"Want a way out of the recession? Create jobs by saving resources"

Saw this in the Business Times today. Author is "visiting senior research fellow at the Institute of Southeast Asian Studies, Singapore, and the author of 'How Asia can Shape the World: From the Era of Plenty to the Era of Scarcities'. He is also adjunct professor at the Singapore Management University & Copenhagen Business School." Not sure I follow the arguments in the article, might have to pick up the book one day.

"The core is high labour costs with low prices on protecting the environment and saving resources. This reflects a perception of scarce labour and abundant resources. The result is efforts to save labour (increase conventional productivity) and hold the floodgates open for use of resources. And it worked; that's why unemployement refuses to fall - we are successful in our endeavours to reduce labour per unit of output. On top of that, current wage levels make it cost-effective to invest in emerging economies. Resources are still priced in as a plentiful factor irrespective of recent hikes in commodity prices telling a different story. The price mechanism does not punish, as it should, using more resources than necessary per unit of output. Despite various financial incentives, it is cheap to pollute; consequently, waste flows into the environment. The combined result is unemployment, resource waste and deterioration of the environment... The new paradigm calls for exactly the opposite. Rising scarcities of commodities make it profitable to cut down o nthe use of resources in the production process. Abundance of labour... calls for more use of manpower. The key is to face the music and start the politically agonosing, economically necessary and ecologically imperative process of changing relative factor prices. Labour costs (wages) must fall relative to commodity prices - otherwise it won't happen and we will stay where we are right now, like it or not."