As I read this article I felt a growing sense of rage and frustration.

As I read this article I felt a growing sense of rage and frustration. Not because I disagree with its fundamental point, which is that PG’s essay is terribly wrong, but because Holly falls into the same traps of fallacious arguments, anecdotal straw men, and general lack of logical consistency that torpedoed Paul Graham’s essay. And ultimately, like Graham’s essay, ends up missing the point entirely.

Let’s start with my favorite argument of the absurd: the “just because I find it of no value it means it has no value.”

King Digital Entertainment (the company that made Candy Crush Saga, and not Candy Crush itself) was valued at $5.9 billion (not 7) because it was generating millions of dollars in revenues. And it was generating millions of dollars in revenues because people found enjoyment in Candy Crush Saga and felt it was worth paying for. Many of my friends are among those people.

I, personally, find Candy Crush and all its variants and clones to be intolerable and a horrific waste of time. But I also feel the same way about opera, golf, NASCAR, baseball, and witty but shallow coming-of-age memoirs by hyper-literate yuppie authors who really haven’t lived enough to have their memoirs be worth reading. And yet, people pay for that stuff! Because they find value in it! And the beauty of a free society is that we can all disagree about what is valuable in life, but we get to choose what is valuable to us, and contribute our time and energy and resources towards those ends.

And that is also the danger of the wealth inequality we’re seeing today, because it deprives people of that economic freedom. Consumer goods like TVs and clothes and computers have gotten exponentially cheaper, but essentials like energy, housing, education, and health care have gotten exponentially more expensive while incomes have stagnated.

The fundamental thing that both Holly and Paul Graham are missing is that the argument really isn’t about whether modern capitalism, startup or otherwise, creates value. It’s an empirical fact that it does. Thanks to modern technologies that have been productized by startups and conglomerates and much else, it’s an undeniable fact that the world is more productive and more capable than it was before. Like the industrial revolution, the information revolution means that a single person can now create things that required huge teams before, or were impossible.

The nurses and doctors out their saving lives have had their ability to save lives tremendously increased by things like MRI machines and genetically targeted drug cocktails.

The problem isn’t that startups don’t create value. The problem is that most if not all of the value that has been created in the past few decades has gone to people at the top of the income pile and that imbalance seems to be getting worse, not better. And this creates all sorts of problems, not the least of which is that extreme wealth inequality leads to extreme political inequality which ultimate leads to the distortion and destruction of the very society that created it.

After all, the goal of every startup (and indeed every company) is to make itself a monopoly. And the goal of every monopoly is to end the competition and market that created it in the first place. Just like every sports team’s goal is to win and keep winning. There’s nothing inherently wrong with that, because while the company is growing and winning it incentivizes creativity and innovation. But just as a sports league has to make sure that the same team doesn’t win always and forever or else the sport will die, we as a society have to make sure that the same people don’t win always and forever, or our society will cave in upon itself.

In other words, startups are wonderful and they create a lot of value. But if only the 1% have the education, resources, and economic freedom to found startups, then pretty soon all we’ll have are crappy startups that really do create no value. That or a revolution.

History doesn’t repeat itself, but it really does rhyme. Many of the same issues we’re facing now with globalization and the Information Revolution are the same ones faced a century ago with globalization and the Industrial Revolution. Then it took a combination of wars, fear of communism, the rise of unions, and the enactment of progressive policies like the New Deal to fashion societies that gave a chance of economic freedom to the masses.

Now? It will probably require something similar but not the same. Maybe unions, maybe not. Maybe more redistributive policies, maybe something different. But either way, progress is best served by having substantive discussions about how to ensure that the vast wealth created by modern technology serves as a basis for better lives for all of us, instead of knocking down startup straw men.

And incidentally, for both Paul and Holly, the best way to create both more startups, more wealth, more technological revolutions, and more economic well-being for all is to make sure that education and economic opportunity are as widely spread as possible.

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