Jaron Lanier's Strange Fantasy

A social critic has a bizarre proposal to save the middle class.

Who Owns the Future?, by Jaron Lanier, Simon & Schuster, 396 pages, $28.

If proposals could be judged solely by their good intentions, Jaron Lanier's Who Owns the Future? would be a masterpiece. Unfortunately, it has to be judged on the quality of its prescriptions, and on that count this tome is a train wreck.

Originally known for his work as a computer scientist and pioneer of virtual reality, Lanier has over the past decade become a social commentator and critic of what he sees as Silicon Valley's anti-human vision of the future. In his new book, which has attracted a lot of media attention, Lanier frets that an advancing network economy is eviscerating the middle class. The Internet has destroyed more jobs than it has created, he writes: While the bankrupt Kodak once employed 140,000 people, Instagram only employed 13 when Facebook bought it.

Journalists, photographers, and musicians are the canaries in the coal mine, Lanier continues. Networking and automation will eventually disrupt all professions, and no one—not surgeons or attorneys or construction workers—will be safe. "What sort of economic impact will self-driving vehicles bring?" he writes. "It could be catastrophic."

Yet it's historically ignorant to obsess about the job-killing potential of technology. As the George Mason economist Don Boudreaux notes, agriculture at its height employed 90 percent of the population and accounted for more than half of GDP. Today it employs just one percent of the workforce, yet we're all the richer for it (and we don't suffer 80 percent unemployment). Wealth comes not from jobs, as Lanier seems to think, but from doing more with less. Jobs that don't create wealth are a cost, not a benefit.

Lanier might argue that it's not just any jobs that he's concerned about; it's middle-class jobs in particular. Without middle-class jobs, there would be no middle class, and without a middle class he fears for the future of democracy and capitalism. Today, he writes, we have a bell curve distribution of wealth and opportunity, but network economies create winner-take-all systems in which one super-efficient superstar dominates a field, leaving little opportunity for anyone else. For example, Lanier argues, Amazon.com's algorithms search for competing prices, both online and off, and adjust its own prices to undercut everyone else, even if it has to set a price of zero. A small bookseller can't compete with this, having lost the protection Lanier calls "locality"—essentially the pre-network barrier that search costs imposed on consumers. (Lanier does not address the large number of small booksellers who sell books to distant consumers via Amazon.)

Without protections, Lanier argues, there would be no middle-class jobs. He is as concerned about "natural" barriers like locality as he is with "artificial" ones such as academic tenure, union membership, taxi medallions, cosmetology licenses, and copyright. (Yes, he lists all of those approvingly.) He calls these barriers "levees," and he laments that they are under attack from two directions: from above by "the rich," who see them as the impediments to efficiency that they are, and from below by ordinary people who don't have a levee of their own and resent those that do.

Copyright is under assault from file-sharing, academic tenure is threatened by online education, and closed shops are increasingly irrelevant in a world of outsourcing. In each case we think we benefit because we're getting something free or cheap, but there's no free lunch, Lanier says, and eventually we must pay the piper.

The notion that today technological change, and especially automation, is moving faster than workers can adapt is not novel. A much more elegant, and mercifully shorter, account of this concern can be found in Erik Brynjolfsson and Andrew McAfee's 2011 ebook Race Against the Machine. Their proposed solution is for human beings to stop racing against machines and start racing with them, forming a symbiotic partnership. While machines are infinitely better at computation and repetitive tasks than humans, they lack intuition and creativity, which humans have in spades. A workforce that focuses on leveraging automation to augment human ingenuity could unlock greater wealth than we've ever seen, they argue.

Lanier has a different solution in mind. He wants to reengineer the Internet—and indeed all networks—to reintroduce the inefficiencies we've overcome. He wants a new digital levee.

How is it, Lanier asks, that a company like Instagram can sell for $1 billion based on the value its users create while those users get none of the money? The value that ordinary people create online is "off the books," he says, and his plan for a "humanistic information economy" is to account for that value and make sure people are paid. Every tweet, every Facebook "like," every cat video on YouTube, and every snapshot on Instagram is valuable, so in Lanier's world every time they are accessed or reused, their authors would receive a small micropayment to compensate them for their creation. Make a small edit to a Wikipedia article? Get a nanopayment from each reader that benefits.

"A world in which more and more is monetized, instead of less and less, could lead to a middle-class-oriented information economy, in which information isn't free, but is affordable," Lanier writes. Sure, you'd now have to pay for stuff, but you'd also be earning "royalties on tens of thousands of little contributions made over a lifetime of active participation on the 'net."

And since everything will be networked, almost anything you do could be "monetized." "Today 'cool hunters' comb impoverished neighborhoods, sniffing out fashion trends," Lanier writes. "In the future, kids in those neighborhoods should earn wealth for their fashion trendsetting." Presumably the first guy who didn't cut off the manufacturer label from his baseball cap would have been set for life.

To implement his vision, Lanier notes that we will have to have government-issued online identification in order to account who created what and who owes whom, and that the prices in his system "might be centrally regulated." One might think this all could put a damper on the Internet as we know it, yet Lanier tells us, "Do not worry: It's not excessively expensive or a threat to the efficiency of the Internet to keep track of where information came from. It will actually make the Internet faster and more efficient." He doesn't explain how.

It's almost embarrassing to have to point out all the ways this proposal won't work, but here's a go.

If you have to pay each time you retweet someone else, won't we all retweet less, undermining the power of social networks? And just who should pay who for a retweet? In many cases I'm the one who benefits if you retweet me, so maybe I should pay you. Perhaps it's Lanier's "central regulator" who will make this determination on a per-tweet basis while it's setting prices.

And how does Lanier know that the economy he's creating will be big enough to support a middle class? There's no evidence presented that his system would make the pie bigger, although he asserts that it would. Yet even if Instagram's users got all of the money from the company's sale to Facebook, they would only have received $28 apiece. There's not much "economic dignity" in that, so I imagine the "central regulator" would have to set much higher prices, which would drive down consumption.

It's also not clear how a price-setting "central regulator" would be better in this system than previous central planners, whose efforts Lanier admits don't work. Nor is it clear how such power to set prices or to issue IDs and track people won't be subject to abuse and corruption. Lanier's plan does not "specify the proper limits of government in an advanced economy," he writes. "These and many other huge questions cannot be addressed yet."

Most important, Lanier ignores the fact that we are already compensated for the value we create online. Sure, we don't get paid to put our cat videos on YouTube or to edit Wikipedia articles, but the fact that we do so "for free" signals that we feel we're getting something in return. We don't get paid to have our habits watched by Facebook and Google, but we allow it in exchange for access to their services. If we didn't feel we were getting a benefit for our little actions, we wouldn't be doing them "for free." Amazon's Mechanical Turk, which pays individuals small amounts to complete tiny, discrete tasks, is a perfect example of how Lanier's scheme already exists when it's more efficient to have an explicit payment.

Lanier's concern for the middle class is noble, but his economic illiteracy is unforgivable in a book that is ultimately a prescription for economic policy. Even if his system succeeded in creating a large middle class, we'd all be the poorer for it.