Productivity

While I was pondering on the problem of minimal wage, it came to my attention that Warren Buffett pointed out the root of the problem to Barack Obama:

A high unemployment rate is the result of excessive un-utilized productivity in the society.

You don't see the relation? It goes like this:

A hundred a fifty years ago, there was a place called California. The land is fertile and very suitable for agriculture. Most of the people there earned their living as farmers, and the product of the land was sufficient to feed everyone.

A few decades later, the industrial revolution came. Much of the manual work in farming could be done by machine. The amount of crop produced remained the same and could meet the need of the whole population. (Actually it increased because of advances in technology.) However, only one-tenth of the citizens needed to be farmers.

How about the rest of them? They came together and drew pictures. The little place they settled was later known as the Hollywood, and they produced Snow White and the Seven Dwarfs. The artists earned their salt and bread and butter; the farmers (and everyone) enjoyed an excellent movie. The living standard improved for the whole mankind.

(To be continued.)