For someone who hates the Lord of the Rings, that's surprisingly well researched. And yet, a lot of his reasoning doesn't make sense. Because population levels in Middle Earth are far lower than in 18th century England, labour costs should be high?
Population levels in Middle Earth strike me as closer to those of Siberia or the eastern European steppe (perhaps with the Ural in the role of the Misty Mountains?) than to those of western Europe. And I think everybody agrees that Siberia was never going to be a good spot for the industrial revolution to start.
To have high labour costs, you need high productivity; you need industry. Most of the industry in Middle Earth seems to be involved in making weapons and jewelry, and not much else. To have high inventiveness, you need a lot of people. I suppose the industrial revolution could start in England because it was both fairly densely populated, but also highly productive. Perhaps because they had the trade network to sell their goods all over the world?
There doesn't seem to be much trade in Middle Earth. There barely are any cities! I mean, Gondor seems to be by far the largest and richest country, and what cities do they have beyond Minas Tirith, Osgiliath and Erech? The rest of Middle Earth seems to be almost completely empty. The various travelling groups would frequently walk for days without encountering any farms or villages.
I don't know why Middle Earth is so empty, but given that it is, it seems like a very unlikely place for the industrial revolution to take place.