Friday, January 4, 2013

New Technology Doesn't Mean Cheaper Goods

With all the advances in modern technology over the past 30 years --- computers, robotization, animation, increased worker productivity, mass production, rapid transit, (etc.) --- and even with corporate subsidies, one would think that this would equate to cheaper prices for goods and services. But yet prices keep going up and wages remained stagnant. 

We could have a glut in labor (like we do now) which results in lower wages, but prices keep going up. We could have a glut in the production of gas and oil (and even with government subsidies) but prices keep going up. What good is modern technology (subsidized by government research and development) if the average consumer doesn't reap any of the benefits until such technology becomes obsolete? 

Instead, by making goods and services cheaper and more abundant, it only allows for bigger corporate profits and extremely larger CEO salaries. "Excess" domestic oil is sold on the global market for higher prices when countries like China began adding millions of cars to their highways; it didn't lower our gas prices. China owns their oil companies, and subsidizes the price of their gasoline --- which costs 50% less than ours does.

In 1915 the Ford Model-T cost $440 when their workers were earning $1 an hour. By the 1920s, the price had fallen to $260 because of increasing efficiencies of assembly line technique and volume.

The starting wage for a Ford employee today is $14.50 an hour and their pickup trucks range from $29,000 to $36,000.

The reason is: The basic fundamentals of capitalism. Goods and services are sold at "what the market can bear". In other words, currently 50% of all American workers earn less than $27,000 a year. If they earned $50,000 a year, Ford trucks would probably cost twice as much as they do today.

We only benefit from cheaper wide-screen TVs and not-so-cheap iPhones because they are made in Chinese labor camps.

1 comment:

  1. Amen.

    Eventually we will reach a point (not in our lifetime) where nobody can afford their products if we keep on this path, and at that point all prices and sales quantities will drop to zero.

    Maybe by then we will wake up and do our part to Keep America At Work