[lbo-talk] Fwd: 1970's redux and where do we go from here?

[tfast]

I would want to add that all the analyses of Chinese labour markets that I
have read argue that, given the skill profile of employment in China,
Chinese manufacturers face an almost infinite supply curve for the forseable
future even at present growth rates.  From this it would be hard to argue
that market mechanisms are likely to produce any kind of a wage and thus
inflation spiral in China.

A correction in the value of the Renimbi might alter the cost profile of
China but it would have to be a pretty heavy correction to aliveveate price
competition among Chinese manufacturers let alone between Chinese
manufacurers and the rest of the world, Bangledesh notwithstanding.


>
> It is true that Chinese exports are exerting a deflationary drag
> globally, which is different from the 1970's. But wages are rapidly
> rising in Shenzhen and in Guandong province to attract workers, and
> Bangladesh has now edged out China as the low-wage champion of the
> Third World.
>

To Doug's sanguine interpretation I would want to argue that near full
employment can induce a wage spiral sans any upsurge in union millitancy or
deepening of density.   That said, however, we are just not seeing, in
Canada or the US, any sign that this so-called blistering hot job market is
pushing wage gains ahead of inflation or productivity increases which is
quite a different story then in the 1970s.

Doug wrote
[As I just wrote Loren: "I've been wondering sometimes if we're in
the early stages of some sort of stagflation. One difference: the
inflation of the 70s was very political - wildcat strikes in the US,
Third World demands for a new order, etc. Don't see much of that now,
except maybe for Hugo Chavez."]

My hopes are of course for a mssive bought of inflation so that my student
loans go away.

Travis