An underappreciated idea in economics is what I call the capital/labor ratio. This ratio is not really some kind of numerical statistic, but rather, a way of thinking about problems and solutions. It can be used to illustrate some of the problems of free trade, and also, their potential solutions.
From the beginnings of industrialization, around 1780, people wondered if machines would replace human labor, and thus lead to mass unemployment and disenfranchisement. If one person with a steam-powered spinning machine could replace 100 people using old-fashioned spinning wheels, what would happen to those 100 people?
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