Is Inequality the Fault of Technology?

On May Day, and with the UK General Election just a few days away, some thoughts on the role technology plays (or could play) in making the world a better (or worse) place.

Owen Jones in his Guardian piece, Don’t Blame Rising Inequality on Technological Change (Wednesday 8^th April, 2015) makes short work of dismissing the ridiculous arguments that the widening gap between rich and poor is an unavoidable product of technological advancement. As he points out …

“Professor Anthony Atkinson is a pioneer of the study of the economics of poverty and inequality. His latest work, Inequality: What can be done?, is an uncomfortable affront to our reigning triumphalists. His premise is straightforward: inequality is not unavoidable, a fact of life like the weather, but the product of conscious human behaviour. The explosion of inequality as a result of intentional policy decisions has been rather spectacular. Take the US, which became steadily more equal from the end of the second world war to the late 1970s. By 2012, the top 1% had more than doubled the share of national income they enjoyed in 1979, and now receive a fifth of gross US income.”

He continues …

“In our own country, the share of gross income belonging to the richest 1% after the first world war was 19%; it had fallen to 6% by 1979, and has since more than doubled. Inequality actually rose twice as much in Thatcher’s Britain as it did in the US, albeit from a significantly lower base.

“Atkinson identifies the usual culprits: globalisation, in which the wealthy can easily pick and choose nations most favourable to their bank balances; rapid technological change, which has stripped away middle-income secure jobs; the explosion of a rapacious financial sector; a shift in attitude to high pay; the hobbling of trade unions, once a formidable counterweight to wealth being sucked to the top; and the erosion of redistribution based on progressive taxation.

“It doesn’t have to be like this. Take the explosion in technology. In Britain, we’ve seen the rise of an ‘hourglass economy’, with professional middle-class jobs at the top (often reserved for the pampered through unpaid internships and expensive post-graduate qualifications) and insecure, low-paid service-sector jobs at the bottom. Many middle-income skilled jobs have been lost, often on the basis that machines can perform such labour more cheaply and efficiently. A recent study suggested that 10m jobs, or a third of all those in Britain, could be wiped out because of new technology and computers.

“But Atkinson refutes the idea that technological change is ‘determined by the gods’: it is the result of decisions taken by scientists, investors, governments, consumers and others. Much of research and development happens in the public sector, as the economist Mariana Mazzucato has underlined in her book The Entrepreneurial State. If you’re reading this column on an iPhone, thank the state for its touchscreen technology, GPS and Siri. So why doesn’t the state take more of an active role in directing technological change so it benefits all? Look at Germany, which rather than opting for a hands-off approach promoted renewable energy industries, both confronting the climate change crisis and avoiding the rotting away of decent jobs seen in this country.

“Some of Atkinson’s proposals are heresy in an era like our own. He suggests raising the top rate of tax to 65% – casting a cynical eye over studies that claim this is counterproductive when it comes to revenues – and calls wisely for proper crackdowns on tax avoidance. Partly it comes down to fairness for the professor: the government’s universal credit scheme aims to cut the marginal tax rate on the poor to 65%. If that’s good enough for those scraping by, why not for those richer than ever before?

“In other European countries, it is taken as read that trade unions have a role in drafting social security legislation – why not here too? Another radical but attractive proposal is to grant all citizens an inheritance payment on reaching adulthood, funded by a 2% tax on personal wealth. With the return to precarious employment, the state could guarantee work, with a minimum wage that actually meets people’s living costs. A maximum pay ratio in businesses would stop shamelessly self-interested CEOs paying limitless salaries and bonuses while their cleaners languish on poverty wages.

“These are the sort of proposals that are banished from the media-defined mainstream of the election debate. The parameters of acceptable political conversation are, after all, heavily policed: even a modest challenge to continually stuffing the mouths of the richest with gold is ignored, ridiculed or demonised.

“We need a whole new way of thinking. The nation’s wealth is not the product of the genius of a few canny entrepreneurs. It is a collective endeavour, the product of the labour of millions and the support of the state. The hospital cleaner, the road-builder, the teacher training up both workers and the entrepreneurs of the future: all help generate wealth. The state builds and maintains the infrastructure, funds the research, educates the nation, protects property and tops up low wages. So much of our collectively produced wealth should not be locked away in a few bank accounts. The triumphalists will tell us that there is no other way. They are wrong, and it’s about time we called their bluff.”

Strong words, but entirely correct, of course. But more than that, in any decent, healthy, civilised world, it should really be precisely the opposite. Technology should support equality by eliminating the excuses for inequality. Not just in a single country but across the world. Why doesn’t it?

Well, as Owen Jones points out, it’s because we’ve decided that it shouldn’t. We’ve decided that new technology simply slots into the same broken economic model we’ve had for hundreds of years. Rather than working for the benefit of humanity, technology still has to be owned by someone. Someone has to exploit it and sell it to someone else. Apparently, it’s naïve to think we can all enjoy technology equally; no, the old hierarchies must be maintained. That means maximum benefit at the top of the tree; by the time it’s filtered down to those that really need it, it’s diluted to the point of ineffectiveness. The developing world needs technology most but it has the least of it. And that’s the model.

Some, of course, will suggest that emerging technology has led to a huge explosion in new start-up companies and may be a driver for social mobility. However, these arguments confuse the concepts of equality and equality of opportunity. The former levels out the pile; the latter simply reorders it.

Take a typical corporate example … A white, middle-aged, heterosexual man leads an IT business with hundreds of employees beneath him. He’s paid many times the average salary of his workers. Such a scenario angers many who consider themselves broadly leftist in their outlook. Now replace the boss with a young, black lesbian. Have you struck a blow for equality? Although many would be satisfied, no, you haven’t. You may have demonstrated increased opportunity but the inequality remains. Redistributing inequality doesn’t eliminate it. It simply provides a moral escape for those who prefer to believe that anyone worse off than them simply isn’t working hard enough.

The whole sickness is probably best illustrated by the levels of financial support available for those looking to exploit technology for their own ends. And this certainly isn’t limited to the private sector. European Horizon 2020 funding, for example, expects to see clear ‘exploitation’ within project proposals; essentially that means who’s going to get rich and how. For any consortium of well-intentioned academics and public bodies, there has to be someone to own the technology in the form of intellectual property rights. In fact, for some EC funding streams, single companies can bid for public money to line their pockets on their own. Whatever happened to the grand-sounding ‘for the good of humanity’-type straplines that most such organisations have somewhere in their mission statements?

We’ve always been sold the lie that inequality is inevitable. Often the alternative is portrayed as a lack of freedom by those with the most to lose from a fairer system. This is the grossest of insults. Those of us comfortably protected in the West, able to choose what to eat and what car to drive have a hugely different concept of personal freedom to someone starving in a refugee camp. By any measure of a decent society, the right to live should override the right to make money; but it doesn’t. Why? Because when the privileged few bang on about freedom, they mean theirs, not anyone else’s.

The next time someone tells you there’s no alternative to the existing system, ask them WHY? If they say a fairer system wouldn’t work, ask yourself if they really mean it wouldn’t work for THEM? And don’t blame technology. Technology could be a huge player for good in the world of today and the future. But it won’t be because those that cling to power won’t let it.