The economics of innovation and its impact on society was the theme of the annual economists’ pow-wow in Toronto last weekend, the Institute for New Economic Thinking conference. And there was no presumption that it is, on the whole, a plus.
Authoritative speakers at the three-day conference included former U.S. Treasury Secretary Larry Summers, Nobel laureates Joseph Stiglitz and James Heckman, former co-CEO of Research In Motion Jim Balsillie, and Bank of England Chief Economist Andy Haldane. But the event’s opening keynote featured a panel of experts who explored the duality inherent in innovations that create new inventions, products, sources of demand, and markets while simultaneously imposing job losses and “significant distributional consequences for society.”
Reporting from Toronto for Time Magazine, Rana Foroohar noted that among the issues the economists sought to address was: “…how can we make sure that the benefits of the digital economy–which currently accrue mostly to the top quarter of society–are more equally shared?”
By way of demonstrating the way innovation is widening the gap, Foroohar writes:
“People who make their living interacting with technology and the digital world make a median salary of $74,000 a year. Those that don’t make $34,000. Women and minorities (with the exception of Asians) lag behind. Seventy percent of people in the ‘innovation economy’ are non-Hispanic whites. And even for women with technology degrees, there’s a big pay differential. Men in the innovation economy make $80,000 per year and women make $53,000, in part because they tend to be concentrated in areas like life sciences, which pay less than physics or engineering or computer science.”
Also last week, in a conversation about the fallout of the Heartbleed bug on WNYC’s Money Talking, Foroohar shared a stat gleaned from the Toronto meeting:
“It’s only the top quarter of the socioeconomic ladder that really believes in technology and trusts it. And it’s no surprise, because that’s the group of people who are receiving the most benefits from it. These are the people who are part of the innovation economy that are seeing their wages and jobs improving because of the Internet,” she said.
For the majority of society that is feeling crunched by technology, she said, “Innovations can produce a sense of dread and despair and fear.”