Seriously, this guy taught economics at a British university?
I have three thoughts. First, of course total factor productivity is declining. The capitalist economy has run out of ideas as to what to do: innovation is fast disappearing and what there is will require little factor input (including labour in the case of AI).
Dear God.
The lower the factor input then of course the greater the rise in total factor productivity. It is, after all, output divided by factor inputs. So, we get output without requiring factor inputs, tfp goes up.
He really is this ignorant, isn’t he?
Just to rub this in. His first chart is of inflation adjusted interest rates – which are, as he notes, strongly negative. Inflation adjusted interest rates are also known as real interest rates. His last is of the natural interest rate – which is a real interest rate. Which is positive. He then says interest rates will have to fall from here. His evidence? That interest rates will rise from their current negative real rate to a positive real rates.
Dear Lordy and Sheesh.
So he now realizes that the technology of AI could change the way things are done. Just a few months ago he was boldly stating that technological change had come to its end.
The measure shows an economic system that is not providing answers to meet needs. That is especially true when most needs that are unmet will have to be addressed by the state in future since markets are incapable of delivering what is required.
At least Those running the show in places like Asmara and Pyongyang can take comfort from his conception that systems run along entirely collectivist lines and financed by Modern Monetary Theory principles are running just fine and dandy. as opposed to the ‘failures’ of capitalism….
“innovation is fast disappearing”
What on earth is he on about? Even assuming he was right, it would disappear a damned sight quicker if people didn’t see a buck in it.
“I have three thoughts.” That could be accurate if we’re talking about the entirety of Spud’s life.
@Sam Duncan
He periodically chucks out that one.
Giving him a long list of recent advancements makes no difference.
It’s not that the capitalist economy has run out of ideas, so much as society continues to put obstacles in the way of just about everything.
@Andrew_C
https://www.t*xresearch.org.uk/Blog/2017/08/25/when-new-technology-becomes-old-and-theres-nothing-to-replace-it/
He tried it here and in the comments amazingly admitted he was wrong!
AndyF said:
“Just a few months ago he was boldly stating that technological change had come to its end.”
Oh, yes, think I remember that; wasn’t it because he had a ‘phone that did everything he thought he could want a ‘phone to do?
Lord Spudcup has repeatedly asserted that Productivity = K*Workforce_cost not K/Workforce_cost, so increased workforce results in increased productivity.