--- title: Winners take all date: May 2024 --- The gap between the few and the many will rise, leading to the best taking most. - The best creators will capture most engagement. - The best doctors will treat everyone. - The best Pizza cooks will make pizzas for the world. - The most powerful country will dictate global culture. Not being one of the best no longer works. --- People doing complex activities have greater variance in ability regardless of training. No matter how much training startup founders / creators / marketers have, there is bound to be large variance in their ability. The more complex an activity is, the more possibilities it has. A factory worker has a limited number of choices at any given moment in time, leading to few possibilities in how they assemble. An artist has an infinite number of choices and possibilities, making their work far more complex. For simpler activities, with enough training, it is possible to become close to the best in ability. The best factory worker is only moderately more productive than the average one. But, the best startup founder is orders of magnitude more productive than the average one: the average founder fails, while the best achieves unfathomable outcomes. This will be true, regardless of the quality of education. Even if the best entrepreneur or artist coached students 24/7 for a decade, the students would still have great variance in ability. There will always be some who are better at making things people want because the activity is far more complex. If we could plot the ability of professionals on a graph, we would notice it follows a power law distribution. The best player is much better than the second-best. The gap is smaller between the second and third best, and so on. The more complex the activity, the differences are more pronounced. The gap in ability between the best creator and the next best is much larger than the gap between the best factory worker and the next best. By many orders of magnitude. --- Greater leverage makes activities more complex by letting us skip simpler activities and by making complex activities even more complex. Leverage is how little time it takes to implement an idea. The more leverage you have, the less time it takes to manifest your ideas. Before computers, we spent a lot of time crunching numbers. As we gained better technology, we could spend more time figuring out what to create and how - which are much more complex than crunching numbers. Greater leverage makes what was once impossible possible, increasing the complexity of an activity. Building software got much more complex when the world adopted smartphones because there were many more possibilities in what you could build and who you could build for. Our minds don't dream of ideas it believes are impossible to implement. More leverage boosts our confidence, letting us dream wider and bigger which also increases possibilities. An increase in leverage, by definition, increases the rate which we make decisions. When implementing an idea takes a long time, inequality between individuals doesn't show up quickly. Imagine a game of chess in which each move takes 5 years. By the time the players die, their differences wouldn't be that clear. It's not that the difference in ability wasn't there, but it didn't have enough time to present itself as a difference in productivity. The faster we make decisions, the more decisions we make, increasing the weight of each decision as it compounds more aggressively. With greater leverage, small difference in ability (in decision making) leads to a far greater difference in productivity. A slightly better player in a long, complex, fair, game making moves rapidly will have much better results. Since our activities are becoming more complex leading to more variance in ability, and we are making moves more quickly, small differences in ability will have larger differences in productivity. --- Teams will no longer be able to hire those that aren't one of the best. If one of the best is 1000x more productive than the average, it makes more sense to wait and hire one of the best than hire 1000 average. This was not the case when the difference was only 10x. As equal opportunity grows and the world is better connected, there will be fiercer competition. This will lead to more creation, improving leverage, creating an even larger gap in productivity between the best and the rest. As our world becomes more fair, individuals will be more accurately compensated for the value they create. The gap in productivity between the best and the rest will also be seen in their wealth. The wealth gap between the best and the rest will grow as leverage grows. There is a limit to wealth redistribution, it will not bridge the wealth gap (as I'll explain below). In a fair, highly leveraged, world with equal opportunity, the best take most. --- There are two kinds of opportunity. One is determined by birth. The other is determined by access to tools, education, and freedom. It's silly to think we're not born with different capabilities, personalities, and emotional tendencies. No two trees are the same. No two rocks are the same. People are not created equal. For any complex activity, some will have a natural advantage. Creating equality at birth is dangerous because it would mean wiping out what makes us unique. We underestimate the impact of our biology on who we are. It shapes our personalities, tendencies, inclinations, and perspectives. Editing our genes to be similar will create true equality, but it will cause our species to fail due to lack of diversity. We ought to double down on what makes us unique, not get rid of it. Inequality in access to tools, education and freedom is unfair. Fairness and unfairness both cause inequality in outcomes. We cannot say that the world is unfair just because outcomes are unequal. Yet, fair and unfair wealth outcomes look different. The shape of wealth outcomes in an unfair world looks like a step function, whereas the shape of wealth outcomes for complex activities in a fair world looks like a smooth [power law curve](https://en.wikipedia.org/wiki/Power_law). Unfair systems tell you what you can and cannot do with your life. They have rigid class boundaries, each with different privileges and freedoms. Few, if any, individuals have outcomes between the classes. - Slaves in ancient Egypt had equal outcomes. You would struggle to find anyone between them and the class above. - Factory workers had similar outcomes. You'd find only few with outcomes between the workers and the owners. More fair systems, like a group of content creators, will have unequal outcomes. But, the outcomes will fall along a smoother curve. It will be more difficult to find rigid classes. Equality in productivity and wealth is possible in a fair world, but only when the activity is simple. No complex activity, in a fair world, will have completely equal outcomes. If outcomes for a complex activity world seem equal, you won't have to look far to find the few that sit above the rest. Moving up is hard in a fair, leveraged world. It's hard to become one of the best and even harder to know what you can be one of the best at. This difficulty, not less access to opportunity, will cause difficulty moving upwards in a fair world. Thus, we can't use difficulty in upward mobility as a measure of unfairness. That's like saying Chess is unfair because I can't be a professional chess player and earn a living playing chess. I likely can't no matter how hard I try. Life isn't fair while the game can be. A better measure is to look at the winners and see what their starting points were. In a fair world we would find little to no correlation between how much privilege they started with and where they ended up. We have a long ways to go but are better than ever before. --- We are accelerating towards a world in which the best take most. Inequality will rise sharply in the next few years and the rise will be greater than the rise over the past century, if not more. It will shock us. Leverage accelerates exponentially fast, accelerating the gap in productivity between the best and rest. Global GDP is an under-approximation of the leverage in the world . More leverage means we can more quickly implement better ideas, increasing our transactions in volume and value. Global GDP is [growing exponentially fast](https://ourworldindata.org/grapher/global-gdp-over-the-long-run), and so leverage is as well, accelerating us towards a winners take all world exponentially fast. --- There will be no middle class: those who aren't one of the best at something the world values won't be able to earn a living. A middle class was only possible in a world with simpler activities, and less leverage, meaning the gap in productivity between the best and average wasn't large. In theory, every single person can be one of the best at something the world values because there is no limit to the number of activities we can have. But, in practice, this won't happen. Some people's strengths will allow them to be the best only in activities the world doesn't value (or won't value within their lifetime). Some won't discover their natural advantages and won't be one of the best at anything no matter how hard they try. Some won't train themselves in the right way. Thus, we need a universal basic income that grows with leverage. A basic income won't "feel enough". If it ever does, the feeling will be fleeting. This is because the next breakthrough in medicine, technology, culture, etc., will make you crave something that you can't afford on the basic income. Such breakthroughs will happen far more frequently, and by relying on a basic income you will perpetually want things that feel like basic necessities - that will be out of reach. A basic income will never be so high that the best outcomes will be close the average because that kind of distribution does not maximize growth (GDP). "Winner-takes-most" applies to countries as well: those that fail to compete on growth will face a new kind of colonialism. They'll need help from winners, and that help will come with uncomfortable conditions. Recipients will be forced to cut their basic income to the amount that maximizes growth, and their culture will be swallowed by the cultures of winners. We're seeing early signs of this. In order to survive, countries won't be able to raise a basic income so high that it kills their ability to compete. Those who do so will be made to cut it when they receive help. Resisting these incentives will get harder as leverage grows. No one creates these incentives. Any group of organisms that want things and want to get what they want as fast as they can will feel the same incentives as they evolve. The winner is just better at optimizing for them. Don't rely on a basic income to get what you want; only treat it as a launching pad to: --- Discover what you can be great at, that the world values (or will value) and become the best you can be at it. Leave the rest to nature. --- ### Notes Complexity != difficulty. A simple activity can be difficult. A complex one can be easy for the right person. Variance in ability is a function of complexity no matter the duration and quality of training. The more complex the game is, the larger the gap in ability between the best and the rest, and the more extreme the power law distribution of abilities. We can observe this in well studied board games: [Chess](https://en.wikipedia.org/wiki/Chess), and [Go](https://en.wikipedia.org/wiki/Go_(game)), through the ELO ratings of professionals. ([ELO is a way to calculate relative skills of players](https://en.wikipedia.org/wiki/Elo_rating_system)). Go is more complex than Chess. In Go, the difference in ELO rating of the top two players is [183](https://www.goratings.org/en/), whereas in Chess, the difference in ELO rating of the top two Chess players is only [25](https://www.chess.com/players). The gap between the best and the next best is greater in Go than in Chess. Meanwhile there's no need for ELO rating for a simple game such as Tic Tac Toe because every "professional" would draw: everyone's ELO is 0. Many of these pros have trained their entire lives and still see inequality in ability proportional to the complexity of their activity. With worse training we would see even greater variance. GDP is an under-approximation because leverage also increases transactions that don't involve money which aren't yet reflected in GDP. GDP is also a lagging indicator of leverage because it takes time leverage to create more transactions. Only implemented ideas that are valued will impact GDP. We will see today's leverage only after people use it to create good things. As leverage grows, GDP will become more accurate.