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Technology and the Top One Percent

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"Technology and the Top One Percent"

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richricher 1

Ezra Klein writes about technology and the growing incomes of the top one percent:

A lot of the rise in inequality has been among a small sliver of the population. The top 1 percent, for instance, has gone from capturing about 8 percent of the national income to 18 percent. But there’s no obvious skills differential between workers in the top 1 percent and the workers directly beneath them. It’s not like hedge fund managers are the only guys able to use Excel.

That doesn’t make a ton of sense to me. The issue isn’t Excel, I think, but the ways in which modern information technology has increased the reward to being “the best” at something. Think about how the internet is changing journalism. It used to be that a paper in a really big city like New York, LA, or Chicago was more important than a paper in Philadelphia or San Francisco. And those papers were more important than the papers in Boise and San Antonio. But the different markets existed on a pretty smooth continuum. That’s not the case anymore. The New York Times has become a major-league global brand while the Los Angeles Times is a shadow of its former self. What’s more, it’s easier than ever to start up a scrappy-but-vibrant small-scale news operation. Which is just to say that we’re seeing growing inequality in the news business with the newspapering “middle class” increasingly squeezed.

That’s probably not the only thing going on in the economy. But there are a lot of features of the “globalization” dynamic that have basically this quality. Being number one is much more lucrative than it used to be, and being number fifteen much less so.

To me this all sounds like a good reason to think redistributive taxation will be welfare-enhancing. Liberals sometimes write about inequality as if only the discovery of some kind of inexplicable conspiracy will justify a progressive policy response. But the real point is that if underlying technological progress is driving surpluses toward a tiny number of people we both can and should “spread the wealth around” a bit.

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