Low productivity in the digital age

BobQ

A new report from the McKinsey Global Institute have reported on Low Productivity in western economies and why reversing the trend may not be as easy as people think.

https://www.mckinsey.com/~/media/McKinsey/Global%20Themes/Meeting%20societys%20expectations/Solving%20the%20productivity%20puzzle/MG-Solving-the-Productivity-Puzzle--Report-February-2018.ashx

Nine years into recovery from the Great Recession, labor productivity-growth rates remain near historic lows across many advanced economies. Productivity growth is crucial to increase wages and living standards, and helps raise the purchasing power of consumers to grow demand for goods and services. Therefore, slowing labor productivity growth heightens concerns at a time when aging economies depend on productivity gains to drive economic growth Yet in an era of digitization, with technologies ranging from online marketplaces to machine learning, the disconnect between disappearing productivity growth and rapid technological change could not be more pronounced.

michaels

Productivity is pretty much measured by the value of people's output. Pre gfc those city bankers and others might have generated 10s of millions of revenues on their own. Now there are fewer of them making much less money each but many more barristas generating 20k of values. Consider the impact of 1 £1m banker retiring and 100 10k barristas joining the labour market. A disaster for both productivity and indeed tax revenue.

economic

michaels wrote: »

Productivity is pretty much measured by the value of people's output. Pre gfc those city bankers and others might have generated 10s of millions of revenues on their own. Now there are fewer of them making much less money each but many more barristas generating 20k of values. Consider the impact of 1 £1m banker retiring and 100 10k barristas joining the labour market. A disaster for both productivity and indeed tax revenue.

The bankers that generated 10s of millions in revenue are the same that destroyed 10s of millions for the banks and then the taxpayer during the GFC.

Thrugelmir

michaels wrote: »

100 10k barristas joining the labour market.

Doesn't neccesarily result in increased activity either. Simply cuts the cake up between existing players into smaller pieces.

Jamie Oliver has found this to his personal cost.

http://www.independent.co.uk/voices/jamie-oliver-barbecoa-london-restaurants-shut-down-job-losses-millions-a8224676.html

GreatApe

The problem is we only measure spending

If I buy sandwich I might add £3 to the economy and ever so slightly improve productivity if I make one at hone neither happens. The end result is more or less the same one sandwich. If I take a taxi home or I walk the 15 minutes it takes the outcome is roughly the same I get home but one adds to the economy and productivity while the other doesn't.

So it's not the best of all measures.

GreatApe

A lot of the tech to date has not been on making things cheaper and thus boosting productivity.
It has been additional goods and services created.
Google Facebook and smartphone are great but they haven't fundamental made life cheaper to live.
Even amazon supposedly extremely efficient and productivite isn't I find much cheaper than alternatives. So while they might be super productive bezos is not really using it to make his products massively cheap he seems to be continuously reinvesting it to try and find the next bug thing.

The next lot of technologies coming from 2020-2040 will I believe have a massive impact on productivity and economic growth. Truely spectacular things will happen. Much like how the world was massively different from 1945-1965. In 1945 people had almost no appliances by 1965 homes were full of TVs phones washing machines fridges Hoovers and a lot more.

Things like self drive cars will make transport a lot cheaper
Computer vision is so important it is the holy grail of technology
Lots of impossible things become possible if you crack computer vision.
From self driving cars to robot doctors to robot house servants. They all start with computer vision.

Relax

I am beginning to get the feeling productivity in relation to a Nation is a distraction.

ultimately if those productivity gains are not reinvested in any meaningful way they serve no beneficial purpose.

GreatApe

Also globalisation was a free shot of productivity for the west from about 1990-2008

If you imagine China as a robot the west found a massively productive robot in the 1990s you would feed it a tiny bit of money and it would output a lot of goods. But this robot has been getting much less efficient since 2010. It is demanding more and more money for similar goods.

So effectively the west bought forward productivity with globalisation

I would say something like 1945-1990 was the electricity boom. Electricity drove massive productivity improvements. 1990-2010 was globalisation which drove good productivity gains.

2010-2020 seems like it is a quiet period for the western world but don't count america out just yet. 2020-2050 is likely going to be a new period of high productivitt gains with technology finally opening its eyes to the world.

Its quite possible by 2050 the world will be unrecognisable. Robotics could be at the point of doing close to everything and thus everything will be free.

GreatApe

Relax wrote: »

I am beginning to get the feeling productivity in relation to a Nation is a distraction.

ultimately if those productivity gains are not reinvested in any meaningful way they serve no beneficial purpose.

Productivity as measured and reported in the Media is output per hour worked. Its less important and less meaningfully than simply output per year. If we look at the French in an hourly basis they are a lot more productive but on a yearly basis we are more productive.

GreatApe

Productivity also has a finby interplay with non earned income.

If I had a magic wand and just created out of nowhere 10 million homes out of the blue and gifted them for free to those who wanted them. Rents would fall towards zero and as such our GDP would contract about 10%

On paper we would be in recession and our productivity would have dives about 10% things would look grim but in reality the nation would be 10 million homes richer

Likewise of I used my magic want to make say 3 million homes dissapeae overnight then rents would shoot up and along with them GDP and imputed rents. The figures would read higher GDP and higher productivity yet the nation would be three million homes poorer.

PasturesNew

If productivity can be continually increased, then it means one day somebody will be doing ALL the work for us!