Stagflation and the Brownian Motion to Mean Labor Costs

Today's spread between "countries who can (do it cheaply)" and "countries who can't (compete on cost)" is closing, and this is closing as consumers increasingly make price based choices.

So what does this mean? My guess is that G7 "stagflation" is the pull of localized wage deflation (stagnation at best) versus the push of exported emerging market wage inflation. Maybe we can blame the free flow of capital, perhaps the free flow of information, or even the encouragement of global democracy. In any case the cheap labor of the world has finally got the means to take notice of their lot in life and they are and will continue to demand more.

Compounding this may well be consumers tightening their belts by consuming cheaper instead of less. This puts upward pressure on cheap G7 external labor while simultaneously putting unemployment pressure on G7 internal labor. This translates into a higher cost of cheap goods independent of G7 wage or employment growth, and that sounds like stagflation to me.

Will this change the price of a Monet? Doubtful. But it will continue to effect high end retailers the more expensive end of the non durable consumer cycle.