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Something I've never been clear on is how this dynamic is controversial. Obviously if labor is scarce wages will go up, eating away at the 'income inequality' boogeyman.
But try to argue that flooding the country with cheap labor will (besides making housing much more expensive) drive down wages and people smirk and tell you that's the "lump of labor" fallacy.
I don't think it is though. Yes, having more people around also generates some economic demand, but surely this is in the same sense that broken windows will generate economic demand? Unless those people are actually providing more value than they cost -- and here we must consider healthcare, education, wear and tear on infrastructure, social friction, decline in cohesion, crime, and so on -- doesn't the argument come down to "Well we have more mouths to feed so that generates economic activity"? And isn't that rather the broken window fallacy?
What is going on here?
It's very easy to make wages go up: just print more dollars. What actually matters is productivity: how much those dollars can guy. You don't make an economy more productive by removing labor from it.
No, because people produce wealth.
Pretty sure this is begging the question I'm asking. People can produce wealth, but they must consume it as well. The former is potential; the latter is given. And if people are, on net, consuming more than they're producing, it's not at all clear to me how "just add more, it generates economic demand" isn't isomorphic to the broken window fallacy.
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