Domande di Internet

What will happen when cheap labor runs out?

Bentornati ad un’altra straordinaria edizione delle domande di cultura generale!

Questa volta abbiamo cercato:

With the global middle class being more than half of the worlds population what are we going to do when every developing country enters the middle income trap and wages are too high worldwide. By the way this isn't far away the US took 70 years, China took 10 years, Thailand took 2 years and with manufacturing moving from china to India (boosted heavily by corona virus) most experts are saying it wont take longer than 1.5 years there and then essentially it will only be Africa left. Will globalization end?

Ed ecco le risposte:

We’d replace cheap labor with automation. If it’s not developed in time, manufacturing would just move into first world contries again. The reason manufacturing is outsourced is just because it’s cheaper to exploit lower income countries. If there aren’t any countries to exploit they’ll just build the stuff and suck up the cost. Those people who moved factories made millions or billions, all that would happen is they lose out of profits. It’s not like every single factory left the US, just that most went to find cheaper labor to exploit.

> China took 10 years, Thailand took 2 years

China took a good 30 years and it will continue to supply for cheap labor for a decade more.
Thailand was never in it. It is a tiny country. Also, it took them a good 20 years (in 20 different 10 year batches) for them to industrialize as well.

It is going to spend more than a good decade in India and a couple of decades more in Africa.
People forget how huge India and Africa are.

I’d say it will be at least 2050 by the time cheap labor runs out, and automation will have easily caught up by that point.

Globalization will never end though. The most boring automation jobs will still get exported to ‘poor’ countries and the service/research/creative industries will stay in the richer countries.

IMO, a big part of climbing this ladder of development will be installing excellent institutes of higher education in your respective nations. India and China are trying really hard at that. SEA (minus Singapore) and Africa on the other hand lag behind by a huge margin there.
I can see that being a major issue for those nations.

Automation lowers labor costs. So what happens to labor when the fast food burger place hires 1 order taker, 1 machine tender person instead of 10 low paid people? What do the other 8 do?

I don’t have an answer to you question, but something interesting.

Some people think that the solution to many of our problems is so simply reduce global popluation. Most people say about 10x less would be good (since that’s about how many we had pre-industrial revolution). The idea is that we could all live “first-world” lifestyles and not exhaust the Earth’s resources.

It would certainly reduce our ecological footprint and make non-renewable resources last a few decades or centuries longer, but the problem with this idea is related to your point. Our lifestyle as it is currently built is based on exploitation of cheap labour. cutting out the 90% of the population who supplies it would render our current economic system impossible and we would have to find another economic model.

So no matter the global population (whether it’s stable at 11 billion as predicted to occur by the year 2120), or 750 million, either way our economic system must change.

First, many are already being replaced with automation.

Some countries, such as Egypt, have massive joblessness rates due to reproduction and no one wanting to invest in places subject to terrorism.

Also, factories that still require cheap labor will move to Africa if needed. All that investment in education means there are tons of office workers available for cheap. Heck, people with graduate degrees in Kenya are ghost writing term papers and theses.

So essentially, China and other Asian countries are moving up the manufacturing value chain even as other English-speaking countries are also moving up the services and back office value chains, leveraging their comparatively cheaper labor.

More people, more automation, fewer good jobs in First World countries. Now add internal migration and external immigration. Much more competition for the remaining jobs, especially low-end jobs, and for the limited housing stock, especially low income housing.