Apr
18
Blog Post #16: Technology Aided By Governmental Guidance
April 18, 2015 | Leave a Comment
Income inequality is undeniable. Various measures, including the Gini coefficient as well as the tax study by Piketty and Saez, all indicate the rapid rise in income inequality levels within the United States over the course of the past century. We all know something must be done to correct this inequality as the United States is on the verge of tipping over. However, as the New Yorker article by Jill Lepore states, the problem is only being exacerbated by Congress as the Democrats and Republicans argue over which party is to blame rather than brainstorm innovative solutions to solve this crisis. The ideas that have been offered, however, have been controversial and do not provide the short-term or long-term relief we need. As such, we need to find another alternative to buffer the negative effects of income inequality until an official one is decreed from the government. One big asset we do have to fight this battle is the technological innovation that has skyrocketed in the past few decades.
Tyler Cowen, in his New York Times article, talks about the positive effects technology can provide to fight the rise in this inequality. Currently, there is a wide gap between the technological skills of the past generation and the current one. As Cowen mentions, this creates income inequality as those with the advanced technological skills will be able to further themselves and compete in the job markets better. Less skilled workers who only possess basic computer skills, or none at all, do not have this advantage. In this day and age where computers are constantly utilized in nearly every sector of the economy, not having these skills is a huge disadvantage. It must be noted as well that there is a large digital divide between those in the same generation as well. This division is caused by the growing income disparities between classes. Working at Let’s Get Ready, a nonprofit whose goal is to provide free college preparation to students in low-income families, I have witnessed the lack of technological skills in many students who I have always believed to be more technologically advanced than I am. However, this is not the case as many of them have not been taught to type correctly or exposed to complex programs I was in high school simply due to their economic status.
However, if we are able to simplify the language of computers down to the level where everyone can use it through deductive reasoning, we may be able to buffer the effects of income inequality in this situation. This simplification of computers will open many doors for those in the lower-income classes who are not exposed to such technology. As Cowen mentions, if everyone is able to maneuver their way logically through computers, those in the low-income brackets will more readily access resources online that can give them an edge in the job market. They will also be able to compare prices for goods, which will increase competition and level the playing field.
There are, unfortunately, negative side-effects stemming from the equalization of computer levels. To simplify computer languages requires heavy technological advancement that we still have not achieved yet. If we are able to reach such an optimal level, we would have already been able to program machines to work on menial tasks that low-income workers currently complete. This will lead to a decrease in jobs, which, as we mentioned in previous posts, is a far cry from what we need to stimulate the economy. In this situation, I agree with Anthony Atkinson’s argument that the government does need to play a heavy part in guiding the path technological innovation walks in. Technological innovation is a powerful tool that can increase or decrease income inequality. What we need to do is push this creativity in the path that will result in the optimal situation for the country – higher equality. If Congress can get its act together, I find that this solution is the most feasible. Other proposed solutions, including a global tax on wealth, a minimum tax on corporations, unemployment programs, national savings bonds, and progressive tax structures, are very controversial and the reason why stubborn parties cannot agree on a legislation. Guiding technological innovation is more neutral, but the effects are still heavy.
There is another downside with technological innovation in our economy. Due to the economic depression and recession, many workers have been laid off. However, we do see a huge peak in entrepreneurship as many of these laid-off workers are turning to self-employment to sustain themselves. These businesses range from small food trucks to restaurants to digital marketing agencies. While this may sound great, we see a disparity in the groups heading towards entrepreneurship. According to the Center for an Urban Future, the locations with the lowest rates of self-employment have median incomes below $33,000. This makes sense, as those in the low-income brackets do not possess a great amount of wealth and definitely not enough to risk it all on opening a business that may or may not still be there in the next six months. As such, we see a high rate of self-employment in the more affluent locations in New York. This does not help our argument concerning technological innovation and income inequality as the rich who can afford to be self-employed can only get richer and wealthier while the poor do not have the resources to even afford a computer, let alone learn to use one.
Therefore, our dilemma now does not span only governmental action, but also the type of government we, the United States, are. We are a capitalistic economy where the goal is to rise to the top with the most innovative and all-encompassing corporation. Yes, technological innovation can help level the playing field if governmental action provides the correct guidance by issuing sufficient legislation. However, the capitalistic and competitive nature of our economy will continue to spur those with resources and skills to rise higher and those without to lose confidence.I wonder if governmental action is sufficient in reversing the effects of this type of economy while still encouraging innovation and competition.
-Amy (SiJia) You
