The growing gap
Technology enabled globalization. Globalization meant investment capital could freely roam the world, looking for the greatest returns. Investors who could buy information about the location of the greatest return could invest accordingly. Wealth built on itself, turning itself into extreme wealth.
Then too, more advanced business machines require more educated operators. Education is becoming more expensive, and students are taking on unsustainable debt to get it. Richer school districts have better teachers and equipment, and the gap in student test scores between rich and poor districts is growing.
Thus, technology is one cause of today’s extreme wealth inequality.*
In earlier times, technological advance equated with new equipment for mining and manufacturing – what the accountants call capital equipment. By definition, these innovations were available only to those who had capital, lots of it. And there’s no question that inventors were bankrolled by capitalists who wanted newer ways to gain leverage over the laboring masses.
Some exceptions proved this rule. The mule- or ox-drawn plow was at one time a new technology, and it enriched small farmers, at an affordable investment cost. Later, the sewing machine allowed small entrepreneurs to start tailor shops – but also enabled more ambitious textile entrepreneurs to perpetrate sweatshop manufacture.
It was the recent genius of Japanese and Silicon Valley entrepreneurs to follow the sewing machine example, making productive equipment (notably, PCs, digital media equipment like mixers and DVD duplicators, and smartphones) affordable for everyone. The equipment enabled hundreds of thousands of new small businesses. If not for the ability of ordinary people to save money and make money using their digital devices, the near-intolerable income inequality in the US would be ever so much worse.
Not enough attention is given to this countervailing trend, even though it’s impact on wealth inequality (as opposed to income inequality) so far appears to be small. See for example iPhone: The Affordably Luxurious Global Accessory. The trend (a light saber wielded against the dark side!) is made possible by Moore’s Law and related cost trajectories: Transistor density on integrated circuits continues to double every 20 months or so at constant cost; the price of DNA sequencing is dropping even faster; and solar power $/kwh ditto.
Bravo, and let’s see more of it!
“In the future there’s [sic] potentially two types of jobs: you tell a machine what to do, programming a computer, or a machine is going to tell you what to do. You’re either the one that creates the automation or you’re getting automated.” -Y Combinator's Sam Altman
Economics meet politics
It’s worth remembering that the science fiction we read as youngsters – even the works of conservative or libertarian authors like Heinlein and Campbell – presumed some kind of mild socialism, a basic dole, in the high-tech futures they painted. (Heinlein, trained as a mathematician, was a better economist than the economists.) After all, with big economic surpluses from robotic production, why not?
Some technopreneur millionaires in our own 2014 rail against the taxes that would support this future, preferring to give to selected charities. Others, suffering under the delusion that being good at making money automatically means they’re good at giving it away, only give to charities they own or control. The situation has become so dangerous that even The Economist, a bastion of conservative thought, is now advocating redistribution.
Big corporations, of course, offshore their profits in order not to pay US taxes, and sit on piles of cash that could, in a sensible world, be put to productive or humanitarian use. Their CEOs gamble that violent social revolution will wait until after they’re retired or dead.
Are we happy yet?
We’d be silly to expect those holding the short end of the inequality stick to be happy campers. But let’s put aside inequality, just for the moment, and look at other effects of technology on happiness.
We say new technologies cause social change. This can mean change in the structure of society – change in its roles and institutions, which I addressed in the journal Foresight (“Meta-measures for Technology and Environment,” vol.16 no.5) – or it can mean change in the outcomes of social organization. The most wanted outcome, naturally, is happiness. As a general, top-level syllogism, we know people dislike change. Tech advances create change. Therefore, we should expect tech advance to reduce happiness, not increase it.
Can it be otherwise? There must be threshold effects. I live in South Korea. At the end of the Korean War sixty years ago, it was the poorest country in Asia. Now it is the richest, or nearly so. Its increased wealth came from technology-based industries, as all Koreans are aware. Poverty, combined with postwar hardships, was not a recipe for happiness. There was an upward bump in the general happiness when people had enough to feed their children and themselves. And another when medical technology reduced infant mortality. There was still another bump, according to one of my informants, when the country reached the stage where people could feed their families by doing honest work, without stealing from each other and from tourists.
That might have been the end of the upward trend in happiness, though. Today, the pace of tech change here remains breathtaking, far beyond what’s common in the USA. And the number of Koreans entering hospital with stress-related illnesses is also growing proportionally faster than in the US. This is especially striking because admitting to mental illness has always carried more stigma in Korea than in America.**
The studies*** purporting to show a positive relationship between technology and happiness seem methodologically flawed, either by not defining the two variables precisely, or by measuring them with sketchy instruments, or by not recognizing the threshold effect. One study found a positive relationship but admitted there were “decreasing returns to scale,” i.e., that doubling the technology did not double the happiness. We knew that already, of course, given that no one has yet invented Woody Allen’s orgasmatron. (In this regard, though, let’s acknowledge the new Pew Research report that predicts sexbots will be “commonplace” by 2025.)
Then too, based on a single question about subjective feelings of well-being,
“The Pennsylvania Amish, when asked how much they agree with the statement: You are satisfied with your life (using a scale of 1 to 10), turn out to be as happy as the members of the Forbes 400.” - James Surowiecki in MIT Technology Review
There is no convincing evidence that technological innovation moves people upward through Maslow’s hierarchy of needs.**** As additional countries emulate Bhutan’s measurement of “gross national happiness,” we might eventually reach an evidence-based conclusion.
“By monitoring and analyzing a person’s sleep patterns, exercise and dietary habits, and vital statistics like body temperature, blood pressure, and heart rate, [sensors] can pinpoint trouble spots in the person’s daily routine and then suggest modifications that measurably improve that individual’s outlook and well-being.”
Meanwhile, researchers at MIT and Hitachi are combining sensor technology with “quantified self” stuff, to directly interface with the physiological indicators of happiness. What’s that you say? A machine cannot make me happy, only I can make myself happy? Well, tech is always a two-edged sword, generating its own abuses, and the sensor researchers may or may not make us happy. At least, they’ll make us think more deeply about what happiness is, and where it comes from.
* Alan Blinder, former vice chairman of the Federal Reserve, writing in the Wall Street Journal, lays blame for income inequality on technology. Other authors (for example Colin Gordon,) claim inequality is cyclical, not structural.
A United Nations University study (A. Singh and R. Dhumale, Globalization, Technology, and Income Inequality: A critical analysis. UNU 2000) concludes globalization and technology are not the primary drivers of inequality, though authors admit technology is a significant contributor. Their paper addresses income inequality, not wealth inequality.
Tellingly, “San Francisco, the heart of the tech industry, now has the fastest-growing income inequality in the country, a gap on par with Rwanda’s.” http://recode.net/2014/05/31/tech-titans-on-income-inequality-and-their-stingy-stingy-industry/
The poor idiot economists think inequality just means there’s a bigger gap between the rich and the rest of us. Not true: Extreme inequality changes everything, including the structure of society and industries. The new structures create latent demand for still more technological innovation (see my “The Circle of Innovation”), and the cycle continues.
** “Since the 1950s, reports of major depression [in the US] have increased tenfold, and while much of that increase undoubtedly represents a new willingness to diagnose mental illness, theres a general consensus among mental-health experts that it also reflects a real development.” http://www.technologyreview.com/review/403558/technology-and-happiness/
You will no doubt remind me that there are (Wall) street thugs in America who still enjoy stealing from us, and you’ll guess correctly that stealing is not extinct in Korea either. Moreover, new technologies make newer and more interesting opportunities for stealing, like identity theft and other Internet cons. However, perpetrators are a smaller fraction of the population than in decades past, and this is a digression, anyway.
**** Certainly, gadgets can make people smile. My daughter goes so far as to say, “Maslow forgot to mention consumer electronics!” Tech entrepreneurs have found limits to selling efficiency. Rishi Mandal, co-founder of Sosh, says, “The next question is, how do you accomplish tasks while creating a smile?”