Productivity was the key to America's economic growth. Because of
improvements in technology, overall labour costs declined by nearly
10 percent, even though the wages of individual workers rose."
Jude Waninski adds in his tome "The Way the World Works" that
"between 1921 and 1929, GNP grew to $103.1 billion from $69.6
billion. And because prices were falling, real output increased even
faster." Tax rates were sharply reduced.
John Kenneth Galbraith noted these data in his seminal "The Great
Crash":
"Between 1925 and 1929, the number of manufacturing establishments
increased from 183,900 to 206,700; the value of their output rose
from $60.8 billions to $68 billions. The Federal Reserve index of
industrial production which had averaged only 67 in 1921 ... had
risen to 110 by July 1928, and it reached 126 in June 1929 ... (but
the American people) were also displaying an inordinate desire to
get rich quickly with a minimum of physical effort."
Personal borrowing for consumption peaked in 1928 - though the
administration, unlike today, maintained twin fiscal and current
account surpluses and the USA was a large net creditor.
Charles Kettering, head of the research division of General Motors
described consumeritis thus, just days before the crash: “The key to
economic prosperity is the organized creation of dissatisfaction.
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