If something makes everything take half as much effort but removes your ability to earn an income (or slashes it more than twice) then it decreases your standard of living despite substantially increasing it for many others.
You are assuming everything else stays static. Maybe if this happens, the ability to do everything in as half as much time will increase competition in a lot of areas bringing prices down and increasing your purchasing power.
That’s not what’s happening in the US. Too much concentration of wealth (not just tech), leading to almost 3rd world country health outcomes, education levels plummeting and unaffordability to live.
"Tech might bring more inequality, but what is the problem with it if it substantially increases everyones standard of living?"
The problem is that ultimately, wealth inequality decreases the standard of living for most people. There are a finite amount of resources. This world we live in is finite. And these resources are being concentrated at the top, in the hands of a few, which leads to less and less of these finite resources being available for more and more people. Although economics is of course complex to some degree, don't lose sight of this very simple mechanism because it is a reality.
"I would argue that is caused by regulatory capture and government interference (e.g. zoning laws) and not technological progress"
If by regulatory capture, you are referring to regulatory corruption influenced by lobbying, then yes, of course that is increasing wealth inequality, and thus decreasing standard of living. Regarding government interference - it's the exact opposite of what you say - proper government interference is what we need. Under current conditions our economic system is not distributing wealth properly. That much is evident and easy to see. And there will be worse living conditions under more stark wealth inequality as opposed to a more even distribution of resources. As mentioned, this world we live in is finite. If these finite resources are syphoned to the hands of very few individuals, this leaves less of these finite resources for the rest of human beings. And as mentioned, tech has contributed to accelerating this, for the reasons mentioned in my above post. So, as mentioned, what we need is government interference. This means taxing heavily the areas that the finite resources I have spoken of are getting concentrated in and redistributing them more evenly.
I do not believe that standard of living should be compared in a vacuum. Since I assume that this is what you are referring to, I am firmly convinced that happiness is relative.
What this means is that improving the standard of living of the average person by 5% while improving it by 50% for a smaller population will hurt more than it helps.
Corporations make profits if their products are worth it to people, true. But in a sufficiently unequal world, what's "worth it" to a rich person matters more in the market than what's "worth it" to a poor person - the rich command more money than the poor. If the money made by corporations accrues only to a few, we get a positive feedback cycle of inequality: corporations cater to the market; the market caters to rich people; and in a highly concentrated market, only a few people get rich off of this. The result is a poor underclass. Society as a whole gets richer, perhaps, but very unevenly. Besides causing political instability, this is also an inefficient allocation of resources - an additional $1000 improves a poor person's life more than it does a rich person's.