Let me try something out on readers. It strikes me that we are in the midst of what we may look back on as one of the great global economic booms of all time. Here's my logic: In the US, let's say that on average our labor is operating with a management and technology factor of "10." As management practices advance, and manufacturing and support technologies are developed, we might move this up to "11" [insert Spinal Tap joke]. We then enjoy the productivity upgrade of going from 10 to 11. However, as the world invests in places like China and India, we see labor that has plugged along at "1" get brought up quickly towards "10." What a huge change! Two billion people with exponentially rising labor productivity -- what an enormous increase in wealth!
I think too many people look at the growth of China through the lens of low labor costs, and assume that as the wages in China begin to rise, the boom will be over. But the source of wealth creation in China is not taking advantage of low wages, it is raising productivity. The boom will continue as long as productivity increases by leaps and bounds; rising wages are just a sign that Chinese workers are getting a share of this productivity increase.