Paul Graham, famous venture capitalist and founder of Y Combinator, just wrote an essay defending income inequality. In fact, he not only defends income inequality, he espouses the “great benefits” it holds and the power it puts into the hands of the “people”.  What people? Wealthy people. Like him!

There have been a lot of responses from people who are far more educated about the politics and economics of the subject than we are, and we suggest you check out what they have to say here and here.

The ideas that tech companies and tech startups are inherently “better” than other types of businesses and that everyone should seek to start a tech company (and presumably seek funding from Paul Graham) are myths that needs to be dispelled.

Yes, technology makes it possible for someone with not much more than an idea and a laptop to start a billion-dollar company. What startup enthusiasts often neglect to mention is that it’s extremely unlikely that your time, effort, and ideas will result in anything that gets any traction.

The failure rate for tech startups is between 80 and 90 percent. This doesn’t include all the “great ideas” for mobile apps that never get off the ground, or the countless ventures within corporations to create a “startup culture” that eventually devolve into chaos and are shut down. Any sane person would agree that these are bad odds. But still, the myth of startup success is repeated endlessly in the media and within the tech community, and most people believe it.

Paul Graham argues that tech startups have invented new ways to make money that don’t take money away from those who are “poorer”,  but rather “make the pie bigger.” Countless examples of successful startups resulting in fewer jobs overall and leading to the destruction of entire industries (look at Uber, Amazon, et al) have proven that this isn’t true.

Innovation and technology are great things, and we love the web and many of the things that have been created because of it. But, to act as if web startups are somehow not the same as other other businesses, that “venture capitalism isn’t capitalism,” or to presume that a new system has been invented in which income inequality is directly tied to whether or not you have the courage to create a technology startup is absurd. And dangerous.

America is beautiful and exciting because it has been a land of opportunity, where someone with an idea can turn that idea into a prospering business; but when we value the disruption of the traditional economy and the creation of startups over the people who teach our children or care for our elderly, something is wrong. Let’s not forget the importance of education and health and the basic services that people provide — let’s cultivate a world where technology and social services can co-exist.

Paul Graham, Income Inequality, and the Silicon Valley Myth
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