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>>This was a short period of massive changes to logistics (better railways), society (electric lights improved factory productivity), and what was even possible

>>This was a short period of massive changes to logistics (better railways), society (electric lights improved factory productivity), and what was even possible to make (improved materials and precision machining). There have been just as many opportunities to raise productivity in modern times, with the development of computerized production, internet communication, robotics, rocketry and space-based industries, plastics, the standardized shipping container, nanotechnology, biotechnology, machine learning, distributed blockchains, etc Nations like Hong Kong and Singapore, which maintained comparatively free-market oriented economies, and ranked number 1 and 2 in the Economic Freedom Index for decades, vastly outperformed more social democratic economies. They not only saw vastly greater economic and wage growth, but closed the huge deficit they had with Western nations in life expectancy in 1960, and eventually surpassed them. HK and Singapore today have a higher life expectancy than even the Scandinavian countries, which in 1960 were #1, 2 and 3. Beyond these anecdotes, you can look at basic correlations found in large datasets covering dozens of economies over a span of decades, which suggest lower government spending, as a percentage of GDP, tends to be beneficial to economic performance: https://web.archive.org/web/20170821004405/http://ime.bg/uploads/335309_OptimalSizeOfGovernment.pdf https://web.archive.org/web/20170821004405/http://ime.bg/upl...

blix 5y ago
The changes in productivity due to computers, robotics etc. are probably closer in economic impact to the first industrial revolution than the second. The second industrial revolution increased demand for labor, raising wages. The first vastly decreased demand for labor, leading to falling wages, increasing inequality and social unrest.
- CryptoPunk 5y ago
  All productivity enhancing technology, whether those that emerged in the first industrial revolution, second industrial revolution or information technology revolution, reduce the amount of labor required to do a task, and thereby increase how much the population as a whole produces, leading to wages increasing. The decline in wage growth since the 1970s does not appear to be due to any special properties of more recent technological innovations, given countries like Hong Kong and Singapore, which were more restrained in their growth of labor regulations and taxation, saw massive wage growth into the 21st century. It appears simply to be due to a huge transition to social democracy: https://ourworldindata.org/grapher/social-spending-oecd-longrun https://ourworldindata.org/grapher/social-spending-oecd-long... Which has resulted in a larger portion of economic output being directed by coercive non-market forces, which are less efficient than the consumer-directed allocation of resources caused by market forces.
  - blix 5y ago
    It took over a century for the median wage in Great Britain to return to pre-industrial levels after the first industrial revolution. > reduce the amount of labor required to do a task... leading to wages increasing. I'm not aware of this "reduced demand leads to increased prices" economic theory. Can you tell me where I can read more about it? Great Britian increased it's total output while wages fell dramatically. I'm not sure your point is supported by evidence here. How appicable are the stories of Hong Kong and Singapore to countries that aren't single cities that occupy unique geopolitical positions? Hong Kong is no longer a country. Surely this is a property of unique relationship with China. Surely many other characterisitics of Hong Kong are related to it's relationship with China.
    - CryptoPunk 5y ago
      >>It took over a century for the median wage in Great Britain to return to pre-industrial levels after the first industrial revolution. I don't know what you're referring to, as all the graphs I've seen have shown a general upward trend in UK wages over the last three centuries. Maybe you could provide a source. What I do know is that per capita productivity, which is almost entirely a function of labor saving innovation, is strongly correlated with average and median wages, and is widely established to be the primary determinant of per capita income. >>I'm not aware of this "reduced demand leads to increased prices" economic theory. Can you tell me where I can read more about it? It doesn't reduce demand. It increases demand. Demand, in economics, is defined as purchasing power intent on consumption. As productivity increases, so does production, and with it real (inflation-adjusted) spending, as people having more goods/services with which to bid on scarce resources like labor. Here's an explanation for how automation raises wages: https://www.economicshelp.org/blog/6717/economics/the-luddite-fallacy/ https://www.economicshelp.org/blog/6717/economics/the-luddit...

blix 5y ago

The changes in productivity due to computers, robotics etc. are probably closer in economic impact to the first industrial revolution than the second. The second industrial revolution increased demand for labor, raising wages. The first vastly decreased demand for labor, leading to falling wages, increasing inequality and social unrest.

CryptoPunk 5y ago
All productivity enhancing technology, whether those that emerged in the first industrial revolution, second industrial revolution or information technology revolution, reduce the amount of labor required to do a task, and thereby increase how much the population as a whole produces, leading to wages increasing. The decline in wage growth since the 1970s does not appear to be due to any special properties of more recent technological innovations, given countries like Hong Kong and Singapore, which were more restrained in their growth of labor regulations and taxation, saw massive wage growth into the 21st century. It appears simply to be due to a huge transition to social democracy: https://ourworldindata.org/grapher/social-spending-oecd-longrun https://ourworldindata.org/grapher/social-spending-oecd-long... Which has resulted in a larger portion of economic output being directed by coercive non-market forces, which are less efficient than the consumer-directed allocation of resources caused by market forces.
- blix 5y ago
  It took over a century for the median wage in Great Britain to return to pre-industrial levels after the first industrial revolution. > reduce the amount of labor required to do a task... leading to wages increasing. I'm not aware of this "reduced demand leads to increased prices" economic theory. Can you tell me where I can read more about it? Great Britian increased it's total output while wages fell dramatically. I'm not sure your point is supported by evidence here. How appicable are the stories of Hong Kong and Singapore to countries that aren't single cities that occupy unique geopolitical positions? Hong Kong is no longer a country. Surely this is a property of unique relationship with China. Surely many other characterisitics of Hong Kong are related to it's relationship with China.
  - CryptoPunk 5y ago
    >>It took over a century for the median wage in Great Britain to return to pre-industrial levels after the first industrial revolution. I don't know what you're referring to, as all the graphs I've seen have shown a general upward trend in UK wages over the last three centuries. Maybe you could provide a source. What I do know is that per capita productivity, which is almost entirely a function of labor saving innovation, is strongly correlated with average and median wages, and is widely established to be the primary determinant of per capita income. >>I'm not aware of this "reduced demand leads to increased prices" economic theory. Can you tell me where I can read more about it? It doesn't reduce demand. It increases demand. Demand, in economics, is defined as purchasing power intent on consumption. As productivity increases, so does production, and with it real (inflation-adjusted) spending, as people having more goods/services with which to bid on scarce resources like labor. Here's an explanation for how automation raises wages: https://www.economicshelp.org/blog/6717/economics/the-luddite-fallacy/ https://www.economicshelp.org/blog/6717/economics/the-luddit...