From: Bart  Croughs <bart.croughs@tip.nl>
Date: Wed, 14 Aug 1996 23:10:35 +0800
To: "'cypherpunks@toad.com>
Subject: Re: National Socio-Economic Security Need for Encryption Technology
Message-ID: <01BB89EA.F7C73200@groningen08.pop.tip.nl>
MIME-Version: 1.0
Content-Type: text/plain



Joel Morgan wrote:

>It seems clear that capital investment in tools will contribute to the
-productivity- of workers.  (Tools here meaning whatever machinery/
infrastructure is used to get work done.)

Bart Croughs quotes a number of economists who seem to be saying that
when capital investment leads to increased productivity (per worker)
this also leads to higher wages.

I'm not sure I understand -why- this should necessarily be so.  It's my
impression that in manufacturing industries, the more mechanized
production is, the more workers will get paid.  Then again, perhaps a
more mechanized industry will pay more because more mechanized
industries hire workers with higher skills (albeit fewer workers).

It's my impression that when a company makes capital investments which
increase productivity, the fruits of this increased worker productivity
are shared (to some extent) with the workers.  I can imagine a number of
reasons why this might be done, but it's not absolutely clear to me
that this would be a direct result of market forces.<

Increased productivity of workers leads to higher wages for workers because
of competition between employers. If a worker produces the worth of $3000 
per month for his boss, and his boss is only willing to give him $2000 
salary, then there are other employers who would be happy to give this man
a job at a higher wage. They still profit if they give him a wage of $2100 
instead of $2000. This process goes on until the salary of the worker equals 
his marginal productivity.

Bart Croughs