The augmented reality game Pokemon Go is sweeping the nation, threatening to surpass Twitter in daily users. It also seems to have caught the worried attention of Vox, where Timothy Lee argues that Pokemon Go and its peer technology products actually represent “everything that is wrong with late stage capitalism”. Lee explains why we should all be less than enthusiastic:
But the Pokémon Go economy also has some real downsides. One has to do with regional inequality. Nintendo and its partners are rumored to be earning more than $1 million per day from Pokémon Go. That money is flowing away from small and medium cities and toward big technology companies concentrated in big cities.
On social media yesterday, lots of people laughed at Vox and Lee for the click-baity nature of the piece. Which was fair; there’s little about Pokemon Go, in particular, that evidences the thesis that the information economy concentrates wealth in the handful of companies in just a few places. Nor is it yet possible to know whether augmented reality games are displacing local businesses, as Vox presumes.But as silly as the news hook may be, the actual analysis is what’s most worthy of criticism, including Lee’s policy proposals:
One is to relax housing policy to allow more people to move to areas where high-tech products are made. While the average resident of Kansas City or Baltimore might not have the skills to create the next great mobile game, he or she probably could find work as a schoolteacher, nurse, or construction worker in San Francisco or New York — but only if he or she is allowed to live within commuting distance of technology workers.The other is to think harder about managing demand. There may be more that central banks can do to boost demand. If that doesn’t work, then more direct income redistribution may be called for — taxing rich people in high-growth areas to fund expanded government services, wage subsidies, or even cash payments to people in slower-growing parts of the country.
Lee should be commended for avoiding the usual blue model regulations and bureaucratic fixes, and he’s right to suggest reforms to housing policy. Affordable housing in America’s urban centers has indeed become a farce, and it’s refreshing to see people on the center-left arguing for the relaxation of regulations.But the belief that further monetary stimulus will solve deeper structural problems requires a giant leap of faith. Moreover, central banks have been furiously trying to boost demand for seven years now, and although they’ve had some success, one of the major effects of their stimulus has been to widen the inequality gap: Low interest rates are boosting stock markets, and well-capitalized investors and the expensive cities like New York in which they work and buy real estate have profited handsomely. People and places without significant exposure to stock markets? Not so much.Alas, this is the sorry state of conventional wonkery these days. Because mainstream policy thinkers lack creative ideas for reinvigorating the American economy and helping the middle class, they issue familiar calls for more wealth redistribution and stimulus. We’re not necessarily opposed to a more progressive tax code or demand-boosting policies like infrastructure spending, but neither looks to us like a serious fix for deep structural problems.A great deal of policy proposals today are rooted in a sense of resignation: capitalism naturally causes inequality, so the best we can do is have the government take more and more from the rich and give more and more to the poor.That approach bespeaks a lack of imagination and historical awareness. Time and again, doomsayers have bewailed free market; time and again, their fears have proven to be greatly exaggerated. In the late nineteenth century, as the United States transitioned from agriculture to heavy industry, new technologies were making farm hands obsolete and rapid urbanization was creating social disorder and depleting rural communities. But no worried mother in 1890 could imagine that her young children would grow up to become mechanics or telephone operators. Those jobs didn’t exist because automobiles and sophisticated landline infrastructure didn’t exist. In any age, it’s difficult and often impossible to know what the jobs and industries of the future will be.Instead of simply redistributing wealth and doubling down on short-term stimulus policies, we should be looking at ways to make it easier for people to start businesses and move jobs. Relaxing licensing requirements and confronting the gatekeepers who lobby for them so that more people can compete for jobs in traditionally-protected industries would be a good place to begin. So would faster implementation of portable pension plans. In addition to reforming housing policies in urban centers, we ought to think about how telework can allow more people who don’t live in San Francisco to make money off of the tech boom.Rather than resigning ourselves to managing “late stage capitalism”, we should be creating a regulatory and commercial framework that can support an information economy. The jobs of the future may be unknowable, but that shouldn’t stop us from imagining and starting to build a country in which they are more likely to be created.Then again, if all our creative energies are directed toward debating the merits of catching virtual Pikachus instead of toward building a new economic model, humanity may indeed be doomed.