Blinder: Technology Has Boosted Inequality of Income

Tuesday, 14 Jan 2014 12:10 PM

By Dan Weil

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While technology has conferred major benefits on our economy, it also has helped boost income inequality, says Princeton University economist Alan Blinder, former vice chairman of the Federal Reserve.

"It may seem strange to cast technology in the role of the villain, and in a larger sense it's not," he writes in The Wall Street Journal. Technological progress is the chief driver of higher living, Blinder says.

"So it is good, not bad, for a country to experience faster technological progress. But new technologies inevitably leave some people behind. And that began to occur in a big way starting at the end of the 1970s."

Editor’s Note: 18.79% Annual Returns . . . for Life?

The Internet revolution in particular has played out in a way to increase inequality, Blinder notes.

Online commerce has wiped out many "ordinary" jobs, he explains. "Think Amazon instead of bookstores, or online reservation systems instead of travel agents."

At the same time, e-commerce has raised the benefits for some "extraordinary" jobs, Blinder adds. "Think of entertainers or inventors of successful apps, for example. The result has been that the rich got richer while the poor and middle class got relatively poorer.

"Rather than trying to mitigate poverty or inequality, the U.S. government piled on," he writes. "Had this been a football game, the government would have been flagged for unnecessary roughness."

Forbes contributor Peter Ferrara says strong economic growth is the answer to income inequality.

"Sustained, rapid economic growth is . . . the ultimate solution to poverty, as after a couple of decades or so of such growth, the poor would climb to the same living standards as the middle class of today," he writes on Forbes.com.

Editor’s Note: 18.79% Annual Returns . . . for Life?

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