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The New Monopolists

While innovations in information technology have transformed how people live, work, and connect, the IT industry's growth pattern has contributed to a widening gap between rich and poor. Addressing it will require new taxation schemes and modernization of antitrust legislation.

STANFORD – For more than 30 years in advanced economies, particularly the United States, wealth and income inequality have increased, real (inflation-adjusted) wages have risen slowly, and retirees have faced declining interest rates on savings. This has occurred while corporate profits and stock prices have risen sharply. Now, research I have conducted shows that these changes were primarily caused by the rise in modern information technology (IT).

IT has impacted the economy in myriad ways; the computer, the Internet, and mobile technology have transformed media, online retailing, the pharmaceutical industry, and countless other consumer-related services. IT has improved life enormously.

But, by enabling the rise of monopoly power, and by facilitating barriers to entry, the growth of IT has also had major negative economic, social, and political side effects, including the proliferation of “fake news.”