Opinion: New technology isn't the cause of inequality – it's the solution

phys.org | 8/7/2017 | Staff
HelloimMe (Posted by) Level 3
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Technology has been blamed for a lot recently. Automation and artificial intelligence have supposedly led to substantial job losses, reduced bargaining power for workers and increased discrimination. It is even blamed for growing income and wealth inequality and, as a result, the presidency of Donald Trump, Brexit, the rise of far-right populism in Europe and the spectre of climate change.

In response, calls are being made for global oversight and regulation of technology and there are attempts to slow down its spread through protectionist trade policies and political lobbying.

Innovation - Problems - Fact - Research - Causes

But perhaps we should be careful about so readily blaming technological innovation for these social problems. In fact, our recent research into the causes of rising income inequality in Germany suggests a lack of innovation and entrepreneurship is actually at the root of the problem.

We shouldn't be trying to obstruct technological innovation and diffusion. Rather, we should face up to the challenge of bringing back to Western economies the entrepreneurship, innovativeness and business dynamism that characterized the years after World War II, when growth was also more inclusive.

Germany - Case - Decades - Inequality - Levels

Germany is a particularly useful case to study. In recent decades, inequality has risen fast, and to unprecedented levels since unification. But unlike in the US, for example, there has been little financialization of the economy and no significant outsourcing of jobs due to globalization. Whereas the US runs a huge trade deficit, Germany runs a large trade surplus. Importantly, evidence shows automation has created more jobs in Germany than it has destroyed. So why is inequality rising so rapidly in the EU's largest economy?

We argue that this is because consumers, investors and innovators in Germany are effectively "on strike." Consumption by households, government and corporations could be much higher in Germany, but they are all saving massively. Public and corporate gross fixed investment spending are...
(Excerpt) Read more at: phys.org
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