Friday, April 22, 2016

Productivity Increases Needed in US

A free market economy operates according to the Price-Demand Curve and requires increases in productivity to keep costs down. 

An early example of this is Henry Ford’s assembly line in 1913.  Cars were too expensive for the average person.  In 1909 The Model T sold for $850 which is equal to $20,513 in todays’ money. By 1913 the Ford Model T sold for $550 or $12,067 in today's money. By the 1920s, it sold for $290 or $3,258 in todays’ money.  In this case, the free market economy worked to the mutual advantage of the consumer and the manufacturer.  This is the model that made America great in the first place.  The automobile allowed further increases in productivity and freedom as families bought trucks and opened their own businesses.

Farm Tractor prices went from $625 to $395 in 1922, allowing smaller farmers the opportunity to cut labor costs and expand planting acreage.

Computers like the IBM System 3 were in use in the 1960s and spread to all areas of business in all industries. NCR supported point of sale transactions, Drafters got Computed Aided Design equipment and accurate manufacturing bills of materials allowed businesses to manage their inventories.

The personal computer was introduced in the 1970s.  The technologies that made this possible included the invention of the transistor by Bell Labs in 1947 that replaced the vacuum tube, the invention of the integrated circuit in 1958 by Texas Instruments and the development of the microprocessor chip in 1971 by Intel. In the 1970s we could go to Radio Shack and build our own PCs.  In the 1980s, IBM PCs were $5000, but businesses were buying them.  In the 1990s, PCs went from $3000 to $1000.  By 2000, PCs were $500 and internet capable.  The PC eliminated the “typing pool” and everybody bought home PCs.

Computer Integrated Manufacturing was proposed in the 1970s, implemented in the 1980s and when refined in the 1990 using Lean Manufacturing process controls, resulted in the end of production errors for all who implemented these design controls.  It allowed US companies the option to send manufacturing overseas in the 2000s.  It will also allow companies to return manufacturing to the US.  Allowing foreign countries to produce our electronics doesn’t help our loss of patent enforcement.

The sensors being put on cars now are the result of advances in parallel processing that reduces response times to enable automated braking in vehicles and allow vehicles to drive themselves.  Again, this may result in lower labor cost and fewer crashes for transportation.   

The recent development of fracking will allow the US to become energy independent and export oil and natural gas to help reduce our $47 billion US Trade Deficit. This would increase US productivity.

Productivity increases are needed nationally.  We have too much debt and need to pay this off.  When this happens to countries, they need to get to work.  The US needs to sell everything it makes to whoever wants it.  It will certainly include energy like oil, natural gas and coal, but will also include food and should include more manufactured goods.
Cost-reducing productivity increases need to be introduced in Healthcare and Education and Government. These 3 industries have high costs and poor outcomes. They need heavy doses of free market economic reform.

Wage increases need off-setting productivity increases in place before they should be implemented. The US has drifted into a ‘managed economy’ tail-spin and needs to use the laws of economics to grow. Unnecessary job-killing laws and regulations need to be repealed, systemic political corruption needs to be rooted out, excessive immigration needs to stop, bad trade agreements need to be stopped, tax policy needs to be reformed and the US National Debt needs to be eliminated. Then, wage and interest rate increases can be allowed to be set by the market. 

Norb Leahy, Dunwoody GA Tea Party Leader


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