By John Tamny
Economist Robert Shiller predicted in a recent New York Times piece that economic inequality “could become a nightmare in the decades ahead.” He believes that the very economic evolution that has always led to higher living standards for all “could lead us into a world in which basic work with decent pay becomes impossible to find.” Shiller cites the proliferation of robots to allegedly bolster the previous statement. Shiller’s limp arguments are a reminder of why we should approach the musings of economists in much same way we do the projections of palm readers.
To see why Shiller is promoting know-nothingness and alarmism over serious thought, readers need only consider Henry Ford, the late Steve Jobs and computer entrepreneur Michael Dell. Each grew extraordinarily rich not by harming the poor and middle classes, but by virtue of turning luxuries once solely enjoyed by the rich (the automobile, a smartphone that is realistically a supercomputer and the personal computer itself) into common goods accessible to all. Inequality isn’t a catastrophe, rather when it’s on the rise the lifestyle gap between rich and poor is in decline. By definition.
That’s the case because as the history of wealth in the world reveals quite plainly, individuals grow rich mostly insofar as their innovations make all income classes better off. They can only grow wealthy–and highly unequal–to the extent that they’re able to fulfill the needs of the majority that is not rich. Assuming a world defined by a lack of “decent pay,” there would be no chance for entrepreneurs to grow rich in the first place due to a customer base lacking funds to spend. Assuming the “nightmare” of joblessness and/or low pay for the masses that Shiller naively predicts, inequality will shrink simply because there will be no major market for the innovative to produce for.
This speaks crucially to the rise of the “robot.”
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