The haves and the have nots

The wired will be the winners, at the expenseof the unwired

ANINTERESTING chart jumped out at me from the pages of the New York Times the otherday. It ranked six countries according to the distribution of income. Ofthe six, Britain was ranked most equitable, Brazil the least and theUnited States came about halfway in between.

ANINTERESTING chart jumped out at me from the pages of the New York Times the otherday. It ranked six countries according to the distribution of income. Ofthe six, Britain was ranked most equitable, Brazil the least and theUnited States came about halfway in between.

The chart's numbers camefrom the World Bank and the United Nations, and compared how the richestfifth of the population compared with the poorest fifth. In Brazil, itfound that the richest quintile command over 64 per cent of the nation'swealth, versus a mere 2.5 per cent for the poorest. The UK figureswere respectively 39.8 per cent and 7.1 per cent, while the USnumbers were 45.2 per cent and 4.8 per cent.

That a deep gulfbetween rich and poor often leads to social strife was perhaps well illustratedby the subject of the accompanying article - the great success being reapedin Brazil by companies that fit out cars with armour plating.

Anothercountry on the list, Mexico, has a wealthiest quintile that controls morethan 58 per cent of its wealth, with only 3.6 per cent in the hands ofthe poorest fifth. I have yet to visit Brazil, but I have been to Mexicoon several occasions. Mexico City writhes with a palpable tension thatI've experienced in few other places. Heavily armed guards stand outsideof banks, stores and the residences of the rich. Crime has risen sharplyin Mexico City in recent years, and some Mexican states have districts thatare on the verge of revolution. Car armourers find plenty of customers inMexico, too.

So how, I wonder, will the Internet affect thedistribution of wealth on this planet? The Net, after all, issupposed to be a great leveller, giving everyone, in theory, an equalvoice. Unfortunately, at this stage of the game, I think just theopposite is true. The Net is going to skew things the other way,wildly.

The problem is that you have to have a computer to get on theInternet, and while there are some 100 million computers online as you arereading this, that figure represents only 1.6 per cent of the people onthe planet. Even the least expensive Palm Pilot or ancient 386 PC is waybeyond the means of people in the poor quintiles in mostcountries.

Indeed, literacy is beyond the means of most of theworld's poor, so even if Bill Gates were to use his entire fortune toequip every world household with, say, a new PC, it wouldn't domuch good. Billions of people wouldn't be able to read the hyperlinks onWeb pages, or their e-mail; much less flame the newbies in chatrooms.

So the world has the possibility to go from worrying about therichest fifth to worrying about the richest 1 or 2 per cent. And it's alltoo possible that such a tiny fraction of the population could begin to amasswealth at a far greater rate than their luckless, and unwired,neighbours.

The reasoning goes something like this: while far too muchis made of computers' "usability", networked computers arenevertheless beginning to convey real and measurable benefits upon theirusers.

Take a simple example: trading shares on the stock market.Once that required part of a day, say an hour, to travel to thebroker's, place the order, do the paperwork and maybe make a trip tothe bank. Today, online stock brokerages can accomplish the same thing inabout a minute. That means that the online customer can accomplish somethingabout 60 times more efficiently than an unwired investor. Indeed,day-trading in stocks has drawn a growing of investors who work at it fulltime.

If the wired segment of society begins to realise such hugeproductivity gains, it stands to reason that they will begin to amass wealthmuch faster than those who don't have access to such tools. It's truethat computers confer such efficiency imperfectly: some activities benefitlittle from computers and networks, and computer crashes can turn a simpletask into a nightmare, for a net loss.

But if a wired individualrealises gains only some of the time, then it makes sense that he or she willfare better over time than his or her unwired peers, all other things beingequal. Larger gains equate to greater wealth which equates to better tools- more bandwidth, better computers, and so the spiralstarts.

Today, 8 per cent of California's population creates 42 percent of the state's wealth, and, yes, those 8 per cent live inSilicon Valley. Boy, are they wired, and boy, are theyrich.

Compare a resident of Sao Paolo's slums with a denizen of PaloAlto's mansions: a day's work for the Palo Altan may bring morewealth than a lifetime's labour for the Sao Paolan, and the trend is nottoward greater equity.

And, to be sure, this is more than just anissue of computer ownership. Nevertheless, it's already happeningthat small numbers of people are cornering ever larger proportions of theworld's wealth, while others, mired in poverty and illiteracy,fall daily farther behind.

And unless the wealthy and fortunate make aconcerted effort, there's hardly anything on the horizon to suggest thatthings will change. Cheaper computers may help a little, but even pounds100 machines would be out of reach of most people in the world, not tomention the barriers of illiteracy and culture.

So what's the easyanswer? Maybe a wireless, £1 machine that was fluent in anylanguage would help. While we're waiting for that breakthrough,though, it might be wise to pick up some car armourer shares. Online,of course.

cg@gulker.com