Karl Smith: “Horses are not so different than you and I”

My longer thesis is that the rising return to unskilled labor is a function of industrialization and that industrialization is unique in this. The wage rate on unskilled labor never benefited before and its not immediately clear that it will ever benefit again.

This is because rents always accrue to the scarce factors of production. Industrialization meant that the only thing we were short on were “control systems” everything else in the production process was effectively cheap.

However, any mentally healthy human being is a decent control system. So, this meant huge returns to being a human. It also meant collapsing returns to being a horse. Though, people think of this as a difference in kind, I urge you not to. Horses are not so different than you and I.

Read the whole thing.

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