Automation only decreases wages if the economy becomes “decreasing returns to scale”
Seems straightforwardly false? The post you cite literally gives scenarios where wages collapse in CRS economies. See also the crowding effect in AK models.
Wow, I didn’t read. Their argument does make sense. And it’s intuitive. Arguably this is sort of happening with AI datacenter investment, where companies like Microsoft are reallocating their limited cash flow away from employees (i.e., laying people off) so they can afford to build AI data centers.
A funny thing about their example is that labor would be far better off if they “walled themselves off” in autarky. In their example, wages fall to zero because of capital flight — because there is an “AK sector” that can absorb an infinite amount of capital at high returns, it is impossible to invest in labor-complementary capital unless wages are zero. So my intuition that humans could “always just leave the automated society” still applies, their example just rules it out by assumption.
I would appreciate it if you could correct the bullet point in your original shortform :) You can edit your comment if you click the triple dot on the top right corner. I had strong downvoted it because it contained the false statement.
Seems straightforwardly false? The post you cite literally gives scenarios where wages collapse in CRS economies. See also the crowding effect in AK models.
Wow, I didn’t read. Their argument does make sense. And it’s intuitive. Arguably this is sort of happening with AI datacenter investment, where companies like Microsoft are reallocating their limited cash flow away from employees (i.e., laying people off) so they can afford to build AI data centers.
A funny thing about their example is that labor would be far better off if they “walled themselves off” in autarky. In their example, wages fall to zero because of capital flight — because there is an “AK sector” that can absorb an infinite amount of capital at high returns, it is impossible to invest in labor-complementary capital unless wages are zero. So my intuition that humans could “always just leave the automated society” still applies, their example just rules it out by assumption.
I would appreciate it if you could correct the bullet point in your original shortform :) You can edit your comment if you click the triple dot on the top right corner. I had strong downvoted it because it contained the false statement.
Edited!