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TRENDS | INNOVATION / GARY CHAPMAN

Must Technological Research Feed Income Inequality?

March 10, 1997|GARY CHAPMAN

U.S. Rep. George E. Brown Jr. (D-Colton), the ranking minority member of the House Science Committee, recently delivered this shocking fact during a speech to the University Research Assn.: In California, "for the first time, the cost of the state corrections system exceeds the combined budget for the University of California and California State College System."

Brown went on: "Yearly graduate tuition at Stanford is less than the average yearly cost of incarceration in California."

The congressman was putting his finger on the most critical issue facing the U.S. economy today, about which the high-tech community has been curiously silent: the diversion of economic resources away from productive long-term research and development toward the warehousing of the poor and uneducated.

Income inequality in the United States is a well-known phenomenon: The U.S. has the highest level of inequality of any industrialized nation. When I was young, it was common to hear my elders say that it was better to be poor in the U.S. than to be poor in other countries. But that's no longer true. The lowest 10% of wage earners in Italy, once the epitome of poor European countries, now make three times more than their counterparts in the United States.

By now, it should be clear to everyone that stubborn and persistent income inequality is not only a moral issue; it has a significant effect on patterns of innovation and technological development.

There are many causes of income inequality, according to economists, and one cause is technological development itself. Factory automation has ejected millions of workers from skilled jobs; advances in software now threaten to thin the ranks of service-sector workers and even professionals like lawyers and accountants.

The situation calls to mind a famous story involving Henry Ford and United Auto Workers chief Walter Reuther. Ford showed Reuther some new factory robots and observed that the machines would never go on strike. Reuther replied, "How many of those machines will buy Fords?"

Leaders of science, technology, politics and industry should be well aware that technological progress creates its own discontent. But they're stuck in the overwhelming consensus of the American elite: that technology is an overall benefit with a logic of its own, determined by the free market; that competition among firms and people leads to improvements in the standard of living; and that the market inevitably finds the optimal way to distribute wealth.

In fact, even in science there is a bias toward the very top of a competitive hierarchy. Science is organized in the United States not for an even distribution of scientific expertise, or to create new job opportunities for qualified graduates, but instead to produce a handful of Nobel laureates, a few huge research grants, corporate monopolies on scientific breakthroughs, and ruthless competition for money, status and power.

From 1994 to 1996, federal science and technology spending was threatened with massive cuts. For the first time, the research community rallied to protect its budget. Now there are proposals to restore funding for science and technology research and development, partly as a result of more effective lobbying by research leaders. But that lobbying has been focused largely on preserving the scale of the funding, rather than on a research agenda that will help solve the nation's problems.

Of course, the scientific community's tendency toward favoring the elite is paralleled by patterns of corporate R&D and innovation.

James K. Galbraith, an economist at the University of Texas, says that because corporate managers look to a small segment of the population as their target market--people with high disposable incomes--we get innovation characterized by over-engineering, "baroque" product features and short product life cycles with built-in obsolescence.

"What inequality tends to foster, in terms of innovation," says Galbraith, "are 'toys' for the rich instead of investments in mass use." That, he says, is why we favor $30,000 cars over mass transit, cellular phones and expensive services over universal access, and bells and whistles for the Internet instead of the guarantee that the Internet will be more affordable and easier to use.

"Inequality," says Galbraith, "produces a 'cult of the novel,' " instead of products that meet widely shared needs.

Conventional wisdom says the solution to income inequality is overall economic growth, which, as the saying goes, "lifts all boats." But these days, even mainstream economists agree that present economic trends indicate that economic growth will actually increase inequality in the absence of ameliorating policies.

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