SECTION: Business; Part C; Page 1; Financial Desk

LENGTH: 1264 words

HEADLINE: THE CUTTING EDGE;
DIGITAL NATION;
INEQUALITY RUNS DEEPER THAN SKILLS GAP

BYLINE: GARY CHAPMAN
 

BODY:
      The "digital divide" has been back in the news recently--but, as usual, only briefly.

On July 8, the Department of Commerce's National Telecommunications and Information Administration released its latest
report in a series called "Falling Through the Net." This is an ongoing study of telephone, computer and Internet use in the U.S.
that can be viewed at http://www.ntia.doc.gov/ntiahome/digitaldivide.

In it, the government reported (using 1998 data) that 40% of U.S. homes have personal computers. However, the report
noted, "between 1997 and 1998, the divide between those at the highest and the lowest education levels increased 25% and
the divide between the highest and the lowest income levels grew 29%. Households with incomes of $ 75,000 or higher are
more than 20 times as likely to have access to the Internet than those at the lowest income levels and more than nine times as
likely to have a computer at home."

In other words, the disparities in access to computers and the Internet are growing.

The next day, President Clinton visited Watts, where he referred to the NTIA report and toured a federally funded technology
laboratory at Locke High School. He also discussed how a new coalition of technology companies, including Lucent
Technologies, America Online and AT&T, will help fund technology academies in economically distressed communities.

On July 12, the United Nations Development Programme released its 1999 "Human Development Report"
(http://www.undp.org/hdro/99.htm), which noted, among its many statistics, that the U.S. has more computers than the rest of
the world combined. The U.N. also found that more than 80% of Web sites are in English, and less than 1% of the world's
population reads this language. It was also reported that "the income gap between the richest fifth of the world's people and the
poorest fifth, measured by average national income per head, increased from 30 to one in 1960 to 74 to one in 1997."

The U.N. authors said that the price of a personal computer amounts to about a month's salary in the U.S., but eight years'
salary for the average person in Bangladesh.

The U.N. also reported that the combined fortunes of the world's 200 wealthiest people more than doubled between 1994 and
1998, to about $ 1 trillion. Other U.N. reports have claimed that 4% of this figure, spent annually, would provide the entire
world's population with adequate housing, food, health care, clean water and sewage systems.

The most common response to these grim statistics--the response of both our political parties and the majority of public
opinion--is that education and the development of skills, particularly computer skills, are the only answers to rising income
inequality. But that may be a delusion.

That's the argument my colleague at the University of Texas, professor James K. Galbraith, made in his 1998 book, "Created
Unequal." In the U.S., Galbraith wrote that we don't have a shortage of skills. What we do have, according to the subtitle of his
book, is a "crisis in American pay."

Galbraith observes that among economists, the near-universal explanation for increased inequality in the U.S. is the "skill
premium," or the price of skill in an increasingly high-tech economy. University of Michigan economist George Johnson says,
for example, that the economic literature shows "virtual unanimous agreement that during the 1980s, relative demand increased
for workers at the high end of the skill distribution and thus caused their relative wages to rise."

Workers with low skills or short educations suffered as a result. Ergo, the argument goes, increasing education and skill
development among the disadvantaged will improve their wage-earning prospects and thereby reduce inequality.
 
 

*

Challenging this assumption is economic and political heresy in the U.S. Galbraith writes, however, that "the skills-shortage
hypothesis--the idea that computers or other forms of skill-enhancing technology are mainly responsible for what has happened
to the wage structure--and the idea that education can cure the problem are, I believe, fantasies."

Galbraith calls these fantasies "comforting" because they lay the blame on workers themselves and "exonerate the state." No
one is against education or acquiring new skills. But these do little, Galbraith says, to change the growing stratification of
society.

An exclusive focus on education and training, such as we have in U.S. public policy, avoids the taboo of challenging the justice
of the wage structure itself. The simple fact is that most Americans are not paid well enough. In the U.S., education is a process
that sorts people on the inequality continuum, what Galbraith calls a "lottery ticket" that avoids questioning the odds of the
lottery itself.

Galbraith offers a lengthy discussion about why the computer is not to blame for income inequality. Inequality expanded a
decade before the widespread use of personal computers, he notes. Most workers in the U.S. already have basic computer
skills, but the majority have still seen their wages sink, relative to other groups and adjusted for inflation. If wages were tied to
technology-based productivity gains, blue-collar workers should have seen the greatest relative increases in wage income,
because manufacturing has enjoyed the most significant growth in productivity. But blue-collar wages have declined for 25
years.

The real blame, Galbraith argues, belongs to political policies that have favored the rich, especially those with interest income.
These began in the Nixon administration, were accelerated by Presidents Carter and Reagan and have been sustained in the
Clinton administration.

Galbraith points the finger at the Federal Reserve, in particular, for keeping real interest rates high to appease wealthy creditors
and at the business and financial class for pushing policies--successfully--that have essentially annihilated the social contract of
the New Deal. This is all obscured by our current fetish for education and training, a form of the growing public sentiment that
it's "every man for himself" in what conservative writer Edward Luttwak calls, pejoratively, the era of "turbo capitalism."

All of this puts advocates of greater equality in a tough spot. Poor communities like Watts and other inner-city poverty zones
definitely need computers and Internet training. It takes enormous energy both to persuade the public that such investments are
worthwhile and in the public interest and to sustain such efforts. This is the only "solution" on the political agenda these days,
and it can change individual lives, offering an exit from poverty and ghettos.
 
 

*

But the real solution to income inequality in the U.S. cannot be the happy-face prescription that we should all become computer
nerds. Even Silicon Valley tycoons need people to wash their clothes, fix their cars, run cash registers and take care of and
educate their children. Those people need a living wage too.

Inequality is the root of nearly all of our problems in the U.S.: corrupt money politics, social polarization and class segregation,
family breakdowns, crime, fin-de-siecle decadence and a stifling and depressing feeling that we've lost our way as a nation.
Computer skills, although very important for everyone, are not the answer. It will take moral courage to "speak truth to power"
to really change things.
 
 

*

Gary Chapman is director of the 21st Century Project at the University of Texas at Austin. He can be reached at
gary.chapman@mail.utexas.edu.

LANGUAGE: English

LOAD-DATE: July 19, 1999