This blog post was originally published at TechCrunch.
As global poverty is continuing to decline, another issue emerges. According to the World Economic Forum, rising income inequality and the pose a risk to the global economy, and may lead to increased polarization and lack of political stability. This is however not a global problem. In developing countries inequality is decreasing and the amount of people living in extreme poverty is at an all-time low. Mobile technology is contributing to financial inclusion in countries without an established financial infrastructure, and global markets creates trade opportunities.
However, the increase in inequality is affecting high- and middle-income countries, as labor saving technology has replaced many blue collar jobs that paid well. Those workers have had to switch into retail and home healthcare jobs, where the pay is typically lower.
The disparity between the rich and everyone else is larger than ever in the United States, and few places is this skewed wealth distribution more visible than in and around Silicon Valley. The chasm between tech multi-billionaires and the rest of the population in Northern California where an estimated 31 percent of jobs pay $16 per hour or less and the median income in the U.S. today is about the same as it was in 1995, as the tech boom was born has led to the conclusion that the tech sector is greatly contributing to increased inequality.
According to The second machine age by Brynjolfsson and McAfee, this has been a slow train coming ever since the 80s when the PC invaded offices and homes. This change has gathered momentum ever since, and the exponential nature of technology is now accelerating this development. While technological innovation has replaced jobs for decades, it has always created more jobs than it has destroyed.
The next wave of intelligent automation will strike hard at another portion of the middle class. Classical middle-income white collar jobs such as bank tellers, insurance underwriters, loan officers, case file workers. Basically, every job that include following the rules and making few decisions. In the banking sector alone, thousands of jobs are at risk of being decimated through the use of artificial intelligence to perform tasks that were previously considered too complex for automation. At last year’s World Economic Forum in Davos it was stated that artificial intelligence is ushering in the fourth industrial revolution, which will change society as we know it. According to a recent report from McKinsey, half of the world’s jobs could be automated by 2055.
The winner takes it all dynamics of the digital economy is contributing to strongly monopolistic markets, where companies like Facebook, Google, Apple and Amazon are disintermediating incumbent industries.
Some may argue that platforms like Uber are generating new income opportunities, but a recent court ruling where Uber was fined 20 MUSD for misleading drivers with inflated wage statistics tell a different story. Sharing has little to do with caring in the sharing economy, and has more in common with quasi-monopolies where freelancers must compete in a hyper-competitive environment by the grace of the platform. Not so different from vassals in the feudal system.
Advancements in gene editing and biohacking, human augmentations and longevity is posed to enhance our lives, but may also lead to a new class divide, where an elite class emerges through both physical and mental upgrades?