Inequality can spur progress

May 24, 2013 at 9:43 am Leave a comment

I went to a conference a few weeks ago where I had the pleasure of listening to Sir Richard Branson speak. One of the points made (actually raised by a member of the audience) was that economic inequality can fuel innovation. In other words, it may be a necessary evil that most innovations first benefit those who are better off economically.

One of the first innovations that came to mind is the widespread use of cell phones. When cell phone technology was invented, it was as bulky as a suitcase and so pricey that it only made sense for the busy businessperson who needed to be in touch with important clients. Right now, a cell phone is such a commodity that even in a country as poor as Haiti, just about everyone has one or sometimes more. More importantly, this technology that started out being affordable to only the wealthiest in the western world is now helping countries like Haiti skip the need for a dinosaur technology called landlines as well as the costly infrastructure associated with it.

As I am writing this post, I’ve been scratching my head to think of a technology that started out among those at the lower end of the socioeconomic scale and then went on to be adopted by the masses. I can think of none. Technology and innovation seem to always emerge for the privileged. Then, with competition prices come down or cheaper versions of the product are made available to others.

Conversely, I think the failure to recognize that the poorest will not be the early adopters of a new product or technology can stifle progress. This is a problem in developing countries such as Haiti where NGOs and institutions encourage services to be developed for those who are less able to pay. These NGOs and institutions mean well, but in their idealism I’m afraid they often do not realize that their model may not be sustainable.

Take, for example, a clinic offering free services. Along with the services of that clinic being free come long lines, shorter time per patient, and lower overall quality of service. Alternatively, imagine that there is another clinic in which patients have to pay for service. In the paid clinic, there is better décor, shorter wait times, and working air conditioning. What is bound to happen is a) there are people who can pay for the service and will make the economic decision that the added value of the paid clinic is worth the price; and b) there are people who can barely pay for the services and will make sacrifices in other areas to go to that paid clinic.

In the US, we recognize that although everyone needs access to certain services such as education or healthcare, society does not have a moral obligation to ensure that everyone is receiving the same level of service. Do we expect public schools to offer the same level of education as a private school with tuition of $50,000 per year? That kind of tuition likely translates in student teacher ratio of 10 to 1 and class offerings in Latin or Greek. Similarly, you are likely to see a huge difference between a visit to a community clinic in a rural area and a private doctor’s office in the suburbs.

Is it fair that the clinic offering concierge medicine to an upper class clientele is different than the community clinic offering indigent care? I think in the US we have come to accept that fairness does not necessarily mean necessarily equality and instead a minimum level of access or standard. We should not seek to push a utopian model, where fairness means everyone has access to the same level of service, on developing countries.

Entry filed under: Uncategorized.

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