Great post, as always, @spectrumecons! Hopefully, you won't mind too much if I present a somewhat Austrian alternative to your analysis of labor:
Fundamental concepts like "scarcity" are usually the place where different schools of economics point in different directions. Austrians, for example, see a question like "is labor scarce?" to be a fundamentally confused one: Labor is, by very definition, scarce since it just is the scarce means according to which every person must allocate their time and actions within this world. Whenever we have to choose between two goods, it is precisely because our labor is scarce that we are unable to enjoy both.
The real question is whether specific people's labor is well coordinated with and adapted to specific people's demands within the market? ("Society" as such can never have too many or too few laborers since society is not a person with its own needs or wants to satisfy.) Such a discoordination within the market might be malevolent (you gave a great example of this) or merely incidental in nature (communication breakdown). The solution might be the "freeing up of markets" or it might require some type of state intervention. Either way, none of these questions should be replaced by the question of whether "society" has too many laborers or not. Such a question simply does not make sense....
At least that's what Austrians think.
RE: Scarcity (Part 4) - Labour, Capital, and Entrepreneurship