Productivity

Productivity is a measure of the efficiency of production. Before the Spanish came to North America, the native tribes spent almost all of their time either hunting or gathering the food they needed to survive. When the Spanish brought the horse to America that all changed. Suddenly, productivity was increased many fold, and life was a lot easier. The tribes found themselves with time on their hands. The tribes that had horses terrorized the tribes who did not and life was never the same.

Productivity has been the measure of the financial strength of America since the Pilgrims first set foot on this continent at Cape Cod. Americans have always had the freedom to exercise their ingenuity to develop the devices or methods that increased productivity and improved their lives.

If you look at a graph of the American economy over time, you will see the correlation between the “good times” and their causes. Eli Whitney’s “Cotton Gin,” Cyrus McCormick’s “Reaper,” the completion of the transcontinental railroad and the assembly line are just a few inventions and systems that dramatically increased production in this country and helped to bolster a strong economy.

Sometime in the 1970’s, it was decided that America would be a “service” oriented economy. Laws and regulations (Free Trade Agreements) were enacted that literally drove manufacturing to third world countries, along with all those jobs. For the first time in our history, we no longer produced anything of consequence in this country except homes and automobiles; a very precarious situation indeed. How can you increase productivity when you don’t produce anything?

For a while, things looked great. The environmentalists were ecstatic; they no longer had belching smokestacks or other toxic discharges to deal with. Products were being produced a lot cheaper in other countries and that kept prices affordable. Tariffs were put in place to protect the American automobile industry, and many foreign manufactures actually set up plants over here to avoid those tariffs and that created American jobs. Then, to bolster the other half of our production capacity, it was decided to lower the lending standards to increase home sales. Productivity “went through the roof” and the economy was booming.

After a while, everybody had a new car and everybody owned a home. Our last two major industries faced a glutted market. Jobs were lost, foreclosures rose sharply, and automobile sales plummeted. Productivity fell to its lowest point in our history.

Historically, tariffs have always been used to balance the competition so that economies that required high wages for subsistence could compete with economies that could subsist on much less. Its time now, to enact more “protective” tariffs. We need to bring the jobs and manufacturing back home. Until this basic economic fact is addressed, our economy will not recover.