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July 29, 2014

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ExtraBold

So the Tories are wrong in reality and in your counterfactual.

A more impressive wrong in reality would be illustrated by being ri5ght in counterfactual.

sjb

"as we're seeing in other contexts, some people will defend any atrocity if it is committed by their own side."

*confused*

Keith

political point scoring aside, this may be good in the short term for the Tory party, although they are languishing in the opinion polls; but for society as a whole it is a mess.

As J S Mill said political economy is the science of wealth. To increase human happiness requires making more wealth. Working more to produce less is the opposite of what society is trying to achieve in its economic activity. It is failure.

Luis Enrique

I think there's a simple reason too. Voters care about unemployment and, for reasons that are not clear to me, GDP growth. But they neither know nor care about productivity, so neither to politicians.

I also struggle to care about it, because I just can't think why the thing that actually matters for real incomes, the path of our productive capacity, should have been permanently knocked down a peg by the crisis, so I am inclined to blame mis-measurement, or investment in the form of not yet fully utilised human capital, rather than thinking we really have a productivity problem. But these opinions are not backed by evidence.

TickyW

Regarding welfare reforms as the driver of low productivity and increased employment count:

Jonathan Portes argues that JSA off-flow rates and the increased job count would be more closely correlated if the welfare reforms were a driver of the rightward shift of the labour supply curve.

I am not so sure. Perhaps the so-called welfare reforms have depressed on-flow rates such that people without jobs prefer to scratch a living on zero-hours contracts, or to engage in faux self-employment, rather than submit themselves to the new regime administered by IDS's cuddly DWP.

Benefit conditionality has been tightening for some years now, as measured by JSA sanctions, but is now tightening at an accelerating and alarming rate. It is hard to believe the recent growth in low quality "employment" is unrelated to this recent tightening benefit conditionality.

More research is needed to ascertain whether there is a link, I suggest.

Dan Kervick

Well, it seems to me that the initial post-crisis surge in productivity was the result of the decimation of the workforce, and the extra work squeezed out of all of those terrified and subjugated people who were left behind to cover the jobs of the dearly departed. But you can't keep extracting more strokes per minute from the galley slaves indefinitely.

When politicians blame output stagnation on productivity stagnation, it sounds like they are blaming their already overworked working citizens for not working even harder and even smarter. So I'm not suprised the politicians don't want to go that route.

They also might be unwilling to shine a light on the fact that the last great technological surge in productivity resulted from technologies that were incubated by mission-oriented, state-driven investment. Mariana Mazzucato has been trumpeting the data on the role of the entrepreneurial state, but she's Labour, and the mad state-shrinkers in the US and Europe want to have no knowledge of that dimension of economic reality.

In any case, the counterfactual seems implausible to me. Why assume that a growth in productivity would have been accompanied by the same level of output?

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