It has a finger on the long term trend of decreasing relevance for labor and increasing relevance for capital as factors of production, but it's certainly not a metric I'd choose and that's why I tried so hard to steer towards something better.
One can imagine a world where productivity increases, the need for old jobs is reduced, but newer, better jobs more than replace them because the economy is experiencing genuine growth. Self-serving capital rhetoric will push you to always imagine it this way, self-serving labor rhetoric will push you to never imagine it this way, but good policy lies in figuring out what's actually happening in aggregate and responding accordingly (the framing I tried to push).
It's not productivity itself; it's the decoupling of productivity from wages. If I'm creating 3 times as much value as my equivalent in 1970, why aren't I getting paid 3 times as much inflation-adjusted money, hmm? It's not even unfair to shareholders - they'd also get 3 times as much as in 1970. But instead they get 10 times as much and I get 0.7 times as much, or something like that. What's the deal?
> If I'm creating 3 times as much value as my equivalent in 1970, why aren't I getting paid 3 times as much inflation-adjusted money, hmm?
Because that increase in productivity comes almost entirely from technology owned by your employer.
To look at it in a contrived example, let's take textiles. There is a textile factory employing weavers who weave fabric by hand, and the factory owners buys a new automated weaving machine that makes the weavers each 3 times more productive. The maker of the machine created the technology, and is paid for it, the owner of the factory made the investment to bring the technology, and profits from it.
This is basically exactly what has happened to modern productivity.
Except in technology where the gains come from my personal investment in skills. I'm spending hours every week keeping up with the field of software engineering. I've been investing in learning my craft since I was 14 or so.
I'd argue the same goes for many types of digital creators, artists, video editors, animators, and so forth.
> Except in technology where the gains come from my personal investment in skills.
Not really. That's essentially a weaver learning to use the new automated weaving machine. That is what you do to remain qualified for the job. Now, if you were a framework or key system creator, building the underlying platforms that get adopted throughout the industry, I would agree. But just learning to use the tooling the the industry creates isn't that different, other than the rate of change you have to keep up with.
A weaver who knows how to use an automated weaving machine produces 3 times as much cloth as one who doesn't, so why don't they get paid 3 times as much? This is the problem of the decoupling of productivity and wages. It started happening at precisely the moment the gold standard was ended - weird.
> A weaver who knows how to use an automated weaving machine produces 3 times as much cloth as one who doesn't, so why don't they get paid 3 times as much?
An automatic weaving machine, operated by a capable operator, produces 3 times as much as a manual weaver. The productivity increase is the machine, not the operator. That's my entire point.
The owner of the machine reaps the surplus, not its operator.
> This is the problem of the decoupling of productivity and wages. It started happening at precisely the moment the gold standard was ended - weird.
You'll get no argument from me about the ills caused by the financialization of the economy, but I don't think that's what's going on here.
>>A weaver who knows how to use an automated weaving machine produces 3 times as much cloth as one who doesn't, so why don't they get paid 3 times as much?
> An automatic weaving machine, operated by a capable operator, produces 3 times as much as a manual weaver. The productivity increase is the machine, not the operator. That's my entire point.
An automatic weaving machine operator, operating a capable machine, produces 3 times as much as the lack of a machine operator. The productivity increase is the operator, not the machine. That's my entire point.
What's different between what I just said and what you just said? Nothing. In fact they can both be true. Both parties can get 3 times as much money as they did previously. Why don't they? Why does one party get 10x and the other party get 0.7x?
If productivity increase is entirely caused by machines, why did it take until 1971 for wages to decouple? The reality is that both workers and owners would like their share to be as high as possible. In 1971, however, owners seized control of the money printer and they never let it go since then.
> Both parties can get 3 times as much money as they did previously.
Increased productivity shifts
the supply curve which will (unless demand has zero elasticity, which is unrealistic) lower the market price of the good. So tripling productivity does not triple the amount of revenue per hour worked.
> Why does one party get 10x and the other party get 0.7x?
Because the people purchasing labor (capital) are able to get the labor they need at that price. Automatic weaving machine operators are trainable, and if they were getting paid 3 times what weavers were paid then people would rush into that space, driving down labor prices—in other words, the supply of automatic weaving machine operators has high elasticity. The demand for automatic weaving machine operators (i.e. the supply of factories full of automatic weaving machines) has much lower elasticity, so capital (demand for labor) gets most of the economic surplus.
It comes down to the capital owners owning the money printer. And nothing else.
I'm aware of a few attempts to create a labour-owned money printer (using the ideas of cryptocurrency) but none that are getting off the ground. Bitcoin is not one - it was a good idea to try, but it got captured by capital just the same as fiat money did.
You can grasp for vague conspiracy theories about “the money printer”, or you can sit down and think about the concrete factors that make demand for labor (i.e. capital investments in buildings and equipment) less elastic than supply for labor. Here are a few:
- It’s fundamentally more difficult to raise and organize millions of dollars to build a factory and fill it with automatic weaving machines than it is for someone to train for a few weeks to become an automatic weaving machine operator.
- Various government regulations, from environmental protections and zoning laws that make it harder to build factories to safety regulations for operating factories, make it harder to open new factories and so decrease the elasticity of labor demand. I want to be explicit here that I am not saying these regulations are bad—but we must recognize the side effects they have.
- Long lead times on capital investments greatly increase the risk of market movements or technological advances making the business plan untenable before it gets off the ground.
- Organizational inertia slows staffing changes. Corporations often make decisions at glacial speeds. Want to hire a new team? Who is going to manage them? Who do they report to? Where will they work? These discussions can take up months, at which point the market has changed and ehhhh maybe we don’t want to hire a new team after all.
- High cost and difficulty of firing people makes hiring for a possibly short-term market opening less attractive. Think union contracts, severance pay, etc. Again, I want to be explicit that I’m not saying these are bad things, but we need to understand the effects they have.
No it’s not. If the increased productivity is realized by multiple industries, then they all compete on price and the price of their goods comes down. That means the consumers of the product capture the gains in productivity.
Farmers using machinery instead of labor has meant cheaper food for everyone, not rich farmers.
I think that if we look at inflation-adjusted productivity, and inflation-adjusted average income, then that would indeed prove increasing inequality, right?
I believe the chart in this link is adjusted by inflation. Showing overall the same trend:
There isn’t anything magically about precisely zero percent interest rates; the behavior we see is mostly a smooth extension of slightly higher rates, which the EU was at.
And of course ZIRP was pioneered in Japan, not the US.
The standard definition of a correction is a 10-20% market decline. “Minor” corrections aren’t defined, though one could imagine an event that barely meets the threshold making sense.
But yes, strictly you are right - this isn’t a correction at all.
> the Nasdaq Composite confirmed it was in correction territory after a soft jobs report stoked fears of an oncoming recession
My point was that it was explicitly a correction and officially confirmed as such for some indices, and that the label of “minor” is more of an opinion or spin.
Why would you ignore the largest state in that land area calculation? Alaska still isn’t quite enough to push the US up, but it’s good for another 20%-ish increase in land area over the contiguous number.
>Why would you ignore the largest state in that land area calculation?
As a non-contiguous later addition, with a small population, where statistically nobody lives there per sq mile, and is not pertinent to the discussion of population density as related to infrastructure problems?
Except in what's holding US bureucratic efficiency down (what we were discussing), and requires spending inflated federal budgets for little returns, Alaska is a big factor relative to its size...
c is used in the definition of the meter, but you don’t remotely need to know that in day-to-day life. As long as the seven base units (length, time, mass, temperature, electric current, luminosity) end up with reasonable values the system is practically coherent.
(are the values reasonable? well, human-scale capacitors and resistors seem pretty heavily skewed away from the center of the scale…)
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