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The Prudent Bear: Malthus was just 220 years early (Martin Hutchinson)
The average earnings of U.S. men between 25 and 34 with only a high school diploma have fallen 25% since 1979, according to Census Bureau data. Women in the same category have done better, but their earnings also have fallen. Given that GDP per capita has risen 73% in real terms since 1979 on World Bank data, those are shocking statistics. Their implication is that the value of the labor of people with ordinary skills has gone into a deep decline even as the country and the world has gotten richer. In other words, Thomas Malthus' gloomy prophecies, written in 1798, were not wrong. They were merely early.

[...] If a Malthusian problem were to occur, we would expect it to occur first in the rewards of modestly skilled people in the world's highest-cost labor markets, because their work is most easily substitutable and can be undercut by emerging market labor. That appears to be what is happening. In the U.S. at least there is a supply surplus of modestly-skilled workers, driving down wages. Since the labor-participation rate in the workforce has dropped sharply since 2008, and these statistics include only workers who are employed, there is clearly a major supply-demand imbalance.

A provoking clutter talk on globalization, financialization, resources, technology follows.
There is another solution: drastic reduction of population (over whatever period is necessary to accomplish this through incentives and without coercion). If the world's population were one billion instead of eight billion, the amount of land and resources available per unit of labor would be octupled and the environmental damage caused by production would be reduced by seven-eighths. Similarly, the amount of capital available per worker would be greatly increased (albeit probably not by a factor of eight), while the knowledge base per worker would octuplet (although the rate of adding to it wouldn't). With labor suddenly scarce, even at the modestly skilled level, the returns to labor would be greatly increased.
That must be the arithmetic.
by das monde on Thu Nov 6th, 2014 at 09:50:28 AM EST
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