Apocalyptic Economics: How Mass Death Boosts Wages

Featured in Zero Hedge

Daniel Drew,  4/7/2015


To the 99%: Choose your poison: death or unemployment.

As Zero Hedge recently reported, a record 93.2 million Americans are not working. The presence of so many people on the sidelines shows the lack of demand for workers and an oversupply of labor. As I have noted previously, some employers like to say there is a shortage of workers, but they are lying. If there were a real shortage, wages would be rising, not stagnating or falling. Three rounds of quantitative easing from the Federal Reserve shotgun of monetary policy have failed to solve the problem.

Unfortunately, the most effective solution is a very grim one, and it is devastating and immoral. I'm not advocating this as a solution, but reality cannot be denied: The most effective way to raise wages would be orchestrating World War 3. If a few billion people disappeared, it would clear out the oversupply of labor, and wages would rise. This is basic economics, and history shows it is true. When the Black Plague wiped out a third of the European population in the 14th century, wages increased. Also, during the population boom just prior, wages had been falling. This clearly shows the inverse relationship between labor supply and wages. Once the oversupply of labor was cleared out, the survivors enjoyed a higher quality of life.

14th Century Wages

Paul Tudor Jones recently warned that enormous wealth inequality will lead to revolution, taxes, or war. He is right. Without some form of government intervention that artificially raises wages and prevents the rich from exploiting the poor, there will eventually be violence. That violence will clear out the oversupply of labor and fix the problem in an evolutionary way. If this happens, you can be sure the war will be quite profitable for the arms dealers and defense contractors.

With so many advances in medical science, mass death as a result of an epidemic seems less likely. War will probably be the cause. However, last year's Ebola situation reminds us just how limited we still are. And on Monday, fleas tested positive for plague in Arizona.

The economics of the apocalypse are knocking on our doorstep.