Dear Friends,
It seems to me that One of the biggest factors leading to the historic rise in affluence of the American people in the last two hundred years is the unprecedented rise in productivity led by American workers. Today, the American worker is more productive than any other worker, anywhere in the world.
Productivity is simply a measure of the efficiency to produce a given output with given inputs. A higher productivity workforce can produce more and better outputs from the same inputs than a less productive workforce. The USA for example produces more GDP for the amount of energy it uses than any other nation. Including the European countries that signed on to Kyoto. They are far behind the US in energy efficiency as measured in GDP output per barrel of oil input.
The main reason why American workers are so productive, relative to the rest of the world and are paid more as a result, is that American workers have several advantages.
The US transportation infrastructure is more flexible. Americans, for the most part, own and use cars to get to work. By doing so American workers leverage their productivity. When a person drives to work they have the advantage of flexibility of work hours. They need not work in conjunction with mass transit schedules. Another advantage of mobility of the American workforce is that Americans are not tied to a certain urban area. If a better job opens thirty miles in the opposite direction, outside the reach of mass transit, an American worker can take advantage of the new opportunity. The worker tied to mass transit must stay within the footprint of the mass transit system.
Basic infrastructure is endemic. Telecommunications infrastructure is everywhere, as is electricity, water and sewage. These alone give American industry great flexibility. This allows US business to move to wherever they can find an underutilized workforce. (Knowing utilities will be available). This keeps competition for jobs between areas within the US near perfect. Actually perfect competition would level the playing field such that no area of a nation would enjoy a higher or lower standard of living. As perfect competition in business gives the consumer the best product at the lowest possible cost to him. Capitalism thrives on perfect competition in both business and in political jurisdictions.
A worker supplied with tools is far more productive than a worker without them. The better suited for the job the tools are the more productive will be the worker. In fact he will be able to work less hard and have greater output than someone without them. Take a screwdriver. A worker with one can easily start and sink screws say at a rate of one a minuet. A worker making do with a dime can start and sink one in three minuets. The worker equipped with a screwdriver can be said to be three times as efficient (productive) than the worker making do with a dime. Moreover the worker making do is subject to greater likely hood of being injured. Further reducing his output and dramatically increasing overhead.
What drives the invention and production of infrastructure and tools is innovation. Innovation that is fostered by business and government investing in basic research. Business, being beholden to the bottom line, must innovate where they can find quick payoffs. Government being less short term profit oriented, can invest in longer term innovation, with longer term payoffs… Like space travel.
Historical records show that the march of productivity in the US has not been uniform. It has had times of fast growth followed by periods of slow growth or even reductions in productivity. The period starting after the Second World War and ending around Nineteen Seventy Three saw a great expansion in American productivity growth. The end of this period of productivity growth followed Nixon’s dismantling the manned Space Program in favor of the then new space shuttle. US investment in Space technology stagnated until Ronald Regan started research on the International Space Station.
In the early Nineteen Nineties American productivity growth resumed. This coincided with the widespread replacing of non Y2K compliant computers by American business. This widespread rebuilding of American data manipulation kick started America’s growth in productivity. As always productivity grows when new technology is introduced and slows when new technology introduction is stagnant.
No other metric can predict the fortunes of a nation better then productivity growth. Maybe John Maynard Keynes was partially right. But instead of burying money at the bottom of a well and having business dig it up… Government should try to put people permanently on the Moon. When that has been done reach farther and farther out. This will ensure steady productivity growth for the workers of the world. Into the future.
Workers of the world would have higher standards of living and would have to labor less. A win for labor. But the Elite would loose leverage on us.
Maybe that is why the far sighted US government has gutted spending on NASA?
