Read this article that I got from my essential friend Alex.
It suggests that we have been in period of cheap and abundant labor for two decades and that that has come to an end.
I love grandiose theories. I was attracted to Marx at age 12, to Freud at 14 and Wesley Mitchell at 18. I still love grandiose theories but I know they are not applicable to humans or human societies.
This article is based on data I don’t have. The baby boom provided much labor for the 1980’s and 1990’s, China has been drawing in workers from the farms for 25 years. The fall of the USSR brought cheap labor to Europe and the world.
Sadly the Arab influx these days can’t be considered cheap labor, too unskilled; the same is true of African immigrants. Virtually no useful skills in either group.
Mexicans and Latins coming to the U.S. are useful labor.
Abundant labor may be a good explanation of the past 25 years of deflation, zero interest and the initial jump in productivity. And it may have come to an end.
I know the cheap Chinese labor is over. I went and looked. But the remaining shortage of labor is not evident to me. Nor is the consequence of inflation returning and labor costs rising.
Japan has done a wonderful job dealing with this for 25 years. They moved factories to low wage countries. There are plenty left: Indonesia, India, Philippines, Malaysia and other S.E. Asia.
Japan also used robots and better administration. These have vast potentials in the U.S. where about 10% of the labor force works hard and competently. The rest is marginal.
I love the cheap labor observation in this article but I don’t see it as coming to an end with a return to inflation.