Sunday, October 31, 2010

Labor Compression

We find labor lamentation here. I feel that I must discuss Labor Compression at this Point. The later consists of a developing sector of the economy adding more and more labor until it hits a maximum point; noting here that labor assets are introduced initially because they are the cheapest resource to bring online at any given point in time, and that every developing sector is in a rush to fully develop as long as markets for their Products have excess Demand. Still, there is an outside limit to the labor which can be employed in the industry even before the full development of the sector due to Costs of Capital, Resource, available Land, and limits on Labor Supply. Read the previous Sentence several times, and consider the implications!

The first Consideration must be that each economic sector will only hold a relevance in relationship to the rest of the economy. Labor will drift to areas where Wages are higher. Technology will craft equipage for the economic sector only when paid amply, and never when those technological resources can find higher employment elsewhere; this means that technological development meets stiff competition in attempted technological development, all based upon the amounts of Cash the economic sector will devote to technological improvement. Land can also be constrained, due to the pollution of the economic sector, it’s relationship to a developed Transportation network, and the ease of acquiring the necessary resources; totally inside a stiff competition for the most desirable Production areas. Finance often enjoys the Flavor of the Month concept, and often makes Capitalization more difficult just when there is great opportunity for expansion–the Flavor greatly influenced by the Speed and Largesse of the Profits within the economic sector. This all grinds away under a process of Mechanization, where labor always loses out to Machines, because of their infallibility and higher production levels; they do not Rest, and work perfectly until they break down.

An interesting element enters the discussion at this point, which states that there exists blockage within the basic context of Land, Labor, Capital, and Resources. Economists and Students can easily determine How Capital often limits Labor and Wages, but do not understand that the lack of trained Mechanists can limit Capital expansion. Pollution Concerns limit both Land and Resource, and the Finance of both. Immigration seems like a Godsend to Some who witnesses the lack of Skilled Labor, and native refusal to undertake Unskilled Labor. All must be judged by what is brought to the Table of economic production. What bothers me is the fact that Capitalized Technology will always reduce Labor elements, and the introduction of new economic sectors into the economy is very limited, both in terms of Invention, and in terms of expansion into the Finance, Land, and Resource sectors. This is Why Immigration bothers Me, because of serious doubt that it will induce Long-Run reduction in Unemployment. I believe that the more unenjoyable elements of Labor will proliferate under Immigration; a contestation with the views of Tyler Cowen, outlined in his current NYTimes articlewhich I should have a link but do not as yet! lgl

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