Wages are determined by supply and demand. If you have many more workers than there are available job openings, wages are going to fall. There will always be someone desperate enough to work for less money. On the other hand, if the supply of workers cannot keep up with the demand, wages are going to rise, because employers will start having to compete among themselves for workers. This was clearly illustrated in the early 90's with newly emerging computer industry. It was not uncommon for computer engineers to earn salaries of $200,000. There was a huge demand and not enough skilled people at the time. It's not just wages, working conditions too. If employers are having trouble finding enough workers they will often start trying to make their workplaces as comfortable as possible to get their employees to stay. So what happens when there is a sudden huge increase in the population? (either a high birth rate, or immigration from outside) This causes the balance between supply and demand to shift, wages will go down. This could have a chain effect. If wages go down, most in society are going to have less disposable income and the overall demand in the economy is going to go down too. So now you have a bigger supply of labor, and less of a demand for it. This will have predictable effects on wage levels and working conditions (they're going to go down). I think the economy can deal with population increases. This is obvious if we look back historically. People were poor then and there were far fewer people. The problem is when the population increases too fast, rather than gradually. If we look back before the Great Depression, there was a huge unprecedented surge of immigration in the two decades that preceded it. Same thing with the Recession of 2007. The economy can grow, it does so gradually, and as it grows it can create new job positions. But you start trying to shove too many people into those scarce new job positions, and what you're going to have is a Recession. Once the balance of supply and demand for labor begins tipping in the other direction, economic growth is going to become difficult.
If we look at it from a Marxist economic perspective it has to do with the balance between labor and capital. What you are essentially suggesting is that capital eventually does flow into the hands of labor, but if we "tip the balance", as you put it, then just the reverse will begin to happen; it will lead to more inequality, which in fact is exactly what we are seeing. If I can draw an analogy, it is like a balance scale, with a weight on one side of the scale and a cup of water on the other side of the scale. The cup has a tiny little hole in the bottom. We can pour water into the cup, representing population growth, but if we pour too much water into the cup too fast, the scale will tip in the other direction. The water will not be able to drain out of cup fast enough, and the cup will fill with water until the cup weighs more than the weight on the other side of the scale. I don't know if anyone here has ever actually played around with a weight balance scale before, but once the scale is tipping all the way down in one direction it becomes difficult to tip the scale back. I mean, even if there is nothing on the scale, it takes a fair amount of weight put on the other side to tip the scale in the other direction. That is why you always have to hold the scale even before you make a measurement.
That is probably why poor countries remain poor. It's a self-perpetuating economic condition. If you have too many living in poverty, there are going to be a lot of desperate people willing to work for low wages, but at the same time there is not going to be much demand for all this labor, since most of the population is poor. The balance of supply and demand for labor is really going to be tipped in one direction and wages are going to remain very low. That is why this should be so concerning. Once the balance begins tipping in a bad direction it can be a difficult hole for that particular society to be able to dig itself out of. The phenomena of "a healthy middle class" that makes up the foundation for prosperous developed countries with high standards of living may be a more fragile thing than many people realize.
which is why the government needs to make it harder for corps to outsource our jobs overseas - - - Updated - - - like Mexico, one of the richest people on the planet, but also many many poor... sadly same is starting to happen in the USA
Good luck on that ever happening. Both the Democrats and Republicans have consistently been supporting "Free Trade Agreements" since NAFTA in 1994. Although some people were already complaining about the trade with Japan back in the late 60's and 70's. I know, hard to imagine now. American trade with Japan back then was kind of like all the outsourcing of American jobs to China that happened later, between about 1997 to 2008. Many of the same issues, people complaining, despite the fact it was happening on a much smaller scale. I still remember hearing stories from my Grandma about how the Japanese used dirty business tactics to drive American companies out of business, and how everything made in Japan was crap (not true now).
This is one of the reasons why immigration is detrimental. Not only do they inflate the job markets up, they also do work for cheaper. This leads to stagnant wages for the working class, while excessive wealth for the elite. Which is exactly what we've seen.
Kind of makes you wonder what wages would have risen to if, hypothetically, the U.S. had not had any immigration in the last 30 years and had not signed those Free Trade agreements. Oh sure, there would have been a "shortage of labor", and we would not be able to afford cheap fast food. But eventually wages would have been forced up. We wouldn't need to have a "minimum wage". It's true, many American industries would not be able to "compete" with the rest of the world. But most American industries are not able to do so now either. Producing things in America is just much more costly than producing them in some other Third World country.
This actually establishes why we have a problem because wages today are almost exclusively driven by "market" demand that always seeks to lower the costs to the minimum possible. Because of the demise of the power of organized labor to act as an economic force to drive compensation up based upon productivity the "market" always produced an unchallenged downward pressure on compensation to the point that a significant percentage of the workers can't afford to live on the compensation. When we had strong organized labor up to about 1970 there was a correlation between productivity and compensation but starting in about 1970 that was lost as the "market" remained powerful while the "unions" became impotent. There needs to be a balance between the downward pressure of "market" and the upward pressure of "organized labor" but that fundamentally doesn't exist today.
That seems plausible enough. It still leaves open to interpretation how to fix this issue. If you're anti-immigration, then that will seem to be an obvious solution. However, there are many approaches to controlling a country's population. It makes you wonder what sort of effects the one child policy in China has had on the economy. Clearly, their economy is growing, yet during that time population has (theoretically) been kept in check.
Why don't we talk about why that happened? Maybe because business and the market gained access to new sources of cheap labor... Or maybe because for a while it seemed like there were plenty of high-level educated jobs for everyone and so people stopped thinking they needed labor unions anymore. Anyway, I agree that something did definitely take place since the early 1970s. Labor unions were completely decimated. The only ones remaining now with any influence are basically the government worker's unions (including teacher's unions). These were less vulnerable to external pressures because the unions had direct access to government policy.
I believe we know why. During the 1950's and into the 1960's there was the influence of organized crime in the major unions and with that came the power of organized crime. The AFL-CIO and Teamsters often worked together to secure contracts because the same organized crime syndicate were involved in both. Often organized crime would resort to questionable, if not illegal, coercion in securing contracts. By the late 1960's the federal government had cracked down on the organized crime influence and with that came a loss of power for the unions. But Republicans didn't stop there under the Nixon administration. Republicans rationalized even further reductions in the powers of the unions after the unions were no longer being influenced by organized crime and where the unions had actually lost power with the absence of organized crime by the 1970's. In short the unions need "legal power" to replace the often "illegal coercive power" that organized crime had provided. Basically, to retain the balance of power between organized labor and market forces we need to replace questionable or illegal coercive practices that existed under organized crime, that worked in maintaining a relationship between productivity and compensation, with a lawful form of power that the unions could exert to secure the same contracts. The problem with Trump is that he's feeding the anti-Hispanic prejudice of low paid blue collar white male Republicans that blame the lower paid "Mexicans" immigrants for the fact that their wages are going down ignoring the fact that the same problem exists for the "Mexican" immigrants. The problem isn't the "Mexican immigrant" but instead it's the Republican anti-union agenda that's existed since Nixon was in office.
most countries are worried about too few births so why worry about too many workers of all things? Unemployment is caused by liberal interference with the law of supply and demand so if unemployment is your issue then you should spend your time promoting capitalism.
