EconAir

Adam Smith - Our Founding Father ADAM SMITH VISITS A PIN FACTORY   Adam Smith’s description of a pin factory is on the first page of  The Wealth of Nations .  (Chapter 1 – “Of the Division of Labour”)  Drawings of pin factories of this period show workers using hand tools. Smith says the process can be broken down into 18 distinct steps, including packaging the pins. Smith mentions that pin factory workers were poorly paid, despite their high productivity.    Adam Smith says he visited a pin factory employing 10 men who produced 48,000 pins per day.  If each of the ten workers had done all the steps themselves, Smith says each worker could produce only 10 or 20 pins per day.  So the pin factory replaces 2,400 to 4,800 pin makers. The increase in labor productivity (output per person per day) is as high as 50 times that of individual pin makers.     This reduction in unit cost or average cost (AC) and the huge i...

FIND POSTS BY CATEGORY CATEGORIES The theme of this blog is that innovation, not price competition, is the basis for understanding economic growth, competition, and analysis. And, like many other former college professors, I also digress. I Heard the News Today The Beginning of the Industrial Revolution Basic Concepts and Theory Market Behavior and Structure Market Dynamics and Information:  How Markets Work Economic Theory and Markets Demographics and Economics American Economic History American History Management World War I:  The Beginning of the 20th Century The Roman Republic and America - Differences and Some Possible Parallels Economic and Fiscal Policy Financial Markets and Investment Strategies Foreign Exchange Markets The United States American Foreign Policy and International  Relations Geopolitics and the Global Economy Geopolitics of Oil and Natural Gas Visionaries Humor, Satire, Whimsy I HEARD THE NEWS TODAY Tariffs and America's Economic War wi...

The Future Labor Force   SUMMARY This post is a summary of some of the themes of previous posts on demographic and population projections, with an emphasis on how demographics will impact economic growth. See bibliography at the end of this post. For a list of all blog posts on a wide variety of topics, see  List of Posts by Topic on my blog.   Almost all countries outside of Africa are already facing or will soon face below replacement birth rates. Without immigration, this could lead first to smaller labor forces with greater numbers of retired citizens. Eventually, however, both the number of workers and retired citizens will decrease. During both stages of the transition, there will be issues of how to increase total output, maintain standards of living and allocate income between the two major age groups. See  Global Demographics and Population Projections .   Population and economies can growth even if birth rates are below replacement. But eventually both...