The gains we get from increased productivity come to us in two main ways: higher wages, or less expensive products. Let's take a look at one product that costs less and delivers more value because of higher productivity:

When I grew up in the 1950s, everyone in the neighborhood took notice when a new television set arrived. The cost of a set represented a big portion of a family's income.

And then there was upkeep. In those days, we could count on our TV sets to make a funny noise and go black just before the car chase came to a climax, just before the big wedding on a soap opera, or just before the championship game. So we called a TV repairman, who came to the house, replaced a tube or two, and gave us a bill for which we hadn't budgeted.

On the other hand, when you go to a discount store and buy a new TV set, the cost likely represents less than a day's pay, and you'll probably never call a repairman (assuming you could even find one). Your set will last for many years, and when it shows its last commercial, you will simply throw it out and buy a new one. In effect, TV sets have become so inexpensive they're a disposable product.

Our television sets are just one of the many products that cost less, at least in real dollars, because of productivity improvements. If we look through our houses we will see many products that effectively cost less and do more than they did a generation ago.

We might even say that the greatest television story ever told is one you won't see on the screen; it's the story of a half century of improvements that pulled the real prices of television sets way down, and pushed product quality way up. And that's true of many household products, especially electronic products.