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There is a huge assumption here that productivity isn't increasing, which is false. Economic output per hour worked has been steadily increasing in every countr

by robjan 5y ago

There is a huge assumption here that productivity isn't increasing, which is false. Economic output per hour worked has been steadily increasing in every country since their respective industrial revolutions. When you go to the source tweet, it turns out that it's comparing the developed world to the developing world. Developing economies will always grow faster, but not necessarily efficiently, because there's more low hanging fruit to pick. These low hanging fruit can be picked by throwing more people at the problem (increasing workforce participation or working longer hours). One example is how much more time it takes to build infrastructure in America vs China. If you look at the data[0], productivity in both countries is growing at roughly the same rate. It pretty much invalidates the assertion in the blog and the source tweet. [0] https://ourworldindata.org/grapher/labor-productivity-per-hour-pennworldtable?country=USA~CHN https://ourworldindata.org/grapher/labor-productivity-per-ho...

fidesomnes 5y ago
As much as I dislike Chinas ruling party, their government is a model of efficiency when compared to the USA and it mostly gets out of peoples way. Contrast that with US government where taxes, vehicle registration, and judicial process is perhaps decades behind despite having more resources. There is something about complacency common to all democracies that never up well. The old refrain "at least Mussolini made the trains run on time" applies just as much today.
hn_throwaway_99 5y ago
> These low hanging fruit can be picked by throwing more people at the problem (increasing workforce participation or working longer hours). I haven't read the article yet, but note increasing workforce participation or working hours doesn't increase productivity - that just increases the denominator for the productivity calculation, and unless it increases the numerator faster there is no productivity increase.
- robjan 5y ago
  This is why I said "not necessarily efficiently". At a very macro level, you can increase economic output by either working more or increasing efficiency (productivity per hour).
alexgmcm 5y ago
I think the tweet linked to by OP is using the colloquial definition of productivity (i.e. I can get more stuff done) and uses examples of computer technology etc. This isn't to be confused with the economic definition of GDP per hour worked - which has far more to do with the sectors of industry that a country has. After all, a few financiers doing million-dollar deals is always going to generate more GDP per hour than coltan miners, even though it's not obvious which is actually generating more wealth. Robert F Kennedy famously said the GNP "measures everything in short, except that which makes life worthwhile".
- failuser 5y ago
  You increase what you optimize for. GDP increase is the stated goal of most current societies and they work to achieve it.
onlyrealcuzzo 5y ago
GDP doesn't take into consideration public debt. If public debt is up 100% and GDP has barely changed - I don't think that's cause for celebration that GDP / hours worked = we are more productive. I'm not saying this is the case. But people use GDP a lot to make points like this - and it's important to talk about how much public debt is increasing GDP.
- skywal_l 5y ago
  If you are in a country where pensions are managed by the state, your contributions are considered taxes. If you are in a country with a private pension system, your contributions are in the GDP! The GDP is not a scientific measure. It is an ideological concept. It doesn't mean it is useless, but it should not be taken at face value.
  - karatinversion 5y ago
    Taxed income isn’t subtracted from income in national accounts though...?
lkrubner 5y ago
Those are PPP numbers, which means they are a total joke. The graph you post does not show the post war boom, nor does it show the productivity stagnation after 1973. The USA went from 3% per year productivity growth, before 1973, to 1.5% productivity growth after 1973. None of that is visible in the chart because the chart is using PPP numbers. But, as a separate issue, the above essay is focused on computers, and so it implicitly raises the Solow Productivity Paradox: why don't computers seem to add anything to productivity? See: The Solow Productivity Paradox: What Do Computers Do to Productivity? https://www.brookings.edu/articles/the-solow-productivity-paradox-what-do-computers-do-to-productivity/ https://www.brookings.edu/articles/the-solow-productivity-pa... McKinsey wrote this in 2018, predicting a productivity boom was coming soon, though of course this prediction has been made often since 1973, and the only time it was even slightly true was during the boom in big box retail 1995-2005: https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/is-the-solow-paradox-back# https://www.mckinsey.com/business-functions/mckinsey-digital... It's well known that in the 1800s the telegraph and then the telephone allowed a large scale re-organization of capital, and capital invested heavily to take advantage of the new technologies, but it was impossible to see a productivity benefit. These technologies allowed new systems of control, but not necessarily any productivity benefit. Since 1970 computer network technologies have offered a similar reorganization, but they are vastly more powerful than the telephone, and they allowed a re-organization that was vastly more profound than any previous reorganization of capital. Millions of jobs were outsourced to India, China, Hong Kong, Singapore, and then Brazil, Russia, Romania, etc.
- throwawaylinux 5y ago
  > But, as a separate issue, the above essay is focused on computers, and so it implicitly raises the Solow Productivity Paradox: why don't computers seem to add anything to productivity? Just going by eye, there is a pretty sharp trend upward from about 1990-2005, which I think roughly corresponds to the period when the bulk of computerization happened in homes, offices, schools, as well as being put to use in many of the most important embedded applications -- factories and machinery, automobiles, etc. Eyeballing the trend before 1990 has it continuing to low-$50s, instead it's mid-$60s, a 20% increase. So why do you think this graph shows computers don't seem to add anything to productivity? I'm not saying they have, but I can't see how that graph demonstrates they haven't.
coldtea 5y ago
>There is a huge assumption here that productivity isn't increasing, which is false. Actually the assumption in the post is the exact opposite: that productivity has increased. The question it poses then is "so what do we have to show for it?".
- epicureanideal 5y ago
  It might be that we're spending the increased productivity on temporary things rather than long-lived things. For example, spending $1M on keeping a retired cancer patient alive. That's good for them, good for their family, good for lots of people to feel like they'll have a chance of survival if they get it, but it doesn't cause a new bridge to be built, etc. The technology improves, the knowledge improves, but those things aren't visible on a skyline. It might also be things like higher quality food, varieties of food, yachts for the rich that most of us don't ever see, or things like that, things that are either consumed and don't accumulate wealth, or things that are relatively long lived and durable but not part of most people's lives because most of the gains have gone to the top 1%. Other ideas: paper pushing services like handling unnecessarily large volumes of litigation just to run a business, which requires work and causes GDP to go up but doesn't produce actual products.
- IkmoIkmo 5y ago
  Cheap clothes, cheap flights, cheap music, movies, cheap food, longer life expectancy, bigger homes with smaller household sizes, cheap washing machines and various appliances, all with far fewer working hours, and far less household work while you're off-work. I'm definitely better off than my parents or grandparents. Hell, we have stories in our family where my uncles would shower at the communal bathhouse cause their home didn't have a bath nor hot water. Everyone used to wear hand-me-downs. We used to send cassette tapes to family abroad because international calls were so expensive. We flew every few years instead of multiple times a year. We saved up for CDs, and I literally never, ever went out for dinner to a restaurant (outside of a rare holiday) with my parents. My dad lost both parents as a child to old age, my grandfather worked 6, sometimes 7 days a week, my grandmother spent almost the entire day running the household (e.g. washing clothes by hand), they had no retirement and lived like that till death. I'm often surprised about this idea we've got it worse off. The conversations usually revolve around housing, healthcare and college having become drastically more expensive. (although, never normalised for interest rates that dropped from 15% to 3%, homes that average 2x larger than 60 years ago with fewer people, life expectancy increasing by a decade since 1950 etc etc). Life isn't better in all respects, but on the whole I certainly wouldn't want to trade with past generations. And a lot of that boils down to productivity allowing new measures of wealth for many. If we look at it on a worldwide scale, the difference is much, much more pronounced. Many lower income countries saw massive productivity improvements. We shouldn't forget that the past 3-4 decades have been all about globalising markets. Factory workers in the US now compete with those in China. IT staff the UK is competing with IT staff in India. Technology is relatively mobile and goes across borders easily. You cannot measure ceteris paribus productivity improvements in terms of gdp per capita in the west without correcting for increased competition abroad (e.g. in China). And in doing so, you will find that there's even bigger productivity increases in lower/middle income countries, too.
babesh 5y ago
https://ourworldindata.org/grapher/labor-productivity-per-hour-pennworldtable?stackMode=relative&country=USA~CHN https://ourworldindata.org/grapher/labor-productivity-per-ho... Are you sure about that? Are you measuring in absolute GDP per person or rate of growth per person?

by robjan 5y ago

fidesomnes 5y ago

As much as I dislike Chinas ruling party, their government is a model of efficiency when compared to the USA and it mostly gets out of peoples way. Contrast that with US government where taxes, vehicle registration, and judicial process is perhaps decades behind despite having more resources. There is something about complacency common to all democracies that never up well. The old refrain "at least Mussolini made the trains run on time" applies just as much today.

hn_throwaway_99 5y ago

> These low hanging fruit can be picked by throwing more people at the problem (increasing workforce participation or working longer hours). I haven't read the article yet, but note increasing workforce participation or working hours doesn't increase productivity - that just increases the denominator for the productivity calculation, and unless it increases the numerator faster there is no productivity increase.

robjan 5y ago
This is why I said "not necessarily efficiently". At a very macro level, you can increase economic output by either working more or increasing efficiency (productivity per hour).

alexgmcm 5y ago

I think the tweet linked to by OP is using the colloquial definition of productivity (i.e. I can get more stuff done) and uses examples of computer technology etc. This isn't to be confused with the economic definition of GDP per hour worked - which has far more to do with the sectors of industry that a country has. After all, a few financiers doing million-dollar deals is always going to generate more GDP per hour than coltan miners, even though it's not obvious which is actually generating more wealth. Robert F Kennedy famously said the GNP "measures everything in short, except that which makes life worthwhile".

failuser 5y ago
You increase what you optimize for. GDP increase is the stated goal of most current societies and they work to achieve it.

onlyrealcuzzo 5y ago

GDP doesn't take into consideration public debt. If public debt is up 100% and GDP has barely changed - I don't think that's cause for celebration that GDP / hours worked = we are more productive. I'm not saying this is the case. But people use GDP a lot to make points like this - and it's important to talk about how much public debt is increasing GDP.

skywal_l 5y ago
If you are in a country where pensions are managed by the state, your contributions are considered taxes. If you are in a country with a private pension system, your contributions are in the GDP! The GDP is not a scientific measure. It is an ideological concept. It doesn't mean it is useless, but it should not be taken at face value.
- karatinversion 5y ago
  Taxed income isn’t subtracted from income in national accounts though...?

lkrubner 5y ago

Those are PPP numbers, which means they are a total joke. The graph you post does not show the post war boom, nor does it show the productivity stagnation after 1973. The USA went from 3% per year productivity growth, before 1973, to 1.5% productivity growth after 1973. None of that is visible in the chart because the chart is using PPP numbers. But, as a separate issue, the above essay is focused on computers, and so it implicitly raises the Solow Productivity Paradox: why don't computers seem to add anything to productivity? See: The Solow Productivity Paradox: What Do Computers Do to Productivity? https://www.brookings.edu/articles/the-solow-productivity-paradox-what-do-computers-do-to-productivity/ https://www.brookings.edu/articles/the-solow-productivity-pa... McKinsey wrote this in 2018, predicting a productivity boom was coming soon, though of course this prediction has been made often since 1973, and the only time it was even slightly true was during the boom in big box retail 1995-2005: https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/is-the-solow-paradox-back# https://www.mckinsey.com/business-functions/mckinsey-digital... It's well known that in the 1800s the telegraph and then the telephone allowed a large scale re-organization of capital, and capital invested heavily to take advantage of the new technologies, but it was impossible to see a productivity benefit. These technologies allowed new systems of control, but not necessarily any productivity benefit. Since 1970 computer network technologies have offered a similar reorganization, but they are vastly more powerful than the telephone, and they allowed a re-organization that was vastly more profound than any previous reorganization of capital. Millions of jobs were outsourced to India, China, Hong Kong, Singapore, and then Brazil, Russia, Romania, etc.

throwawaylinux 5y ago
> But, as a separate issue, the above essay is focused on computers, and so it implicitly raises the Solow Productivity Paradox: why don't computers seem to add anything to productivity? Just going by eye, there is a pretty sharp trend upward from about 1990-2005, which I think roughly corresponds to the period when the bulk of computerization happened in homes, offices, schools, as well as being put to use in many of the most important embedded applications -- factories and machinery, automobiles, etc. Eyeballing the trend before 1990 has it continuing to low-$50s, instead it's mid-$60s, a 20% increase. So why do you think this graph shows computers don't seem to add anything to productivity? I'm not saying they have, but I can't see how that graph demonstrates they haven't.

coldtea 5y ago

>There is a huge assumption here that productivity isn't increasing, which is false. Actually the assumption in the post is the exact opposite: that productivity has increased. The question it poses then is "so what do we have to show for it?".

epicureanideal 5y ago
It might be that we're spending the increased productivity on temporary things rather than long-lived things. For example, spending $1M on keeping a retired cancer patient alive. That's good for them, good for their family, good for lots of people to feel like they'll have a chance of survival if they get it, but it doesn't cause a new bridge to be built, etc. The technology improves, the knowledge improves, but those things aren't visible on a skyline. It might also be things like higher quality food, varieties of food, yachts for the rich that most of us don't ever see, or things like that, things that are either consumed and don't accumulate wealth, or things that are relatively long lived and durable but not part of most people's lives because most of the gains have gone to the top 1%. Other ideas: paper pushing services like handling unnecessarily large volumes of litigation just to run a business, which requires work and causes GDP to go up but doesn't produce actual products.
IkmoIkmo 5y ago
Cheap clothes, cheap flights, cheap music, movies, cheap food, longer life expectancy, bigger homes with smaller household sizes, cheap washing machines and various appliances, all with far fewer working hours, and far less household work while you're off-work. I'm definitely better off than my parents or grandparents. Hell, we have stories in our family where my uncles would shower at the communal bathhouse cause their home didn't have a bath nor hot water. Everyone used to wear hand-me-downs. We used to send cassette tapes to family abroad because international calls were so expensive. We flew every few years instead of multiple times a year. We saved up for CDs, and I literally never, ever went out for dinner to a restaurant (outside of a rare holiday) with my parents. My dad lost both parents as a child to old age, my grandfather worked 6, sometimes 7 days a week, my grandmother spent almost the entire day running the household (e.g. washing clothes by hand), they had no retirement and lived like that till death. I'm often surprised about this idea we've got it worse off. The conversations usually revolve around housing, healthcare and college having become drastically more expensive. (although, never normalised for interest rates that dropped from 15% to 3%, homes that average 2x larger than 60 years ago with fewer people, life expectancy increasing by a decade since 1950 etc etc). Life isn't better in all respects, but on the whole I certainly wouldn't want to trade with past generations. And a lot of that boils down to productivity allowing new measures of wealth for many. If we look at it on a worldwide scale, the difference is much, much more pronounced. Many lower income countries saw massive productivity improvements. We shouldn't forget that the past 3-4 decades have been all about globalising markets. Factory workers in the US now compete with those in China. IT staff the UK is competing with IT staff in India. Technology is relatively mobile and goes across borders easily. You cannot measure ceteris paribus productivity improvements in terms of gdp per capita in the west without correcting for increased competition abroad (e.g. in China). And in doing so, you will find that there's even bigger productivity increases in lower/middle income countries, too.

babesh 5y ago

https://ourworldindata.org/grapher/labor-productivity-per-hour-pennworldtable?stackMode=relative&country=USA~CHN https://ourworldindata.org/grapher/labor-productivity-per-ho... Are you sure about that? Are you measuring in absolute GDP per person or rate of growth per person?