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All costs boil down to: Natural Resources, Labour, and Capital. If Capital is not scarce, Labour is scarce, and there isn't a change in natural resources (ther
by rjtavares 5y ago
All costs boil down to: Natural Resources, Labour, and Capital.
If Capital is not scarce, Labour is scarce, and there isn't a change in natural resources (there may be in some cases, but I don't think that changed a lot), then capital should become cheaper and labour should become more expensive. That's how a well functioning market economy should work.
Inflation is largely irrelevant in the discussion, since the real output of the economy doesn't change with inflation (of course, hyperinflation and deflation can destabilize an economy, but we're definitely not there).
- skohan 5y agoI don't really understand this: why should capital availability increase in the face of a labor shortage? Making capital doesn't actually create more labor, so wouldn't this just re-allocate labour towards those with more access to cheap capital?
- rjtavares 5y agoI'm not suggesting capital availability increased because of labor shortage. I'm saying capital availability has been high for a while (one of the reasons for the low interest costs). EDIT: just noticed I missed an "and" in the original comment. It should be "If Capital is not scarce, and Labour is scarce"