How is the idea that variation in productivity leads to a variation in income a "breathtaking misunderstanding of poverty"?
It's absolutely true that variation in productivity leads to a variation in income and it's also true technology acts as a lever and is increasing the variation in productivity between people.
At no point did PG say anything like what you claim it "sounds like" he is saying. The essay was an argument to attack rent-seeking, and other bad behaviors, but not the variation in productivity. It also argued that even if all rent-seeking were eliminated, there would still be variations in income because some people are far more productive than the average.
>>How is the idea that variation in productivity leads to a variation in income a "breathtaking misunderstanding of poverty"? It's absolutely true that variation in productivity leads to a variation in income...
No. Productivity has nothing to do with income. You can be the most productive widget-maker in the factory. That doesn't mean you will make a lot of money.
Income inequality exists and has been growing because those at the top have been reaping the increases in productivity of those at the bottom. In fact that's the entire debate: employee productivity has massively increased since the 70s, but wages have not reflected this.
> You can be the most productive widget-maker in the factory.
You are using a non economic definition of productivity, and he is using the economic one. In Economics, productivity is the value of what is produced, not the quantity.
This is really the heart of the debate: what is the origin of wealth? Is it mostly productivity, people working hard and reaping the benefits? Or is it mostly opportunity, people being in the right place at the right time, and reaping the benefits?
Where you fall on pg's essay is defined by your answer to that question.
Keeping in mind that PG is a venture capitalist -- as in, a financier -- how should we apply your interpretation of his essay to PG himself? His current job is incubating companies and then collecting returns, so are you saying that PG was arguing that he is the problem?
A an example of rent collecting would be if he used his wealth to lobby for a law requiring all start-ups to have a license which an organization he controlled granted (and charged for).
If you truly don't think he is contributing to wealth creation, I can only surmise that you really don't understand the job he performs and the wealth created by people who are good at that particular job.
Angel investing and venture capital are jobs that are also prone to the Peter Principle. What makes them different than many other jobs, especially angel investing, is that the person has promoted themselves to their own level of incompetence. Just because some (maybe many) angel investors are incompetent and don't contribute to wealth creation does not mean that none do.
His essay focused on one particular lever, technology. His original lever was technology. Now he uses other levers, economic capital, social capital and experience to create wealth. Extracting value from economic capital alone is rent seeking. This is what banks do with loans. Providing economic capital with advise on how to most intelligently make the most of the capital goes beyond mere rent seeking and enters the realm of wealth creating activities.
He's providing incredible value/wealth to the startups he advises and invests in. I'd also argue that his essays are a great deal of wealth given to the world.
It's absolutely true that variation in productivity leads to a variation in income and it's also true technology acts as a lever and is increasing the variation in productivity between people.
At no point did PG say anything like what you claim it "sounds like" he is saying. The essay was an argument to attack rent-seeking, and other bad behaviors, but not the variation in productivity. It also argued that even if all rent-seeking were eliminated, there would still be variations in income because some people are far more productive than the average.