As I like to point out, debates on economic policy suffer badly from the "which way is up problem." At the same time we are constantly hearing concerns about aging baby boomers and large budget deficits (too little supply and too much demand) we also hear stories about robots displacing workers and creating mass unemployment (too much supply and too little demand).

Either of these stories could, in principle, be true, but they can't possibly both be true at the same time. It speaks volumes for the confusion perpetuated in public debates that we do simultaneously hear both concerns raises. (I was once on a radio show where the other person was warning about robots taking all the jobs. He then said things will get even worse when the baby boomers retire and we have to pay for Social Security. Just think, we first have no jobs and then have no workers.)

Anyhow, the NYT had a story about a state-of-the-art auto factory in China which relies largely on robots to put together cars. This is interesting because there have been numerous stories about how China is going to meet some terrible fate as a result of its one child policy, which sharply curtailed population growth. Its labor force is projected to shrink over the next two decades.

In fact, there is basically zero reason for China to be worried about its shrinking labor force. China still has tens of millions of people employed in extremely low productivity agricultural work. It also has many older factories with outmoded technologies. These can be readily replaced with new factories, like the one highlighted here, which will have much higher productivity.

In short, there is pretty much nothing to the China labor shortage story. But on the plus side, many economists can be employed talking about it.