Since this part of the issue is blowing up I thought I’d address it. At his blog Tyler says defends median rather than mean income:
Kindle eBooks are themselves a good example. It’s a real improvement for a lot of us — especially travelers — but even the median reader, much less the median American, doesn’t have a Kindle or buy eBooks. As I argued in The Age of the Infovore, the big gains of late have gone to the extreme information-processors.
I’ve seen in the MR comments (and elsewhere) a lot of anecdotal comparison of recent gains vs. earlier gains in technology. Don’t we now have this, don’t we now have that, and so on. Of course. Median incomes have risen somewhat. But, when it comes to the average household, the published numbers for median income are adding up and trying to measure those gains and it turns out their recent rate of growth really has declined.
Okay, but this doesn’t quite jive with the point that the book overall seems to be making.
If the idea is that we have been making innovation gains but that they have only benefited the infovores then that’s just another way of saying that we have skyrocketing inequality.
Properly measured price indices for different preference and endowment sets would show that real incomes for the infovore class are soaring while incomes for everyone else are declining.
This is just another way of saying that the middle class is being left behind. The obvious solution is to tax the inforvores. You reduce their utility and use those resources to help the lower class.
Now there might be some problems with figuring how to optimally tax away the utility of this class but I don’t think that’s that big of a technical issue, though it could be a big political issue.
Just as a preview you don’t necessarily have to tax information itself, to tax infovores. You just want to design a tax system that incentivizes infovores to devote more of their time to producing traditional resources, which you then transfer to the middle class, and less of their time soaking up knowledge on the internet.