This has been a post long stuck in “draft” form, given is complexity and breadth. Due to both mulling over a very abstract topic, and procrastination. I am a little more compelled to put it into writing today, as I wait, subjected to a 4 hour flight delay in a Lombok Airport (lovely beaches; learnt surfing). What better way to spend it then thinking about Economic Producitvity.
It is a complex topic, with its uses and critiques. I first came across the concept of Producitvity while working in the economic agency of the government.
Baseline thoughts
- A decline in Productivity growth is consistent, but also a worry for developed economies
- Within the modern realm, high productivity can be commoditised - its a plateau
- Its unintuitive: we celebrate the advancements in computers, AI, and greater technologies, and yet these do not reflect in real terms.
My initial reactions at the time:
- Global inequality - might have some relation to Productivity
- Some industries, such as trading and finance - appear on metrics but are not fundamentally value-adding in real economic terms.
- Similarly, bullshit jobs and roles may appear on data , but some, like bureacracy, middle management, are structural to firms and developed economies.
- Value goes into paying for bullshit jobs, without commensurate returns on Productivity
- There are diminishing returns in areas of technology (linked to the point about the difficulty to quantify ICT and services, which seems to be a recurring theme)
- As per the economic chapters - more industries (and investment) are moving into intangible economies - which are poorly measured by rather Archaic economic theories
My slightly more informed notes, from reading some articles:
Economists point to a mismatch in the labour market and skills; structural low demand in developed economies, and the poor ability to quantify the impact of ICT (Information Communications and Technology).
I’m not sure I quite buy into the first to reasons however as these are so fundamental to the economy, and only by a highly managed economy can this issues be addressed - an unactionable conclusion.
Further reading:
My slightly more recent reactions are based on an e-library book, Productivity , by Michael Haynes. Published in 2020
Notes that called out to me a little more:
- Economist Schumpeter states that Entrepreneurs are neither inventors nor innovatos, but instead mobilisers to “get things done”
- The issue of difficulties to measure is acknowledged and analysed in great detail. In fact, if the book started with this chapter i would largely have gotte my answers: I largely interpret most modern economics using productivity as somewhat discredited: Rubbish/irrelevant data in, and meaningless conclusions out.
- What I found interesting , was a chapter on the “Perverse Elements of Productivity” (table 8.1), which largely details how certain things measured could lead to negative real outcomes; and similarly, how certain things not measured (like home care, etc) can lead to positive real outcomes
- It somewhat points (in my lay understanding) towards Productivity as a measure of Movement or Busy-ness, without fully reflecting whether this is a useful or good thing. I draw a connection to the whole observation of workers in Japan working very long hours, but not necessarily outperforming its western counterparts.
- Utility and productivity gains should go hand in hand. But it is a real possibility that marginal disutility is a possibility. Roads that lead to nowhere, and doing things that don’t add realy work or value.
Reflections
Given the stagnation and neither immense growt nor decline: It is suggested that some sort of threshold or steady state forms up for developed economies, where additional resources and investments are not put into new “productive” forms of economic drivers, but into a unproductive forms that just….exist - propping up the labour market and economy.
If I were to read an article about declining productivty in the future - I probably wouldn’t be too distraught - it is unclear to me what low productivity actually means.
The Future of Productivity and Economics
This whole things reminds me of the broader economic conepts on getting the floor to rise until basic needs are met, until housing is in place.. but Needs are only half of the political contract; i would argue that Wants are just as important - needs and wants are relative to the broader society.
For modern economies, I suppose the concern is declining productivity and being past longer living in an abundance of “excess”, remains a principle concern - unproductive constituents may consume more than they did in the past (graying population, decline in roles with real-economic value) thus putting strain on how governments can manage.
The conditions for this to be true therefore, that in the case of climate and broader economy - a fully unified central body is needed to make the sacrifices and trade offs needed. Totally the pretext to villain origin stories - but I’m not yet in my Villain arc.
Thus solves the Productivity question - and this can finally be unearthed from the tombs of Draft-land, and made tangible so I can move on.
Happy Holidays!