In Defense Of Prosperous Inequality

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Self-driving cars will save roughly 32,000 lives lost every year to auto fatalities, reduce pollution and save us countless hours wasted in traffic. It will also obliterate the taxi industry — like it did the steamboat industry.

Bringing to the masses services, which were once considered luxuries (personal assistants, cutting-edge medicine, and world-class education), means automating some jobs out of existence.

A number of broadside attacks against the Internet economy, most notably from the New Yorker‘s George Packer, paint the Silicon Valley workforce as libertarian utopians who are blind to the fact that an army of highly paid photo-sharing app designers are crushing San Francisco’s middle-class.

In a fascinating and even-handed piece, Packer chides Silicon Valley founders for failing to answer the question of “Why, during the decades of the personal computer and the Internet, The American economy has grown so slowly, average wages have stagnated, the middle-class has been hollowed out, and inequality has surged?”

The reason why none of Packer’s A-list interviews have an answer is because technology itself creates inequality. “The observed rise in inequality across both developed and developing countries over the past two decades is largely attributable to the impact of technological change,” explained Florence Jaumotte, Subir Lall and Chris Papageorgiou in a working paper for the International Monetary Fund (which generally confirms why economists find a steady increase in productivity and stagnant wages).

However, compared to a few decades ago, life is getting better in some respects: cancer survival rates have doubled, leisure time is up 4-8 hours, and women are free to spend more time on career, in part thanks to domestic chore gadgets (yay for the Rumba!).

Packer never explains how Silicon Valley could operate any other way, but industry unions do have a plan to stop the march towards inequality: block innovation.

Worker union AFL-CIO is lobbying to block high-skilled immigrants from competing with Americans, taxi unions want to stop Uber from offering car rides, and faculty unions aim to halt the spread of cheap online college courses.

In many cases, technology creates more jobs than it destroys, especially for those in the third world.

There is an important role for the government to provide safety nets and job training, but indirectly blaming innovators isn’t a productive message.

But, financial equality has never been, and will never be, a goal of the Internet economy. The goal is wealth creation. For those who can now access world-class professors and medical treatment anywhere in the world, Silicon Valley has lived up to its promise.

Read the full argument on The Daily Beast