I keep thinking about labor shares though. Yes, wages might rise in a world with AGI, so far so good. But I still worry about the implications of a decreasing labor share.
I think my main concern is a political economy one. A higher capital share might mean that political power is concentrated among few capital owners, which in turn affects the welfare state and so on. This argument is not new, you can find it in this essay and elsewhere. I might try to turn this into a formal model. Do you know if such work exists already?
One could also make a reference point argument: My utility is determined by my consumption, but also by my standing relative to others. I might be worse of then if some people’s income explodes, but mine rises only somewhat.
Great post!
I keep thinking about labor shares though. Yes, wages might rise in a world with AGI, so far so good. But I still worry about the implications of a decreasing labor share.
I think my main concern is a political economy one. A higher capital share might mean that political power is concentrated among few capital owners, which in turn affects the welfare state and so on. This argument is not new, you can find it in this essay and elsewhere. I might try to turn this into a formal model. Do you know if such work exists already?
One could also make a reference point argument: My utility is determined by my consumption, but also by my standing relative to others. I might be worse of then if some people’s income explodes, but mine rises only somewhat.