On the pros and cons of high labour costs

An article at the ABC this week suggests another explanation for why Australians might feel poor despite being amongst the richest people who have ever lived: as the article’s author, Michael Janda, has it, the cost of things that people “need” to buy is rising more quickly than the things that they “want” to buy. The former includes things like education, healthcare and housing while the latter includes things like cars, toys and computers.

It may be more precise to say that the cost of things requiring human labour (or land, in the case of housing) are increasing while the cost of things produced by machines is decreasing, but Janda’s point is that many of the things we regard as essential fall into the former category while many of the things we regard as luxuries fall into the latter. Many people would regard clothing and motor vehicles as essential, for example, but these are comparatively cheap because factories can produce them by the millions.

One might be tempted to say that it’s just bad luck for us that so many of the things that we consider essential require a lot of human labour. That the cost of human labour is going up, however, is intertwined with the process of people becoming richer since most people obtain their income through selling their labour (and, in Australia at least, increasing one’s wealth through ownership of real estate is popular for those in a position to do it). One can imagine in the abstract a society in which everyone obtains their income by owning factories or trading the products of them, but the present world is a long way from such a thing and not making any obvious progress towards it.

From a perspective in which we are all expected work to support ourselves, then, it might not seem such a bad thing that human labour should be both necessary and expensive. If it ever came to be that everything we both needed and wanted could be produced cheaply in factories, we’d find ourselves in that dystopia that those who worry about technological unemployment are forever fearing and their critics forever dismissing.

This may or may not be much comfort to someone wondering how they’re going to pay for education, healthcare and the rest of it. By itself, neither Janda’s analysis nor the discussion above can tell us what the proper cost of human labour might be, only that it’s somewhat more complicated than na├»ve complaints that costs are too high or wages too low make out, and that we might need to be careful what we wish for.

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