2013-09-10/Technology and the Distribution of Wealth

• when: 2013-09-10
• author: Gideon Rosenblatt
• source: The Vital Edge
• topics: jobsolescence economic disparity labor productivity
• keywords
• link: http://www.the-vital-edge.com/technology and the distribution of wealth/
• title: Technology and the Distribution of Wealth
• summary: There is a question so important to the modern economy that it often hides in plain view. I'm talking about the role that technology plays in the distribution of wealth. This connection between our distribution of societal resources and our rapidly evolving technology centers on two fundamental phenomena: (1) The way technology displaces labor (2) The way technology concentrates profits

The primary way that technology displaces labor centers on productivity, which amongst most economists today is usually framed as "labor productivity," or the amount of goods and services produced in one hour of human labor.

Labor productivity gains happen by:

a) Holding the amount of labor steady and increasing the flow of goods and services;

b) Holding the flow of goods and service steady and decreasing the amount of labor; or

c) Some combination of the two

Economists focus on "labor productivity" because, historically speaking, human labor has accounted for the largest portion of the total cost of production. As corporations have concentrated on maximizing profits over the last several decades through downsizing, restructuring and the like, it's usually been with a heavy reliance on option "b" – i.e. replacing humans, first with hardware, and now increasingly, with software.