I am not sure I buy this thinking. If labor was more expensive things might cost more to begin with, but eventually people will figure out how to do stuff with

I am not sure I buy this thinking. If labor was more expensive things might cost more to begin with, but eventually people will figure out how to do stuff with machines. So eventually things will get even cheaper than they were with cheap labor. There is no reason a computer mouse should be assembled by hand at all. But of course nobody wants to invest in automating tasks that can be done for breadcrumbs by some desperate poor people somewhere.