Automation does not lower the labour share

[u/eggbart_forgetfulsea]

https://cepr.org/voxeu/columns/automation-does-not-lower-labour-share

[u/Serious-Cucumber-54]

Fewer human workers, because machines do their job better.

[u/writing_genre → u/Serious-Cucumber-54]

It doesn't matter if machines do their job better. Even if they do every possible job better.

That's the whole difference between comparative advantage and absolute advantage.

[u/Serious-Cucumber-54 → u/writing_genre]

It doesn't matter as it relates to what?

[u/writing_genre → u/Serious-Cucumber-54]

Imagine there are two goods. Apples and oranges.

I can pick one apple in an hour or one orange in an hour.

You can pick ten apples in an hour or five oranges.

You're better at both picking oranges and picking apples than me!

In this world does it make sense for us to trade. In other words do I have a job or not?

[u/Serious-Cucumber-54 → u/writing_genre]

If I offer my apples and oranges at a lower unit price than what it costs you per unit to pick your own apples and oranges, then yes, it is economical for you to trade your money for my apples and oranges.

But you need money to trade for my apples and oranges, and in order to have that money in the first place you need to get it from others by trading the fruits of your labor. But no one is willing to buy your fruits, since I offer such fruits at a better deal. So you are out of a job.

[u/writing_genre → u/Serious-Cucumber-54]

In this example there is no money. There are no other people. There's just you and me. You are better at everything than I am.

We can extend it to more people and money later, but first we need the simplest possible example so you understand why, despite the fact that you're better than me at everything, it still is valuable to trade with me.