Question

• Innovation and physical capital are 2 of the 4 factors of production. Discuss some specific ways that 1 of the following laws increased the productivity of 1 or both of these factors of production:
• 1862 Pacific Railway Act
• 1956 Federal Aid Highway Act
• 1946 Federal Airport Act
• What other examples of economic concentration can you share?
• What are the risks and advantages to economic concentration?
• How has economic concentration influenced your industry?

Answer 1

The Pacific Railroad Acts of 1862 were a series of acts of Congress that promoted the construction of a "transcontinental railroad" (the Pacific Railroad) in the United States through authorizing the issuance of government bonds and the grants of land to railroad companies. The Pacific Railroad Act of 1862 began federal government grant of lands directly to corporations; before that act, the land grants were made to the states, for the benefit of corporations.

The Federal Aid Highway Act of 1956, With an original authorization of $25 billion for the construction of 41,000 miles (66,000 km) of the Interstate Highway System supposedly over a 10-year period, it was the largest public works project in American history through that time

Federal Airport Act of 1946 is United States statute establishing a federal program for the development of civil aviation airports within the continental United States.The Federal Airport Act of 1946 brought about a federal responsibility and participation in the further construction of airports through the newly established Federal Aid Airport Program. The Federal Aid Airport Program provided annual funding of 75 million dollars for airport construction and improvements.

Transportation projects can have various impacts on a a community’s economic development objectives, such as productivity, employment, business activity, property values, investment and tax revenues.

• A new highway or public transport service increases a community's access to other areas. This increases businesses' labor pool, reduces their costs to obtain input materials and services, and expands their potential market. This may increase "economies of scale" in production processes, which means higher productivity through lower costs per unit of output.
• Mobility management strategies, such as more efficient road pricing, can improve travel time reliability, which reduces logistics and scheduling costs beyond just the travel time savings.
• New transportation links between cities and ports, and new types of inter-modal facilities and services at those locations, make it possible for new patterns of international trade to develop. In some cases, the new links may improve the efficiency of business customer/client visits as well as product deliveries.

These laws further helped in the development of the transport and communication enlarging their competitive strength, making available scarce resources more easily and efficiently therby providing a better platform for the corporations to enhance their innovation as well as the physical capital increasing their overall productivity.

Risks and advantages to economic concentration

Economic concentration is good in one way because it helped the economic development of a country to some extent, as the top business houses were able to attract foreign collaborations. On the other hand, it is claimed that concentration of economic power could lead to monopoly. With monopoly power in their hands, the industrialists may try to dictate the economic life of the consumers. Industrialists wielding economic power may also attempt to distort the economic progress of the country. Moreover, they may put down their numerous competitors who are comparatively smaller units who may prefer to merge with the big units or accept their control with a view to enjoying the same fruits. Another adverse consequence of growing concentration of economic power would be increasing uneven distribution of income and wealth which may lead to unnecessary social unrest. This also results in widening the gap between the total income and total investment of the big industrialists who are tempted to earn black money with a view to avoiding the tax net which, in turn, leads to hoarding or spending unproductively on lordly luxuries. This may divert the resources from essential goods production to production of luxury products which is bad.