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Business Management

Tech's Voice of Dissent: Jerry Kaplan scolds US inequality

About 25 years divide my first and third phone calls with Jerry Kaplan. I interviewed him circa 1990/1991 when he was CEO of Go Corp., the maker of the PenPoint operating system for stylus-controlled computers - a device model recently reinterpreted by Apple. The second was when I called him up shortly afterwards on his home phone number without thinking about the time difference: it must have been three or four in the morning but he took it with good grace.

Fast forward to late 2015 and we’re talking again over a transatlantic phone line, this time about his new book Humans Need Not Apply, a highly readable, if alarming, account of the progress of artificial intelligence and its potential effects on society.

Trying to bridge the quarter-century between chats and his life back then as leader of one of the most scrutinised startups of its time and now as thinker/author on tech/society, I ask about today’s environment for entrepreneurs.

“The process by which companies get started has certainly been streamlined,” he says. “The barrier to entry has gone down. Technology has continued to evolve very rapidly. You don’t need as much knowledge or as many technology skills. There’s been so much attention [on new potential for technology] that it’s attracting people from all around the world. It’s like the replay of the gold rush: people pan for gold and a very, very small number [get rich].”

 

An elite cadre

This takes us quite effectively into Humans Need Not Apply. As well as positing various possible outcomes in a world where “synthetic intellect” based on algorithms, machine learning and so on has changed the nature of business and employment, the book is also a critique of the way an elite cadre of the super-rich can do pretty well anything they like while many Americans have highly restricted opportunities in life.  

“The fundamental problem I see is there’s an assumption that all these technologies are an unmitigated good and valuable for society, but the truth is societal goals are not well aligned with the technology.”

Kaplan says that citizens and decision makers are not adequately aware of what technology might do to US society and jobs and he argues that today “benefits accrue to a small group of people who are already wealthy”. This sliver of people at the top of the tree can for example get preferential access to low-risk investment opportunities so wealth concentrates while with “a great sucking sound” the middle class is “hollowed out” and America becomes bifurcated between “rich people and everybody else”.

One example: a rich person starting up a new venture can borrow at under a two per cent interest rate while a credit-card borrower would pay a large multiple of that rate.

Somewhere along the line there has been “a definite shift to rules and regulations that benefit the wealthy” with financial deregulation and the reluctance of Government to intervene, leaving the economy open to tremors and shocks. This, together with the march of automation replacing human beings, makes for a very dangerous time, Kaplan says.

 

Minority reporter

I suggest that as a serial technology entrepreneur domiciled in California he must find himself in something of a minority position.

It seems so. Kaplan says there has arisen “a false mythology” where, like tourists visiting Las Vegas, the pervading message is that anybody can get rich, whereas in reality the odds are loaded.

But the plutocrats, princes, tycoons and magnates of Silicon Valley are smart people, I suggest. Don’t they see things the same way?

“I do interact with a lot of wealthy people - all the time I’m sorry to say - and people’s ability to colour their views to suit their own self-interest and delude themselves with a false narrative and [ignore what is] in front of their noses is quite remarkable,” he says.

“Everyone will privately agree that there’s a lack of class mobility but can’t quite square that with their political views and wanting to support the policies and people that will support their personal interests.”

So, this elite: it’s the CEOs of the world’s biggest companies, right? But didn’t leaders like Steve Jobs and Larry Ellison come from humble backgrounds? However, it’s not so much the CEOs that worry him; he’s thinking more about the VCs, financiers and startup incubator owners.

“It’s not the entrepreneurs. Those are not the rich people around here and that’s the dirty little secret. It’s those in the finance business making the pick-axes and tools that the gold miners use. You don’t get that money by working. You make that money mostly by taking other people’s money and investing it in the projects of other people. Where do new financiers come from? The answer is primarily from rich parents and the second group is people who get lucky.”

 

The great American myth

And it’s not just the upper, upper echelons that buy into a “broad mythological narrative”, he says.

“Just look at some of the idiocy that goes on in the US today. The public mind becomes delusional. There’s a group of people who rail mightily against the national debt. That sounds sensible until you realise the problem is not the amount of money being borrowed, it’s servicing the debt.”

In fact, he says, interest rates today should see Government investing to improve infrastructure and services but “a logical fallacy is used as cudgel to beat back government regulations”.

It sounds like the reverse of the American dream.

“There’s a group of people who can do whatever they want and to all practical purposes for free ... The have-nots can vote but our political system isn’t representative of the interests of the bulk of the population.”

And so while the richest find ways to hide their wealth and increase it, the paupers are left to be consoled by with “Horatio Alger poster boy stories” of rags-to-riches chances to ascend the pecking order.

If this sounds like bitterness, it’s as well to realise that Kaplan writes in the book about his own home, with its projection rooms, wine cellar, suites and dual outdoor sound systems, in enough detail to make most of us envious. And yet, he writes, he is still not in the top one per cent of America’s wealthy.

His answer is to reverse policies so that the “very, very bright” future for US business leads to lead to something approaching equality of opportunity.

In Humans Need Not Apply, Kaplan lays out a full hand of practical ways to make America more open, inclusive and equitable. When I speak with him he doesn’t sound overly optimist that the times they are a-changin’ any time soon though.

The people at the apex of the American pyramid are almost always from privileged backgrounds, he says, and “the policymakers talk to the rich people, it’s that simple”.

In an America where the can-do spirit remains celebrated, ultra-conservatism appears to be asserting itself, and where most technology business leaders seem to think that the best thing Government can do is keep taxes low, relax visa rules and otherwise keep out, Kaplan can sound like a voice in the wilderness, shouting out unpalatable thoughts. I do hope though that he and his book gain a wide audience.

 

Related reading:

Review: What an untrammelled AI world might bring

Upset by America but unbowed, Scott McNealy still rages

Ethernet inventor Bob Metcalfe still rings the changes

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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