The Squeeze Is On

In The Reckoning, I suggested that the decades-long squeeze on labor still has room to run, particularly in light of two technological trends: the growing adoption of robotics and the emergence of 3D printing.

Two interviews released this week lend credence to the continuing squeeze.

First, Ray Dalio of Bridgewater Associates1 sat down with Charlie Rose, and when asked about inequality, responded:

Inequality—I think it’s mostly a function of technology in a global workplace. In other words, technology is having an effect on that productivity that means that you don’t need people the same way that you did before.  And it’s a big—it’ll be a big issue.  And it’ll be a big—a much bigger issue going forward.

Second, Katy George of McKinsey & Company discussed the firm’s most recent concept on manufacturing: Next-shoring.  Essentially, the global labor-cost arbitrage game is over (for now, at least), energy dynamics are changing, and the aforementioned technological advancements (plus digitization) mean capital-intensive manufacturing operations should be located near centers of demand and innovation.  This eight-minute interview provides a more detailed overview:

So in short, the future’s probably going to be amazing.  But as a society, we’re likely going to require radical transformations in our approach to education, corporate financing and our views on “full employment”—among other things.  The journey between here and there may get turbulent; but for now, it’s on to the evening’s entertainment.

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Note:

1 I find Dalio’s principle of “radical transparency” attractive.  This pitch on Bridgewater’s website is captivating.

1 Comment

  1. joec says:

    This is very interesting and represents a significant change force for the outsourcing businesses at ibm, Xerox, Accenture, etc which are built around a labor arbitrage model to produce ‘savings’ for the customers. Global presence, local centric. That said, not sure how well this new thinking applies to products and manufacturing.

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