Last week, a laundry list of business professors and Silicon Valley elites posted an Open Letter on the Digital Economy calling for sweeping changes in public policy, how we run our corporations and how our democracy functions, in order to reverse the growing income inequality gap.
Don’t feel too badly if you missed it; just about everyone did. Like a tree falling in the forest when no one’s around, the missive was more or less shunned by the media – traditional and social – and fell with a silent thud on deaf ears.
The question is why? Usually, when technology industry luminaries like venture capitalist Steve Jurvetson, Sun co-founder Vinod Khosla, Salesforce CEO Marc Benioff, and media guru Tim O’Reilly get behind such a trendy and noteworthy cause, the media goes wild. Not this time.
A glaringly short, compulsory piece in the Wall Street Journal has all of four comments. O’Reilly’s Twitter post got just 37 retweets from his nearly 2 million followers. And that was pretty much it. Downright embarrassing, considering the media was all over billionaire investor Chris Sacca’s plan to transform Twitter.
So what about this letter turned everyone off?
The premise is based on the 2011 book Race Against the Machine, in which MIT Sloan business profs Erik Brynjolfsson and Andrew McAfee (also the letter’s primary authors) propose that the pace of high-tech innovation is putting people out of work, eroding household income growth and hollowing out the middle class.
Beneath the surface of what appears to be a noble cause, however, the pair is calling for nothing short of a radical reengineering of the American economy, laying out “how democracy can and should function” based on broad assumptions that don’t exactly pass the smell test.
While there has been a growing gap between productivity and employment since 2000, you’d have to be willfully blind to ignore the obvious cause. Many economists say it was almost certainly the result of a combination of two recessions following the collapse of the tech bubble in 2000 and the housing bubble in 2007.
In fact, if you look at a chart of median household income in the United States, you can hardly miss the correlation. Everything was going along just fine until the dot-com bubble burst. And just as we were beginning to recover from that, the sub-prime mortgage crisis took us down into the great recession and an agonizingly slow and anemic recovery.
While some of the letter’s recommendations make sense, others are grandiose, far-fetched, and progressive in the extreme. These people are smart enough to know they’ve got to come up with a better argument than the “robots ate our jobs” before proposing a whole new set of entitlements, yet another mega-expansion of government and a radical redistribution of wealth to pay for it all.
I’m sure that none of the highly accomplished CEOs and VCs involved in this effort got to where they are by investing in businesses that were based on such questionable problem statements and inconclusive arguments.
Even if you believe that every American should have a guaranteed income, a college education, and a host of other subsidies and benefits – and that we can just ratchet up the tax rate without any negative economic repercussions – you’d have to be pretty naïve to think the American people are just going to start marching down that path based on a three-page open letter addressed to nobody.
Which brings us to an aspect of this agenda I can only describe as disconnected.
The academic and tech gurus that support this cause are among the architects of our digital economy. Many are pretty well immersed in the federal government apparatus and have access at its highest levels. And some may stand to benefit, directly or indirectly, from some of the proposals, particularly their research agenda.
Maybe that’s why the letter wasn’t addressed to anyone in particular. They should have addressed it to themselves.
Look, I’m pretty sure these people’s hearts are all in the right place, but that’s not what any of them are known for. They’re known for their minds – their intelligence, their research, their business savvy – and perhaps above all, their accomplishments. Of all people they should know that, if you want to change the world – or at least how the U.S. operates – you’ve got to do better than this.