Courtesy of Mish.
The debate over productivity rages on. Some believe productivity is understated. Others believe it is overstated.
Janet Yellen believes a lack of strong productivity gains may be responsible for tepid wage gains.
Financial Times writer Edward Luce is confused, as are many others. Luce discusses The Mystery of Weak US Productivity.
Osborne on Productivity
In 2105, then UK chancellor George Osborne made boosting UK Productivity a Priority.
“Let me be clear: improving the productivity of our country is the route to raising standards of living for everyone in this country,” he said. “Our future prosperity depends on it.”
Greenspan on Productivity
In an Interview with Gold Investor Alan Greensppan blamed the aging of baby boomers.
We have been through a protracted period of stagnant productivity growth, particularly in the developed world, driven largely by the aging of the ‘baby boom’ generation. Social benefits (entitlements in the US) are crowding out gross domestic savings, the primary source for funding investment, dollar for dollar. The decline in gross domestic savings as a share of GDP has suppressed gross non-residential capital investment.
Output per hour has been growing at approximately 1⁄2% annually in the US and other developed countries over the past five years, compared with an earlier growth rate closer to 2%. That is a huge difference, which is reflected proportionately in the gross domestic product and in people’s standard of living.
As productivity growth slows down, the whole economic system slows down. That has provoked despair and a consequent rise in economic populism from Brexit to Trump. Populism is not a philosophy or a concept, like socialism or capitalism, for example. Rather it is a cry of pain, where people are saying: Do something. Help!
Yellen on Productivity
