CEO of Coca-Cola funded, Copyin.com. Rails/Angular developer, Entrepreneur & YC alum. Previously built and sold Clickpass.



There’s a a really interesting discussion unfolding right now between Paul Graham and Tim O’Reilly on the Wealth Gap and whether or not economic inequality is really a bad thing per se.

I used to believe that the argument against wealth inequality was unsubstantiated and largely fuelled by jealousy. I believed (and still do), that economic inequality is a natural consequence of increased economic leverage. If the most successful people are becoming more effective and the least successful remain consistently ineffectual then you get a divergence in wealth. If the baseline is zero and the top line goes up then the two of them diverge.



And it’s not just the rich who become richer. Over the last 50 years the whole world has become a much better place to live. Health, wealth and education are up across the board. That’s happened because our economies are more efficient and more effective. The people who run the businesses that drive those economies have benefitted proportionally. Is it really such an issue if a few people get rich so a lot of people can get wealthier?

I used to think not. Now I’m not so sure. Because what comes with a wealth gap is an empathy gap. And when people lack empathy they treat each other in ways they wouldn’t want to be treated themselves. Often those ways are bad and when you treat someone badly enough they dislike you. If you continue to treat them badly they hate you. And when people hate each other bad things happen.

In order to find out more I tried to read a book on the topic. I didn’t succeed because it annoyed me so much I had to stop reading it. Most of it was arguing that poverty was bad (obvious) and that wealth per se was bad (not true). Most of the arguments against disparity were that things would be better if the poorer had more cash. But, as Paul Graham points out, that is not the same thing as saying that inequality is bad. What it says is that poverty is bad. And that’s something that I don’t think anyone would argue with.

The book was annoying and convinced me of nothing. However I had a lingering, unsubstantiated feeling there was a fundamental danger in the haves moving further from the have-nots. It was actually only only when I watched Neill Blomkamp’s Elysium (an allegorical story of the US/Mexican dichotomy played out in a futuristic, dystopian earth orbited by a utopian, man-made paradise) that I realised what it was and how I’d already seen it play out my own life. When the gap gets too large, empathy dies. And when empathy dies things get very bad.



As a career entrepreneur, most of my adult life has been spent with very low and extremely unpredictable income. I never wanted for anything during childhood but as an adult I’ve put everything I’ve ever had into my businesses and there have been many, many months when the stress of pennilessness rang like tinnitus in my ears. When buying bread and milk spikes your cortisol you’re in a bad place.

Essentials are the least stressful part though. What really hurts is the discretionary spending and what kills you is the forced discretionary spending. Unless you hermit yourself (as I did for three years during my twenties), it’s hard to get away from the social impetus for that spending. When you would walk a mile rather than take a $2 bus ride, buying a round of drinks cuts you like a sword. I wanted to punch a guy in the face when he asked me for a $20, double Talisker. He had a well paid job as an engineer with Nvidia. I had $20,000 on a credit card. How could he not realise the position I was in. How could he not realise that I’d literally spent ten hours walking across the hills of San Francisco to save the money his whisky cost me.

Imagine you ordered a drink and when the bill came it cost you $500. Imagine how sick that would make you feel, how it would ruin your evening. I had so little money at that point that that’s exactly how I felt. It ruined my night and I honestly hated him for it.

And yet eight years later I did basically exactly the same thing myself. I was back in San Francisco. This time I was there as an advisor to the Entrepreneur First cohort. These were all 20-something, first-time, unfunded entrepreneurs. I’d organised for us all to go out to dinner in the Mission. We weren’t at a particularly expensive place but when the bill came, every single one of the fifteen people there wanted to split it item by item. I found it intensely annoying to end the meal in such a tedious way and dismissed it suggesting that we just divide by the number of people.

But then I remembered that each of them was on a stipend of $1,600/month. They had to use that money to fund both both themselves and their companies. Meanwhile I was making $1,000/day contracting. So whether I was up or down on a $30 meal didn’t really matter to me. I didn’t have any empathy with their situation.

Not only that but I also ate and drank more. They were all budgeting, I wasn’t. So I wasn’t just being unsympathetic, in my carelessness I was also getting this crew of scrabbling start-uppers to subsidise my splashy lifestyle. Only, that didn’t occur to me because I didn’t feel the pain of expenditure the same way they did. I forgot the same pain that would have hurt me viscerally seven (or even two) years earlier. Yes, I was That Guy (though I subsequently paid over my share).

The powerful thing about empathy is it stops you from accidentally hurting people. You feel their pain as if it was your own. And that stops them from them hating you. And that’s good for everyone. That guy in the bar hurt me and made me hate him because he didn’t empathise with my situation. I made those young entrepreneurs stressed because I didn’t empathise with theirs. And both those things happened because we were economically removed from each other and lacked empathy.

Empathy doesn’t care about absolutes, it’s only the relative that matters. If you’re all rich or you’re all poor then it’s all cool. It’s only when you’re different that things get screwy. I have a very successful friend who’s CEO of a company that you will have probably heard of. By any normal standards he’s very well paid but many of his friends have sold their companies and made tens of millions. He’s now no longer able to keep up with them and finds himself resenting how much they will spend on a holiday or a meal that leaves him high and dry.

Boo hoo I hear you cry, poor him. It must be so hard living on a decent salary and not able to keep up with centi-millionaires. But unless you’re earning less than $3,650/year then boo hoo, poor you. Because you’re already earning more than 75% of the rest of the world. How does anyone in the UK or the US have any soap box to stand on when 20% of the world lives on less than $365/year? The UK government gives job-seekers $4,200/year in cash alone and that’s aside from housing and healthcare which is of course free. If you live in the UK you made it into the top 25% most wealthy people in the world even before you got out of bed. Well done you.

But the fact that you’re richer than most of the world doesn’t matter because let’s be honest, what matters is how much you have relative to those around you.

When you feel the pain of financial stress you feel the pain of financial stress. Is the suicide of the man evicted from his bedsit any less stressful than the suicide of the man who can’t pay his children’s private school fees or the teenager who can’t afford the right trainers? Stress and distress are stress and distress, who are any of us to judge their intensity.

Any of us feeling poor would probably immediately feel better if we were hanging out with the Syrian refugees currently camped out in Calais. We’d be grateful just to have a country to call our own. Small comfort to the financially suicidal in their hour of need though. Were they “rich and entitled” or “poor and needy” as they left this world? It all depends on your perspective.

The reality is that as long as you’ve locked in the first two levels of Maslow’s hierarchy then it’s hard to say that you’re poor in absolute. But that’s not to say that you’re not poor relative to those around you and that’s not to say that that’s just as distressing. Fairness and equality is deeply, deeply hardwired. In this incredible experiment it’s shown that even monkeys will demand equal pay for equal work. Hardly surprising then that inequality enrages humans.

So while I always thought a wealth gap wasn’t a bad thing per se; now I’m not so sure. Maybe, like me at that dinner table, the larger the wealth gap, the less we notice when we take more than our fair share. And the less we notice ourselves doing things that make people hate us. Or hating people for things they never meant to hurt us. If the guy in that bar had been a student, I like to think he’d have never asked me for a $20 drink. If I’d been out to dinner with those entrepreneurs only two years previous I’d have been delighted to itemise the bill.

I’ve never met a wealthy person that hates the poor but I’m shocked by the number of people I know who hate the wealthy. I never really understand why since none of them have obviously suffered at the hand of the “rich”. But then it doesn’t have to be something obvious to add up. Like the annoying housemate who eats all your ketchup, it just has to be occasional, careless or callous to eventually accumulate into a ball of righteous fury.

So to come back to Paul’s essay I think that his points are right, it’s not the wealth gap per se that’s bad. However I do think that the Empathy Gap is a bad thing. And the Empathy Gap is truly a problem with the distance between the two ends of the spectrum and independent of where either of them are. And for that reason I think a Wealth Gap is probably a bad thing too.

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