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Home Publications Blogs Beat the Press If We See Inequality Because of Technology, It's Because the Government Wanted Us to Have Inequality

If We See Inequality Because of Technology, It's Because the Government Wanted Us to Have Inequality

Wednesday, 16 April 2014 04:55

How rich would Bill Gates be if anyone in the world could make a computer with the latest version of Windows without even sending him a thank you note? Think about this question as you read Eduardo Porter's piece on how technology might be shifting income towards capital making society ever more unequal.

Porter is of course right, we have seen a large shift in income from labor to capital across the world over the last three decades. However it is difficult to see how this could be seen as technologically determined when so much of this shift was clearly attributable to patent rents and other laws that certainly were not determined by technology. If current patterns of growth are increasing inequality it is because we have designed a legal and institutional system to bring about this outcome. There is nothing natural about this pattern of development. (in addition to the Bill Gates example, imagine what would happen to Walmart's profits if it executives faced criminal penalties for violations of labor laws.)

Comments (8)Add Comment
Big Government: The Enemy of Your Enemy is Your Friend
written by Last Mover, April 16, 2014 7:20

Indeed. It's wonderful the political right takes this message to heart and everyone understands they mean what they say about getting big government out of business.

How else could the sock puppets for the economic predators who run the country be so successful in convincing the masses that more efficient technology - not massive abuse of intellectual property rights - is taking their jobs.
Our TBTF banks
written by ifthethunderdontgetya™³²®©, April 16, 2014 7:50
Eat up ever-increasing shares of the economy.

And for what? So that billionaires can be wealthier.
written by Larry Signor, April 16, 2014 8:17
One of the largest redistribution mechanisms is the assumption of the cost of negative externalities by the public sector. Think co2 emissions, BP oil spill, WalMart plastic bags (not to mention the $6 billion in SNAP to its employees), TARP, negative health impacts...A great time to be a corporation, but not so good to be a human.
written by Jonah, April 16, 2014 10:30
"A great time to be a corporation, but not so good to be a human."

I thought corporations ARE people, my friend. Didn't we learn that in 2012?
Patents should be for the little people
written by Dave, April 16, 2014 10:44
Patent reform should take into account company size. Perhaps the length of patent grants should be indexed to capitalization level and subject to periodic rent-seeking review. Patents are necessary in some cases, but our laws are pretty archaic.
much simpler analysis...capital labor ratios....
written by pete, April 16, 2014 1:23
The global capital/labor ratios are way out of whack as you look across countries. Compare the capital rich US, Europe, and Japan to the labor rich India, China, and Africa. Globally, capital is simply scarce. Artificially, capital flows were constrained until quite recently. Now the floodgates are open, capital is flowing to the spots where it is most scarce, and earning great returns. This will continue until the global capital/labor ratio stabilizes, at which point the returns to labor (as a percent of GNP) will grow again. Mean time, as GNP rises, both labor and capital see increased absolute returns. Global wages are zooming. Just not in the US and Europe.
written by Alex Bollinger, April 16, 2014 4:15
But policy isn't exogenous. These laws are passed because rich people want them passed, and inequality increases their political power.

It's a chicken/egg situation, a positive feedback loop, and maybe there's something outside of policy driving inequality that's making policy further drive inequality.
written by MS, April 16, 2014 6:53
Why single out patent law? The universal state prohibitions against theft, whether it be shoplifting or robbery, would seem to be the greatest impediments to wealth redistribution.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.