August 30, 2007

MORE ON HIGHER WAGES WORLDWIDE, from Megan McArdle: “There’s a lovely psychic benefit to thinking of Chinese workers getting wealthier, happier and healthier, all while supplying us affordable HDTVs. Some analysts, however, are worried that this benefit will come at a stiff cost to us: inflationary pressure from Chinese exports.”

And some related thoughts here:

I spent a significant part of the last three years working in India training derivative traders and I saw the same phenomenon ocurring as described in the Times article. Wages rising fast but, more importantly a shortage of truly qualified workers. India has an enormous population of uneducated lower class workers. Those workers however need a great deal of education before they can step in and work in the call centers or programming shops. The cheap cheap labor era is over in India. The same appears to be ocurring in China. The impact will be higher inflation in the developed world than we have seen in the past decade.

Hmm. That doesn’t sound good.