PeopleProfitsPensions.com

By: Robert F. Abbott

I see in a news story that the net worth of the average Canadian is now a whopping $165,400, more than ever before. The statisticians got that number by taking the country’s total assets of 5.5-trillion dollars and divided by the number of people in the country - - 30-million and a bit.

We could argue all day, of course, about whether that’s an accurate figure or not. And, people on the left would no doubt raise some sort of convoluted clash of classes argument, and demand more redistribution of wealth.

But, leave all that aside while we reflect on how far we’ve come over the past two hundred years. At least those of us who live in and whose forefathers lived in what has become the developed world.

Few of us know, apparently, that until the beginning of the Industrial Revolution our forefathers had an average net worth that was very near zero. They lived on the edge, so to speak, never sure when a famine or some other catastrophe might literally kill them and their families.

Like residents of poor countries today, there were no social safety nets then, except perhaps the kindness of neighbors. Of course, there’s a good possibility that the neighbors might be suffering through the same catastrophe and unable to help.

It’s also worth noting that before the Industrial Revolution, there was little communication and little transportation between towns just a few miles apart. That meant one town could be undergoing famine while another town a short distance away was enjoying bountiful harvests.

The average net worth of the people in your country may be greater or less than that of the average Canadian, but if you live anywhere in the developed world, you are undoubtedly far wealthier and far more secure than our forefathers of just a few hundred years ago.

You’re reading the commentary section of People, Profits, & Pensions. There’s also a book section, where you can read excerpts from my forthcoming book by the same name, visit http://www.people-profits-pensions.com . In addition to reading, you can also be a book critic and give me your thoughts on what you’ve read.

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 ]