Chris Dillow highlights the flipside of the excellent employment figures: alongside still disappointing levels of GDP, they indicate a sudden loss of productivity. After touring through some popular explanations -an absence of bank credit, technological slowdown, a delayed return of entrepreneurial vim – I enjoy how he settles on a Mazzucato-like observation about exactly when productivity boomed; spoiler alert, it wasn’t during the small government phase.
I would also question how real is the fall in productivity. A more graph-strewn post may follow one day when not typing on a mobile. But real productivity ought to be a slow moving variable. People don’t suddenly lose their brains, infrastructure or capitalist institutions. We suffered some obvious real hits -declining oil production, the financial sector – but not 10% GDP worth.
I think productivity is a residual. It’s what you get when you divide (weak) overall GDP through by (strong) labour numbers. If you can explain each side, you explain productivity, without the angst about our losing our way.
I think you can.