alt Hacker News>>A weaver who knows how to use an automated weaving machine produces 3 times as much cloth as one who doesn't, so why don't they get paid 3 times as much?
> An automatic weaving machine, operated by a capable operator, produces 3 times as much as a manual weaver. The productivity increase is the machine, not the operator. That's my entire point.
An automatic weaving machine operator, operating a capable machine, produces 3 times as much as the lack of a machine operator. The productivity increase is the operator, not the machine. That's my entire point.
What's different between what I just said and what you just said? Nothing. In fact they can both be true. Both parties can get 3 times as much money as they did previously. Why don't they? Why does one party get 10x and the other party get 0.7x?
If productivity increase is entirely caused by machines, why did it take until 1971 for wages to decouple? The reality is that both workers and owners would like their share to be as high as possible. In 1971, however, owners seized control of the money printer and they never let it go since then.
> Both parties can get 3 times as much money as they did previously.
Increased productivity shifts the supply curve which will (unless demand has zero elasticity, which is unrealistic) lower the market price of the good. So tripling productivity does not triple the amount of revenue per hour worked.
> Why does one party get 10x and the other party get 0.7x?
Because the people purchasing labor (capital) are able to get the labor they need at that price. Automatic weaving machine operators are trainable, and if they were getting paid 3 times what weavers were paid then people would rush into that space, driving down labor prices—in other words, the supply of automatic weaving machine operators has high elasticity. The demand for automatic weaving machine operators (i.e. the supply of factories full of automatic weaving machines) has much lower elasticity, so capital (demand for labor) gets most of the economic surplus.