All around the world, labour is losing out to capital

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A falling labour share implies that productivity gains no longer translate into broad rises in pay. Instead, an ever larger share of the benefits of growth accrues to owners of capital.

Cheaper and more powerful equipment, in robotics and computing, has allowed firms to automate an ever larger array of tasks. They reckon that the cost of investment goods, relative to consumption goods, has dropped 25% over the past 35 years. That made it attractive for firms to swap labour for software whenever possible, which has contributed to a decline in the labour share of five percentage points. In places and industries where the cost of investment goods fell by more, the drop in the labour share was correspondingly larger.

Accelerating technological change and rising productivity create the potential for rapid improvements in living standards. Yet if the resulting income gains prove elusive to wage and salary workers, that promise may not be realised.


This on-going trend is direct result of automation. I have no idea what % of unemployable people (due to no work to be had) will lead to breakdown of society. Greece has 27% unemployment and seem to still maintain society, but it takes high level of social programs to do so. Great Depression in US spiked unemployment to mid-20%s. Germany during early 30s had seen 30% unemployment.

My guess is that around 30% is magical number and will lead to regime change in US. If that happens we will likely see another US civil war, possibly with nukes.


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