Tyler Cowen’s comments on income inequality and technology… I disagree

I just read Tyler Cowen’s comments in the International New York Times Upshot piece titled, “How Technology Could Help Fight Income Inequality“, and I could not make it past the second paragraph before the words came rushing out of my mouth, “rubbish!”.

It is a short piece so I invite you to read it yourself but I will remark on a few of his comments that just leave me unsettled.  Cowen essentially argues in his piece that we should consider letting technology solve the income inequality problem – that “Technology has contributed to the rise in inequality, but there are also some significant ways in which technology could reduce it.”

Funny enough, however, Cowen early on concedes that, “It is a bit harder to see how information technology can lower housing costs, but perhaps the sharing economy can make it easier to live in much smaller spaces and rent needed items, rather than store them in a house or apartment.

What I read from this is, “well, o.k., technology will not help lower housing costs, but hey, maybe this thing called the “sharing economy” will make it easier for folks to tolerate income inequality.  Oh, and since you have to tolerate living in a shoe box and don’t have space for all of those products that 2/3 of the American economy needs you to spend money on, you can just share those too.  Its gonna be great! 🙂

While I can agree with Cowen that there are some areas where technology can help alleviate the income inequality problem, I disagree with his notion that it in itself can be the solution.  What I find remarkable with Cowen’s comments is that he mentions nothing of how government can help – libertarian bias???  How can anyone talk about income inequality without addressing some of the overt obstacles to achieving it – such as an education system that favors means, or government regulation that discriminates against investors who are  not wealthy enough?  Perhaps that is what he meant when he said that, “these possibilities reframe the inequality problem”.

Mr. Cowen finally ends his piece with stating his belief that, “there exists a plausible and more distant future in which we are mostly much better off and more equal.”  I am getting butterflies in my stomach just imagining the possibilities! (sarcasm)

Mr. Cowen, the Jack and Jills of America are tired of sugar coated pep talks about how free markets will be good for everyone and that the sun will shine everywhere – if only you are patient and think happy thoughts.  Whether it is the idea that eventually wealth will ‘trickle down’ or that technology will solve it – the average American, in fact, the average global citizen, is not buying it anymore.

I urge you to consider addressing the core drivers of income inequality instead of trying to reframe the conversation into an extension of failed economic policies.

About Jose Velez

I received my degree in economics and finance from the University of Texas at Dallas School of Economic, Political and Policy Sciences in 2006. Since then I have worked within the energy industry focusing on regulatory and environmental issues.
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