We Grow More Equal as Technology Dematerializes the World

At this year’s Federalist Society student symposium Richard Epstein and I spoke on a panel on Innovation and Inequality.  We agreed that the innovation created by capitalism has hugely benefited the poorest in society.  We disagreed over the extent to which the very nature of modern innovation itself has a tempering effect on inequality.

In my view, modern innovation helps reduce real inequality both around the globe and in the United States. And it does so for fundamental reasons. Information technology creates value by better arranging material resources.  And because of the nature of our accelerating technology, the know-how for such information technology rapidly becomes common property benefiting everyone.

Another way of putting this point is that modern information technology dematerializes the world and thus democratizes it, because it is material things that are scarce. The move from its to bits is also a move to equality, because bits can be enjoyed by the many simultaneously. Income inequality gives a misleading picture because we all enjoy the benefits of a growing pool of expressions of ideas.

Let me give some concrete examples. Watson, the machine that beat the best players at Jeopardy, is going into medical diagnostics. When it becomes a routine part of medicine, it will help level the standard of health care, because the rich’s access to the best doctors becomes relatively less valuable than it was before. We will see similar advantages for legal consumers, as machines enter the legal space, creating documents, like wills and trusts, and predicting the outcome of legal cases.

Another way of understanding how modern innovation improves equality is to consider how much faster innovations move down the income scale. After the clock was invented, it took hundreds of years for timekeeping devices to become affordable to the middle class. Even in the last century, for a long time, only the relatively well-to-do had refrigerators and televisions. Today, new technologies circulate throughout the population far more quickly. Five years after the introduction of the smart phone, about half of America’s population had one. Today is it seventy percent and rapidly growing. Outside the United States, smartphones have been a source of substantial improvement for the poor as people in developing nations use them to interconnect and make money.]

My last example is personal. I have had good the fortune to become acquainted with Peter Thiel, the justly celebrated Silicon Valley entrepreneur and sage. Now it will not surprise you to know that Mr. Thiel’s net worth far exceeds mine.  In the middle ages, perhaps the relevant comparison would have been between a Duke and a fellow of an Oxford College. Because of their difference in wealth, their daily lives would have been utterly different. But the way Mr. Thiel and I live today looks a lot more similar than our medieval counterparts. We both spend much of our day in front of computer screens, which have pretty similar capabilities. It is true that Mr. Thiel’s residence is a lot nicer than mine. But as virtual reality takes hold (sooner than you think!), that difference too will diminish. The dematerializing world of innovation is a world of growing equality.

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on March 01, 2015 at 00:41:08 am

Maybe. This thesis is, after all, not especially new. If anything, it is rapidly approaching meme status, at least in the blogosphere. And maybe it will happen. We should all hope it does.

But I am suspicious of anything that sounds too good to be true. Material things are not going to disaapear. The world of ideas is not going to house me, or heat my home, or get me conveniently to work. The most valuable things people own will continue to be their houses and cars, for the foreseeable future.

Much of what information markets do, at least for most people, is about entertainment. The internet has provided us all with cheap pornography. But entertainment of that sort sustains neither the needs of the body nor the needs of the soul. I have to believe that for most people, entertainment will continue to be the sort of thing one looks for only after one's more basic needs have been met.

I am skeptical of anyone predicting utopian futures. I hope I am wrong about this one.

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Kevin R. Hardwick
on March 01, 2015 at 04:40:37 am

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We Grow More Equal as Technology Dematerializes the World | Online Library of Law & Liberty

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Foundation for Defense of Democracies
on March 01, 2015 at 10:58:43 am

I think you are quite correct in this. At times, Maginnis seems to fall victim to a near utopianism driven by the wonders (and they are considerable) of modern technology. Yet, even the examples he cites are not necessarily supportive of his argument.
Yes, Watson may provide more effective diagnosis, as do MRI's compared to standard x-ray film; yet, it still remains for a *procedure* to be performed, and this at some cost. I suppose there is some small comfort in knowing what is afflicting me - even though I do not have the resources to correct it!
As for Watson, and its predictive validity for "cases and controversies," I am a little more suspect. How is it that all of the best minds in the World of Law, (some no doubt contributors to this very site) can not agree on what the LAW is, where is should go (or if it should go anywhere at all), nor can any of these same minds predict with any degree of certainty what the august body of Black Robes will do on any given case. More date does not necessarily mean better data.

As for smartphones and their rapid distribution amongst the populace, would this be so, if there were no such thing as Obamaphones (approximating $2-3 billion in expenditures over the years)? In effect, one is saying that yes, it is possible to *spread* ALL these new wonders - BUT only if there is a concomitant commitment on the part of (fill in the blank here -________ - government, perhaps?) to so distribute (or redistribute resources) to the general populace.

No, rather than providing for greater equality, what this may portend is restrictions on Liberty as the government (social justice activists, as well) push / mandate the forced distribution of these new technological wonders to all. We already provide free heating, free food, etc. Where will it end?
And no matter what, our elites will always have the latest and greatest and the plebes will look on longingly.
Are Obamaphone recipients happy now - or do they still seek more? Indeed, they do - and this will continue in the future.
As Kevin argues above, this may be more sould destroying than edifying. I could not agree more!

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on March 02, 2015 at 14:35:45 pm

I think there is very good reason to believe that what separates people is not merely scarce material resources. Mr. McGinnis either wants to dematerialize the human body or is else quite deceptious about our differences. I suspect that in a future in which he describes, a lot of equality would consist in at least some human being concealing themselves as best they can, because with perfectly transparent information, unequal abilities & different intentions with respect to the use thereof are no longer going to be quite as tolerable as they are today. To speak of our world today, our limits put limits not only on the needy & the destitute, but also on the greatest ambitions. Remove some of those limits--will you have thereby made the destitute the same as the ambitious?

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