Every economic transition benefits the few. Only some economic transitions benefit the many.
We wouldn’t want to do without economic progress, but not every economic transition is progress.
The first major economic transition happened when the economy was still very primitive. Two million years ago Homo erectus came down from the trees and stood up on two legs. (You can tell how primitive the economy was by the fact that Homo erectus never licensed his name to any of the pharmaceutical companies who advertise to men on Fox News.)
Becoming bipeds was a splendid economic advance for our ancestors, allowing them to walk to places where there were good things to eat and run back with their arms full of them. Unless they fell over. Which the members of the species Homo erectus who aren’t our ancestors did.
I’m guessing there was a “Pareto Distribution” among Homo erectus. The Pareto Distribution (named after early twentieth-century Italian economist Vilfredo Pareto) is a 20/80 split, a commonly observed phenomenon in economics—20 percent of workers do 80 percent of the work, 20 percent of clients account for 80 percent of earning, 20 percent of investors make 80 percent of the money, 20 percent of husbands help with the 80 percent of household chores done by wives, etc.
One out of five Homo erectus walked around looking for good things to eat. Four out of five grunted, “Standing up is too hard,” or, “Standing up makes me dizzy,” and sat back down. And were eaten by saber-toothed tigers.
At about the same time that we started to stand up we also started to make stone tools. The Paleolithic age was another major economic transition. Stone axes, stone knives, and stone spearheads allowed us to hit, stab, and spear things.
But, again, I’m guessing that paleo-technology baffled many cavemen. Try it yourself—make a sharp stone knife blade by taking one rock and knocking it against another. Having much luck? Me either.
If you and I had been around back then the things that got hit, stabbed, and speared would have been us.
The next important economic transformation was ten thousand years ago—the Neolithic Revolution, when agriculture began to replace hunting and gathering. This would seem to have been a win/win development for everyone concerned. You just sit there and watch the corn grow. Wheat, rye, and maize don’t kick or bite or charge you with big horns. They can’t run away. And they don’t try to fool you when you’re gathering them, the way delicious-looking deadly nightshade berries do.
But, as the prestigious British journal New Scientist says, “Decrease in physical stature and health in transition from hunter-gathering to agriculture is well-documented.”
Turns out Neolithic farmers were smaller, weaker, less resistant to disease, and died a lot more.
Besides, where’s the fun in sitting there watching the corn grow? Me for hunting some deer with my Remington .30-06 semiauto. We’ll gather a few six-packs on the way home.
Slavery also caused an economic transition. And what a brilliant innovation slavery must have seemed. You used to have to work. Now somebody else has to work. And it’s free. Well, almost free. You’ve got to provide some straw pallets and dole out thin gruel once a day and give the slaves an occasional break to drink out of a mud puddle.
Slavery was a brilliant innovation unless you were a slave. And that was fairly likely. Historians estimate that at the beginning of the Roman Empire, in the first-century B.C., between 35 percent and 40 percent of the people in Italy were slaves.
Free slave labor also didn’t make things easier for the working-class Romans, the plebeians. The Imperial Minimum Wage was, basically, 0.
I suppose the plebs could have attempted to undercut that … “I’ll bring my own straw pallet, bowl of thin gruel, and mud puddle.” But …
When the Roman Empire fell and the Middle Ages came along, the plebeians were economically transitioned into serfs, villeins, and other forms of peasantry. This at least got them outdoors and into the fresh air, delving and spanning on the large manors of feudal barons.
Baronial manors were efficient economic institutions, at least compared with rapine and pillage, the other economic institutions of the era.
The medieval peasants, however, did not seem to have been very grateful for this economic efficiency. There were violent peasant uprisings in A.D. 841, 928, 1277, 1323, 1343, 1358, 1381, 1382, 1401, 1409, 1437, 1441, 1450, 1453, 1462, 1478, 1485, and 1498.
The only economic good news for ordinary people during the Middle Ages was the Black Death. It did have side effects in the 1340s and 1350s, killing between 30 percent and 60 percent of Europe’s population. But consider the benefits: upward pressure on wage rates and benefit packages resulting from supply-side labor market shortfalls.
The discovery of the New World meant a literal economic transition. The Spanish transitioned an estimated $530 billion worth of silver and gold from the Western Hemisphere to Europe on their treasure fleets.
There were only about 90 million Europeans at the time. This meant that each of them got $5,888.88 apiece and everybody was rich. Or so simple arithmetic would tell us.
Simple arithmetic would also tell us that the people who lived in the New World lost $530 billion, and modern research indicates that European diseases killed as many as 90 percent of them. If you were a surviving Native American, you were a rounding error. And broke, too.
But the Industrial Revolution was great for everyone … everyone, that is, who was rich already. They were selling the coal on their estates, making steam at their factories, and spinning cotton in their mills. We were mining the coal, shoveling it into boilers, and working as child laborers on the looms.
Eventually, of course, the Industrial Revolution was great for everyone. Microwave ovens for rich and poor alike!
And the scientific knowledge and technical expertise that resulted from the Industrial Revolution led directly to the Digital Revolution.
The Digital Revolution may be the most significant economic transition since we came down from the trees.
Will it benefit the few? Will it benefit the many?
We’ll use me as an example of the many and Mark Zuckerberg as an example of the few. How have we been doing—comparatively?
Let’s start in 1987. That was when Time named the Personal Computer as its “Man of the Year.” We’ll count 1987 as the beginning of the Digital Revolution.
In 1987 I was a freelance magazine writer with an uncertain income stream. I owned a little (mortgaged) house in the country. I had about $20,000 equity in the house and maybe $10,000 in the bank and an old pickup truck. My net worth was about $31,500.
In 1987 Mark Zuckerberg was three. I think we can fairly calculate his net worth (assuming a piggy bank) to have been in the low one figures.
The Digital Revolution has now been going on for thirty years.
I am a freelance magazine writer with an uncertain income stream. I own a large (mortgaged) house in the country. I have three children in private schools and an old pickup truck. My net worth (adjusted for inflation) is about $31,500.
Mark Zuckerberg’s net worth is $72.3 billion.