Here is a video from the IMF…
At the 4 minute point, the representative talks about youth unemployment in Europe and recommends two things…
- training to appropriate skills which would make someone more valuable.
- bringing down costs of employment.
Oh, how wonderful!… Make your skills more valuable only to meet wage suppression. They just do not understand that people need to be paid more.
“The insufficiency of effective demand will inhibit the process of production in spite of the fact that the marginal product of labour still exceeds in value the marginal disutility of employment.”
In other words… It is pointless to increase the marginal product of labor when you are faced with insufficient effective demand.
Every country has a self-interest to compete by lowering labor costs. In effect, the advanced world is continually sinking into a secular stagnation. The key is for an organization like the IMF to step in and recommend a coordinated effort among countries to raise labor income, not decrease it, and thus increase effective demand for production. That will create investment.
Just pay labor more!