Bank Underground, the Bank of England's blog, has published a new post by BoE researcher John Lewis this morning, saying:
How poor has the past decade of productivity growth been by historical standards? Exceptionally.
To investigate this I take Total Factor Productivity data from the Bank's Millennium of Macroeconomic Data dataset and add on my estimate of 2017 growth (0.14%)
From 2007, 10-year average productivity growth was negative for the first time in almost a century. Overall, it was the worst decade since the late 18th century.
There's not much to add to that. Except, of course, that austerity clearly does not work.
And to wonder why the Tories retain any economic credibility.
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Yes and the best decades were …… the 1960s and 70s. The shift to financial rentier capitalism has not delivered.
Which is not what the BoE said, of course
Charles Adams – Financialisation has delivered handsomely for those who tell the population what to think and how to vote and they are not going to change their tune any time soon. Things might start to change when the 1% becomes the 0.1% and then becomes the 0.01% … when one guy has all the money he might wake up and realise he has toothache and there’s no one around to help him.
From the diagram the answer is clear. We should go back to the age of steam. Also, it indicates that 1941 would be the kind of year we should be aiming for.
It’s incredible what you can with a planned economy!
When there was a chance of losing their property rights the British establishment took a leaf out of Stalin’s book.
Demetrius says:
“….Also, it indicates that 1941 would be the kind of year we should be aiming for…..”
That sums up the US policy. And judging by recent events in Syria it looks like maybe we are going to follow suit.
It would be interesting to see a graph of Government Spending overlaying this of productivity. I suspect there may well be a relationship, whether it’s causal is another question.
How does your comment passes moderation without a rebuke when you are clearly undermining the clear claim from Professor Murphy that the relationship is causal.
But my comment questioning what austerity is, and noting how spending now is higher than in 2007 which is the base line year for the claim, fails to pass moderation.
Because I am not convinced you are not trolling
It all simply beggars belief. Difficult to accept the Tories don’t understand what they’re doing to UK society. So that leaves one with no other conclusion that they’re a bunch of dangerous sociopaths engaged in democide. It’s a sobering thought that it’s already almost 8 years since Marc Blyth posted this – https://www.youtube.com/watch?v=go2bVGi0ReE.
But, as always, the $64,000 question is how to get rid of these political vermin/parasites? The general public doesn’t seem to be too concerned … yet. One clings to the optimistic hope that enough people will eventually wake up. However, so much avoidable damage has already been done across the entire socio-economic spectrum that it will take decades to recover, if ever. Could it be that Pvte James Frazer was depressingly right: “We’re doomed” – at least for the imaginable future?
Thank the Lord and Kaldi the Ethiopian goatherd for coffee 🙂
Slightly off topic ( or maybe not ) I went to the BofE blog via the link and saw another blog post entitled ‘ Did Quantitive Easing boost bank lending ? ‘ . I scrolled down to the conclusion which was ‘ In the is blog post we find no evidence to suggest that QE boosted bank lending ……..’ Well there’s a surprise, and an admission.
Quite
I find the term and definition of productivity both confusing and inadequate. The current definition does little to show how well a country is doing economically because it neglect to take into account all those who are unemployed. To make an extreme point, if a country is so automated that only one percent of its work force is needed to man the robots, etc., productivity will be a near maximum, yet 99% of its potential workers are idle.
Also, I often hear of examples of high productivity such as French supermarkets. Having lived in France for nearly 20 years I can confirm that productivity in large shops – supermarket, DIY, and white goods – is indeed high, chiefly because customer service is inadequate, often nearly non-existant keeping staffing levels as low as possible. Also, one notices that three major difficulties affecting users over the last few years; silicone for breast implant; horse meat parading a beef; and baby milk unfit for use, have occurred in high productivity France. ’nuff said.
I think that is what I might call selective sampling
Here’s a Bill Mitchell article on the productivity effects of the EU imposing Austerity measures on Greece:-
http://bilbo.economicoutlook.net/blog/?p=33286
We shouldn’t be surprised that the period that delivered austerity has also delivered the worst decade for UK productivity growth since the 18th century.
Austerity destroys wealth, it accelerates the general cost curve on a positive exponential trajectory. Austerity is financial gang rape on the middle and working class. It is only since the emergence of Jeremy Corbyn and Labour’s mass membership has a glimmer of hope arisen.
Many critics say Labour’s economic policies are all over the place. But what do people expect. The whole of the planet has been assaulted by the apparently unstoppable march of Finance Capitalism. Its tentacles have reached deep into all sections of society and seduced even a large swath of the PLP. An opposing viable system will not appear all suited and booted.
The green shoots of a new economic order are fighting to reach the sunlight of intelligent discourse and popular engagement.
The present travails including the false accusation of widespread antisemitism within the labour Party should be viewed in this context. The forces of reaction desire is to trap all political discourse between the Tories financial gang rape Standard and New labours financial gang rape Lite. Labour under Jeremy Corbyn wants to strike a new path.
Jeremy’s address to the Jewish community could just as easily be recast to a wider audience. “We admit the evils of Capitalism have wrought immense damage on society, it philosophy has even infected some sections of the Labour Party. We offer our sincere apologies for the deep hurt and injustice that the innocent victims of this vile system have had to endure. We promise to stamp it out completely and deliver a society for the many not the few”.
That is the real battle that is being fought and behind the ever more desperate efforts to unseat Jeremy Corbyn.
We shouldn’t be surprised that the period that delivered austerity has also delivered the worst decade for UK productivity growth since the 18th century.
Austerity destroys wealth, it accelerates the general cost curve on a positive exponential trajectory. Austerity is financial gang rape on the middle and working class. It is only since the emergence of Jeremy Corbyn and Labour’s mass membership has a glimmer of hope arisen.
Many critics say Labour’s economic policies are all over the place. But what do people expect. The whole of the planet has been assaulted by the apparently unstoppable march of Finance Capitalism. Its tentacles have reached deep into all sections of society and seduced even a large swath of the PLP. An opposing viable system will not appear all suited and booted.
The green shoots of a new economic order are fighting to reach the sunlight of intelligent discourse and popular engagement.
The present travails including the false accusation of widespread antisemitism within the labour Party should be viewed in this context. The forces of reaction desire is to trap all political discourse between the Tories financial gang rape Standard and New labours financial gang rape Lite. Labour under Jeremy Corbyn wants to strike a new path.
Jeremy’s address to the Jewish community could just as easily be recast to a wider audience. “We admit the evils of Capitalism have wrought immense damage on society, it philosophy has even infected some sections of the Labour Party. We offer our sincere apologies for the deep hurt and injustice that the innocent victims of this vile system have had to endure. We promise to stamp it out completely and deliver a society for the many not the few”.
That is the real battle that is being fought and behind the ever more desperate efforts to unseat Jeremy Corbyn
Sorry to be a stick in the mud but this most misrepresented of topics may not be one where we can be serious and take a quick political pot shot at the same time.
Some thoughts and considerations:
1. Thankfully this example from the BoE is is using multifactor productivity growth which is more comprehensive, instead of (the usual) mere labour productivity which only tells one skewed half of the story. More importantly however:
2. This decline in productivity growth has happened world-wide over the past decade. Just type the words “productivity growth slowdown” into your Google search and you’ll get no less than 15 solid pages of articles dedicated to the global slowdown in productivity growth that has affected the US, EU, China, Australia, Canada and just about all of the industrialised world over the past decade and a half. So we can’t put this one down to Tory austerity. The austerity regime definitely doesn’t help but it can’t be assumed to be the cause.
3. Significant productivity growth doesn’t really occur incrementally. As (Russian economist) Nikolai Kondratiev revealed it is something that follows historic long waves of innovation and investment in new technologies that save labour or improve the efficiency of machines.
For a quick idea see Part2 on this page: http://www.oxfordscholarship.com/view/10.1093/0199251053.001.0001/acprof-9780199251056
Macroeconomic management can play an important role but it is not the principal driver. Innovation is and that occurs globally in a variety of ways, sometimes as the unintended by-product of industrial or military invention. Government can assist by improving laws, education, research and infrastructure but it is not directly responsible for productivity growth.
4. Productivity growth, by definition, isn’t necessarily a good thing and it can be very misleading. Multifactor productivity growth (MFP) by definition is the growth in output minus the growth in inputs (with the inputs being capital and labour). What happens sometimes, quite often, is that a positive, much needed investment in new capital or infrastructure results in a statistical decrease in productivity growth – and why? Because we’ve increased our inputs. Conversely we can slash jobs unsustainably and let our capital or infrastructure run down and then record an increase in productivity growth by the very same logic.
When some workers, salary earners for example are effectively forced into unpaid hours (in order to keep their jobs) labour productivity “grows” statistically because it is only the paid the paid hours that are recorded
A decrease in productivity growth may have nothing to do with innovation or efficiency when, for example, it represents a shift in investment and employment from highly automated industries to labour intensive services. That shift may be good if those are socially positive services or it may be really bad if it represents a shift toward financial rent-seeking at one end of the scale and crappy insecure zero-hours jobs at the other. The statistics alone don’t tell you about qualitative change.
4. The labour productivity statistics, for their part, are wrong by definition in one very important respect – they measure they the output per worker of currently employed workers. So, theoretically we could have 50% unemployment in some circumstances and claim to have high productivity growth – while half the available workforce is idle! That’s a poor concept of “productivity”. The current measure is “output per hours worked”. A truer measure would be output per available hours. That would take the inefficiency of unutilised labour (unemployment and underemployment) into account.
6. Labour productivity (and to a lesser extent MFP) has increased over the past 4 decades but, unlike the post-war years, wages haven’t risen in line with productivity growth. – so why should the workers give a damn about productivity growth if they don’t get to share in its benefits and the big money is being made by financial rent-seekers who don’t produce anything anyway?
See here: http://graphics8.nytimes.com/images/2011/09/04/opinion/04reich-graphic/04reich-graphic-popup.jpg
At his point you might think well, the Tory austerity years have lowered productivity growth because they fostered the shift toward insecure, inefficient hospitality jobs and financial rent-seeking and so on etc. and you might be right but consider this: we could replace that regime with one that introduces massive, perfectly affordable, socially, environmentally positive investment plus a job guarantee and the productivity growth statistics as we currently know them would reward us by recording a huge decrease in productivity growth (labour and MFP) – and why? Because our inputs have would have risen – yes we would have productively utilised idle labour and other wasted resources and become statistically “inefficient” for the ongoing period of that investment.
So taking that into account how do we feel about our anti-employment, anti-investment productivity statistics now? “Productivity growth” on its own, without context, means virtually nothing.
Looking forward, a new period (or long wave) of artificial intelligence (AI) productivity growth is being anticipated and it will achieve its statistical results by having cheaper capital (IT as opposed to heavily engineered, physical machines) and by eliminating millions of service jobs with nothing to suggest that the mass of people will share in the ‘benefits’ of that unless there is massive intervention to ensure that they do. A potential global disaster in the making. Even if the political intervention arrives and it is good we will still enter a de-humanised world of inferior services and deeper, more socially detached machine dependency.
Is it not time now to realise that productivity growth, in and of itself, is passe, to realise that there are already more than adequate resources of labour and technology to provide a better life for all and that it is the fairness, the distribution and quality of life that matters?
I leave you with this article by Adair Turner in Social Europe. It isn’t ideal for my liking but it is interesting, layman friendly and I like the title:
https://www.socialeurope.eu/is-productivity-growth-becoming-irrelevant
Appreciated
Thanks
All of which,Marco, with which I agree in principle (and possibly in detail too) and find no quarrel with the Adair Turner piece either, leads me to wonder where it gets us.
WE have some serious metrics problems. GDP is …..perhaps not entirely useless, but deeply flawed at best.
Productivity is a sham metric if we take an overview that ignores labour discarded in favour of more efficient technology. Simple case: If using a traction engine to plough is to be regarded as truly more efficient it has to pay for the displaced workers too. Somehow. Having them sit in deckchairs being paid to watch is obviously not going to cut it by most people’s reckoning.
In recent years we’ve had suggestions, quite seriously intended, that attempt to measure ‘happiness’. We’ aren’t going to ‘buy’ that because it’s far too subjective for committed bean counters.
So what are we to measure ?
Does median income cover enough bases ? If it does it has to include income across all sectors including pensioners and the unemployed workforce irrespective of why they are not currently participating in the ‘official’ workforce.
We can’t continue to measure economic activity and ignore the economically inactive as if they were all doing nothing useful. It worked passably well (perhaps) when women didn’t commonly ‘work’ outside the domestic economy, but we really haven’t even begun to address the distortions that women as part of the workplace economy have created. And it’s been the increasing reality for a century.
And I’m not suggesting that we go back to incarcerating women in the home, I’m saying we need to be realistic about how we balance economic outcomes when ‘families’ may have dual, single or no income.
I don’t have an answer. I think UBI addresses the issue, but maybe falls far from solving it in part because we don’t really accept the terms of the issue itself.
If that sounds like a frustrated rant it probably is. Though I am quite …calm.
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