Tariff equation: productivity-per-hour promotion formula for a productivity per hour focused Utopia
The previous blog-post ( http://davidvirgil.blogspot./2009/04/tariff-for-world-trade-could-properly.html ), I suggested a formula for a basic tariff on imports focused on globally discouraging transportation inefficiency, isolating the situation to foreign labor cost (Xaw) in location Xa, domestic labor cost (Aw) in location A, and cost of transporting product Theta from Xa to A for sale in location A (Xat).
The formula can be expanded to include non-wage production costs.
Let Xap represent the non-wage production cost at location Xa, and Ap the non-wage production cost at location A.
One obtains a situation wherein: Xap + Xaw + Xat = Ap + Aw in equilibrium, when the price of a given product, product Theta, using the alternative of importing to location A from location Xa, is equal to the price of product Theta if the alternative of location A producing product Theta in location A is used.
Non wage production costs reflect productivity per hour.
Productivity per hour is affected by: natural resources, environment, human talent, human skill, humans paid at levels that maximize productivity per hour, managers organizing humans to work together in efficient ways, geographic location advantages, etc.
Productivity per hour is not the same thing as productivity per dollar paid. Ed could be more productive per hour than Joe, at the same time Joe could be more productive per dollar paid than Ed.
A world dedicated to productivity per hour would tend to pay workers more because in the current world that emphasizes productivity per dollar paid, workers are paid less than the level at which their productivity per hour is maximum.
Productivity per hour changes depending upon the amount paid per hour, and is effected by the amount paid per hour.
It is possible to determine the wage level at which a worker's productivity per hour is maximized. If there is more than one such wage level, the lower of these wage levels is what I call the minimum productivity maximizing wage level, or MPMWL.
A world that emphasizes productivity per hour, would be a world where the workforce producing a given product, product Theta, would be composed of the persons whose productivity per hour is superior with regards to production of product Theta. This would improve the world's economy in terms of the amount of hours the world put into producing the things that it consumed.
Thus the world's wealth would increase in terms of leisure time, which reasonably must be considered a significant type of wealth.
At university I learned one way to measure such leisure time is based on the concept of opportunity cost; if a person can get paid $10/hour working, his time is said to be worth $10 per hour.
Fact is, a sports team does not perform as well, when you have the goalie play center -forward, and transfer the center forward to play goalie.
When you have people who excel in terms of productivity-per-hour when it comes to the building automobiles engaged in agriculture instead, and those who excel in productivity-per-hour in agriculture engaged in building automobiles, you have a non-optimal situation similar to the goalie being switched with the center-forward.
A world focused on productivity per dollar paid, to a significant extent fails to respect and reward those who excel in terms of productivity per hour; this inhibits human reproduction amongst those who excel in terms of productivity per hour; this in turn results in long term economic damage to such a world.
World X could be superior in wealth and income, compared to a world Y which is a much better place to live in compared to world X, even though world Y is inferior in total wealth and income--because world Y is superior in terms of wealth and income per hour worked.
Generally I would expect that a world which competently emphasized productivity per hour (without losing sight of the lessons that have been produced by an economic history derived from a world focused on productivity per dollar paid), to be superior in terms of wealth and income to a world focused on productivity per dollar paid.
A world focused on productivity per hour, would be a world in which employees were paid enough to be able to buy goods and services that increase their productivity. Such a world, would feature employees with money, time, and energy available to invest in improving their own productivity.
A mature economics is able to place quantitative values on leisure time and on the advantages of high pay per hour worked, able to discern and appreciate a world that excels in terms of productivity per hour.
If I gave you the choice between having to work 70 hours per week to make $700 a week, and working 20 hours per week to make $600 per week, which would you prefer? You'd prefer $600 per 20 hours work. Likewise, a world focused on productivity per hour could excel a world focused on productivity per dollar paid.
A world focused on productivity per hour would utilize tariffs to help insure that the employees whose productivity per hour is the greatest got the work that is to be done, as opposed to employees excelling in terms of productivity per dollar paid. This would rectify situations involving products being produced in locations featuring low productivity per hour and exported for sale to locations featuring high productivity per hour for the product in question.
A first estimate for an equation representing what this tariff should be:
Xaph = productivity per hour producing product Theta in location Xa.
Aph = productivity per hour producing product Theta in location A.
XAprice = price of product Theta when imported into location A from location Xa for sale in location A
Aprice = price of product Theta when product Theta produced in location A
Pdiff = Aprice - Xaprice
The productivity per man-hour tariff applied to all imports in the new world emphasizing productivity per hour would be (javascript style):
if (Aph > Xaph & Aprice > Xaprice)
{productivity_per_hour_tariff = Aph/Xaph * Pdiff}
Cognizant of: the need to be cautious with a new method; the fact the productivity-per-hour promoting tariff could be combined with other tariffs; the possibility that a nation may need to be given a chance to improve its productivity per hour; and, inaccuracy re productivity per hour measurements, this could be adjusted as follows:
if (Aph > Xaph & Aprice > Xaprice)
{productivity_per_hour_tariff = mult * Aph/Xaph * Pdiff}
//mult represents number between 0 and 1
Note: the asterisk of course represents the multiplier sign.
@2009 David Virgil Hobbs
The formula can be expanded to include non-wage production costs.
Let Xap represent the non-wage production cost at location Xa, and Ap the non-wage production cost at location A.
One obtains a situation wherein: Xap + Xaw + Xat = Ap + Aw in equilibrium, when the price of a given product, product Theta, using the alternative of importing to location A from location Xa, is equal to the price of product Theta if the alternative of location A producing product Theta in location A is used.
Non wage production costs reflect productivity per hour.
Productivity per hour is affected by: natural resources, environment, human talent, human skill, humans paid at levels that maximize productivity per hour, managers organizing humans to work together in efficient ways, geographic location advantages, etc.
Productivity per hour is not the same thing as productivity per dollar paid. Ed could be more productive per hour than Joe, at the same time Joe could be more productive per dollar paid than Ed.
A world dedicated to productivity per hour would tend to pay workers more because in the current world that emphasizes productivity per dollar paid, workers are paid less than the level at which their productivity per hour is maximum.
Productivity per hour changes depending upon the amount paid per hour, and is effected by the amount paid per hour.
It is possible to determine the wage level at which a worker's productivity per hour is maximized. If there is more than one such wage level, the lower of these wage levels is what I call the minimum productivity maximizing wage level, or MPMWL.
A world that emphasizes productivity per hour, would be a world where the workforce producing a given product, product Theta, would be composed of the persons whose productivity per hour is superior with regards to production of product Theta. This would improve the world's economy in terms of the amount of hours the world put into producing the things that it consumed.
Thus the world's wealth would increase in terms of leisure time, which reasonably must be considered a significant type of wealth.
At university I learned one way to measure such leisure time is based on the concept of opportunity cost; if a person can get paid $10/hour working, his time is said to be worth $10 per hour.
Fact is, a sports team does not perform as well, when you have the goalie play center -forward, and transfer the center forward to play goalie.
When you have people who excel in terms of productivity-per-hour when it comes to the building automobiles engaged in agriculture instead, and those who excel in productivity-per-hour in agriculture engaged in building automobiles, you have a non-optimal situation similar to the goalie being switched with the center-forward.
A world focused on productivity per dollar paid, to a significant extent fails to respect and reward those who excel in terms of productivity per hour; this inhibits human reproduction amongst those who excel in terms of productivity per hour; this in turn results in long term economic damage to such a world.
World X could be superior in wealth and income, compared to a world Y which is a much better place to live in compared to world X, even though world Y is inferior in total wealth and income--because world Y is superior in terms of wealth and income per hour worked.
Generally I would expect that a world which competently emphasized productivity per hour (without losing sight of the lessons that have been produced by an economic history derived from a world focused on productivity per dollar paid), to be superior in terms of wealth and income to a world focused on productivity per dollar paid.
A world focused on productivity per hour, would be a world in which employees were paid enough to be able to buy goods and services that increase their productivity. Such a world, would feature employees with money, time, and energy available to invest in improving their own productivity.
A mature economics is able to place quantitative values on leisure time and on the advantages of high pay per hour worked, able to discern and appreciate a world that excels in terms of productivity per hour.
If I gave you the choice between having to work 70 hours per week to make $700 a week, and working 20 hours per week to make $600 per week, which would you prefer? You'd prefer $600 per 20 hours work. Likewise, a world focused on productivity per hour could excel a world focused on productivity per dollar paid.
A world focused on productivity per hour would utilize tariffs to help insure that the employees whose productivity per hour is the greatest got the work that is to be done, as opposed to employees excelling in terms of productivity per dollar paid. This would rectify situations involving products being produced in locations featuring low productivity per hour and exported for sale to locations featuring high productivity per hour for the product in question.
A first estimate for an equation representing what this tariff should be:
Xaph = productivity per hour producing product Theta in location Xa.
Aph = productivity per hour producing product Theta in location A.
XAprice = price of product Theta when imported into location A from location Xa for sale in location A
Aprice = price of product Theta when product Theta produced in location A
Pdiff = Aprice - Xaprice
The productivity per man-hour tariff applied to all imports in the new world emphasizing productivity per hour would be (javascript style):
if (Aph > Xaph & Aprice > Xaprice)
{productivity_per_hour_tariff = Aph/Xaph * Pdiff}
Cognizant of: the need to be cautious with a new method; the fact the productivity-per-hour promoting tariff could be combined with other tariffs; the possibility that a nation may need to be given a chance to improve its productivity per hour; and, inaccuracy re productivity per hour measurements, this could be adjusted as follows:
if (Aph > Xaph & Aprice > Xaprice)
{productivity_per_hour_tariff = mult * Aph/Xaph * Pdiff}
//mult represents number between 0 and 1
Note: the asterisk of course represents the multiplier sign.
@2009 David Virgil Hobbs
Labels: global prosperity, international trade, productivity-per-hour, tariffs
posted by David Virgil at 9:07 AM
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