Alex Imas: evaluation

Transcript context

…It’s probably worth defining labor share and capital share real quick. The whole economy, the total sum of goods and services sold, is either paid out to people in wages or it’s paid out to capital, which is to say, there’s rent on buildings and shareholders of companies that get paid out. For many hundreds of years, ~60% of the economy basically gets paid out to humans in wages, and the other 30-40% gets paid out to people who own machines and land and claims on companies. The question is, if 60% is going to wages right now, does that shrink as AIs get smarter and better? This is a Kaldor fact. We should stress this. It’s incredibly surprising that it’s over 60% after the Industrial Revolution and all of the automation we’ve ever seen. Some people are worried it’s an accounting error that it’s been so constant. There’s even a controversy right now. Some might say labor share has been falling in the last 20 to 30 years. But there have been a lot of accounting changes in the last 30 to 40 years. For example, Atkinson has a paper showing that if you keep the accounting constant over the years, labor share hasn’t even fallen ever. But it’s not that surprising, right? Phil, you made this point that if labor and capital are complements, you need both to do anything. It would make sense that you’d need to pay both of them to get something done.…

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