The Revolution in Earnings Capacity in a World Without Jobs
Chapter 8
"God is not mocked: for whatsoever a man soweth, that shall he also reap." — GALATIANS 6:7
Major shifts in how we produce goods or defend ourselves fundamentally change society's structure and alter how wealth and power are distributed among different groups. The Information Age represents more than simply increased use of powerful computers—it signals a revolution in lifestyles, institutions, and how resources are allocated.
Since the role of hidden violence in controlling resources will be greatly reduced, a new wealth structure will emerge without the government coercion that defined the twentieth century. Because location will matter far less in the Information Society, all organizations that operate within geographic boundaries rather than beyond them will become less influential. Politicians, labor unions, regulated professions, lobbyists, and governments themselves will hold diminished importance.
As government-granted favors and trade restrictions become less valuable, fewer resources will be wasted either seeking or resisting such lobbying efforts. Those who have used force and local advantages to redistribute income are destined to lose much of their power, fundamentally altering control over resources.
Private wealth that governments have previously seized will instead remain with those who create it. Growing amounts of wealth will flow to the most capable entrepreneurs and venture capitalists around the world.
Globalization and other features of the information economy will increase income for the most talented individuals in every field. Since exceptional performance will create enormous value, earnings distribution across the global economy will mirror what we already see in performance fields like professional sports and opera—where a small number of top performers earn vastly more than everyone else.
The Information Age has already transformed wealth distribution, particularly in the United States, contributing to the bitter divisions in modern American politics that we examine in the next chapter.
Success in the Information Age demands high levels of literacy and mathematical skills.
A comprehensive U.S. Education Department study, "Adult Literacy in America," revealed that as many as 90 million Americans over age fifteen lack basic competencies. As expatriate author Bill Bryson bluntly observed, "They couldn't find their way out of a paper bag."
Specifically, 90 million American adults were found incapable of writing a letter, understanding a bus schedule, or performing basic arithmetic—even with a calculator. Those who cannot decipher a simple bus timetable are unlikely to navigate the Information Superhighway successfully. This third of Americans who have failed to prepare for the electronic information world forms a pool from which an angry underclass is emerging.
At the opposite end of society sits a small group—perhaps 5 percent—of highly educated information workers and capital owners who are the Information Age version of the wealthy landowners who once ruled feudal society. The crucial difference is that today's elite are specialists in production, not specialists in violence.
AMMON'S TURNIP ⭐
In the late nineteenth century, several economists began developing mathematical economics, with William Stanley Jevons being the most distinguished in England. One of the first to apply probability theory to a major social question was German economist Otto Ammon, whose work was first translated into English by Carlos C. Closson in a 1899 Journal of Political Economy article entitled "Some Social Applications of the Doctrine of Probability."
While this might seem purely of historical interest, Ammon addressed an economic problem that is resurging today, and his approach remains stimulating. Otto Ammon argued that the random distribution of coin flips was matched by the distribution of human abilities. Writing before the development of intelligence testing and IQs, he relied on Francis Galton's earlier work on intelligence.
Ammon did not consider that social utility, or success in life, depended simply on intelligence. He identified "three groups of mental traits which are largely decisive in the place which a man will occupy in life."
These were:
- Intellectual traits: This encompasses all aspects of rational thinking—quick comprehension that allows rapid learning, strong memory for retaining and applying knowledge, sound judgment for making good decisions, inventive power for creating new solutions, and other cognitive abilities that form the foundation of mental capability. These traits determine how well someone can process information, solve complex problems, and adapt to new situations.
- Moral traits: These character qualities include self-control in managing impulses and desires, willpower to pursue long-term goals despite obstacles, industry in maintaining consistent effort, perseverance through difficulties and setbacks, moderation in avoiding excess, deep regard for family obligations and relationships, unwavering honesty in all dealings, and similar virtues that build trust and reliability. These traits determine whether someone can be depended upon and will honor their commitments. A brilliant mind without moral steadiness, he suggested, would often collapse under the weight of poor decisions or lack of discipline.
- Economic traits: This category covers practical business abilities including organizing talent for managing people and resources, technical skills relevant to one's field, appropriate caution in avoiding unnecessary risks, clever calculation of costs and benefits, foresight to anticipate future trends and needs, thrift in managing resources wisely, and other competencies that enable material success. These traits determine how effectively someone can create and preserve wealth.
To these mental traits he added:
- Bodily traits: Physical capabilities including the power to work long hours without fatigue, endurance for sustained effort over time, ability to handle physical and mental stress, resistance to various pressures and temptations, natural vigor and energy, robust good health that supports consistent performance, and other physical attributes that enable sustained achievement. These traits determine whether someone has the stamina to execute their plans consistently.
In Otto Ammon's view, the probable distribution of these qualities of intelligence, character, talent, and physical capacity were similar to those of a lottery drawing. He went further and argued that there were, in fact, many more than four variables, and that they varied across a much broader spectrum than simple categories suggest.
If instead of drawing from a small lottery, one draws from a lottery with millions of combinations, the highest possible outcome becomes extraordinarily rare—perhaps occurring only once in a million draws. The man or woman who scores very highly in all the factors that determine success in life is much rarer than simple probability would suggest.
Yet, Ammon notes, a mixture of high and low scores in these human qualities may produce "persons of unbalanced, inharmonious gifts, who, in spite of some brilliant qualities, cannot successfully meet the tests of life."
"Like a lonely mountain peak, or rather like the spire of a cathedral, rise the men of high talent and of genius above the broad mass of mediocrity… The number of the highly gifted is at all events so small that it is impossible that 'many' such exceptional individuals could have been held back in lower economic positions simply due to flaws in social institutions or lack of opportunity." — Otto Ammon ⭐
Traits and Incomes
Ammon then examined income distribution, finding patterns in German states and Charles Booth's London study that matched his probability theory. Booth found roughly 25% poor, 52% comfortable, and 15% well-to-do—with small minorities at both extremes (the "submerged tenth" at bottom, 7% at top). From this, Ammon concluded that abilities determine social position, and society resembles a "diamond shape" with most people concentrated in the middle class.
The Shape of the Diamond
Modern industrial societies indeed follow this diamond pattern, with a small wealthy and upper-professional class at the top, a larger middle class forming the bulk, and a minority poor class at the bottom. Relative to the middle, both extremes remain small. In modern London, there are certainly more millionaires than homeless people.
This analysis becomes particularly relevant given the major long-term shift we are experiencing in the financial and political relationships between the top and middle classes. The skills needed in the Factory Age, now ending, differ dramatically from those demanded by the Information Age. Most people could master the skills required for operating mid-twentieth century machines, but those jobs have been replaced by smart machines that essentially control themselves. An entire category of low- and middle-skill employment has already vanished.
If we are correct, this previews the disappearance of most traditional employment and the reconfiguration of work in the spot market. As Clive Jenkins and Barrie Sherman noted:
"Yet it is a fact acknowledged officially but quietly, that most of the unemployed youngsters have no qualifications whatsoever..."
The "qualifications" they reference are not merely traditional academic credentials, but the complex technical literacy, analytical thinking, and adaptive problem-solving abilities essential for thriving in an information-based economy where continuous learning and digital fluency have become prerequisites for economic participation.
Check out the first chapters I posted weeks ago:
