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Comment by UncleOxidant | Hacker News Reader

> Is the economy made for man, or man for the economy?

Pendulums swing.

Right now we're in the part of the cycle where man is being adapted to the economic system (so the latter). We're in a situation where more and more capital seems to be ending up in fewer hands - the rise of AI seems likely to accelerate that trend and lead to even more income inequality if we're not very careful. The rising tide was supposed to raise all boats, but that doesn't seem to be happening as much anymore as it did earlier.

We've sort of been here before (The Gilded Age) and we were able to get the pendulum to swing back in favor of the workers through mass labor movements in the late 19th and early 20th centuries - that was a move towards the economy made for man. Will we be able to do that again?

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At the time of the Gilded Age, there was no income tax (personal or corporate), and government expenditure as a ratio of GDP was at single-digit percents; yet there was massive productivity gains and corresponding massive real wage growth among unskilled workers[0], even against the backdrop of surging immigration. Stupendous private fortunes later funded philanthropic efforts behind some of the most renowned institutions of today.

In contrast, today, we have government expenditures at a full third of GDP[1] and progressive taxation (with public calls by elected officials for truly confiscatory levels of taxation), yet real wages (as you point out) are rising a lot slower[2] than in the Gilded Age, and the poverty rate has more or less remained constant for decades[3].

I, too, wonder if we can move towards an economy made for man again.

[0]: https://www.nber.org/system/files/working_papers/w14555/w145...

[1]: https://fred.stlouisfed.org/graph/?g=8fX

[2]: https://fred.stlouisfed.org/series/LES1252881600Q

[3]: https://aspe.hhs.gov/sites/default/files/private/pdf/154286/...

> At the time of the Gilded Age,

[1] starts at 1947; [2] starts at 1979; [3] starts at 1964. None of your sources show that poverty was less of a problem during the Gilded Age (1877 to 1896). I find it very hard to believe the Gilded Age handled poverty better since it predates Social Security and the Great Depression.

You're right that data is poor for the 19th century. The point I wanted to draw with my more recent sources is that there seems to be little empirical evidence to show that increased redistribution via taxation and expanded government social programs actually alleviate poverty, compared to the evidence for rising living standards via technological advances and fierce capitalistic competition that lowers costs.

Across OECD countries, there appears to be at least a passing correlation between countries that have a higher ratio of government expenditure to GDP (and are at least commonly perceived to have generous government-provided social benefits) and lack of real wage growth over the past two decades[0].

[0]: https://stats.oecd.org/index.aspx?DataSetCode=AV_AN_WAGE

Aren’t wealth impacts of “technological advances” significantly skewed by a supply chain designed around cheap labor abroad?

The thing is that the use of "cheaper labor abroad" makes said labor less and less cheap, because the economies develop where production is very active, and life standards improve. Right now labor on Chinese high-tech factories is already not cheap enough for many Western customers, and they set sights on countries like Vietnam.

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