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Comment by cortesoft | Hacker News Reader

Right, but labor costs might be a large or small portion of the total costs.

Which doesn't address the flexibility of the margin. Carbon fiber might cost more than an operator of a machine that turns carbon fiber into a useful good.

I think the percentage of the cost of the final product sunk into labor acts more like a VAT. Sure, the manufacturer making carbon fiber canoes may spend more on carbon fiber than the operator. But what percentage of the carbon fiber supplier's cost to manufacture is labor? And what about the the labor costs in the tools the supplier uses? Etc. It's a cumulative percentage, not just at the last mile. Similar to how VAT is calculated (at least in my admittedly limited understanding of VAT).

I think this is in contrast to highly automated industries (tentatively). I think the train of thought is that lower labor costs results in a higher concentration of wealth as less wealth is distributed since there are lower labor costs.

However, I would posit that the more direct measure is profit percentages. Hypothetically, if labor costs go down, and profit margins stay the same (ie if the savings are passed on to consumers), then I would imagine there would be an increase in consumption.

Where the money gets back to workers may change (as increased consumption would mean increased demand for the materials McDonalds uses, which likely have higher labor costs). High profit percentages, however, typically benefit those that own some of the company.

This is entirely conjecture, I am not well versed in economics. If there is some flaw in this (and I'm sure there are several), I would love to be corrected for my own education!

Sorry, I picked the wrong word. If labour is a large part of total costs that's superior to it going to a single person outside the city c.p. etc. etc.

That's not obviously true by itself without some underlying unspoken premises we probably do not share.

I reject mercantilistic views of economy. They belong in the 1600s where they died.

Yeah, you know, I'm not really convinced myself to be honest. Obviously you want to take advantage of comparative advantage, etc. but is a more prosperous city one which has a less unequal income or wealth or does optimizing for top-line wealth just create everything else along the way? I don't really know.

I'm pretty comfortable abandoning the view. It wasn't built on a strong basis.

Income inequality is weakly correlated with everything. It seems to be a necessary consequence of both the most and least prosperous societies.

Honestly, income inequality is a red herring of left politics and public schooling. If the most prosperous societies have high income inequality, then the question must be asked: does it matter?

Unless you want to design a utopia. That goes swimmingly every time, I promise.

Edit: If income inequality is a consequence of freedom, it's a very, very tiny price to pay. Don't optimize for the economy. Optimize for freedom. Empirically, that's how you create prosperity.

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