Skill-Based Technical Change
There's this loony hypothesis in economic circles that had me in stitches (especially after reading what I've been reading for the last 18 months on technological history). It's apparently a fairly entrenched idea that economic inequality stems to a large extent from technological change; the reasoning is that those with technical skills can parlay those skills into economic force multipliers or something, so they get richer faster. This is called 'skill-based technical change' (SBTC) theory.
I don't think so. That's not how technology (not itself a well-understood term) works. But apart from that, there are actually two models of technological spread that are very different, and work against the SBTC model.
Firstly, there's the 'ubiquity' model. In this model, technology spreads very quickly until everyone has the tech. This is the empirical case with many technologies — washing machines, refrigerators, toasters, radios, MP3 players, pottery, the plough, road-building, brick-making. Given a general technological level in a society, some techs will become ubiquitous very quickly. Once the coiled-coil tungsten wire technology became available, incandescent bulbs became ubiquitous within years.
Secondly, there's the 'patent control' model in which the tech originator deliberately makes it hard for the tech to become ubiquitous. But because the only way that's possible is if the tech requires a very high level of tech (e.g. stealth materials tech (and in the past, steel), requiring a large industrial base to be economically viable) or it is very arcane (e.g. stealth materials tech (and in the past, steel), which very few people understand in detail). Such tech is too expensive to give people an advantage.
Real-life examples are doctors and lawyers. The two are oft-cited examples of professional middle-to-upper class prosperity. But as my doctor and lawyer friends will tell you, the economic benefits aren't as obvious as you might think. Doctors have it worse; they tend to get sued more often and need far more supporting tech — lawyers only need information and brains.
The real money-makers often don't have a tech advantage at all; if anything, they are really good at networking and deal-making, which are social advantages. They make use of technology, but the advantage of technology is unclear at best. Any tech they do use doesn't enable them to get rich faster then the next 40% of population, simply because tech of that kind is ubiquitous tech — computerised trading systems etc. It's again brain and skill.
So is inequity accelerated by technology? I don't think so. The same people who argue for SBTC models also acknowledge that a large middle class is created by tech ubiquity, which means the bottom moves up faster than the top. Which, in turn, means technology should actually work against wealth inequity. Maybe some economist can correct me on this point.
I don't think so. That's not how technology (not itself a well-understood term) works. But apart from that, there are actually two models of technological spread that are very different, and work against the SBTC model.
Firstly, there's the 'ubiquity' model. In this model, technology spreads very quickly until everyone has the tech. This is the empirical case with many technologies — washing machines, refrigerators, toasters, radios, MP3 players, pottery, the plough, road-building, brick-making. Given a general technological level in a society, some techs will become ubiquitous very quickly. Once the coiled-coil tungsten wire technology became available, incandescent bulbs became ubiquitous within years.
Secondly, there's the 'patent control' model in which the tech originator deliberately makes it hard for the tech to become ubiquitous. But because the only way that's possible is if the tech requires a very high level of tech (e.g. stealth materials tech (and in the past, steel), requiring a large industrial base to be economically viable) or it is very arcane (e.g. stealth materials tech (and in the past, steel), which very few people understand in detail). Such tech is too expensive to give people an advantage.
Real-life examples are doctors and lawyers. The two are oft-cited examples of professional middle-to-upper class prosperity. But as my doctor and lawyer friends will tell you, the economic benefits aren't as obvious as you might think. Doctors have it worse; they tend to get sued more often and need far more supporting tech — lawyers only need information and brains.
The real money-makers often don't have a tech advantage at all; if anything, they are really good at networking and deal-making, which are social advantages. They make use of technology, but the advantage of technology is unclear at best. Any tech they do use doesn't enable them to get rich faster then the next 40% of population, simply because tech of that kind is ubiquitous tech — computerised trading systems etc. It's again brain and skill.
So is inequity accelerated by technology? I don't think so. The same people who argue for SBTC models also acknowledge that a large middle class is created by tech ubiquity, which means the bottom moves up faster than the top. Which, in turn, means technology should actually work against wealth inequity. Maybe some economist can correct me on this point.
Labels: Economics, Technology, Wealth
etched with acid at 11:12:00 am
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