Lecture13_fall2009

Lecture13_fall2009 - Lecture 13: Golden age of productivity...

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1 Lecture 13: Golden age of productivity • Electricity as a “general purpose technology” for illumination and automation. Diffuses from 1900-1920. • Electricity increases TFP – but with a lag. Required complementary capital investments. – Redesigning factories – Public generation stations • Analogy with computers. Will computers increase TFP with a lag? Or are computers simply not that productivity enhancing? Electricity as “general purpose technology” “ The use of electricity is now so general that it is difficult to name any industry… to which this modern mechanism has not been applied…practically all the new factories or shops in the United States of any size…have electricity.” - US Census of Manufacturers, 1905 ELECTRICITY IS: • Power source for automation; illumination • Used in workplace and in homes
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2 E/H Diffusion of electric power, 1899-1929 Electricity allows for mass production via assembly line technology • First truly “mass produced” product = automobile c. 1910 • Accomplished true interchangeability of parts • Product for the masses: A few standard models. Designed to be affordable to middle class.
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3 (1) Used first assembly line technology Ford plant, c.1913 "The man who puts in a bolt does not put on the nut. The man who puts on the nut does not tighten it.“ – Henry Ford Attaching body to chassis Ford plant, c. 1913 “In Mass Production there are no ‘fitters.’”– Henry Ford
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4 (2) Produced for the masses Highland Park (MI) Ford Factory 1913 Diffusion of the automobile in US • Model T within budget of middle class – In 1908, cost $825. Dropped to $575 in 4 years.
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Lecture13_fall2009 - Lecture 13: Golden age of productivity...

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