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A Thought for the Web’s Silver Anniversary

Research & Commentary
March 09, 2014


Let’s learn from our not-so-distant past and share the gold. New technologies don’t have to bring us new inequalities.

By Sam Pizzigati

A quarter-century ago, Tim Berners-Lee invented the Web. Did that invention have to bring us billionaire fortunes?

A quarter-century ago, Tim Berners-Lee invented the Web. Did that invention have to bring us billionaire fortunes?

Exactly 25 years ago this week the British computer scientist Tim Berners-Lee conceptually “invented” the World Wide Web — and began a process that would rather rapidly make the online world an essential part of our daily lives.

By 1995, 14 percent of Americans were surfing the Web. The level today: 87 percent. And among young adults, the Pew Research Center notes in a just-published silver anniversary report, the Internet has reached “near saturation.” Some 97 percent of Americans 18 to 29 are now going online.

Americans young and old alike are using the Web to work wonders few people 25 years ago could have ever imagined. We’re talking face-to-face with people thousands of miles away. We’re finding soulmates who share our passions and problems. We’re organizing political movements to change the world.

Life with the Web has become, for hundreds of millions of us, substantially richer. Not literally richer, of course. The same 25 years that have seen the Web explode into our consciousness have seen most of us struggle to stay even economically. The Internet and inequality have grown together.[pullquote]The same 25 years that have seen the Web explode into our consciousness have seen most of us struggle to stay even economically.[/pullquote]

Tim Berners-Lee never saw this inequality coming. The ground-breaking research he published on March 12, 1989, the paper that proposed the system that became the Web, carried no price tag. Berners-Lee would go on to release the code for his system for free. He didn’t invent the Web to get rich.

But others certainly have become rich via the Web. Fabulously rich. Forbes magazine last week released its annual list of global billionaires. Some 123 of them, Forbes calculates, owe their fortunes to high-tech ventures. The top 15 of these high-tech billionaires hold a collective $382 billion in personal net worth.

Numbers like these don’t particularly bother — or alarm — many of today’s economists. Grand new technologies, their conventional wisdom holds, always bring forth grand new personal fortunes for the entrepreneurs who lead the way.

In the 19th century, points out this standard narrative of American economic progress, the coming of the railroads dotted our landscape with the fortunes of railroad tycoons. In the early 20th century, the new automobile age created huge piles of wealth for car makers like Henry Ford and the oilmen who supplied the juice that kept his auto engines humming along.

Why should the Internet age, mainstream economists wonder, be any different? A new technology comes along that alters the fabric of daily life. That new technology gives rise to a new rich. The one outcome naturally follows the other. No need to get bent out of shape by the resulting inequality.[pullquote]Epochal new technology doesn’t always automatically generate grand new fortunes.[/pullquote]

But epochal new technology doesn’t always automatically generate grand new fortunes. The prime example from our relatively recent past: television.

TV burst onto the American scene even more rapidly — and thoroughly — than the Internet. In 1948, only 1 percent of American households owned a TV. Within seven years, televisions graced 75 percent of American homes.

These TV sets didn’t just drop down into those homes. They had to be designed, manufactured, packaged, distributed, marketed. Programming had to be produced. Imaginations had to be captured. All of this demanded an enormous outlay of entrepreneurial energy.

But this outlay would produce no jaw-dropping grand fortunes, no billionaires, even after adjusting for inflation. That would be no accident. The American people, by the 1950s, had put in place a set of economic rules that made the accumulation of grand new private fortunes almost impossible.

Taxes played a key role here. Income over $400,000 faced a 91 percent tax rate throughout the 1950s. Regulations played an important role as well. In television’s early heyday, for instance, government regs limited how many commercials could run on children’s TV programming. TV’s original corporate execs could only squeeze so much out of their new medium.

And television’s early kingpins couldn’t squeeze their workers all that much either. Most of their employees, from the workers who manufactured TV sets to the technicians who staffed broadcast studios, belonged to unions. TV’s early movers and shakers had to share the wealth their new medium was creating.[pullquote]TV’s early movers and shakers had to share the wealth their new medium was creating.[/pullquote]

Today’s Internet movers and shakers, by contrast, have to share nothing. In an America where less than 7 percent of private-sector workers carry union cards, online corporate giants seldom ever need bargain with their employees.

In a deregulated U.S. economy, meanwhile, these Internet kingpins face precious few public-interest rules that keep them from charging whatever the market can bear — and rigging markets to squeeze out even more.

And taxes? Today’s Internet billionaires face tax rates that run well less than half the rates that early TV kingpins faced.

We can’t — and shouldn’t — fault Tim Berners-Lee for any of this. He freely shared, after all, his invention with the world.

[toomuch_promo]“I wanted to build a creative space,” Berners-Lee observed in an interview a few years ago, “something like a sandpit where everyone could play together.”

Some people didn’t play nice.

Labor journalist Sam Pizzigati, an Institute for Policy Studies associate fellow, writes widely about inequality. His latest book: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970.

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