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The Internet's Network Efficiencies Are Destroying the Middle Class
Hugh Pickens DOT Com writes "Joe Nocera writes in an op-ed piece in the NYT that the same network efficiencies that have given companies their great advantages are becoming the instrument of our ruin. In the financial services industry, it led to the financial crisis. In the case of a company like Wal-Mart, the adoption of technology to manage its supply chain at first reaped great benefits, but over time it cost competitors and suppliers hundreds of thousands of jobs, thus gradually impoverishing its own customer base. Jaron Lanier says that the digital economy has done as much as any single thing to hollow out the middle class. Take Kodak and Instagram. At its height, 'Kodak employed more than 140,000 people.' Kodak made plenty of mistakes, but look at what is replacing it: 'When Instagram was sold to Facebook for a billion dollars in 2012, it employed only 13 people.' Networks need a great number of people to participate in them to generate significant value says Lanier but when they have them, only a small number of people get paid. This has the net effect of centralizing wealth and limiting overall economic growth. It is Lanier's radical idea that people should get paid whenever their information is used. He envisions a different kind of digital economy, in which creators of content — whether a blog post or a Facebook photograph — would receive micropayments whenever that content was used. 'If Google and Facebook were smart,' says Lanier, 'they would want to enrich their own customers.' So far, he adds, Silicon Valley has made 'the stupid choice' — to grow their businesses at the expense of their own customers. Lanier's message is that it can't last. And it won't."
The micropayments for content idea sounds familiar.
The billionaires are destroying the middle class, by extracting their wealth; Internet efficiencies are just one means they use to do that. This is, simply put, not inevitable, and if the power structures were different, the Internet would be enriching, not destroying, the middle class.
How to change that, and the end game if it is not changed, are left as exercises for the reader.
because consumers are rarely informed enough to purchase anything other than the least expensive (or most hyped) product.
I think they're plenty informed; I just think they don't care as long as they can get it a few pennies cheaper somewhere else and it fits in with their short-term outlook. In the 70's and 80's the autoworker unions were very militant about buying US-made cars, going so far as to ostracize their fellow workers who owned imports and made them park in lots off site of the factory. In that case you were supposed to spend more on a comparable car because they saw it as an issue that went straight to their job security. However, there was never any qualms about buying other cheaper commodities made in China and other countries. In that case you were "stretching your dollar" (those weren't their jobs) and finding great bargains and being an otherwise wise consumer.
I recall an interview with an airline executive many (20?) years ago. He said they heard and listened to customer complaints about the quality of air travel, in particular leg room. He said they tried all sorts of quality of flight improvements, including putting less seats in the plane, but in the end people made their choices largely on the price of the ticket, so they ended up going back to cramming as many seats in the plane they could.