On balance, the empirical evidence together with anecdotal evidence from the market indicates that secondary market subordinated debt spreads are generating indirect market discipline on banking organizations. While market discipline is currently exerted directly and indirectly on large U.S. banking organizations, the strength of this discipline could be enhanced by policymakers in a number of promising ways.
But this seminal shift in the world's workforce is producing, in effect, a level adjustment in unit labor costs. To be sure, economic systems evolve from centrally planned to market-based only gradually and, at times, in fits and starts. Thus, this level adjustment is being spread over an extended period.