Revenues are determined by production

National income and national product are equal and, in fact,

are two sides of the same coin: the national

represents the value of goods and services produced in the prices

buyer and the national income - the amount paid for the resources expended

the production of these goods, plus the fact that the entrepreneur is in

as his income.

For example, suppose that the construction company to

product - in this case, the house, hiring workers and buying materials:

wood, nails, bricks. When selling a house, its price is a measure of

produced. At the same time, workers' wages, payment for materials

and that is a construction company as its own

profits (which can be either positive or negative) in

is the sum of income from all manufacturers, and is exactly equal to the value of

manufactured products.

Understanding the relationship between income and production helps to see

the only real source of economic wealth. Vital

level (income) increases with the volume of production (production

the right people to goods). In particular, it depends on whether we to

using the same or a smaller quantity of labor and other resources

build another house, create another computer or camcorder.

Here is a historical illustration of the equality of income and production. Workers in

North America, Europe and Japan produce an average of approximately

five times more output per capita than their predecessors 50 years

ago. And per capita income is calculated after adjusting for inflation -

what economists call the real income - today is also about

five times higher.

The volume of output per worker is the reason

differences in the earnings of workers in different countries. For example, the average worker

United States is better trained, more productive uses machines and

benefits from more efficient economic organization

society than the same worker in India or China. As a result,

average U.S. worker produces output about 20 times

more. Without this, his earnings would have been no higher than in other

countries.

Often mistaken policy argue that the source of economic

progress is the creation of jobs. During the election campaign

One of the recent political leader argued that his economic

program rests on three pillars: "Jobs, jobs, and more

time jobs. "However, the emphasis on the issue of jobs can only

confuse the situation. Employment growth is not conducive to faster economic

progress if it does not lead to an increase in production. To achieve a

high level of per capita output is needed is not more

jobs, but rather a more productive labor and equipment, more

effective organization of labor.

Some believe that technological progress affects the

the workers. In fact, just the opposite is true. If

recognize that the expansion of production is the source of more than

High-level salary, it becomes obvious positive impact

technological advances: innovative technology enables workers

ability to produce more and thus earn more.

A farmer, for example, are able to perform more work, replacing

harness horses to a tractor. Accountants can work with a large

number of documents using a computer instead of a calculator. Similarly,

same time to the secretary to prepare a letter on the computer more than

typewriter.

Sometimes specific jobs eventually disappear altogether.

Modern technology has largely eliminated the profession

manufacturers of convertibles, lifters, Hammers, domestic workers,

diggers. These changes, however, release the human resources that

then used to expand production in other industries

economy, and thus serve as a means to achieve more

high standard of living.

Understanding the relationship between output and income will help you understand

why no legal minimum wage or

the efforts of trade unions are unable to raise the general level of wages of workers.

Raising the minimum wage rate leads to a crowding out of

unskilled workers. Consequently, employment of this category

will fall, thus reducing the total production. While this

probably, and may help some other categories of workers,

average income of the population will result in lower as

reduced output per capita.

The unions, of course, able to limit competition from workers

they are not included, thus increasing the wages for their members. But

without a corresponding increase in productivity they can not

raise wages for all. If they could do it, then the average

Salary in the UK, where unions are very numerous and active,

would be higher than in the United States. In practice, however, the opposite is true.

Wages in the UK, where half of the workers' union is, by

At least 40% lower than in the United States, where membership

unions are not as high as 20%.

Without high productivity can not be a high salary.

Similarly, no growth in production of goods and services that are

demand can not be real growth in national income.