[IP] more on Maybe there's no mystery after all
Delivered-To: dfarber+@xxxxxxxxxxxxxxxxxx
Date: Tue, 06 Jan 2004 15:32:58 -0600
From: Dee Smith <deesmith@xxxxxxxxxxxxxxxxxxx>
Dave:
A fascinating corollary of all Steven Cherry's comment that in the very
long run wage levels equalize is worthy of consideration. Jobs are moved
sequentially to cheaper labor pools where (and as) the labor in those
places becomes skilled enough to handle the work, as Mexico has seen to its
dismay in recent years. Mexico, formerly a destination of choice for
relatively skilled cheap labor, has seen jobs move to East Asia - China in
particular - as its relative labor costs increased.
China and its neighbors represent probably the last large pool of cheap
labor on the planet. On the very long term that Mr. Cherry mentions, what
happens to the base cost of production as the equalization process plays
out and China's workers demand - and receive - higher pay in the decades
ahead? Will the cost of everything simply start to rise inexorably at
some point? Is this sustainable, or in the long run will it be a wage
bubble that bursts, worldwide? How will (or might) population growth
impact this? Any IP economists have any insight on this?
Even if there is another pool of cheap labor in Africa or somewhere else,
assuming processes continue in their present direction, at some point it
will be absorbed too, so the question remains, it would seem.
-Dee
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