... but the living is squeezy (Macroman sings).
Food production nowadays is a matter of converting fossil fuels to food. So food is not only being competed for directly but via energy costs too - see chart of Wheat (white line) and Oil (brown line). Macroman concludes with the obvious (obvious once one has read it): This could all be looked at as a symptom of the macro picture. The one of the flattening of the global wealth gradient based on the rule that if someone is willing and able to do your job for less than you, you are stuffed. Americans, in his words, are stuffed.
The world is steadily competing for raw materials, so any slow down in the West can only express deflation through lower wages as competition for jobs tightens and hence labour cost inputs fall. So whilst service sector (higher labour component) may see a higher relative price deflation, the basic cost of survival, food and energy to the individual stays the same, or rises as we are now seeing.
2 comments:
And who stuffed them but the free- traders? The Wal-Marts and consumer worshippers? Those snake-oil salesmen who conned the US into blowing away a twenty or thirty lead in technology by positioning all the manufacturing in China. And on the other side, the hunters for alleged foreign talent to displace the native workers. It is the business class more than any other that has been the major advocate for open borders and wholesale hollowing of the US technological base. Yes you can always find the odd policeman with the gilt-edged pension, but in the larger scheme of things it the treasonous businessmen who have to answer for their crimes.
You cannot stop trade at the border. If something is much cheaper on the other side of the border, trade will develope. If illegal, smuggling. The same with manpower. If the difference is dramatic as it was ten years ago (Chinese auto worker 1 dollar per hour, American 40 dollar per hour), you cannot stop equalization.
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