Wealth inequality today in the United States
There’s been a significant hubbub about wealth inequality in the United States in the past few years, with various politicians and financial media discussing the issue.
The issue has seemingly struck a nerve with many Americans; more than 1.7 million live viewers watched Vermont Senator Bernie Sander’s town hall on economic inequality. Townhall events don’t get that many views ever, except for presidential nominee debates. So what’s going on here?
In my view, American citizens are beginning to realize how much more of an issue economic inequality is becoming. Market Watch reports that the top 1% of Americans haven’t controlled as much wealth as they do since before the great depression. Let’s take a look at some of the numbers.
In 2015, the top 1% of Americans took home 22% of all the income in the country. In comparison, right before the Great Depression hit the top 1% of Americans took home 23.9% of all income.
Meanwhile, top CEOs of tech companies continue to accumulate significantly more and more wealth. Jeff Bezos reportedly is personally worth more than $100 billion. It’s highly possible that within the next 50 years Jeff Bezos or another tech CEO of a publicly traded company could become the world’s first trillionaire (an amount so large that even my word processor marks “trillionaire” as not a real word).
That’s not to say that Amazon and other large tech companies haven’t been a significant positive utility to people’s lives (although exactly how much is difficult to quantify). I’m also not saying that all wealth inequality should be eliminated. That’s what occurred in Venezuela, where everybody is equal. Equally poor.
There will always be some level of wealth inequality — some people simply work harder, some people are more intelligent than others, some people are better at learning, some people are better at running businesses, some people stumble into luck, etc.
My thesis is simple. I believe that biotechnology will lead to an unprecedented amount of wealth inequality in the United States, unless biotechnology is regulated. The rest of this essay will explore why I believe this, steps that can be taken to prevent such a scenario from happening, and final thoughts.
How biotechnology can lead to massive wealth inequality
Image from Pexels
So how does biotechnology play a factor in possibly leading to unprecedented levels of wealth inequality? Let’s take a look at what is happening in the world of biotechnology, and what it will likely look like in the next 50 years. I’ll examine two factors of biotechnology: gene editing and general human longevity.
For gene editing, I’m going to focus on the most recent development: CRISPR. Crispr stands for Clustered Regularly Interspaced Short Palindromic Repeats, and it is a gene editing technique that has gotten a significant amount of press over the past few years. CRISPR can be used to change any chosen letter in the DNA of an organism.
That all sounds good in theory, but what does this look like in practice?
There’s strong evidence that certain human traits such as intelligence and strength can be attributed, at least in part, to genetics. For example, the myostatin gene put a limit on muscles growth by limiting the size and number of muscle cells within a certain range. Deletion of this gene causes hyper-muscularity.
A boy was found without myostatin, and was found to have superhuman strength: at 4.5 years old he could hold 3kg dumbbells with his arms straight out to his sides.
It’s not out of the realm of possibility within the next 10 to 20 years of scientists using CRISPR to remove the myostatin gene from humans to deliberately cause muscle growth.
Now imagine that a CRISPR solution is created to edit the DNA of an embryo so that, when the person grows up, that person is guaranteed to be hyper-intelligent (>130 IQ) and hyper-muscular due to removal of the myostatin gene.
Likely this will only be available to the rich in the beginning due to how much is involved. Let’s say at first it costs $50,000 for a person to reliably do this to an embryo. That means only people who have that much money saved or more will be able to use CRISPR to edit their children’s genes to create innate genetic advantages in them. People in third-world countries will simply not be able to afford this.
This will likely cause the gap between people in first-world countries and third-world countries to widen, as well as increase the gap between those in poverty and the top 1% in the United States.
In the future, It’ll be nearly impossible for a child born in a poor family to compete in entering universities or the job market when his competition consistently has an IQ that is 30 points higher than his and can memorize information and recognize patterns much more quickly.
In sports, these poor children will also not be able to compete because the competition will consistently have a significant advantage to the removal of the myostatin gene, causing a level of muscle growth that is impossible for a person with the myostatin gene to compete with. This means children from richer families will be more likely to get scholarships in universities for sports such as Football or running.
Let’s now look at the longevity aspect of biotechnology, which I believe wil also play a role in increasing wealth inequality. Scientists now believe that it will soon be possible, through biotechnological innovations, to extend a person’s lifespan beyond 120 years old. Calico is a company created by Google that aims to “devise interventions that enable people to lead longer and healthier lives”.
Again, this longevity solution will likely be costly in the beginning. Let’s say in the next 10 years it costs $50,000 to be able to consistently and reliably increase a person’s lifespan by 30 years. The person will be able to continue to work within that additional 30 year time-period.
Bob and Joe: A thought experiment
I’ve given an overview of what biotechnology will be capable of. Let’s look at some hard numbers to see how this will look like in terms of actual wealth. I’ll explore this through the parable of two men: Bob and Joe.
Bob did not have his DNA edited through CRISPR because his parents could not afford it. As a result, Bob has an IQ of 100, normal muscle growth, and a life expectancy of 75 years (the average life expectancy of a male in the United States today). Bob can reasonably work well up to age 65.
Joe, meanwhile, did have his DNA edited with CRISPR because his parents could afford it. His parents spent $100,000 to have his DNA edited as an embryo, and now Joe has an IQ of 135, has unparalleled levels of muscle growth, and a life expectancy of 105. Joe can reasonably work well up to age 95.
Both Bob and Joe begin consistently working and investing in a stock market index fund for the S&P 500 at the young age of 25. Over the past 90 years the S&P 500 has had an average annual return of 10%, so I’ll use that for my calculation.
Bob makes $65,000/year in construction and can consistently put away $1,000/month into the index fund for 40 years until he becomes too old to work. Joe, meanwhile, makes $130,000/year as an investment banker (which he has access to due to his pattern recognition and memorization abilities) and can consistently put away $2,000/month into the index fund for 70 years. Let’s see how this plays out (you can put the numbers HERE if you want to verify them):
Bob, 65 years old
By the time Bob is old enough that he can’t consistently work anymore, he will have $5.8 million. Not bad.
Joe, 65 years old
At the same age that Bob retires, Joe will still be able to continue working at full capacity. At 65, Joe has $11.6 million
Bob, 95 years old
Bob won’t live to be this long, and there’s a very high probability that he will be dead by the age of 75 or before.
Joe, 95 years old
Joe is now getting to the point where he can’t consistently work like he used to. He still has at least another 10 years ahead of him that he can look forward to. Joe has consistently been putting away $2,000/month into the stock market for 70 years. At the ripe old age of 95, Joe will have…$208.2 million.
It doesn’t take a genius to see the vast difference between $208.2 million and $5.8 million.
These numbers are, of course, idealized. It’s not guaranteed that the S&P 500 will return 10% annually over the next 100 years. Maybe Bob works until 70 instead of 65. But the overall point still stands: biotechnology will provide a significant advantage to the already wealthy in the United States and will likely widen the wealth gap. Bob is a stand-in for the middle class person in the United States, and Joe is a stand-in for the wealthy.
In fact, it’s highly likely that I’m radically underestimating the end results. Say, for example, that because of Joe’s intelligence he can consistently get an 11% annual return over 70 years instead of 10%. That extra 1% difference will lead to an end amount of $360.1 million, $160 million more than before.
It’s not difficult to see how this, playing out over several generations, can lead to massive amounts of wealth inequality. The gap will grow largest, however, between first-world countries and third-world countries. For them, it’ll be nearly impossible to compete in the global marketplace in a future where almost all of manufacturing is automated, jobs require an increasing amount of cognitive ability, and your competition not only has significantly more money but also a significantly higher cognitive ability than you do.
What to do about it?
Hopefully I’ve demonstrated how, over only a few generations, innovations in biotechnology can lead to an ever widening gap in wealth inequality. Now you’re thinking, what is there that can be done about this potential future problem?
There are several ways that we can avoid the massive wealth inequality through biotech scenario. Note that this is by no means an exhaustive list.
Regulating use of gene-editing technology
If, in the future, parents can use CRISPR to grant their children superhuman abilities it will likely cause an uproar among people who are not able to afford this. One step that should be taken is regulating the use of biotechnology so that it cannot be used to provide massive inherent unfair advantages to a child, such as a guaranteed high IQ or guaranteed 150 year lifespan.
Of course, there is also some difficulty in defining what exactly will lead to a massive inherent unfair advantage or not. In the future CRISPR will likely be able to completely cure genetic diseases such as sickle cell anemia, cystic fibrosis, and others.
Is it an unfair advantage if some parents can guarantee that their child will never have a genetic disease and others can’t because of the cost? These are the questions that we will have to grapple with in the future.
Quickly lowering the costs of biotech innovations
If biotechnological innovations, such as increasing lifespan or guaranteeing no genetic diseases, are incredibly cheap then there is not as much of a need to worry about certain people getting inherent advantages and others don’t. If it costs, say, $500 to apply gene-editing to guarantee inherent advantages to a child a majority of people in the United States will be able to use this.
There are several ways that this can be achieved. The first way is through research and development so that the costs go down over time. Perhaps scientists find a way to make it so that gene-editing method to guarantee no diseases is incredibly cheap.
Another possible way to lower costs is for the national government to subsidize the costs of gene-editing. It is in a nation’s best interest for its citizens to have advantages over other countries, so this option is not off the table. However, there will likely be a ferocious debate about whether the government should be involved in financially supporting the biotech industry, or (either implicitly or explicitly) endorsing the industry.
Final thoughts
Hopefully you begin to realize the massive disruptive impact that biotechnology could have in the future. We should aim to limit the potential negative effects of biotechnology, while at the same time allowing innovation to occur. Biotechnological innovations will offer many benefits to people, and we should ensure that everybody has access to these innovations and not just a select few group of people.