sure, they do have a role in narrowing it.