How a Labor Shortage Could Explain Negative Interest Rates

read this new Tyler Cowen op-ed @ the bar at highway last night and almost spit out my beer. he is channeling your idea of talent being the limiting constraint (sadly doesn't reference you)

"... Venture capitalists will tell you that there are plenty of great ideas; what’s lacking is execution. There simply aren’t enough talented founders to go around....it also may help explain those negative yields. Consider this scenario: You are invested in German bonds at a negative yield. This is not a very attractive proposition. Yet maybe you are already heavily invested in German and U.S. stocks. And since stock markets move together more than before, due to globalization, you may be reluctant to raise your level of risk. Furthermore, in the U.S., by far the single largest equities market, the number of publicly traded companies has been shrinking dramatically. So you might seek out less correlated equity investments that will give you a higher return. In particular, you might consider investing in venture capital. That is one way of investing in new companies. But while new companies can eventually become highly profitable, most of them fail. Under one estimate of the return to venture capital, perhaps only 20% of funded projects succeed, and that is in the portfolios of the top venture capital firms. (The estimates vary considerably, but everyone agrees big winners are hard to come by.) Now consider a scenario from an alternate universe....there is a lot more talent for startups. When it comes to venture capital, rather than having 2 out of 10 companies do well, maybe it is 3 out of 10, with more mega-winners too. That brings a big increase in returns, roughly 50% more, if the new talent is proportional in impact to the old. Under this scenario, capital would flow out of negative yield securities and into the venture arena, or into other ways of starting and funding new companies. It is then probable that yields on government securities would move into positive territory, to attract the funds from portfolios. In other words:The great stagnation in returns stems from a stagnation in finding and mobilizing talent. There are plenty of lamentations about how the world is squandering human potential. There are also numerous hand-wringing discussions about negative yields. Rarely, however, does anyone note that these two problems are related: They reflect an imbalance between how well we mobilize human and non-human resources.I am not suggesting that the shortage of talented labor is the only reason for negative nominal yields. But the negative yields are now so widespread that they can no longer be dismissed as an aberration. It is also noteworthy that the U.S. has the most developed venture capital markets in the world, and it has not yet moved into negative yield territory.I agree with the notion that negative yields are the result of larger structural forces. That’s precisely why the best way to think about them is not in purely financial terms but as a symptom of the difficulty of finding talent...."

also reminded me of a Brynjolfsson's paper that echoed the same thing that found the "genius' share" (so talent's share, defined as the top 3% of all US labor income * by the total US non-financial corporate labor income) ) of income increased from a nadir of 6.7 percent in 1984 to a peak of 31.4 percent in 2006. (included that as a updated citation for your chapter)

Seth G. Benzell and Erik Brynjolfsson, "Digital Abundance and Scarce Genius: Implications for Wages, Interest Rates, and Growth," National Bureau of Economic Research, February 2019, https://www.nber.org/papers/w25585

Tyler Cowen, "How a Labor Shortage Could Explain Negative Interest Rates,"Bloomberg, September 13, 2019, https://www.bloomberg.com/opinion/articles/2019-09-13/negative-interest-rates-could-their-cause-be-a-labor-shortage