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Specifically, they argue that digital technology drives inequality in three different ways. First, by replacing old jobs with ones requiring more skills, technology has rewarded the educated: since the mid-1970s, salaries rose about 25% for those with graduate degrees while the average high school dropout took a 30% pay cut.45 Second, they claim that since the year 2000, an ever-larger share of corporate income has gone to those who own the companies as opposed to those who work there—and that as long as automation continues, we should expect those who own the machines to take a growing fraction of the pie. This edge of capital over labor may be particularly important for the growing digital economy, which tech visionary Nicholas Negroponte defines as moving bits, not atoms. Now that everything from books to movies and tax preparation tools has gone digital, additional copies can be sold worldwide at essentially zero cost, without hiring additional employees. This allows most of the revenue to go to investors rather than workers, and helps explain why, even though the combined revenues of Detroit’s “Big 3” (GM, Ford and Chrysler) in 1990 were almost identical to those of Silicon Valley’s “Big 3” (Google, Apple, Facebook) in 2014, the latter had nine times fewer employees and were worth thirty times more on the stock market.47 Figure 3.5: How the economy has grown average income over the past century, and what fraction of this income has gone to different groups. Before the 1970s, rich and poor are seen to all be getting better off in lockstep, after which most of the gains have gone to the top 1% while the bottom 90% have on average gained close to nothing.46 The amounts have been inflation-corrected to year-2017 dollars. Third, Erik and collaborators argue that the digital economy often benefits superstars over everyone else.
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