Mind the Gap

Paul Graham’s essay Mind the Gap argues that income variation in modern democracies reflects productive differences rather than injustice.

The “Daddy Model” Misconception

Children mistakenly view wealth as fixed and distributed by authority. “Wealth is something that has to be generated” rather than merely parceled out. This childhood perspective persists into adulthood, making people uncomfortable with unequal earnings.

Historical Context

For most of history, fortunes came through theft and appropriation by rulers. Only with the middle class and Industrial Revolution did wealth creation become the primary path to riches. This legacy makes societies suspicious of the wealthy, even when fortunes are earned legitimately.

Technology’s Leveling Effect

While technology increases income gaps, it decreases lifestyle differences. Expensive goods become commodified—luxury cars offer minimal advantages over mass-produced ones. The wealthy increasingly live materially similar lives to average people.

Health Indicator Framework

Increasing income variation signals a healthy economy, indicating that talented individuals are rewarded for creating wealth. Suppressing this variation produces societal stagnation.

The Core Principle

“You need rich people in your society” not for spending, but because their wealth-building activities benefit everyone—they create tractors, not just jobs.