by Scott Santens | Apr 14, 2014 | Opinion
The purchase of Oculus by Facebook for $2 billion is the new best example of the growing inequality inherent in 21st century capitalism – what Paul Mason describes as the The Fourth Wave. A few people just got really rich, while the thousands of people who helped build the company from nothing, through $2.5 million of crowdsourced capital and a thriving open-source developer community didn’t. Every single funder and every single developer should be given their share of cash and Facebook stock. But of course that won’t happen, and even if it could happen, how would this share be calculated, especially as far as the developers are concerned?
Jaron Lanier also describes this phenomenon in his book “Who Owns The Future” where the increasing inequality we see in the information economy is being driven by what he refers to as “siren servers”, where those with the most computing capacity in control of the networks earn all the money, while those responsible for creating the actual networks don’t. He suggests this could be rectified by somehow adding a price value to information exchanges and processing, making it more expensive for central server farms to operate in a way that transfers money to those comprising the actual networks. He doesn’t know exactly how this could be achieved, but feels a solution to this problem is very important to our future.
I submit that one solution to this problem is to instead of the attempt to create a price value for information exchanges, we recognize the overall value of these exchanges, and thus the need to transfer part of the surplus unjustly gained by those running the largest fastest servers to those comprising the actual networks.
A monthly netizen’s dividend in the form of an unconditional basic income would represent an acknowledgement of the share naturally belonging to those who actually comprise all of the networks, of these surpluses not presently being shared with them. In a world of ever-rising productivity and perpetually stagnant wages, this recognition would help resolve our growing problem of the few with the machines getting extremely rich on the backs of the many, while the many get nothing but broken promises.
Palmer Luckey helped build something great, but he did not do it alone. Without the Oculus community he would be just another VR dreamer with a phone tied to his face. He and his executive and creative teams did not create billions of dollars in value on their own. The billions transferred to the Oculus team from Facebook, who themselves only exist because of those who comprise the Facebook network, is entirely disconnected from the thousands of funders who made it possible, and the thousands of people in the open-source community who worked together to help improve the product and reveal what was possible with it. That none of these people will receive anything for being completely integral to creating the value seen by Facebook as worth the billions to purchase it, plainly shows the need for remuneration, and therefore the justification for basic income as representing our society as a whole sharing in the value created in our own networking.
by Karl Widerquist | Apr 1, 2014 | Research
SUMMARY. This article discusses a policy that is essentially a very small basic income guarantee. The author writes, “A 1990s plan to create nest eggs using federal grants and tax credits was never enacted, but with a few small tweaks, it’s an even better idea today.”
Norm Ornstein, “A Plan to Reduce Inequality: Give $1,000 to Every Newborn Baby.” The Atlantic, Feb 13 2014.
-Shannon Stapleton/Reuters, via the Atlantic
by Craig Axford | Mar 24, 2014 | Research
Nobel Prize winning economist Joseph Stiglitz
[Craig Axford]
There are a number of ways to successfully deal with the issue of inequality, and they are not mutually exclusive. Among them, a guaranteed livable income, which comes in as recommendation number 8 in this article.
Andrew MacLeod, “Eighteen Ways to Shrink Inequality”, The Tyee, February 4, 2014
by Karl Widerquist | Mar 22, 2014 | Research
SUMMARY: This article focuses on poverty and inequality, discussing how poverty puts people in a condition in which they cannot make meaningful choices. “Instead, we might look to policies like a guaranteed basic income or a negative income tax, in which we give people money and treat them with the dignity their humanity entitles them to. … Not only would it help those who are suffering get by, but rather than treating them like social degenerates, it would trust and empower them to make their own financial decisions. Given how much responsibility the more fortunate among us have for the problems plaguing the poor, it is the least our society can do.” The author, Shamus Khan is an associate professor of sociology at Columbia University. He is the author of Privilege: The Making of an Adolescent Elite at St. Paul’s School.
Shamus Khan, “The marriage of poverty and inequality: Who is responsible when people don’t have enough?” Al Jazeera America. February 20, 2014.
by Citizens' Income Trust | Mar 7, 2014 | Opinion
Robert A. Becker (ed.), The Economic Theory of Income Inequality, Edward Elgar, 2013, 0 85793 908 1, hbk, lvii + 636 pp, £225
Ten years ago, Edward Elgar published a two volume collection of reprinted articles, The Economics of Poverty and Inequality, edited by Frank Cowell. The publication of this new volume of reprints, a few of which are also to be found in Cowell’s collection, is a symptom of the increasing importance of inequality as a political issue.
Like Cowell’s collection, this new volume is a treasure trove. It contains classics such as Lorenz’s 1905 ‘Methods of Measuring the Concentration of Wealth’ ( – strange how disconcerting it is to see the Lorenz curve, as originally drawn, on a graph with per cent of total wealth along the horizontal axis, and per cent of population along the vertical). It also contains more recent material, including Foster and Wolfson’s 2010 article ‘Polarization and the Decline of the Middle Class’.
As Becker points out in his comprehensive introduction, any intelligent discussion of inequality needs to discuss how it should be defined, how measured, and how evaluated – and particularly how it should be measured – a question addressed by a long section in the introduction and by most of the articles that Becker chooses to reprint. But as Tony Atkinson’s 1970 article ‘On the measurement of Inequality’ points out, measures of inequality that make no reference to an understanding of society’s welfare might be quite misleading: hence the importance of the Pigou-Dalton ‘transfer principle’, which states that we should only use a measure of inequality if it always decreases when a rich person transfers resources to a poorer person.
This principle is satisfied if two income distributions are represented by Lorenz curves that do not cross: and here we can legitimately say that the distribution represented by the curve closest to the straight line diagonal is more equal than the one represented by the curve more distant from the diagonal. Where the Lorenz curves cross – that is, where one distribution is more equal at one end of the income distribution, and the other more equal at the other – then deciding which distribution represents the least inequality is more problematic. A number of the articles tackle this problem. More complex still is the attempt to construct measures of inequality that take account of both income and wealth, and the four papers that discuss such multidimensional inequality measures are understandably amongst the most complex in the volume, both conceptually and mathematically.
Many of the articles require an understanding of mathematical models of the economy, and the reader who is not familiar with the mathematics of economics will find some of the papers hard going. But a number of the articles are more generally accessible, and particularly those in the fourth part of the book, which explore the relationship between inequality measurement and understandings of individual and social welfare: although here too there is often plenty of mathematical notation.
A number of the papers have an eye to the effects of inequality of income or wealth on society, although often implicitly rather than explicitly. The final two papers make an explicit connection between income inequality and the polarization of society. Becker quite correctly titles this section ‘Directions for future research on economic inequality’, for what income inequality is doing to our society is rightly a cause for concern and therefore an important field for further research.
This final section suggests that perhaps there should have been an additional concluding collection of articles on economic analysis of the effects on inequality of social policy reforms: both those reforms that have been implemented, and those that have not yet been. Tony Atkinson already has three articles in Becker’s collection, and if this additional section had been added then it would almost certainly have contained yet more of Atkinson’s output: but that would not have been a problem – merely a recognition that Atkinson has contributed substantially both to an understanding of the measurement of inequality and to our understanding of what might be done about it.
It will be of interest to readers of this Newsletter that much of the effort that Atkinson has put into the evaluation of the effects on inequality of feasible policy changes has been expended on the proposal for a Citizen’s Income.
