Paul Graham on the Distribution of Income
By Arnold Kling
From Mind the Gap.
Like chess or painting or writing novels, making money is a very specialized skill. But for some reason we treat this skill differently. No one complains when a few people surpass all the rest at playing chess or writing novels, but when a few people make more money than the rest, we get editorials saying this is wrong.
…Perhaps the CEO or the professional athlete has only ten times (whatever that means) the skill and determination of an ordinary person. But it makes all the difference that it’s concentrated in one individual.
…prices are determined by what buyers want. People like baseball more than poetry, so baseball players make more than poets. To say that a certain kind of work is underpaid is thus identical with saying that people want the wrong things.
Well, of course people want the wrong things…It’s lamentable that people prefer reality TV and corndogs to Shakespeare and steamed vegetables, but [is it] unjust?
…If there is enough demand for something, technology will make it cheap enough to sell in large volumes, and the mass-produced versions will be, if not better, at least more convenient. And there is nothing the rich like more than convenience. The rich people I know drive the same cars, wear the same clothes, have the same kind of furniture, and eat the same foods as my other friends.
…in a modern society, increasing variation in income is a sign of health. Technology seems to increase the variation in productivity at faster than linear rates.
…The only option, if you’re going to have an increasingly prosperous society without increasing variation in income, seems to be…that people will create a lot of wealth without being paid for it. That Jobs and Wozniak, for example, will cheerfully work 20-hour days to produce the Apple computer for a society that allows them, after taxes, to keep just enough of their income to match what they would have made working 9 to 5 at a big company.
As an illustration of people wanting the wrong things, I would have used the fact that New York Times readers prefer Robert Frank’s sophomoric column to the work of Paul Graham. However, my guess is that years from now, Paul Graham’s words will still be worth something.