To: Boplicity who wrote (6968 ) 11/27/2000 2:21:56 AM From: Walkingshadow Respond to << I contend the economy will always find away around tight job market with more and more use of technology. >> try to find a way to expand in the face of a tight job market. But to what degree it can succeed is arguable indeed. I submit that a tight job market sooner or later, probably sooner, exerts an inflationary pressure. The economy was, in my view, clearly expanding faster than the capacity of any technology to provide a solution to the tight labor market. I realize that many employers have outsourced labor into the global market. But even a brief conversation with management of most companies in most industries I think will be convincing evidence that there were several forces at work there which were destined to limit growth in an inflationary fashion regardless of the Fed: 1) The increasing inability of industries, particularly high tech industries, to attract and retain qualified personnel; 2) the sense among labor that they have the upper hand, and could now negotiate for a slice of the pie from a position of strength. Increased growth would only serve to exacerbate the first because accelerating growth requires more and more qualified personnel, and thus the shortage would become more acute, and have an even greater inhibitory effect on growth. Also, increasing incentives must be paid to qualified personnel in order to retain them, and at least some of these costs must be passed along ultimately to the consumer, stock options notwithstanding. This in turn would tend to exacerbate the second, the ultimate result of which would inevitably have been slowed growth in an inflationary environment.increasing inflation, with the Fed now virtually powerless to act, since either easing or tightening would be likely to only make things worse.
