Science fiction movies portray two different futures. In one future, mankind lives in a beautiful utopia. There are flying cars, shiny buildings and people wear really clean clothes. The other future is much more bleak. People are struggling to survive.
Not unlike the movies, technology is going to define our future. We dream of a future where robots do all the work and we live spectacular lives. The reality is that our robots, or our technology, can drive our incomes down and further income inequality.
In Singapore, self-driving taxis began carrying passengers last week. This week in Pittsburgh, passengers can be picked up by one of Uber’s self-driving cars. Uber expects to have 100 self-driving vehicles on the road by the end of 2017.
Uber has already used technology in a way that is great for consumers. Rides have become much more affordable. But, wages for drivers are also going to continue to go down. And self-driving car service has the potential to put Uber’s 1.5 million drivers out of work. The drivers, whose incomes are in the bottom 90%, will lose their ability to earn income from Uber, while the owners of Uber, who’s incomes are in the top 0.1%, will generate more wealth and income.
In 2007, the International Monetary Fund declared that the “main factor driving the recent increase in inequality across countries has been technological progress. (IMF Survey: Technology Widening Rich-Poor Gap, October 10, 2007). Technology increases the premium on skills and pushes wages down for low-skill positions. Eventually, technology can completely eliminate the demand for any jobs that are considered low-skill. And, technology will also continue to raise the bar on what is considered a skill position. Moreover, technology can allow one skilled worker to do the work that would have required dozens of skilled workers only a decade ago. The result is fewer and fewer skilled workers and less income for anyone that is not a skilled worker.
“Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine owners successfully lobby against wealth redistribution,” Stephen Hawking (CNN:Money, Stephen Hawking: Technology is making inequality worse, October 12, 2015.)
Governments are not in a position to effectively redistribute wealth without completely and radically changing our economic system. And, that means it is up to us – the 90%. We are the most powerful force in our economy, and we have to figure out how to create income equality. The irony is that we will probably have to use technology to do it. Who else is going to change the world?