Have you heard of the great resignation? The shortage of truck drivers and restaurant workers in the U.S. and Europe has hindered reopening and triggered a hawkish voice that we are about to see a spiraling wages? Think so.

But have you ever heard of lying flat? If not (we didn’t have until a few days ago), then you should.

A big question facing economists and the market is whether the current high inflation is a temporary phenomenon or a harbinger of a more permanent phenomenon. To truly know whether price pressures will last longer, the most important thing we need to understand is whether the dynamics between labor and capital have fundamentally changed.

Hawks warned that shortages heralded a terrible wage-price spiral in the United States and parts of Europe in the 1970s. Workers’ demand for higher wages triggered price increases, which in turn triggered further wage demand. Fed Chairman Paul Volcker successfully (but painfully) stifled this dynamic by raising interest rates by 10 percentage points to more than 20% in the early 1980s.

In the decades since, it has been smooth sailing in terms of inflation. However, now, with inflation lingering after the pandemic, central bankers (and their financiers) are watching labor market dynamics more closely than at any time since the Volcker era.For example, the Bank of England in its latest Monetary Policy Report:

The focus on Threadneedle Street and the Federal Reserve is far less than the big resignation, but the result may be much more important and is a phenomenon that has emerged in China.

As early as April, 26-year-old Luo Huazhong posted an article on Baidu with the username of a kind traveler about why he chose to reject the rat race that has become a feature of many Chinese young people’s lives.The translation is as follows Polite quartz:

I haven’t had a job for two years, I just wandered around and I couldn’t see what was wrong. The pressure mainly comes from comparison with peers and the values ??of the older generation. These pressures continue to emerge. .. However, we do not have to comply with these (norms). I can live like Diogenes, sleeping in a wooden barrel and enjoying the sun. I can live in a cave like Heraclitus and think about the “logo”. Since there has never been a school of thought that insists on human subjectivity in this land, I can develop one by myself. Lying down is my philosophical movement. Only when lying flat can a person become a yardstick to measure everything.

The post resonated and was shared tens of thousands of times on Chinese social media, sparking a movement later called “Tang Ping” or “Lying Down”.Flat lay is now popular until last month Chinese President Xi Jinping condemn One of the official publications of the Communist Party of China.

If Xi Jinping’s condemnation is not enough to stop the movement, then wage increases may be.As the freelance writer Qin Liwen pointed out in her episode “Poke with Chopsticks” podcastThe reason the movement gained momentum is that millennials no longer believe that they can make enough money to provide safety for themselves and their parents, and as only children, they are mainly responsible for:

The mentality is, if I can make more money, I will do it. You know that you have secured safety for your family or yourself. If they get paid more, they will still work without protesting because they still feel they can control their lives. This is very Chinese. In Europe, you can’t understand, because I see people in Europe would rather take a three-month vacation and give up a lot of salary. In China, this is not the case. In China, you need money to take care of your parents. There is no valid health insurance. ..

… Everyone wants more money. So if their salary continues to rise, people will still fight for it. but it is not the truth. This is why they lost their way.

Qin also pointed out that although the number of participants should not be exaggerated-there are many young people willing to stay on the “hamster wheel”-the movement does reflect a broader “darkening of hope”.

Perhaps “lying flat” will eventually collapse in the face of suppression. We are not experts in the social dynamics of Chinese society (if you are, we welcome your ideas in the comments section). But we believe that policymakers in the United States and Europe should pay attention to China’s millennials as much as they pay attention to labor shortages in their own labor markets.

Since the mid-1980s, China’s opening up and economic development and globalization have become one of the most important drivers of global inflation dynamics. It is a major contributor to the Great Moderation, which allows the central bank governors who follow Volcker to control price pressures with relative ease. Although cheap Chinese labor is far from the only factor limiting the wages of Western workers, More than 800 million people The working age there is A sort of Explain why decades of low unemployment rate failed to bring about the factor of salary increase.

China’s wages have Rising rapidly in the past ten yearsHowever, “lying flat” shows that the pace we are seeing is far from enough to meet the needs of young people.Twenty to forty-year-old people Slightly less than 30% Among China’s 1.4 billion people, as the one-child policy triggers huge demographic changes in the coming decades and shrinks the working-age population, their importance to the labor market will increase significantly.

If these millennials succeed in getting the better terms and conditions they want, then lying flat, rather than resigning, may be an important factor that will ultimately make global wages and prices rise in a more lasting manner.