The Derived Demand for Equality

I agree with Robin that Americans have little demand for an abstract economic equality. But that is not the issue. The issue begins with people measuring their economic circumstances against where they reasonably expect to be. For example, if you look at the May 2006 economic polls of the American Research Group, 52 percent of respondents say their household economic situation is good, very good, or excellent, while 46 percent say their household economic situation is bad, very bad or terrible. Looking to the future, 9 percent expect their household economic situation will be better a year from now while 54 percent expect their household economic situation will be worse. I appreciate the effect of gas prices, etc., but I suspect these are not terrific numbers for the fifth year of a recovery in which labor productivity has risen by more than 20 percent in total.

In these circumstances, we are likely to see what Robin might call a derived demand—a political sentiment that the costs of globalization and technology be shared more equally.

Also from this issue

Lead Essay

  • The Future of the American Workforce in the Global Creative Economy by Richard Florida

    In this month’s lead essay, Richard Florida, bestselling author of Rise of the Creative Class, argues that the old industrial era has given way to a new creative era. Science and technology, art and design, and culture and entertainment have superceded natural resources and industrial infrastructure as the key to economic success. Talent is now the key factor of production and winners in global economic competition will be those who can best deploy and attract it. However, the creative economy is a source of increasing inequality both within and between nations. Florida argues that the key to bridging the gap between the creative and service sectors is to harness the creativity of service sector workers to make their jobs both higher-paying and more satisfying.

Response Essays

  • Reality and Fantasy in Economic Revolutions by Robin Hanson

    In his reply to Florida’s lead essay, George Mason economist Robin Hanson argues that creativity matters less for economic growth and the future of work than Florida thinks. According to Hanson, Florida’s emphasis on creativity distracts us from the prospect of a truly revolutionary change to work and economy just over the horizon: rapidly exponential growth driven by smart machines. “An economy with intelligent machines could grow very rapidly indeed,” Hanson argues, “and induce rapidly falling human wages.” Will we be prepared if we’re busy making the Creative Class comfortable?

  • Education and Inequality in the Creative Age by Frank Levy

    MIT economist Frank Levy agrees that creativity is more important than ever in a world where computers and foreign workers can do routine work less expensively than domestic workers. This shift, Levy says, requires better education in problem-solving. But education can only do so much. The gains from rising labor productivity are going largely to the wealthy, Levy argues. Unless policies and norms are reinstated that spread those gains more widely “all of the nation’s institutions will be at risk.”

  • Wealth and Power in the 21st Century by Edward E. Leamer

    While agreeing with much in Florida’s essay, UCLA economist Edward Leamer suggests that the key to understanding the future of work isn’t creativity, but talent. “Is a personal computer like a forklift or a microphone?” Leamer asks. Forklifts are forces for equality, washing out individual differences in ability. Microphones, on the other hand, amplify difference in ability and talent. If training cannot create talent, but can only enhance it, the gains to training will be highest for the talented, and it will not be possible to close the talent and wage gaps by offering more training to the less talented.

The Conversation