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Digital economy needs rebooting

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The brilliant and eccentric American technologist, thinker and musician Jaron Lanier, who gave us the evocative oxymoron "virtual reality," has been having some second thoughts about the digital economy.

The problem, as drawn in his new book, Who Owns the Future?, is that massive networks, "big data" and ever faster computers have evolved such concentrations of economic power and efficiency that they are eviscerating the middle class.

Having long ago leached manufacturing jobs from North America, they are now well into the same process with all other employment.

The barriers to wealth's natural tendency to flow upwards (Lanier calls them "levees"), such as unions and effective regulation, are being overwhelmed.

We are headed towards a world divided between a few who profit wildly from information advantages, and the rest of us who are milked for data, and then left to do the cheap and scarce labour that has yet to be automated.

This dystopian scenario leads eventually to economic collapse. If too few people have enough money to buy things, even the billionaires can't survive.

But Lanier believes the problem is tractable. His simple, but revolutionary solution comes down to accurate accounting. Information is valuable. Those who provide it should be compensated.

Present and near-future technologies that replace middle-class jobs, such as machine translation, robot nurses and self-driving trucks, all rely on massive observations of real people doing those jobs.

Computers translate Chinese into English by surveying countless instances of existing translation and then developing algorithms that mimic it. The resulting software can command a high price, but the humans who provide the observed material remain uncompensated. This is accounting fraud writ large.

Lanier says: put that value on the books, and the economy will grow sufficiently to sustain a middle class over the long term.

The mechanism he proposes is a system of "nano-payments" that are remitted to the providers of any information that generates revenue.

For instance, if a photograph you post online is used to develop facial recognition software, you would be entitled to a small payment. If a video of a nurse administering an IV is used to design and program a robot to do the same task, that nurse would be compensated.

Who Owns the Future? is more than a modest proposal. Lanier offers engaging, first-hand histories and analyses of the digital revolution.

His discussions of money and capitalism are non-ideological and clearer than any economist's. His only political premise is that there is no democracy without a middle class. He wants a fair deal for those who provide value.

Lanier's style is gentle and personal. He anticipates objections and uses modest footnotes to answer them. He is fully aware of how formidable it will be to divert the massive aircraft carrier of the current information economy, but is certain the solutions he advocates are technically feasible -- it's the political hurdles that are higher.

At a time when Silicon Valley is awakening from its long apolitical slumber and beginning to think about engaging in the governing of the world, Lanier is several steps ahead.

If he succeeds in his quest, he may yet be remembered as both the Adam Smith and the Thomas Jefferson of our age.

Jeff Presslaff is a Winnipeg musician with a strong interest in sustainable systems.

Republished from the Winnipeg Free Press print edition June 29, 2013 A1

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