The good times are coming?

[Young Master Smeet]

I love this article, it takes a sweep at Piketty, but the assumptions are fundamentally Marxian, especially the central role of the reserve army of labour:

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/11882915/Deflation-supercyle-is-over-as-world-runs-out-of-workers.html

Quote:

The working age cohort was 685m in the developed world in 1990. China and eastern Europe added a further 820m, more than doubling the work pool of the globalised market in the blink of an eye.

"It was the biggest 'positive labour shock' the world has ever seen. It is what led to 25 years of wage stagnation," said Prof Goodhart, speaking at a forum held by Lombard Street Research.

We all know what happened. Multinationals seized on the world's reserve army of cheap leader. Those American companies that did not relocate plant to China itself were able play off Chinese wages against US workers at home, exploiting "labour arbitrage". US corporate profits after tax are now 10pc of GDP, twice their historic average and a post-war high.

An important point is:

Quote:

China will no longer flood the world with excess savings. The elderly will have to draw down on their reserves. Companies will have to invest again in labour-saving technology, putting their great stash of idle money to work.[…] Professor Goodhart makes large assumptions. He doubts that robots will displace workers fast enough to offset the labour shortage, or that greying nations are culturally able to absorb enough immigrants to plug the jobs gap, or that India and Africa have the infrastructure to repeat the "China effect".

The point is that labour tightening will drive robotisation, but if it's not quite fast enough, we'll have labour sving technology and rising livign standards…Interesting stuff.

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