NOTE: Several family members were brutally slaughtered recently, so I will take a break from writing. Their deaths erased my affinity for writing about politics or the economy, thus I'll later limit myself to health and brainpower in addition to completing my book on rapidly overcoming racism and bigotry. BTW, the two men who murdered my father are still on the lam; I am offering up to $100,000 for information leading to their arrest and conviction.

A shocking example of how USA efficiency has plummeted

The Erie Canal was an engineering marvel: a 363-mile-long canal linking the Atlantic Seaboard and Great Lakes, with 18 aqueducts to cross rivers and 83 locks to raise and lower boats over the 682-foot vertical drop from one end to the other. Built between 1817 and 1825 without experienced surveyors, civil engineers, or skilled laborers, it slashed statewide shipping costs by 94% and created so much wealth that the term “millionaire” was coined shortly thereafter.

Cost? A mere $7 million—about $100 million in today's dollars. Now for something shocking: the canal was built primarily by hand supplemented with animal power. That is, no modern tractors, bulldozers, or other heavy equipment that can do more work in a day than a man—or even a man with a horse—can do in a year.

Since modern earthmoving equipment makes workers hundreds of times more productive and enormously more valuable even after factoring in equipment cost, why couldn't we replicate the Erie Canal for much less than the inflation-adjusted $100 million figure? Such a mammoth project would likely now cost over $100 billion and perhaps even more, thanks to predictable cost overruns and delays imposed by court orders halting construction so scientists could bemoan the project's impact on local mosquito populations and whatnot.

No one involved in building the Erie Canal system was an expert; instead, they improvised and learned as they went along. Even with almost 200 years of experience and heavy equipment that literally moves mountains, we can't begin to match the productivity per inflation-adjusted dollar of the original canal workers. Such a project would now cost 1000 times more—but why?

For as long as I can remember, economists have said that the productivity of American workers is steadily increasing. If we've really made such amazing leaps in output per worker, why are today's workers left in the dust by their early-19th century counterparts with shovels and pickaxes but no chainsaws or Caterpillars?

Comments (3)

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Comment #80 by Kevin Pezzi, MD • Website: www.ER-doctor.com
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December 19 2010 10:06:11 PM

@William: Mass production (which didn't exist back then) dramatically lowered the cost of production, so today's heavy equipment, while expensive, can't explain the thousand-fold cost differential. Additionally, the price per day of heavy equipment use isn't much considering how they multiply the effectiveness of men working.

While today's workers do enjoy a higher standard of living, it's not 100 or 1000 times greater than it was when the Erie Canal was built--ultimately, construction firms mechanize their workforce to enhance their productivity per dollar. Thus, I remain mystified by the interim dissipation in productivity.

Comment #79 by Ted Decker
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December 19 2010 10:03:38 PM

Today's Cost

It's frightening to think how much this canal would cost if constructed today—by this government.

Comment #78 by William Wheaton
December 19 2010 09:04:29 PM

Today's Technology

I like the article. It makes a lot of sense. The question is why today's productivity cost is higher than in the 19th century.

For one our cost of living is higher. Second it requires a lot of money to build equipment to meet technology that did not exist before. And the ways we produce goods are not the same any more.

So it is impossible to compare the productivity of any services in today's environment with the old days in terms of dollars.

Another example, today we depend heavily on computers for information to run businesses. The price to acquire this information is not cheap but very reliable, and this did not exist in the old days.

I am sure it is the same in the field of Medicine.

William Wheaton

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