This is data capitalism. In ordinary capitalism the rich get richer, and in data capitalism those who have data, build superior products, get more users and thus more data, while others starve. Good datasets can be bought but it is scary in its own way.
"In ordinary capitalism the rich get richer [...]".
Errr, not really? I mean, at a minimum you're making a somewhat controversial statement - lots of people (me included) wouldn't automatically agree that the rich get richer, especially if you're thinking "only" the rich get richer, which is what is implied by the comment above. (As evidence, see established companies that go bankrupt, and new startups which rise from nothing to become dominant players, much like Google itself, which has existed for a relatively brief period, or something like Uber).
So let's hope that data capitalism is like regular capitalism!
I'm rich and part of the financial 1%. I can indeed confirm the rich get richer. I'm not going to enumerate the specific methods, but I do feel bad that middle class or bay area software engineers cannot employ certain financial tricks that only the rich can do.
As a teaser, one important thing is to not share information (i.e. Don't blog about financial "hacks"). Call it a corrupt moral compass or whatever you like, but the fact is this behavior is rampant.
I think it is education the is the biggest differentiator of this generation and that boils down to school district (and everything this entails race, wealth etc).
That something so important is decided at an early level of one's life that has wide reaching implications is quite frankly a disgrace.
Only the most endeavours break the cycle and they are too few and far between that are not really encouraged on most levels of society around the world due to the norms.
to anybody curious about this dude's 'financial hacks' - just hire an accountant
the vast majority of financial tricks require scale (of capital) - e.g. itemized deductions, business expenses, even tax-loss harvesting - but they aren't secret!
The tricks you mention are only about avoiding taxes, I wouldn't call those "rich getting richer" tricks, I'd call them rich preserving their capital tricks. Rich getting richer is more along the lines of hearing about investment opportunities while golfing with your banker, insider trading, having the capital to play in certain markets that only big money is allowed to play in, being able to take huge risks. Angel and VC investing being in that last category.
Capitalism is around 200 years old. Most of the extreme income inequality in the States has been going on for only around 30-40 years or so. So I don't think you can necessarily blame only capitalism for this.
Also, I don't think anyone knows the exact causes of this growing inequality - some libertarians, for example, would argue that it's excessive regulation that is causing part of the problem - which isn't capitalism, it's the opposite of capitalism.
But most importantly, note that I specifically talked most strongly against the idea that only the rich get richer. Just as an example, how many of today's billionaires are relatively new to the game? It's not all of them, not by a long shot. And while some minimum level of "being rich" is certainly a factor (in the send that everyone who lives in a 1st-world country is rich), there are lots of people on that list who started with relatively little.
I suggest reading Thomas Piketty's book "capitalism in the 21st century".
One of Piketty's points is the relationship between the rate of growth of the economy, `g`, and the rate of return on capital, `r`. If the rate of return of capital exceeds the rate of growth of the economy, that is `r > g`, then inequality of wealth increases over time. As they say, "the rich get richer".
These conditions (`r>g`) have been observed from historical data under normal conditions (excluding events like world wars), and we expect them to continue into the future, particularly with projections of declining or stabilising global economic growth rates [1].
The period after the two world wars (with relatively high equality) is unusual in history and over we're seeing inequality of wealth increase, inherited capital becoming an increasingly relevant factor, etc.
[1] let's ignore the other perspective of whether continual economic growth is actually feasible or desirable given the reality of hard environmental limits.
I haven't read the book, and only have a high school knowledge of economics, but that seems fairly intuitive to me.
Wealth is effectively "liquid power" and "power" is the ability to get other people do to what you want. One of the absolute most obvious things you'd want them to do is... give you more power.
So I think it's a pretty natural outcome that, absence other forces, any power imbalance will tend to magnify over time.
Times in history where the entire economy is growing very fast basically mean new power is raining down on all people uniformly. That will tend to reduce disparity in the same way that adding the same positive number to both the numerator and denominator leads to a fraction closer to one.
Of course, this simplified model treats every person as an island. Where the story gets more complex is when you consider people working together in a group. And I think through most of history when you've seen power imbalances get reduced, it's because you've seen people work together to form groups that have greater power than the smaller number of individuals they are pushing against.
One of the things that really scares me about the US today is how much we've culturally lost that ability to organize and work together. And, of course, the small number of increasingly powerful people and groups like it that way, as they always have.
Rich get richer in capitalism because they have more money to leverage getting better deals and researching better ways to multiply their money than poor people do.
Most successful (Valley) startups don't start from nothing, far from it, they start from a vast network of other rich peoples money, usually VC, occasionally the state.
Well, things are of course much more complicated than I have presented in my short comment. And economists are still debating whether Piketty's conclusions are valid.
But the dynamic I have described is certainly there. And it can become dominant.
Pure unregulated capitalism (which America is very much not) is Darwinian in how similar to natural selection. In natural selection the top of the food chain sometimes die off, but in general I agree with the GP poster.
I don't think it's a great idea to apply Darwinism to fields outside of biology, especially in the social sphere. It led to a lot of bad science in the past.
It sure as hell seems like natural evolution is being applied to the social sphere. Statistically, children from "well off" families do consistently better across all life pillars (health, money, family, friends) than poorer families. Come on, financially richer families are less fat/obese than poorer families. This is a direct link to living and longevity (Darwinism).
Yes, but the two groups exist and are adapted to two totally different environments. I imagine that some in the well off population see the others as a different species. Thusly, strict Darwinism doesn't apply here.
To truly see who is more fit, I propose that we take a group of 12, 6 from each class, and drop them off on an uninhabited island. We will places weapons and traps at strategic locations. We shall call this experiment Project Craving Romp.
Yeah, and guess who are the people behind these falling corporations and these new startups? Yes it is them. The bankers. Wall Street. The Rothschilds. TPTB. Call them as you like, but they money are in the hands of few and without money you cannot build a startup.
A company like Google who has a virtual monopoly on search queries can make decisions like removing referrers to downstream sites where they send users thus depriving everyone but Google access to the actual keywords. While doing this that obviously benefits Google greatly, they can also claim it benefits the user as well since their query keywords aren't being shared with a 3rd party. It is complicated to think about monopoly vs privacy in this context.
