Sunday, July 6, 2014

Measuring Industrial Production and Productivity in Computer Age Economy of Geometric Progressions

Measuring Industrial Production and Productivity in Computer Age Economy of Geometric Progressions Calls for Returning America Back to the Times of Labor Intensive Export Driven Industries to Generate 'full Employment' Maybe Becoming Absurd Lex Loeb Contributor Network . Contrary to what you hear from politicians and media pundits both left and right, The United States of America is still the number one industrial manufacturer on earth. The US also has a higher rate of productivity than most of the world too. Productivity means we can produce more goods and services at lower cost which also means less effort than occurs in other countries. The US has competitive advantages compared to the rest of the world which in most cases have nothing to do with labor. The big buzz word these days is "education" and "educated workers". There is some truth in that and plenty of examples where there is no truth at all in "education" being the cause of anything. The most impressive productivity tool in America and world economic history is computer and the recording device coupled together. America's industrial production increasingly depends on sales of software and other intellectual property like music and films that can almost instantly be downloaded for a fee anywhere on the face of the earth and beyond with a satellite relay connection This is an economy of geometric progressions never before seen in the history of the world. When Henry Ford invented his version of the assembly line for manufacturing cars he was limited to the number of cars he could produce by the size of his factories. He was also limited by the locations of his factories for exporting cars. That has never changed for the car industry and many others . The software and intellectual property development industries have grown to be larger than many other forms of manufacturing coupled with instantaneous communications and the ability to download content anywhere and to pay by credit card on line it has a complete geometric progression potential . Software creates real viable tools for everyday life that people pay for. Eventually software will drive your car more safely than you can drive it yourself and it will provide the operating mechanisms of robots of every imaginable kind that will save people the need to do hard manual labor in ways that gasoline did to horsepower only on a geometric progression level such that 2 becomes 4 and 4 becomes 8 and 8 becomes 16 and so on and so on. This is here and now and a whole new economic reality. Measuring economic production in America in particular requires a relatively new definition of what industrial products include. Not everyone is going to be capable of operating in the world of intellectual property and software development and production . With the environmentalists closing down all access to exploitation of natural resources lots of people will find they are unemployed and unemployable with polluting jobs moving to places like china. The pollution and waste from high tech facilities is presently something that our politicians look the other because they are promoting those industries as "clean." People may not be aware of how much the high tech industrial powers in the economy pollute because they use loads of rare earth and heavy metals most people have never heard of. Big tax breaks are given to Intel and companies like that are supposed to be clean and then ten to 20 years later we find out that some never before heard of chemical is polluting the ground water because of them. Without companies like Intel with Moore's law we would not be experiencing the geometric progression economy we are all over the world. The point of this article is just to show that old measurements of industrial production in terms of energy and commodities no longer apply in the entirety the way they did and increasingly much of the industrial production and exports are taking a totally different form than gets counted in traditional measurements. Unemployment numbers may not lie but the thought that those old "brick economy" jobs are going to return if politicians do this that or the other thing including job training programs is a lie. Intellectual property transmission as a major part of the economy has a side effect of making the rich seem to be getting a lot faster than the middle class and poor are because it does not count the utilities and tools people get so they may actually be working less or not having to work as hard as they used to . We have all seen on Bill Gates got as rich as quickly as he did creating essential computer software. Instantly you can see how just a few people of the top 1 percent or less will skew the results of figuring out what an averaged income is compared to people earning only thousands of dollars per month compared to billions. Duplication of published software can enable people to communicate as never before which huge savings in the economy that pass more profits though on the other end. People have already forgotten how expensive a long distance call used to be. Few remember when it was nearly impossible sometimes to make calls out of countries like Mexico because the systems were still running on switchboard systems when ATT in the USA had already gone digital. Do you remember the $10 or $50 international phone call? Now calls are almost free for everyone. You can save money on gasoline making calls or save a trip around the world to order Chocolate from growers deep in the heart of Africa and if no chocolate is available there you can just call on Latin America instead. For $10 you can now even get a free phone that comes with a number of pure-paid minutes. For 50 dollars a month you can get a quality cell phone with unlimited calling. What else is industrial and not thought to be industrial as a product? Cable or digital satellite television is. It used to be you would have to walk or drive to a movie theater for entertainment now for a lot lower cost you can just flip 1000 channels to find entertainment. Do we need the government to administer laws to be sure we build so many horse and buggies or cars to keep up with the statistics from 1893? Maybe we need to pay more attention to having the cost of government go down to match what happened to phone service when competition entered the arena and when the new technology came into being. How come the cost of government keeps going up when we have the technology to make it cost a lot less? You can save a lot of money on a program that does your taxes for you on your computer and not have to pay an account to file your taxes for you . What if instead of a big tax bill you could download government information that gave you equal access to government that all the really special interests have? We have horse and buggy government in the era of computer economies of geometric progressions because people think we really need big government. Already if you visit a casino you will see that instead of ATM machines paper stubs with encrypted codes on them become the same thing as money but these only work in the casino. Soon a system just like that will work everywhere instead of ever having to touch any piece of government printed bills or coins. Instead of going to an atm machine and getting 20 dollar bills you will get a slip of paper with an encrypted code on it as cash which means no one ever again will have to load any atm with wads of recycled twenty dollar bills instead they just put in one new roll of paper. You take your fifty dollars cash from the new atm to the cash register in any store and if you get change they give you a new slip of paper for the exact amount instead of bothering with government issued cash again with a new encrypted code on it. In this case money itself becomes an industrial product but not one that is generated until someone demands it. It then gets difficult to gage the size of an economy run by computers in terms of over all industrial production and in terms of value being created. It could mean geometric progression in growth of wealth. People will have to have jobs that have never existed before in order to service all the machines required. Machines can be built all over the world and imported that have no value with out the downloaded software and intellectual property for which there may be a higher rate charged for. The United States of America has much larger economic productivity than any preceding civilization in history. It is certainly not just the United States reaping the benefits of these high levels of productivity. The phenomenon is world wide and apparently sustainable for the foreseeable future. If you ignored the international issue of protection of intellectual property rights you probably are missing the areas of the US economy where the US has enormous industrial power and competitive advantage. It used to be that one would measure industrial production in the US by how many cars were built of how many tons of steel were produced. We still use measurements like these and we track farm production which is still a huge part of the economy. Over the years American industrial powers have lost some market share in some industries to foreign competitors as foreign industrial powers have found they cannot compete with some US industries. The ubiquitous computer in America and the world has started to change virtually everything including what industrial goods are , their production costs and efficiencies, what is and is not an industrial good and the relative productivity. Computers in a device the size of an I-phone can have the power of a giant main frame computer 50 years ago. It is not just that the small hand held computers can have immense computing power or link to vast computer networks but that these devices are everywhere . A computer device that can download any programed code can instantly make itself more productive. Any computer program downloaded that is paid for is essentially an industrial product. The growth of company's like Oracle and Microsoft has been a phenomenon never really before seen in the history of economic development. Just go look at the chart for Cisco corporation on google finance or yahoo finance for the maximum number of years. You see that Cisco corporation shares grew to be about 200,000 percent of what they started out at going up in price during the Internet bubble years and collapsing after that to around 100,000 percent of their initial public offering value. Cisco had such a phenomenal run betting intel, google, Microsoft, oracle and other companies because it was at the center of making the world wide web and Internet a reality with the devices they make. Every time anyone anywhere on the Internet around the world with over a billion participants , downloads anything on line that has to be paid for. Industrial production has to be counted. When we start to measure a near geometric progression in our economic circumstances the economy cannot be failing. One of the profound results has been misleading data that the rich are getting richer as the middle class and poor fall behind. This is simply because a relative few people can transmit industrial programs to millions or billions of computers though out the world and be paid for every copy of the program legally made. Computer programs do things that one used to have to hire people to do. An example is a program like turbo tax which allows the user to download the program and instead of paying an accountant to do his taxes his computer can do it for less money. That is a way for millions of people to purchase advanced industrial productivity at rather minimal cost. Restaurants around the world can pay to download software that organizes their entire business with a special program. For restaurants it is a lot cheaper than hiring book keepers, accountants and a restaurant general manager when the computer will keep track of everything from orders and printing checks to accepting credit card or cash payments. Musicians and performing artists have discovered that they can sell downloads over the Internet. It is similar to the old system of manufacturing records, tapes ,cds. dvds and it may cost consumers less than those older more physical content formats did. The industrial process is thus actually expanding not contracting. Programs not only provide content and computer enablers they provide for increased productivity in almost all industries. An economy that is almost a geometric progression is rinsing in place of an economy where skilled labor was the only thing that mattered. Computers can do a lot of things that used to be done by a lot of different employees who were stuck sitting at a desk for 8 hours or more a day. We are moving from comparisons of horse power in the new economic revolutions to the speed of light of communication in a digital world and it becomes a huge mistake for people to refer to the rust belt as something that needs protection as an industrial Renaissance area. Big mistakes will be made when ideology enters the equation such as government promotions of solar or wind energy farms that actually are less efficient than just growing trees on vacant land and harvesting the wood to burn fires . Trees may still be the ultimate solar energy factory and if not trees then sugar cane and grass. The big gains from solar might only come from putting solar power out into orbit around the earth because of real efficiency gains. It may be pure romanticism to look back at the kind of jobs that were the big deal of the past and not be looking at a future of robotic repairmen or even robots that repair robots. It maybe that the present economy is one big illusion. Maybe economies have always been an illusion. Necessary for any economy is relative scarcity of resources which is why socialist economies never get running like capitalist ones do. Right now health care is a scarce resource that comes at a high price. Instead of the government looking to infuse more competition into the field by offering to train 15,000 new doctors or to build computers that can be our doctors of the future the government is going to spend an infinite amount of money hiring 15,000 new irs agents because people in government believe that creation of permanent quality jobs like these will get the economy rolling. Unfortunately although it might lead to more taxes being collected and more people being put into government health care programs it cannot reduce costs without rationing resources because government has done absolutely nothing to increase the available health care resources as a result of their "solid well meaning planning." Instead of government making the tax system automatic with a flat tax system that allows the economy to spend less money paying taxes and more time making money we end up with illogical means to achieve a hoped for end. That means nothing will happen to make health care costs go down or medical services to be more effective. Instead of government giving patent rights of generic drugs to patent holding drug manufactures in exchange for lower prices they tax the drug companies and medical device makers more expecting those taxes to pay for other's access to the same goods. It is bizarre thinking but still very popular. Instead of making health care services and goods tax free or greatly reducing the taxes they raise taxes further limiting supply. To top it off the government will not allow heath insurance companies to offer their best products in all states in exchange for concessions on the rules that govern them. Health care is just waiting to become part of the geometric progression economy. With the cut politicians want from all aspects of the "system" in exiting and higher taxes it is no wonder that health care is not going where telephone service went from the days of the $10 long distance operator assisted phone call to the near geometric progression of unlimited free calling plans. Government is still actually measuring economic growth in the same terms it did when horse and buggies were the predominent mode of transportation. What is and is not an industrial job and what is an is not counted as an export product might surprise you. In the new world of geometric pogression economies phone calls, like computer software downloads or logging into a nonsense site like facebook even can be producing an unseen economic product just as valuable as hay to feed horses in the old world order of the economy that was just 120 years ago. . Close

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