| The concept of the "population dividend" sounds very much like the concept of "reserve army of labor" which was advocated by a famous economist whose name begins with "M". :) In his view, the dynamics of capitalist production would produce more and more output, with less and less labor, thus guaranteeing that this "reserve army of labor" would always remain. In the very short-term, this might be right. But in the long-term, innovation and technology will create consumer demand for new things (e.g. "green jobs" and "green technology") that will soak up this "reserve" and raise living standards. The issue is if education, mobility, and other public goods will be provided so this reserve army can take advantage of these new opportunities. My bigger concern is that this "reserve army" is coming into competition with people globally. Globalization is making this labor much more fungible. This suggests that workers in the US with jobs that can be offshored, will face lower and lower wages as the global market becomes much more fluid. So a consumer electronics manufacturing worker in the US will increasingly get paid what his Guangdong counterpart is getting paid. On the other hand, the specialized software or ASIC designer in Shanghai will also get paid a comparable salary to her Silicon Valley counterpart. Globalization will result in massive rich-poor disparities, much like what you see in China today. This will be hard for people in the West to accept. This may be an oversimplified view, just as the most strict interpreters of economist "M" has found over the last century. But we will face some turmoil as this "reserve army" comes into play. Manufacturing jobs will keep moving to Dongguan. But I will continue to pay over 10X what Shanghai families pay for an Ayi because immigration policies prevent that "reserve army" from competing to local service jobs. This will, for better and for worse, be interesting times for China and US in the coming decades. |
Why Things in China is Cheap?