It is no coincidence that the last three callers--Shawn in Cincinnati, Philip in Louisville, and Edward in Baltimore-- on yesterday's Diane Rehm show made comments about wage deflation, because this is what is happening in America.
The developing world, BRIC countries et al, are now cranking consumer goods much cheaper than we can. No way around it. The great expansion of national wealth and productivity that we were manifesting a hundred years ago is what the emerging countries are now in the midst of. There is nothing wrong with this; its the way the world has always been. The lean and vigorous youngsters have always surpassed the older folks . This applies to nations and whole economies as well.
I enjoy listening to the Diane Rehm show immensely, and frequently. I caught it yesterday while painting and cleaning a vacant apartment, which is part of my job. Thank God for my job.
Susan did a nice job of filling in for Diane, as usual, although no one will ever really fill Diane's unique footprint in public discourse. The panel was, as usual, well-chosen, with Jim, Jerry and Betsy, all of whom are highly qualified to talk about their topic at hand, jobs and the economy.
But the illustrious panel spent the first twenty minutes or so, as is typical for today's talking heads, in the predictable media obsession about what Bernanke said, and the snail's pace increments of labor statistics and GDP and all the gov numbers and blahblahblah.
I got a little upset when Jerry said the major reason we're not getting job recovery is because growth is slow. Well that's like saying the sky is blue and leaves are green. Now Jerry had some very good points, as did the other panelists, points about international competition in business and manufacturing, discouraged workers and their segment of the unemployment statistics, the "sugar high" of Fed-generated liquidity, the "still real dangers" that threaten our hyped-up recovery, gains in the first part of the year with declines in the second half of the year and how that may be a pattern in the last few years, whether and how/why companies are producing more goods with fewer workers and less pay, the necessary once-and-future skills development and job training programs that our country needs and the emperor's new clothes and so forth.
But those three callers from the rust belt--they really drove, and without planning it, the point home: wage deflation. Too many people looking for work in a short production economy--wages go down. Its just supply and demand, as supplied to employment. No rocket scientist needed there.
But its time that some Americans start taking new directions; we need to find something else to do. And it is no coincidence that the first caller, Chad in Lansing, spoke about his chosen field of training and employment--agriculture--and how strong that sector is in our economy just now.
Agriculture has always been the heart of our great American expansion, and perhaps it always will be, because we have an abundant resource that many nations have a shortage of--land. And, as Jerry pointed out during the enlightened part of the discussion--the demand for food is high. Always will be. Not to mention energy sustainability, appropriate technology, etc. which is another topic altogether. Gotta go to work now; have a nice day.