link to original reddit post by /u/omgcoin

There is a popular argument in libertarian circles - employees just chose to work for a fixed wage (because of high time preference), if they really wanted they could become capitalist.

This is actually terrible self-contradicting argument. The above statement is correct only in free market with no artificially imposed barriers of entry. However, the only reason you (and me) so strongly oppose existence of the state is because you know that the state is actively destroying free market. Moreover, the very existence of the state is not compatible with free market (at least in long term).

In other words, if the above statement were correct, you would already living in libertarian paradise.

In reality, there are layers of reasons why it's extremely hard to switch from being fixed wage worker to a capitalist (a person who makes money by directly interacting with the market). I'm going to list reasons below (it's not even complete list):

  1. Central banks are constantly diluting each unit of money through uncontrollable emission of monetary base. In third world countries, it directly reflects in rising prices for everyday goods and services because they don't have developed financial markets to absorb increased supply of money. Since salaries are sticky, they don't rise along with increasing money supply. That means that throughout a year, your real income is constantly decreasing till next raise (usually once per year). In short, you are not going to save enough capital to afford being unemployed (which is needed to start your small venture). In first world countries, you can escape inflation by investing in financial assets. However, financial assets are volatile and correlate with increasing money supply only in long term. That means to invest in financial assets, you should be able to lock your money for 5 years to escape near term volatility. Unfortunately, not everybody is able to afford to lock their money for 5+ years in volatile financial assets. In this case, that means wealth gap between those who can afford to invest and those who can't will exponentially increase over years. In the case of hard money, wealth of poor people who work for cash won't get constantly diluted. And all of this is on top of layers of taxes (income tax, payroll tax, value added tax etc);

  2. To some, asset price inflation might sound too abstract, not real. However, the bad news is that real estate is actually asset and at the same time, everybody needs to live somewhere (at least to stay productive). That means rental payments or mortgage payments will be one of the biggest parts of your spending. Even worse, real estate becomes politically sensitive issue. Due to mechanics of democracy, it will lead to populist regulations of real estate market like rent control, zoning laws etc. This further exacerbates existing problem. That means you are going to spend even bigger share of your salary on real estate;

  3. If this doesn't sound enough, you are also going to spend huge portion of your salary on health care. The problem is that health care is inherently politically sensitive issue. It means that, again due to mechanics of democracy, healthcare industry will be plagued by regulatory capture masked under progressive regulation. Moreover, it's true not only in US but in every country. In Europe, you are going to sponsor inefficient healthcare sector through highly progressive tax;

  4. I won't mention education costs here because I think so called higher education is absurdly overrated. I'm doing pretty well without having any degree at all. However, if you want to escape your country, you are going to be discriminated if you don't have formal degree. Contrary to popular opinion, you won't have big problems with employers (depends on sector, if you are software developer, you don't need any degree to be very successful) but you are going to have problems government regulations. Namely, many immigration visas require formal degree to be eligible for employment visa. However, there is a way to bypass this restriction if you receive job offer with big salary or you have many years of experience in relevant sector. Since I don't have any degree, it took me years to become qualified for employment in 3 first world countries. Without these government restrictions, I might left my country years earlier (and therefore would be much richer, especially considering compound returns from investments I might make years earlier);

  5. What most people are missing is that high taxes isn't just high taxes on the same economy. For example, I had a chance to live in Sweden. I know that high salaries simply doesn't exist there. The reason is simple. For employer, salary is simply motivational tool and nothing more. It doesn't matter how progressive Google on surface, they are simply calculating how much they would spend on star software developer (payroll tax + income tax) and how much software developer would receive as net income. Since salary is motivation tool, you can calculate "motivational efficiency" as "I / T", where "I" - net income of employee, "T" - total spending on employee (payroll tax + income tax). As a result, Google and other high end employers are hiring star developers in low tax Switzerland, not in high tax Sweden (despite that Switzerland is much more expensive than Sweden). So in high tax country, many lucrative opportunities doesn't exist and people don't even think that such opportunities can exist! Since, Sweden is high tax country for very long time, Google and others initially didn't choose Sweden as their primary HQ. So statistics won't even show you what could exist but doesn't exist. For the same reason, Sweden and other European countries ranks high in "happiness index". The reason is very simple - all ambitious people are either left Sweden or never even considered to relocate there. So such "happiness index" is only counting people who are not ambitious and don't care to become capitalist in the first place;

  6. Even if you somehow saved enough money to start your own venture, you are going to get stuck with endless regulations (and banks will act as gatekeepers). It's dishonest to say that you can just raise money from VC. To raise money from VC, you should build at least some prototype and find market fit. In order to do this, you should be able to afford being unemployed for certain amount of time. There are many dishonest "success" stories which in reality hide the simple fact that they had rich parents (at least rich enough that their teens didn't care about finding a job to feed themselves). Even if you somehow raised money from VC to meet artificially high barriers of entry, you likely lost control over your startup by diluting your stake. In this case, VC becomes de-facto your new employer;

  7. Moreover, securities regulations discriminate against retail investors under mask of protection from risks. One of the most efficient ways to cement existing social classes is to deprive poor people from risk taking because one of the most efficient ways to jump from wage worker to capitalist is asymmetric returns. For example, Andreessen Horowitz revealed that it made $78 million off its $250,000 seed investment in Instagram. Governments usually have laws defining "accredited investor" (usually defined as high net worth individuals). Non-publicly traded companies aren't allowed to offer their equity to retail investors. There are dishonest claims that retail investors can participate in closed, private offerings. However, I watched lectures for founders hosted by YCombinator in Stanford and they strongly advised not to get "non-accredited investors" on board due to potential legal complications. If securities regulations wouldn't exist, Instagram shares might be available for trading from almost day one, everyone could have opportunity to asymmetric gains. Roughly speaking, companies spent vast majority of their exponential growth being private. It's true that publicly traded company might experience exponential growth but it's much harder to find mature companies with potential of exponential growth. It's also true that options is good source of asymmetric returns. However, their time limited nature makes them non-trivial investment since you have to time the market which is orders of magnitude more difficult than investing in promising technology without strict time bounds. Moreover, after GameStop drama and establishment reaction to it, I expect that government might try to limit access to options trading for retail investors. Crypto so far is the only case when retail got far ahead of institutional investors and predictably many governments aren't happy about it;

  8. In the case you dislike your political system and also dislike being employed, you are mostly out of luck. In most countries, you can relatively easily receive employment visa (even without degree) but it's extremely difficult to immigrate to other country as unemployed. Usually, so called "startup visas" aren't really startup visas. Real startup is when you are literally just started building something in your bedroom without any idea if there is any market fit for this, let alone about any income. You might iterate through different ideas, some of them might work, some of them might never work. This is real startup, not well funded company with office, HR and 100 employees. However, so called "startup visas" usually require business plan, large capital, promise to create minimum 10 jobs in next year or two. Basically, it's not opportunity visas but rather - hey, if you already built successful, well funded company, then you might come here. That's why large armies of smart, talented developers from third world countries like India or Eastern Europe waste their time being in employment visa slavery and enrich already rich first world mega corporations. You can acquire golden visa to just "be" in foreign country without being employed. However, since big countries deeply dislike when small countries offer such opportunities, many small countries either never offer golden visas or stop offering golden visas. As a result of such artificial scarcity, golden visas start from 250k EUR. In my case, I employed under employment visa slavery only because I can't afford golden visa and simultaneously I deeply hate political system of my home country;

In short, in current statist economy, there are too many people waste their time being employed and there are too many bloated corporations protected by artificially high barriers of entry. That's terrible way to allocate human resources.

Stateless capitalism is an ideology of radical decentralization and erasing barriers of entry. In stateless capitalism, there would be much more self-employed people and small, very specialized companies because there would be no state to protect bloated corporations from competitors.

In other words, progressivism is an ideology of employment slavery and stateless capitalism is an ideology of self-employment and small companies.

Socialists use these frustrations with corporatism to promote their slavery masked as freedom from corporatism. In fact, USSR took employment slavery to a completely next level. In USSR, it was illegal not being employed:

https://en.wikipedia.org/wiki/Parasitism_(social_offense)#Soviet_Union

Even worse, sometimes you didn't have a choice where you want to work and you usually didn't even have a chance to leave USSR if you didn't like their system.