January 24, 2022

Economists Pin More Blame on Tech for Rising Inequality

Mr. Acemoglu and Mr. Restrepo have published papers on the impact of robots and the adoption of “so-so technologies,” as well as the recent analysis of technology and inequality.

So-so technologies replace workers but do not yield big gains in productivity. As examples, Mr. Acemoglu cites self-checkout kiosks in grocery stores and automated customer service over the phone.

Today, he sees too much investment in such so-so technologies, which helps explain the sluggish productivity growth in the economy. By contrast, truly significant technologies create new jobs elsewhere, lifting employment and wages.

The rise of the auto industry, for example, generated jobs in car dealerships, advertising, accounting and financial services.

Market forces have produced technologies that help people do their work rather than replace them. In computing, the examples include databases, spreadsheets, search engines and digital assistants.

But Mr. Acemoglu insists that a hands-off, free-market approach is a recipe for widening inequality, with all its attendant social ills. One important policy step, he recommends, is fair tax treatment for human labor. The tax rate on labor, including payroll and federal income tax, is 25 percent. After a series of tax breaks, the current rate on the costs of equipment and software is near zero.

Well-designed education and training programs for the jobs of the future, Mr. Acemoglu said, are essential. But he also believes that technology development should be steered in a more “human-friendly direction.” He takes inspiration from the development of renewable energy over the last two decades, which has been helped by government research, production subsidies and social pressure on corporations to reduce carbon emissions.

“We need to redirect technology so it works for people,” Mr. Acemoglu said, “not against them.”

Article source: https://www.nytimes.com/2022/01/11/technology/income-inequality-technology.html

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