PeopleProfitsPensions.com

By: Robert F. Abbott

As elections come and go, there’s one central theme that comes up time and time again, anywhere free elections (and sometimes not-so-free elections) occur.

And that theme is prosperity. Voters want ever higher standards of living for themselves, and they want their children to enjoy even higher standards.

And, politicians promise to deliver or at least to try to deliver that prosperity, “A chicken in every pot,“ as the saying used to go. Getting from the idea to reality has always been a challenge, though, in more ways than one.

Probably the single best way to increase prosperity is to increase productivity. By productivity, I use the standard definition, which means getting more done or more made while using the same amount of time, invested money, or resources.

However, productivity increases often come at a cost, specifically existing jobs and sometimes wage rates. For example, a company invests in new equipment and that new equipment does the job of a number of workers. The company may then lay off the unneeded workers, or cut their wages.

Consider factories and how they’ve changed over the past century: Once, workers stood shoulder to shoulder on assembly lines, but now a few better-trained workers use machines to do the work that hundreds of lesser-trained workers used to do.

So, there’s a price to pay when we, as a society demand to be ever more prosperous. That price is the ongoing pruning of jobs or the reduction of wages in an existing sector.

And, it’s a price worth paying. Overall, society comes out ahead when productivity increases take precedence over the maintenance of jobs that no longer make economic sense.

[You’re reading the blog version of People, Profits, & Pensions. In the book version, you can read excerpts from the forthcoming book of the same name, at http://www.people-profits-pensions.com ]