Friday, February 11, 2011

Inequality, Technology, and Labor

-- Posted by Neil H. Buchanan

In my post on Monday, I extended my discussion of technological breakthroughs and their effects on society. My argument thus far boils down to these three points: (1) many of the great technological breakthroughs of the industrial era (airplanes and cars in particular) seem to have been fully exploited, with no apparent prospects of further game-changing advances, (2) whether or not (1) is true, the current era of information technologies seems not to be changing society in nearly as profound ways as the earlier technologies did, and (3) whether or not (1) or (2) is true, the current wave of technological breakthroughs is coincident with income stratification, whereas the early- to mid-20th Century's waves of technological change coincided with significantly egalitarian trends in income distribution. I thus suggested that deliberate policies to promote greater equality, especially reinvigorating labor unions, would improve matters.

My most recent post elicited two especially thought-provoking comments, both of which I have been pondering at some length. I offer the following thoughts not as a riposte to those comments, but in appreciation of the opportunity to think more deeply about these issues.

The question of most pressing global significance, I suppose, is whether I (channeling Frank Rich) am right in believing that modern information technology is not a driving force in the ongoing Egyptian popular uprising. Many people think it is, of course. In yesterday's New York Times alone, there was a front-page news article and an op-ed by Nicholas Kristof, both of which simply presumed as an obvious fact that events in Egypt are being led by "The Facebook Generation."

Confessing to having no expertise in Egyptian affairs, I take the point that some of what is happening there has apparently been carried on through new media. I maintain skeptical, however, of the cause-and-effect implication. As an analogy, consider the media story that quickly emerged after the tragedy at Columbine. There was a "trenchcoat mafia." The perpetrators were outcasts who had been bullied by football players. And so on. It apparently turns out that all of this was simply false. I heard the author of a book that was published recently (name and title currently escape me) talk about this. It was a convenient story, and everyone jumped on it. It became the accepted reality. Maybe "Facebook caused the Egyptian uprisings" is not a similar example of a hyped-up, simplistic story; but it fits the pattern. On this issue, however, I am certainly open to informed reporting that does not simply take the established storyline as its starting point.

In some ways, what is happening in Egypt is more important than anything that I wrote in my recent posts. Even so, within the context of my argument, the Egypt story is hardly central. The broader issue is whether I am underestimating the social effects of technology more broadly. On this, the two commenters on my Monday post are in disagreement. The commenter who disagrees with me suggests that I have made two specific errors (among others): (1) I am too impatient, and (2) I am confusing "technology" with "logistics." Both criticisms have some merit. In fact, I readily concede the second point, noting only that I do not see that as undermining my argument. I should comment on the first point, however.

It is possible, after all, that something big is brewing that is not currently known (or knowable), regarding technology and social progress. Again, however, I remain skeptical. In higher education, for example, claims have been made for over a half century that modern information technology will change everything. And it still might. So far, however, it is difficult to see the major transformations that technology has wrought. Yes, there is "distance education." But "Sunrise Semester" and "University of the Air" -- TV-based educational initiatives in the 1960's -- were the same basic thing. I receive promotional material all the time from publishers who want me to believe that their latest software platform will do everything I and my students could possibly wish; but the difference is in form, not substance. Email has all but replaced office hours, but the output is the same. As the second commenter on Monday's post argued persuasively, predicted changes from technology (his example: computers will make paper obsolete) are often wildly wrong.

My point is not that nothing ever changes. Rather, I am saying that the way society is being changed by technology seems to have changed. The automobile changed the world, and so did the personal computer. Whether or not one agrees with me that the former changes were more profound than the latter as a matter of transforming the way we live our lives, it is undeniable that the former occurred in an era of economic convergence, while the latter is occurring while society becomes much less economically egalitarian.

Which brings us to the final question raised in the second comment. Is the modern era one in which we simply cannot replicate the egalitarian trends of the post-WWII era? Would it be mere romanticism to try to reinvigorate unions, for example, in a world where they are obsolete? I once spoke with an airline executive who argued that unions were once important, in preventing atrocities along the lines of those described in Sinclair's The Jungle, but that unions were no longer necessary (and are, he argued, now harmful to society). Similarly, many analysts claim that globalization and other modern trends make unions superfluous at best.

This theory, however, does not fare well against the evidence. Most importantly, the United States is not the only country in the world with labor unions; so it is possible to test the hypothesis that unions are declining -- and, most importantly, wages for most workers are stagnant or falling -- because the economy has fundamentally changed. Under that theory, how do we explain Germany's success? The largest and most dynamic economy in Europe, which has extremely powerful labor unions that protected workers from layoffs, maintained relatively low levels of unemployment and high wages during the Great Recession. Some analysts point to Germany to argue that fiscal austerity works. Yes, in the context of the labor and industrial policies of Germany, fiscal austerity did not lead to the disaster that people like me predict would happen here. In the context of this post, hwoever, the central lesson from Germany is that a 21st Century economic powerhouse, with relative social equality, is able to maintain its success while maintaining strong unions and labor protections. I believe that the success is in large part because of those unions, but this example at a minimum makes the opposite case a more difficult sell.

A more thorough-going discussion of these issues is well beyond the scope of this already lengthy post. I will, however, point interested readers in the direction of a book that discusses these issues at length. Neil Brooks, of Osgoode Hall law school in Toronto, who is one of the best tax policy scholars in the world, has co-authored (with the prominent journalist Linda McQuaig) The Trouble With Billionaires. I have not yet had a chance to read the book, but Brooks's description of the book includes the following: "[The] increase in the concentration of income and wealth [since 1980] was not the inevitable result of technological change and increased globalization, but was the result of political decisions (and indecisions)." I have a feeling that McQuaig and Brooks explain this better than I can.

I am open to the possibility that a society could become irretrievably split between rich and poor. I do not, however, think that there is good reason to believe that we have reached that point. It would be wonderful if modern technology were to allow us to turn the tide, without further policy interventions. At present, however, that is not happening. Useful public policies are available to us, if we would only adopt them.


michael a. livingston said...

I think part of the problem may be that you are trying to separate economics from other discourses For most of the twentieth century capitalism felt itself seriously threatened by left-wing extremism and adjusted accordingly Now it feels itself threatened if at all by religious extremism which elicits a very different response: rather less concern for economic equality and more for its own religious and spiritual impulses That's not to say that there isn't a difference between different types of technological change and their effects: but it's no less important the ideological context in which the changes take place

Doug said...

So your argument is: Because Germany has unions the airline executive claims that unions are necessary to prevent atrocities? What?

Unions can prevent injustice and they can also cause injustice. Governments can step in or not. Unions have a more structural role in the relationship making it more difficult for management to mistreat workers but that role also allows them to demand a share of the return on capital acting as a tax on investment (for private sector unions).

Employment law isn't perfect - the employment relationship is costly to change meaning that small violations and abuses will not be corrected by market forces. Using unions is a structural remedy but for most government and professional workers one where the costs may outweigh the benefits.

Also, Germany and the EU generally have had costs to high unionization. Making it harder to fire means companies are slower to higher - particularly for younger people and particularly for people who society is less willing to take a risk on (e.g. recent immigrants).

Personally, I'm not the biggest supporter of unions but recognize they have played a valuable role in the past and in some instances still do.

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