The basic premise is skill acquisition or the lack thereof has been the main determinant of why income inequality persists across generations.
Those who can adapt, learn, and monetize new competencies navigate economic shifts more successfully than those who cannot.
In terms of how or what it means, I've come across this interesting argument that we're entering an era where value creation is increasingly divorced from traditional labor inputs.
The ability to generate income depends less on hours worked and more on systems, networks, and assets that produce returns independently of direct human effort.
I personally have only had a glimpse of what this means in practice. Somehow, this model is easier to notice in certain places once you're aware of it.
This in itself is probably based on this difference between labor and capital. I'm not sure how drawdowns are factored into the equation in terms of capital but the fundamental asymmetry is in scalability, since labor income has a natural limit via time/effort as opposed to capital-based income.
Also, the value of labor income, at least in a traditional sense, seems to have plummeted relative to other forms of value creation. We see this in how markets price human effort versus other scalable assets like IPs and network/platforms.
Natural abundance
Whenever I visit a really local market, one of the observations I tend to be more aware of is the dynamic conversations between buyers and sellers.
Sellers always throw this indirect line about selling for a good discount because they 1) want to clear their inventory ASAP 2) don't have the storage capacity or refrigeration to preserve goods beyond the market day.
I think given they face the brutal mathematics of having perishable items, some buyers are negotiation athletes who'll walk through the whole marketplace, compare prices, then make a decision.
I always wonder whether the time for that long process is actually worth it. Another thought that comes to mind is it's more than just the time aspect sometimes, as there's this sense of knowing how deep is the river before dipping your toes, so to speak.
When there's an oversupply of market goods as such and sellers having more inventory than they could possibly sell in one market session, buyers become this sort of price-setting aristocracy using leverage that inverts the usual power dynamic.
The seller's labor, i.e waking before dawn, harvesting, transporting goods to market, becomes devalued by the sheer abundance of identical offerings and not necessarily by any deficiency in effort or skill.
It's also worth mentioning that this is a seasonal thing, mostly during harvest periods when nature generates an overwhelming surplus that floods local markets simultaneously.
I think nature is the ultimate generative system, requiring minimal ongoing labor once crops are established.
Design problem
However, some of the farmers who tend these systems capture almost none of the theoretical efficiency gains. By that, I mean many of them don't have a system in place on top of this generative system for storing and processing raw harvest into value-added products with premium pricing, for example.
Meaning the value isn't in the generation itself, but in controlling distribution, timing, storage, or transformation of what's generated.
Without the capital infrastructure to store, process, or access off-season markets, that generative capacity nature offers them becomes a liability during abundance, which still puts them at a level where their income remains stubbornly tied to effort.
Arguably, finding a parallel to modern economies is entering this era where AI and automation represent a kind of harvest season that nearly never ends, generating enormous output with minimal labor.
Who controls the infrastructure that makes generative capacity valuable extracts much of the surplus. And the operators mostly stay stuck making things instead of capturing their value.
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