December 7, 2014


How Technology Could Help Fight Income Inequality (TYLER COWEN, 12/06/14, NY Times)

Technology has contributed to the rise in inequality, but there are also some significant ways in which technology could reduce it.

For example, while computers have improved our lives in many ways, they haven't yet done much to make health care and education cheaper. Over the next few decades, however, that may well change: We can easily imagine medical diagnosis by online artificial intelligence, greater use of online competitive procurement for health care services, more transparency in pricing and thus more competition, and much cheaper online education for many students, to cite just a few possibilities. In such a world, many wage gains would come from new and cheaper services, rather than from being able to cut a better deal with the boss at work.

It is a bit harder to see how information technology can lower housing costs, but perhaps the sharing economy can make it easier to live in much smaller spaces and rent needed items, rather than store them in a house or apartment. That would enable lower-income people to live closer to higher-paying urban jobs and at lower cost.

Another set of future gains, especially for lesser-skilled workers, may come as computers become easier to handle for people with rudimentary skill. Not everyone can work fruitfully with computers now. There is a generation gap when it comes to manipulating electronic devices, and many relevant tasks require knowledge of programming or, more ambitiously, the entrepreneurial skill of creating a start-up. That, in a nutshell, is how our dynamic sector has concentrated its gains among a relatively small number of employees, thus leading to more income inequality.

It's not just that technology is consistently driving down the cost of living, enriching all of us, nor that it is doing the scut work that the lowest classes used to be sentenced to.  The big fact that Mr. Cowen still hasn't processed is that all of the nations with developed economies remain democracies and the capacity to generatre ever greater wealth at ever lower cost means there's more to be redistributed universally.  

Labor was the means of redistributing wealth when manufacturing required labor.  As manufacturing requires less and less labor we won't stop redistributing, we'll redistribute via labor less.

And while the creative elites will have more wealth than everyone else, they'll also be laboring for it.  But no one will quibble about labor inequality except for what he's already argued will be a rather small minority.

Atlas doesn't shrug because he's tired of carrying the weight, but because no one cares if the wealthier have to work for it.

Posted by at December 7, 2014 8:26 AM

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