The Growth in the U.S. Productivity Has Nothing to Do with How Other Economies Move In the Long Run

According to the main principles of practical macroeconomics and logic relations of macroeconomic indicators, the growth in the U.S. productivity has nothing to do with how other economies move in the long run. Also, the inflation and unemployment in the U.S. will keep independent change in a long period.

One of the core principles of practical macroeconomics is that the long term movement of the macro economy is fueled by the supply side which includes the factors of production and total factor productivity. The factors of production indicate the labor force, the land, the level of technology, and the capital. These elements of manufacturing have direct relationship with production and are independent of outside economies. Specifically, the size and quality of labor force relies on that of population in one country. The land, in other words, the plant and the technology are decided by how much money the investors have. Besides, the rate of saving and the availability of transportation and communication services are also necessary to the production because they are determinants of whether the products could be delivered and consumed perfectly. Since Japan or China cannot influence either the purchasing power or the quality of transportation in the U.S., these supply-driven factors are totally decided by the U.S. itself. Furthermore, total factor productivity means the amount of labor force, the efficiency of production, and the number of hours worked. If more people work more smartly in more hours, the long run condition of the macro economy in the U.S. would be positive. And this positive result definitely comes from inside power.

Another core principle of practical macroeconomics is that inflation and unemployment move independently in the long term. Although there is an inverse relationship between the two aspects in the short run, it’s hard to say that they have any concern in a long time. On one hand, inflation is merely