What you are missing is that the resources in the world that matter are bounded. So if a minority is creating most of the value at scale, they will be able to redirect most of the resources to themselves. This drives the increase in inequality.

That is why thinking purely in financial terms is misleading. It's not because everyone has more $$$ in the bank that everyone is better off.

Is it really the case that Jeff Bezos is consuming a million times more finite resources than someone whose net worth is $100k? It seems to me like what you buy with virtually infinite money is status like hanging out or sleeping with celebrities, a seat in important rooms, and assets. There is only so much additional jet fuel and human labor a multi-billionaire can consume.

It is a fair point if the focus is on billionaires (Bezos, Zuck,...). The proportion of resources they consume is well below their wealth. They may even contribute positively to society through charitable causes.

The real issue is that tech/startup founders and workers who, while less rich, accumulate more wealth at scale compare to the rest of society. And given their number, I'm afraid this will have a real impact by greatly increasing inequality. That would be ok if the other part of the population would also be able to live better. But I do not think it will be the case.

Btw: I am a tech founder.

SpaceX, etc. That's what you do with billions to spend.

I think there’s an interesting and fair argument to make that one negative consequence of billionaires is entire otherwise unproductive economic sectors that exist for no reason other than their vanity (mega yachts, Swiss boarding schools, high fashion, doomsday bunkers). That is a different argument than one about resource hoarding though — a Louis bag doesn’t take much in the way of resources, just a single python in the worst case!

>one negative consequence of billionaires is entire otherwise unproductive economic sectors that exist for no reason other than their vanity

This isn't just relegated to billionaires. Depending on how you define "consumption", up to 70% of the U.S. economy is consumer driven. Now I wouldn't call all this "unproductive" but it's probably selectively unfair to claim only the uber-rich are spending money on items they don't need.

The resources are bounded. The value you can create from those resources is not bounded.

Google, Microsoft, Twitter, Netflix, etc., are enormously valued and none of it is based on bounded resources.

I respectfully but also totally disagree. Value of money in particular is not intrinsic, it comes directly from the ability to redirect resource today (buy a home) and the future (be able to retire comfortably).

People made rich by Google will absolutely be able to redirect more resources to themselves in a world of bounded resources.

I think a lot of founders are idealistic about it and refuse to believe that at scale the start up mentality will increase inequalities. That's PG's point acutally, see the last sentence of his essay: it will. But he doesn't care. I do.

While you're not wrong, I think what you're missing is an important qualifier. Sometimes they are creating perceived value that doesn't materialize. Meaning the value is at least part speculation, rather than realized value.

E.g., did Broadcast.com really create nearly $6B in value just because that's what it was speculatively valued at when purchased? I'd argue no, unless you think the "greater fool theory" is the correct way to measure value rather than intrinsic worth.

If you've got a superpower that enables you to determine the "real" value of something rather than its "perceived" value, you can use it to become the richest man in the world.

Intrinsic value can be measured, albeit imperfectly. Equity, as an example, is measuring real assets as opposed to some pie-in-the-sky assumption of future worth built on a foundation of hopes and dreams. Value investors have in fact gotten rich this way for a long time.

> Intrinsic value can be measured

No, it can't. It can only be guessed at. Everybody knows that "book" value isn't terribly reliable.

> Value investors have in fact gotten rich

Here's a simple test for your theory. You're sure you're right. If so, you have invested in "undervalued" stocks and gotten rich. If you haven't invested based on your theory, are you sure you're right?

As for me, I invest my money where my mouth is.

I have actually invested a substantial (for me) portion this way. It’s performed better on both an absolute and risk-adjusted basis than either the additional speculative growth or index strategies I’ve employed.

I’d also avoid absolute terms like “everybody”, “always”, etc. because they’re easily falsifiable

You're way up on others if you actually invest in your theories. Congratulations!

But I do suggest caution. A strategy that works for 3 years may not play out well over 10, 20, 30 years.

Yeah, I know I wrote "everybody knows". I meant "it is generally known".

I appreciate the advice. While I’ve only been investing this way for about 11-12 years, back testing has been statistically valid to the early 2000s (limited by the availability of index funds for comparison). You’re right though, who knows if it’ll work in 30 years. There’s some evidence that it may based on trends in institutional investing. That enough uncertainty to avoid putting all my eggs in that basket.

> early 2000s

I got hammered really hard by the 2000 crash. Down something like 75%. I thought I was smart by not investing in bubble stocks. But the secondary die-off caught me. It was a bitter pill.

It’s certainly possible something similar can happen to me. Part of this is mitigated, I think, by the fact that the overall volatility is reduced. That’s one of the pitfalls I’ve seen in contrast to the growth plays not based on intrinsic value. I think it’s the main reason the risk-adjusted returns are better but time will tell. Black swan events always seem obvious only in hindsight.