Comment by starspangled 10 months ago
Nobody would be investing in labor intensive industry because it doesn't return as well, so there would be a huge oversupply of labor, so prices would already be at their floor.
That doesn't seem to be what's happening though.
Right, you're replying to my hypothetical which does not describe reality. You contradict the post I first replied to, so it supports my point.
What
Let me echo back what I understand to be your argument: “If there were accelerating returns to capital moving the equilibrium of labor/capital-intensiveness mix, then there would be no demand to further reduce the cost of labor”
My argument is: regardless of where that equilibrium is at any given point in time, it will almost never be 0% labor-intensive, and anyone engaged in labor-intensive production would always have a preference for even lower-cost labor.
So the answer to the question of, “why do businesses want immigration despite a more capital-intensive mix of production” is “because cheaper labor is better regardless of how much labor you need.”
> What
You're replying to basically a strawman I wrote. I didn't say that is what's happening, I said that's what would be happening if investment was all going into capital and not labor intensive industry as OP said.
Economic systems aren't typically describable with terms like "nobody." There's an equilibrium in investment levels between capital- and labor-intensive sectors, and that equilibrium is moving. If there was a huge oversupply of labor, then it'd make it more compelling to invest in labor-intensive sectors, which would both shift the equilibrium and eliminate the oversupply (which is what has already happened/is happening every hour of every day, thus there's no massive oversupply).