Demographic denouement, an end to an era of fluid labor supply leaving the world exposed to the eventual maybe inevitable, they say, sustained rise of cost pressures. A globalized economy, as it was from the fifties until, say, August 9, 2007, had meant a widely available cheap pool of previously untapped labor easily mobilized once the (euro)dollars were secured. The whole world benefited from the exchange, though some far more than others.
The labor theory of inflation is as old as AW Phillips’ work linking higher levels of employment with a possible acceleration in consumer prices. If companies have to compete for few remaining workers, wages skyrocket which forces rational profit-seeking companies to pass those surging input costs to their consumer customers.
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