In the 1990s, the venture capitalist John Doerr famously predicted that the Internet would lead to the “the largest legal creation of wealth in the history of the planet.” Indeed, the Internet has created a tremendous amount of personal wealth. Just look at the rash of Internet billionaires and millionaires, the investors both small and large that have made fortunes investing in Internet stocks, and the list of multibillion-dollar Internet companies—Google, Facebook, LinkedIn, and Amazon. Add to the list the recent Twitter stock offering, which created a reported 1,600 millionaires.
Then there’s the superstar effect. The Internet multiplies the earning power of the very best high-frequency traders, currency speculators, and entertainers, who reap billions while the merely good are left to slog it out.
But will the Internet also create the greatest economic inequality the global economy has ever known? And will poorly designed government policies aimed at ameliorating the problem of inequality end up empowering the Internet-driven redistribution process?
As the Internet goes about its work making the economy more efficient, it is reducing the need for travel agents, post office employees, and dozens of other jobs in corporate America. The increased interconnectivity created by the Internet forces many middle and lower class workers to compete for jobs with low-paid workers in developing countries. Even skilled technical workers are finding that their jobs can be outsourced to trained engineers and technicians in India and Eastern Europe.