It’s also something that really shouldn’t be happening. For we – and it’s us, in tech, driving it – are in the middle of a technological revolution. The two things simply aren’t consistent with each other, and one of them must be wrong.

We cannot be having lovely new ways of doing things, and also have low productivity growth and low real wage growth. It’s like saying we’re going down uply, something that only happens in Escher drawings – and economics is weird but not that weird.

3 comments on “Elsewhere

  1. Isn’t the effect of Google and other services indirectly included in productivity due to the benefits for other services and businesses? For example, if a business uses Google to find a cheaper supplier or Google Maps to find a faster delivery route, their input costs will be reduced, which will show up as increased productivity. Before the internet, it might have been harder to find these things out (it involved talking to people and reading maps) but now they can be more easily found, so businesses are perhaps more efficient and the productivity figures include that improvement. Google etc. don’t seem to do anything new – just apparently more efficient ways of doing what’s always been done.

    Of course that still leaves the question of why measured productivity hasn’t improved much – maybe the positive effect of internet services isn’t nearly as dramatic as it superficially seems – vast amounts of time wasted vaguely looking far and wide rather than concentrating on quickly finding a reasonable compromise (Parkinson’s Law?) – and/or the amount of time spent on idle web browsing and social media more than makes up for any marginal efficiency improvements.

  2. What if the tech changes drive more people into working for the sort of service industries that typically have low productivity growth (or the sort of government activities that might very well have negative productivity growth)?

    Anyway, it seems to me that the first question about any econometric assertion is “how do you know”? Maybe the measuring instruments are rubbish.

  3. Reports of low productivity growth aere down to not comparing like-for-like. Since 2008/9 the UK has been “on-shoring” a lot of lower-skill, lower-wage jobs that it outsourced to India during the “Brown bubble” years. The growth in employment is mostly on low-paid jobs *which are paid more than JSA*. So total National Income (“GDP”) rises while average wages and productivity decline.
    To be honest, it isn’t only “on-shoring”: there is also a growth in low-paid “carer” jobs as the number of old and frail increase with a corresponding increase in demand for “carers”.

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