2012-01-11

Modern technology, obsolete economics

Courtesy of Ray Kurzweil and Kurzweil Technologies Inc.
Ray Kurzweil claims technology has been steadily narrowing the gap between rich and poor. Richer people still get new technologies first, but poor people are catching up. As proof, he offers us his chart "Mass Use of Inventions". Technological acceleration, Kurzweil tells us, means this trend will continue during the 21st century. When the Singularity finally arrives in 2045, it will finish -- not start -- the world's transition to a post-scarcity economy with no financial inequality. I'd like to agree with him, but I can't, for two reasons.

First, the idea of corporate-made technology as a social leveler amounts to trickle-down economics, a dead theory whose obituary hit the papers earlier this month.


If Alice buys a Panashiba LCD TV, almost all the benefits will be split between her household and Panashiba. The only way her poorer neighbour Bob is likely to noticeably benefit is if she puts her old CRT TV out by the curb and he picks it up. Further R&D and/or a greater economy of scale may make the LCD affordable to Bob later on if Panashiba executives make an investment, but Alice's purchase won't convince them to do so if they're not already convinced. They'll make their decision by researching the shopping habits and opinions of Bob's income bracket, not Alice's. In fact, they'd have a little more incentive to invest if Alice were waiting for the price to come down.

Second, Kurzweil's data only relates to communication technologies. Outside that narrow field, the data don't support the claim, even when picked by its proponents. If anyone can argue that the trickle-down theory works, and that the haves and have-nots are converging naturally without the need for tax reforms or more government spending, it should be a libertarian think tank like the Cato Institute, who attempted in late 1999. especially when they can freely data dredge using a whole century of output from the US Census Bureau. But their own selection of data shows the gap is as wide as ever.

For example, Cato claims economic disparity is declining in the United States as a natural side effect of technological growth. The chart they present as proof is this:

If their claim is true, then the adoption curves should be more closely bunched up at the top ends than bottom ends, and none of them should flatten out until close to 100% adoption. And if Kurzweil's chart generalizes beyond computing and telecommunications, and to percentages other than 25%, then they should also be more bunched up near the right side than the left. In other words, a chart that supported both Cato's and Kurzweil's claims would look more like this:


And it would hold not only for the United States but also for any other industrialized country, and sooner or later worldwide.

The early leveling-off of Homeownership and Clothes Washer on the Cato Institute's chart are understandable: home ownership can't be considered a technology (the apparent wizardry behind mortgage-backed securities and credit default swaps notwithstanding), and US households without clothes washers usually have access to laundromats. The European Futures Observatory predicts that more homes will be rented in the future, and that an increase in refurbishment and cradle-to-cradle manufacturing will lead to more leasing of home appliances, so this trend isn't inherently surprising or worrisome.

More problematic is that Air Conditioning and the Dishwasher proliferated more slowly than the Refrigerator and the Clothes Washer, despite doing so far more recently. The late adopters aren't catching up. Since these are all items that appeal to almost every American who can afford them, these figures put the lie to the idea that the technological divide between rich and poor is narrowing, even within the US.

Other charts present similar issues:
  • The percentage of the US population in poverty has generally been rising since it hit its low point in 1973, especially among children, and looks unlikely to ever drop below 10%.
  • While real hourly wages for manufacturing workers are rising, this increase is slowing, even when benefits are included.
  • While cancer survival rates are improving for both white and black Americans, blacks are falling further behind. Their survival rate is consistently about 0.7 times the white rate. In other words, it's as though 30% of black cancer patients were, and had always been, doomed by their colour alone.
  • Heart disease deaths are declining, but this decline fits an S-shaped curve with the right-hand asymptote around 100 deaths per 100,000 population.
John F. Kennedy said in 1963, "A rising tide lifts all boats." Yet even when propaganda attempts to prove this aphorism with respect to the tide of 20th-century progress, it ends up showing the opposite: the fancy yachts float higher and higher, threatening at any moment to start levitating, while more proletarian craft are sunk by the tidal waves. The rising tide of technology can certainly lift all boats during the 21st century, but only if we use it to build lift locks.

"Wait a minute Chris," I can hear people protesting. "What about the singularity? What about the post-scarcity economy?" While the statistical trends I've shown here may not be valid to extrapolate past the singularity, the existence of economic disparity certainly is. In my third and final post in this series, I'll discuss what the digital divide would mean in a posthuman society. I'll also talk about poverty in existing "post-scarcity" economies around the World... of Warcraft.
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