Thursday, 1 March 2012

The wealth gap is about to widen: Raspberry Pi

Yesterday my mate was a bit miffed he didn't get one of these at the fastest sell out RS Components have ever seen. Its supposed to help educate the young and ultimately to advance the economy. But who will benefit in the end?

Revolutionary Raspberry Pi sells out in two hours crashing website

This could well be an amazing technology that increases the economy's productive power through educating young people. That is, the total amount produced for the same investment of labour and capital will increase in proportion to the other major factor of production. The value of the land needed to do all that production. Rents and mortgages.

Great! But only for a short time. Eventually the increase in production will all be taken up in higher land values as wages and interest are competed down to a new equilibrium.

So even though productivity will increase absolutely, the proportion of the gain going to the producer will fall when compared to what property owners can charge for the land needed to produce and live on.

While high taxes on productivity and privatisation of property values persists all the gain will go to property owners in the end. Oh dear oh dear oh dear.

I constantly remind my geeky friends, innovators, high priests of technology who claim that it will all save the world about this. Not to mention my Georgist friends, colleague economists and reform campaigners.

But to no avail. The Matrix has them on technology begin our saviour. See here for a full exposition:

Technology and the Distribution of Wealth