Balaji believes technology is flattening the world, while Peter asserts that geography and geopolitics will once again dominate world outcomes over the next few decades. There's truth to both of their visions, and I'm figuring out which factors to weigh more.
Productivity and automation....the incentive to invest in productivity-increasing equipment is considerably driven by the ratio of two quantities: labor cost, and cost of capital. If you're paying $25/hour and the interest rate is 4%, there will be a lot of projects that make sense that don't make sense when you're paying $4/hour and the interest rate is 8%. (There was an interesting study of differential adoption of the Spinning Jenny in England, France, and India under the influence of these factors)
Historically, there has been a benign positive feedback loop in the US between mechanization and wage rates. This loop has I think been to some degree interrupted by offshoring.
Productivity and automation....the incentive to invest in productivity-increasing equipment is considerably driven by the ratio of two quantities: labor cost, and cost of capital. If you're paying $25/hour and the interest rate is 4%, there will be a lot of projects that make sense that don't make sense when you're paying $4/hour and the interest rate is 8%. (There was an interesting study of differential adoption of the Spinning Jenny in England, France, and India under the influence of these factors)
Historically, there has been a benign positive feedback loop in the US between mechanization and wage rates. This loop has I think been to some degree interrupted by offshoring.
Anticipating Part 2, Grant!