The labor shortage is the catalyst for sustained inflation
warrenbisch.medium.com
The labor shortage is the catalyst for sustained inflation
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Re: The labor shortage is the catalyst for sustained inflation
#2This article does not address the basic economic premise of the substition effect, by which consumers will search for cheaper goods of equivalent value.
It would strike me that with massive labor shortages, many businesses will look to technology to replace labor. This could be via AI, or other automation systems.
Not an economist.
Re: The labor shortage is the catalyst for sustained inflation
#3This article does not address the basic economic premise of the substition effect, by which consumers will search for cheaper goods of equivalent value. It would strike me that with massive labor shortages, many businesses will look to technology to replace labor. This could be via AI, or other automation systems. Not an economist.
Hasn’t this been the trend for a while now, though? My understanding is that self driving trucks are still a decent time ahead of us, and logistics seem like the primary bottleneck causing a lot of these shortages.
Labor systems will definitely be seeking AI replacements, but just because they are needed now doesn’t necessarily mean they are available now. Although you make a very good point, and I think we will certainly see acceleration in this direction.
Re: The labor shortage is the catalyst for sustained inflation
#4This article does not address the basic economic premise of the substition effect, by which consumers will search for cheaper goods of equivalent value. It would strike me that with massive labor shortages, many businesses will look to technology to replace labor. This could be via AI, or other automation systems. Not an economist.
You can't have something for nothing, and it turns out you need a lot of human to make just a little AI.
Re: The labor shortage is the catalyst for sustained inflation
#5This article does not address the basic economic premise of the substition effect, by which consumers will search for cheaper goods of equivalent value. It would strike me that with massive labor shortages, many businesses will look to technology to replace labor. This could be via AI, or other automation systems. Not an economist.
Exactly, we’re already seeing this. Lots of restaurants are cutting back on front of house staff and replacing them with QR codes, cellphones and iPad kiosks.
Re: The labor shortage is the catalyst for sustained inflation
#6This article does not address the basic economic premise of the substition effect, by which consumers will search for cheaper goods of equivalent value. It would strike me that with massive labor shortages, many businesses will look to technology to replace labor. This could be via AI, or other automation systems. Not an economist.
This argument never sat well with me.
Businesses buy machines, AI, and other automation systems to improve their standing. They do this regardless of the price of labor (unless labor gets really cheap but this is broadly not true in the US or EU). Investing in such assets give them an advantage.
The problem is when everybody does this. Then its no longer an advantage but a necessity. There's probably something to be said about this also raising the barriers to entry in certain fields (e.g. try opening up your steel foundry).
Therefore, businesses will look to technology to augment and/or replace labor whenever they can. This is regardless of the current labor market (barring extreme circumstances, of course).
Re: The labor shortage is the catalyst for sustained inflation
#7This article does not address the basic economic premise of the substition effect, by which consumers will search for cheaper goods of equivalent value. It would strike me that with massive labor shortages, many businesses will look to technology to replace labor. This could be via AI, or other automation systems. Not an economist.
Or labor assisted by machines: if businesses start to repatriate factories, one can expect them to take the opportunity to automate plants like never before. There would be few but highly paid jobs.
There must be a business case for bringing manufacturing jobs home, or I've missed something.
Re: The labor shortage is the catalyst for sustained inflation
#8I think all labor blue/white bordering around the middle class has another thing coming. Okay, so suddenly we’re all too good for the blue collar jobs. Fine, go to school or get training and come to the white collar industry.
I can say without any allusions that white collar work is saturated and competitive, so you are showing up to the wrong port.
We will need those blue collar jobs, and if industry starts filling it with immigrants while you are off trying to study up and failing to get that white collar job, you’ll lose out double (no income for all those years). All while this is happening, the blue collar industry will further depress wages because they have even cheaper immigrant labor now - the new standard.
People will resort back to saving whatever money they have, and living at home with their parents. The economy will stagnate, and inflation won’t be a problem because we were overzealous on the reality of our economy.
Re: The labor shortage is the catalyst for sustained inflation
#9This article does not address the basic economic premise of the substition effect, by which consumers will search for cheaper goods of equivalent value. It would strike me that with massive labor shortages, many businesses will look to technology to replace labor. This could be via AI, or other automation systems. Not an economist.
Exactly, we’re already seeing this. Lots of restaurants are cutting back on front of house staff and replacing them with QR codes, cellphones and iPad kiosks.
QR codes and having a phone for menu is a brutal experience.
Personally I go to a restaurant to have face time with people, the phone (or tablet) is a wrench in that, and not worth it. I’ll pay a premium to not use an electronic interface.
Edit: it does make sense for fast food, especially mobile ordering (I salute the McDonald’s UI/UX(though recent updates are making it worse.. typical))
Re: The labor shortage is the catalyst for sustained inflation
#10Actually, keeping interest rates at nearly 0% and printing trillions of dollars/pounds/euros over the last 14 years is the catalyst for sustained inflation.