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...

  INTRODUCTION   Japan gets special consideration because it is further along the demographics declining population curve than any other large country. Unless there are major changes in healthcare technology, immigration, public policy, and birth rates, most industrialized countries will follow Japan down the path of declining and aging populations, and smaller labor forces.    PROJECTIONS   Japan’s current (2024) population is around 122 million people. This is the 15 th  year of population decline, down from a high of 128 million. The yearly decreases so far have been small, both in numbers and as a percent of the total. This is expected to continue until 2030. Then population decreases are expected to accelerate to a population of 104 million in 2050 and 87 million in 2070. At the end of the century, Japan’s population is projected to be 60-65 million people, about half its current size.   The high dependency ratio (the number of elderly divided by ...

“The age is running mad after innovation.” Samuel Johnson In the Beginning Why study economic theory and analysis, read economic history, and make economic forecasts? The short answer is because of the Industrial Revolution and the attempt to understand its dynamics and structure. Economics is an attempt to understand the material world we live in, the environment created by the Industrial Revolution. THE BEGINNING OF THE INDUSTRIAL REVOLUTION The Industrial Revolution began in England in the late 1700s. It then spread to America  and western European countries. This post will summarize its origins in England and describe the early decades of the Industrial Revolution in America. The Industrial Revolution was a radical break in history. But in England, many of the preconditions were already in place, as can be seen by the history of the Wedgwood company. The revolutionary generation that first adopted steam engines saw t...

Corporate Growth Strategies  INTRODUCTION The ideas and analysis of the prior chapters can be used as the basis for corporate strategies to drive corporate growth and development. The trends and dynamics of economic development and economic growth determine corporate strategies. This chapter will use the ideas of opportunity cost, the role of information systems, and the mix of defensive and innovation strategies to explore corporate strategies. It is not just a question of corporate growth. It is also a question of corporate survival. Statistical evidence indicates large public companies are disappearing at increasing rates. Companies and their managers have to adapt to changes in the external environment if they are to stay competitive. They must react when there are changes like a shift in consumer tastes, new production technology, new competing products or services, new software to manage the company, new competitors, or changes in the macro economy.  Survival in the...