[bsbechtel]

You guys are opening up a whole other can of worms getting into labor. We tend to think of labor as a cost of production and something to be minimized. Maybe we need to start thinking of labor as a (actually, the main) party responsible for creating the value the firm produces for society. Anytime value is created, it can go to 4 parties - the consumer (lower prices), the government (taxes), the shareholders (through profits), and the employees (labor wages). Maybe the reason our economy is so screwed up right now is because employees are getting a smaller and smaller share of the pie, not because technology is displacing jobs. If more people are out of work because of technology, great! That means we have more people who can go work on things like curing cancer and colonizing space :-)

[fennecfoxen]

> Maybe we need to start thinking of labor as a (actually, the main) party responsible for creating the value the firm produces for society.

Right. That's pretty much straight Marxist ideology. (I say this as a matter of fact, not as a matter of denigration per se.)

Idea for you.

It's a free country, relatively speaking. So if labor is truly primarily responsible for the value in something, perhaps you and a bunch of laborers should get together and start a business providing value to people, and paying lots of money to the labor. Assuming the labor is the primary thing that generates value, it should be easy - in fact, they can attract the best labor by paying more than they'd get in a regime which does not value their output.

If, however, you find that it is really hard to get started because it takes a lot of money to buy equipment (or to pay salaries of people programming vast troves of computer-code, which is more or less custom-manufactured capital)... if you find that it's hard to get started with labor alone, then you've effectively demonstrated that capital provides a significant part of the value.

Silicon Valley may provide a few interesting case studies for you if you wish not to do the exercise yourself at this time.

[unclebucknasty]

There is no need to test whether capital provides value, as it obviously does. Your parent was speaking to viewing labor as providing the primary value.

I noticed though, that your test's premise started as a means to challenging your parent's assertion that labor provided the primary value (i.e. you implied that capital provided the primary value). But, your test's conclusion was that capital provided only significant value, which no one is arguing. Apparently, you couldn't bring yourself to conclude that capital provided the primary value, perhaps because your test doesn't prove it.

But, I have an exercise for you. Imagine starting a company with very little capital, but plenty of labor (i.e. people willing to work for a share in future profits). Now, imagine starting a company with $1B and no labor.

In any case, regardless of which you deem technically "most" valuable, there is still the question of degree: that is, do the rewards accrue to the parties proportionate to their value?

[bsbechtel]

I actually run a painting company where we pay our employees roughly double the industry standard, and we're one of the (if not the) fastest growing painting companies in the state we are located. As owners, my business partner and I are investing every penny we can back into R&D and new technology to improve our efficiencies. Both provide value.

[unclebucknasty]

Good points. Of course, I'm going to quibble a little, else I wouldn't be replying!

>...our economy is so screwed up right now is because employees are getting a smaller and smaller share of the pie, not because technology is displacing jobs"

But, the two are related right? When tech displaces jobs, which it of course has, then there is lower demand for labor and the price of labor (wages) goes down. There are other forces as well, but all primarily stem from a drive to keep costs (and hence prices) down, while keeping profits up.

>If more people are out of work because of technology, great! That means we have more people who can go work on things like curing cancer and colonizing space :-)*

I know that was half tongue-in-cheek, but would that it worked that way! Alas, what we value economically versus what would benefit us as humans are too infrequently aligned. There will come a day though, when only a tiny fraction of the population will be "neccessary" to create what the world produces. It will be interesting to see how society realigns itself and evolves when so few people need to do traditional (economic) work.

[kamaal]

>>There will come a day though, when only a tiny fraction of the population will be "neccessary" to create what the world produces. It will be interesting to see how society realigns itself and evolves when so few people need to do traditional (economic) work.

We are already there, and we seem to be doing just fine. I guess only ~3% of US population today works in farms compared to >70% a century back. The only thing is work keeps changing. People have better things to work on. That has always been the trend since mankind even existed.

If the effort required to produce something goes down, prices too go down significantly.

[unclebucknasty]

>We are already there, and we seem to be doing just fine

We're not there yet.

>The only thing is work keeps changing. People have better things to work on.

By definition, as long as we have better things to work on (which are valued by our economy), then we haven't arrived at the point about which I'm speaking.

Technology is moving at an accelerated pace. What automation and tech can do is moving up the skill ladder and replacing more jobs than before. In addition, a globalized workforce/economy means we are reaching a scale that is giving us ever-increasing efficiency and per-worker productivity. This is why we are seeing the beginnings of a very stubborn structural unemployment and stagnant wages over the last couple of decades.

But, we are just starting. And at some point, a much smaller percentage of what we produce will require humans. When that happens, the "better things to work on" won't fit the current economy's definition of value that is worthy of compensation. That is, it won't go to the production of goods or services for which people are willing to pay.

[w1ntermute]

> That means we have more people who can go work on things like curing cancer and colonizing space

Labor isn't 1-for-1 substitutable. You can't take a 50 y/o manual laborer with a high school education who's been displaced by robots and just turn him into a cancer researcher or rocket scientist.

[bsbechtel]

It's not, but humans are dynamic beings who can learn new skills, not stagnant machines with one single function. 100 years ago half our population was illiterate, yet we overcame the displacement of thousands of farm workers due to technology. We will continue to do this throughout history again and again.

[w1ntermute]

> 100 years ago half our population was illiterate, yet we overcame the displacement of thousands of farm workers due to technology.

As new generations came of age. That doesn't solve the problem of all the middle-aged people who are now out of work because they have been obsoleted by computers. These are very real problems, politically, socially, and economically, in the short term.

[bsbechtel]

Lots of middle-aged people who are needing to develop new skills with lots of time on their hands. Sounds like a good business opportunity for a creative entrepreneur in the education space.