Jan 15, 2007

Economics Can Be Difficult

Robert Samuelson writes in an article “The Economic Mega-Worry” on REAL CLEAR POLITICS about another worry on the American economic front. Productivity is a concept that is often referred to in statements made by Ben Bernanke or the former Fed’s Chief Alan Greenspan, but never seems to add much meaning.

Mr. Samuelson does a very good job of explaining the effects that productivity can have on our future and the future of our kids. He illustrates that a 2.5% rate over the next 28 years would result in an average income of $73,000 for our kids. If productivity slows to 1%, then the average per capita income would only be $48,000.

Productivity can have a huge effect, what Mr. Samuelson fails to expand on is exactly what, as an average everyday American, we can do about it. It would seem that an increase in demand for American made goods would result in a higher GDP and productivity gains would follow.