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Submission + - The Internet's Network Efficiencies Are Destroying the Middle Class

Hugh Pickens DOT Com writes: Joe Nocera says in op-ed piece in the NYT that the same network efficiencies that has 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.
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The Internet's Network Efficiencies Are Destroying the Middle Class

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Money is the root of all evil, and man needs roots.