P1The power and ambition of the giants of the digital economy is astonishing—Amazon has just announced the purchase of the upmarket grocery chain Whole Foods for $13.5bn, but two years ago Facebook paid even more than that to acquire the WhatsApp messaging service, which doesn’t have any physical product at all. What WhatsApp offered Facebook was an intricate and finely detailed web of its users’ friendships and social lives.

P2Facebook promised the European commission then that it would not link phone numbers to Facebook identities, but it broke the promise almost as soon as the deal went through. Even without knowing what was in the messages, the knowledge of who sent them and to whom was enormously revealing and still could be. What political journalist, what party whip, would not want to know the makeup of the WhatsApp groups in which Theresa May’s enemies are currently plotting? It may be that the value of Whole Foods to Amazon is not so much the 460 shops it owns, but the records of which customers have purchased what.

P3Competition law appears to be the only way to address these imbalances of power. But it is clumsy. For one thing, it is very slow compared to the pace of change within the digital economy. By the time a problem has been addressed and remedied it may have vanished in the marketplace, to be replaced by new abuses of power. But there is a deeper conceptual problem, too. Competition law as presently interpreted deals with financial disadvantage to consumers and this is not obvious when the users of these services don’t pay for them. The users of their services are not their customers. That would be the people who buy advertising from them—and Facebook and Google, the two virtual giants, dominate digital advertising to the disadvantage of all other media and entertainment companies.

P4The product they’re selling is data, and we, the users, convert our lives to data for the benefit of the digital giants. Just as some ants farm the bugs called aphids for the honeydew they produce when they feed, so Google farms us for the data that our digital lives yield. Ants keep predatory insects away from where their aphids feed; Gmail keeps the spammers out of our inboxes. It doesn’t feel like a human or democratic relationship, even if both sides benefit.

P1It is true that CEO pay has gone up—top ones may make 300 times the pay of typical workers on average, and since the mid-1970s, CEO pay for large publicly traded American corporations has, by varying estimates, gone up by about 500%. The typical CEO of a top American corporation now makes about $18.9 million a year.

P2The best model for understanding the growth of CEO pay is that of limited CEO talent in a world where business opportunities for the top firms are growing rapidly. The efforts of America’s highest-earning 1% have been one of the more dynamic elements of the global economy. It’s not popular to say, but one reason their pay has gone up so much is that CEOs really have upped their game relative to many other workers in the U.S. economy.

P3Today’s CEO, at least for major American firms, must have many more skills than simply being able to “run the company.” CEOs must have a good sense of financial markets and maybe even how the company should trade in them. They also need better public relations skills than their predecessors, as the costs of even a minor slipup can be significant. Then there’s the fact that large American companies are much more globalized than ever before, with supply chains spread across a larger number of countries. To lead in that system requires knowledge that is fairly mind-boggling. Plus, virtually all major American companies are becoming tech companies, often with their own research and development. And beyond this, major CEOs still have to do all the day-to-day work they have always done.

P4The common idea that high CEO pay is mainly about ripping people off doesn’t explain history very well. By most measures, corporate governance has become a lot tighter and more rigorous since the 1970s. Yet it is principally during this period of stronger governance that CEO pay has been high and rising. That suggests it is in the broader corporate interest to recruit top candidates for increasingly tough jobs.

P5Furthermore, the highest CEO salaries are paid to outside candidates, not to the cozy insider picks, another sign that high CEO pay is not some kind of depredation at the expense of the rest of the company. And the stock market reacts positively when companies tie CEO pay to, say, stock prices, a sign that those practices build up corporate value not just for the CEO.

P1In her new book Cogs and Monsters: What Economics Is, and What It Should Be, Diane Coyle, an economist at Cambridge University, argues that the digital economy requires new ways of thinking about progress. “Whatever we mean by the economy growing, by things getting better, the gains will have to be more evenly shared than in the recent past,” she writes. “An economy of tech millionaires or billionaires and gig workers, with middle-income jobs undercut by automation, will not be politically sustainable.”

P2Improving living standards and increasing prosperity for more people will require greater use of digital technologies to boost productivity in various sectors, including health care and construction, says Coyle. But people can’t be expected to embrace the changes if they’re not seeing the benefits—if they’re just seeing good jobs being destroyed.

P3In a recent interview, Coyle said she fears that tech’s inequality problem could be a roadblock to deploying AI. “We’re talking about disruption,” she says. “These are transformative technologies that change the ways we spend our time every day, that change business models that succeed.” To make such “tremendous changes,” she adds, you need social buy-in.

P4Instead, says Coyle, resentment is simmering among many as the benefits are perceived to go to elites in a handful of prosperous cities.

P5According to the Brookings Institution, a short list of eight American cities that included San Francisco, San Jose, Boston, and Seattle had roughly 38% of all tech jobs by 2019. New AI technologies are particularly concentrated: Brookings’s Mark Muro and Sifan Liu estimate that just 15 cities account for two-thirds of the AI assets and capabilities in the United States.

P6The dominance of a few cities in the invention and commercialization of AI means that geographical disparities in wealth will continue to soar. Not only will this foster political and social unrest, but it could, as Coyle suggests, hold back the sorts of AI technologies needed for regional economies to grow.

P7Part of the solution could lie in somehow loosening the stranglehold that Big Tech has on defining the AI agenda. That will likely take increased federal funding for research independent of the tech giants.

P8A more immediate response is to broaden our digital imaginations to conceive of AI technologies that don’t simply replace jobs but expand opportunities in the sectors that different parts of the country care most about, like health care, education, and manufacturing.