Quote:
Originally Posted by wazz
This a 9/10 take. Tech is created for money, curiosity, or power; almost never is the motivation 'solve the world's problems'. If it were, we wouldn't have artificial scarcity and overproduction.
However, while automation does lower the cost of production, those benefits again accrue to the owners. When you have big efficiency gains, many dummy jobs and even dummy firms insert themselves along the way to take a piece of the pie too. So it's rarely the case that efficiency gains go to the end users. You only have to look at the breakdown between productivity and wages that the Nixon shock & then Reaganomics had:
You make some really good points that I wouldn't argue with, especially when it comes to worker wages.
The only thing I would add, is that big efficiency gains tend to accrue to the business owners in the short term, but will end up going to the customers in the long term.
I think this is because of competition in capitalist markets.
Imagine you have a company that farms eggs to sell. Maybe they current have a 10% net profit margin where they sell a dozen eggs for $2.00 and it costs them about $1.80 for all their expenses.
Now suppose that they come up with some new farming practice that improves their efficiency, so now it only costs then $1.00 for all of their expenses and their net profit margin is now 50%.
For a few years, they will try to retain this margin and squeeze as much profit out as they can. But there is a famous quote for capitalism that says "your margin is my opportunity".
People will see how much money this egg farmer is making, and they will try to copy it so that they also have 50% margins. Then they will try to undercut the other farmers so they decide to sell at $1.75 and still make a very profitable 42% net profit margin.
This cycle will continue for a few years, until eventually all the egg farmers are using this new practice and they are all selling their eggs for around $1.11, which has now brought them back down to their original 10% net profit margin that they had when they started years ago.
Just to give a concrete example, I looked up the prices for eggs, flour, and bacon in 1950 and 2015. When you adjust for inflation, you will see that flour has become 46% cheaper, eggs have become 66% cheaper, and bacon has become 15% cheaper.
When big efficiency gains are made, we typically see a few years where businesses profit off the margin gains before it gets eaten away over time and eventually the end user (customer) tends to benefit from reduced prices.
But you are also totally right, it is often the case that the workers might never see any of that gain either in the short term or long term. The gains go to the owners at first and eventually to the customer.
But you bring up some great points, just adding in my 2 cents