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References: <Pine.LNX.4.64.0708200401310.19265 &AElig boston.eecs.umich.edu>
Date: Mon, 20 Aug 2007 10:59:41 -0400
To: "Daniel Reeves" <dreeves &AElig umich.edu>
Cc: improvetheworld &AElig umich.edu, reeves-hayos &AElig umich.edu,         reeves-kalkman &AElig umich.edu
From: "Clare Dibble" <clare.dibble &AElig gmail.com>
Subject: Re: mind the gap
Status: O

One problem that jumps out at me from Paul Graham's essay is that
systems in today's society are too complex for us to really grok with
this overgrown monkey brain we have.  Do companies have moods?  Do
nations have personalities?

The reason this is important may not be well enough formed to come
across very well, but when I worked in Tampax, it had recently (2-5
years earlier) been acquired by P&G.  But the Tampax executives had
"run out" much of the value of the business before selling.  They new
they were nearing retirement and wanted out.  and they fully
depreciated the equipment, did not make capital improvements, had
lavish company retreats, and not done much development for the future.
 They knew they were sitting on the most trusted brand in tampons, and
that that idea, that trust, of women everywhere is what would bring a
price when they sold.

They sold at a good time, and P&G is a big company that can weather
bumps and bruises.  But when Tampax was acquired, I have the
impression that they were steadily bleeding market share and only the
infusion of development including a product launch or two, some smart
restructuring by closing a plant down to packaging pallets more
efficiently, and updating the image while staying true to the core
"trust" image have helped turn that around.

But here's the thing... it seems like CEOs are currently a parasite to
the value that is American Corporations in a very similar way to the
last days of the Tampax old guard.  And if companies don't get an
infusion of development and value distribution, we may soon find
ourselves teetering on the brink of bringing down business as we know
it.

I have no beef with Paul Graham's fortune... but I think as a smart
man he runs his rationalization engine to the extreme.  I read
somewhere that the reason women don't do start-ups has to do with
women in engineering being rare, pairs (successful start ups,
according to him are typically started by a couple of people) are
exceedingly rare.  I'm sure that plays a role, but find it hard to
believe that it is the whole story.

I do think that some jobs should pay more than others... the other
extreme of all jobs paying the same amount I find equally ridiculous.
Why become a surgeon if you can make the same amount working fast
food?  The problem is the distribution.  If there are many jobs that
pay one unit and a few jobs that pay a hundred units, that makes
careers the equivalent of playing the lottery... a few people hit it
big while most cannot significantly better their situation.  I read an
article lately that starter homes are going away.  Low income people
cannot move up the social latter because it is more profitable to sell
a CEO a mansion than to sell a modest single family dwelling to
someone who lives in a trailer.

The problem with this has to do with how people are motivated.  Small,
incremental striving seems to work better for most people than
randomness of fortune.  And the middle part of the curve is what is
disappearing.

I would be curious to hear what Steven thinks about all this.


On 8/20/07, Daniel Reeves <dreeves &AElig umich.edu> wrote:
> We've been debating this essay
>    http://www.paulgraham.com/gap.html
> and I thought I'd move it to improvetheworld...
>
> I'll start:  Graham is so right!  The income gap between the rich and the
> poor is wonderful!
>
> Actually it started more as a debate about the nature of capitalism and
> interest ("why should money 'grow'?").  Here was the gist:
>
> * [the economy] is a zero-sum game, isn't it?
> - no
>
> * those earning money are taking it away, even if only indirectly, from
>    other people, no?
> - no, not if you think in terms of wealth (wealth = stuff you want,
>    money = way to transfer wealth)
>
> * Or am I totally simplifying the haves vs. the have-nots with my pie
>    metaphor?
> - yes, that's precisely the Daddy Model of Wealth!
>
> * Is it THEORETICALLY possible for no one to owe any money at all in this
>    world, i.e., that everyone just has money that "grows"? Or does money
>    only grow if it is taken away from others?
> - You're right, not possible, but for the opposite reason of what you seem
>    to be suggesting.  You grow money by giving it to someone (lending it),
>    not by taking it away.
>
> It even got a bit heated, along the lines of "Trixie, I don't think it's
> right for you to lash out against capitalistic/yootlicious ideas without
> grokking the answers to your questions [above]".
>
> Oh, and I offered a yootle to the first person who could answer the
> quasiphilosophical question why money *should* grow, with the hint that it
> has to do with human mortality.  I believe that's the only reason that
> holds in all circumstances.
>
> In any case, Trixie wanted to resume the debate and this is clearly the
> place to do it!
>
> DO NOT CHANGE THE SUBJECT LINE WHEN YOU REPLY (so it's easy for those not
> interested in this debate to delete the whole thread).
>
> Ok, go!
> Danny
>
> --
> http://ai.eecs.umich.edu/people/dreeves  - -  search://"Daniel Reeves"
>
>   "Everything that can be invented has been invented."
>     -- Charles H. Duell, Commissioner, U.S. Office of Patents, 1899.
>
>