If a labor market somewhere is allowed to saturate, opportunities will end and centers of innovation, will be no more: they get this way because of course, to begin with, there are some condensation nuclei like a good uni doing research or a bunch of government contractors, but these are present in many places - and then, it needs some limitation on supply of labor. If it is present, people get to make a lot, raising cost of living and property, which pushes mediocre people out and attracts the best (increasing net benefit for the best and reducing, then making it negative for the mediocre ones), so you get a place where there is a high concentration of good people and thus high S/N ratio.
Remove limitation and you just stay in the mediocriland and these condensation nuclei result in no rain. Increased buying power of the newly forming local industry does not transpire in (sustained) higher wages because enough new people flock in to fill all the space, as a result there is no ripple effect, no higher SNR, and no reason for others to move in there (just because why, you don't get any benefits either as a worker nor as a business). Labour limitation and making people compete to get in the pool of candidates, is the key.
As a simple analogy, imagine a uni with a 100% acceptance rate. Even if it has some initial advantage like a few famous professors, it is bound to be a useless piece of shit and any initial advantage will quickly dissipate.
Remove limitation and you just stay in the mediocriland and these condensation nuclei result in no rain. Increased buying power of the newly forming local industry does not transpire in (sustained) higher wages because enough new people flock in to fill all the space, as a result there is no ripple effect, no higher SNR, and no reason for others to move in there (just because why, you don't get any benefits either as a worker nor as a business). Labour limitation and making people compete to get in the pool of candidates, is the key.
As a simple analogy, imagine a uni with a 100% acceptance rate. Even if it has some initial advantage like a few famous professors, it is bound to be a useless piece of shit and any initial advantage will quickly dissipate.
Filter is the key.