11g-x 21st Century Inequality: Be on Top

 11g-x  21st Century Inequality: Be on Top

Update: 24 Septr 2021

Inequality’s increase, writes Dr Tyler Cowen (Ph.D. in economics) is due to intelligent machines. The smart software is transforming almost everything about work, and ushering in an era of “hyper-meritocracy.” It makes workers redundant by doing their work for them, makes them more unforgiving by tracking a worker’s  mistakes and it creates a new class of workers: people who know how to manage and interpret computer systems, and whose work, instead of competing with the software, augments and extends it. Over the next several decades wages for that new class will grow, while the rest will be left behind. The inequality will affect not only work, but where and how we live.

   If we want a preview of work in the next decade, we should look to where computers are now making a big difference: online dating, medicine, and even chess.
  Here is a condensed interview with Dr Tyler Cowen.

In “Average Is Over,” you say inequality will grow in the U.S. Why?

First is measurement of worker value. We are measuring a worker’s value to a business, and, when you do that, often you end up paying some people less and other people more.

Second is automation—especially in terms of smart software. Today’s workplaces are often more complicated than a factory for General Motors was in 1962; require higher skills. People with those skills are often doing very well, but many don’t have them, and that increases inequality. 
Third is globalization which means low paid labor is being farmed out to 3rd world countries where wages are primitively low. This slows pay increases and causes many to become unemployed and, of course, increases inequality.

You think that intelligent software will make the labor market more unequal. Why?

Because of the intelligence needed working with smart software. Also the training! There’s a big digital divide in this country between workers who simply can use computers and workers who in addition can understand them and who know what to do to make them work better. That divide means more inequality.

You believe, in future the most well-paid workers will be those who best understand how to manage computers? Why?

Think of your future middle-class job? You read medical scans, and work with a computer. It does the diagnoses, but with special or unusual scans you may say, “Hmm, that’s not quite right—I need a doctor to look at this again and study it more carefully.” You’ll need to know something about medicine, but not like being a doctor; you’ll need to know something about how these programs work, but not like being a programmer; you’ll need to be really good at judging; and you’ll have to have a sense of what computers can and cannot do. It’s about working with the machine: knowing when to intervene.

How do you learn to be fluent with these smart, digital tools?

Computers themselves are the best teachers. You can download programs for free or low price. Like in chess, computers not only play against you, they teach you.

That touches on another software revolution: online education. Many people think that, because online education will be cheap and widely available, it will be a democratizing force. But you offer another possibility—it will deepen inequality. Why?

Because of the premium it places on conscientiousness. There’s so much free material on the Internet you can learn from, some people are pure self-starters: they pick up computers and teach themselves everything. But I think most of us are not; most need role models, coaches, exemplars; most need discipline or rewards; need to be motivated. Fostering motivation will be a big growth sector. 

One of the ironies you write about is that, while the smart-software world will reward the most conscientious and self-motivated people, it will also feel increasingly strange. Our computers will tell us to do things that feel counter-intuitive or seem risky. Behavior might become less “average.” What about that?

This new world will look strange to us. Take online dating. One could imagine that dating by computer will maximize our chances of identifying a best person for a good marriage. So we might, in some cases, be quite forward with people, more than we would naturally feel is appropriate.

In the book, you write that computer dating might urge us to go out with apparently unlikely partners—they might even guide us during our dates, monitoring our heart rates and sending us text messages like “Go on! Kiss her now!”

Maybe most of the time it won’t go very well—you’ll get rejected quickly or you’ll look like a fool—and it’ll feel wrong. But if that risky behavior increases your chances of connecting with the right person quickly enough, before they end up meeting someone else, it might nonetheless be good. (Ed: A good word for this behavior is my use of "encountering"—-and see Notebooks 1, New Ideas where it is listed as one.)

   And there will be old-fashioned persons, saying “Here are all these new devices telling me what to do—but screw them.” It will be upsetting for older persons and they may give bad advice, i.e., to ignore the computer revolution. (Cf. The late writer Ray Bradbury dissing the Internet.) 

Let’s say you are right that only some people—you’ve proposed fifteen per cent of the population—find it easy to work with intelligent machines, and want to live what you call, in the book, a “hyper-meritocratic” lifestyle. They’re very well paid, and they pull away from the rest of the country, and inequality grows. How do you see that playing out?

Well, people are (and have been) moving out of old-style, middle-class neighborhoods. You see this in American cities. Manhattan is far wealthier than before; Washington, D.C. is rapidly growing expensive new neighborhoods (gentrification); while places like Texas are adding more people who make less income, who are leaving places like California or New York because they cannot compete with the new computer-savvy worker. So I think we will see much more geographic segregation by income class.

   Also, I think there will be many more people who will live semi-bohemian, [freelance] lifestyles, who culturally feel upper-middle-class or even straight upper-class, but who don’t have that much money. (The affluent homeless)

Most people who write about inequality write in a tone of moral outrage. You seem to have deliberately avoided that; you’ve written about it in purely predictive terms.

I point out things we might do to make inequality problems less severe. But I think that to dispassionately lay out the facts is the best, first thing to do to open up that dialogue—to step back first, and view things more analytically, and then to apply our judgments.

End of interview. Now an end note on a related point: population growth and its affect on the economy. As an 88-year-old, still with mind and memory sharp, I recall the 1950s, 60s and early 70s when a good personal car cost at most $2000 and many used cars sold for 3-digit dollars, when rents for a good 2-bedroom big city apartment were less than $100 a month, when one could buy a well-spaced unattached home for $5000 on low interest government loans of 20-year mortgages, and when college education was free or very low cost. And recall then the price of gold (a good measure of all product prices and US dollar value) was US $35 an ounce. Even correcting for salary change inflation, prices have obviously sky-rocketed way beyond middle class means by 2021, And the skyrocketing did not happen smoothly over these last 50 years; it happened overnight in 1971-1973 (the Nixon Oil Shock). The cause, rarely discussed, is the massive population growth (World population of 2-billion to nearly 8-billion today). A simple math equation is: increased population = increased demand for product and runs ahead of production, causing increasing prices. Today in 2021, each human is paying much more for key products like homes, rents, education, motor vehicles, because of the unnecessary, increased population (overpopulation from this standpoint). But, further, the increased population increases the demand for gross product and with increased price this results in huge profit for the top capitalist class. Thus the great increase in billionaires and millionaires. So here is another cause of inequality that will be very hard to fix. And add to that the cost from the environmental deterioration that has led to global warming and increased costs of medical care from the attendant illnesses.  And now Covid-19!
   From a social standpoint (not a capitalist one), Malthus was right!

To read the next chapter, click on 11h  The Science-Civilization