How Claude Fable 5 Helped Develop a Theory of Wages, Scarcity, and AI

Summary

A Wilsons Blog post describes an economic theory developed from a data exercise on how taxes and benefits affect consumption and labor, with Claude Opus and later Anthropic’s Fable 5 assisting with data gathering, assumptions, and relevant literature. The author is now formalizing the theory with a co-author from the Stockholm School of Economics. The formal paper combines a task-based framework associated with Acemoglu and Restrepo with classical scarcity economics and input-output recursion to determine the wage rather than leave it as an estimated or freely chosen parameter. In the model, the wage depends on the relative performance of humans and machines at the marginal automatable task, the rental price of machines, and access to scarce inputs such as land, with machine costs recursively determined by capital, labor, and fixed-resource requirements. The author argues that this framework can account for rising housing and rents relative to other consumption, associating the trend with changes in technology since around the 1970s and the spread of the internet. The post further proposes that AI could reduce the human advantage at the marginal task more broadly, potentially putting additional pressure on wages, while stressing that the theory remains extremely unvalidated. Its policy implication is to tax scarce resources, especially land, and use the proceeds to fund consumption; the author also suggests sovereign wealth funds as a way to capture scarcity rents across borders. The post closes by disclosing that much of the presented prose was written by Claude Fable 5, whose voice the author deliberately retained while providing guidance for readers.