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February 16, 2011


Luis Enrique

it's all because nobody is buying CDs any more.

... interesting rise of online retail over the last 5 years has done nowt for measured productivity. It has surely done something to real productivity. I don't trust the data. Or is it Baumol's disease and a services economy?

ah - I blame the rise of organic food and free range chickens, retarding output / worker ratios. Damn you Riverford! **shakes fist**

Tim Worstall

"Or it might be something else."

sure, the deranged levels of paperwork and red tape that the EU imposes upon hte economy.

Ah, but people will say, other countries manage to have growing productivity even with this.

Yes, I would say: but we're the only people who take it seriously, for a start. And secondly, we're not used to it, meaning that this imposition is indeed coming as an adverse shock.....


@ Luis - if productivity is being understated, then either GDP is higher than reported or employment lower. Which? And why?
@ Tim - why did the red tape become more onerous after about the mid-00s? Any particular regulation to blame?
I ask simply because there are so many questions here that aren't being asked, but should be.

Luis Enrique


GDP is obviously dodgy - all those downloaded CDs and finally the Guardian has persuaded people to move into non-market production.

'course it's possible to pick holes in GDP data, but the question is of course why did it start to matter in 2004. Is that when Primark opened and everyone started buying t-shirts that cost £1? I dunno.

it's the Great Stagnation innit ... although have your read interfluidity on that?


Surely the reason is the increased share of the public sector as a proportion of the overall economy.

The nature of a lot of the public sector and the way that it is managed ensures that it sees much lower productivity growth than the private sector.

Over five years the addition of low productivity growth activity to the overall economy reduces total productivity growth.


Hmm I don't think public sector employment increased very markedly in the last 5 years. The increase was really in the early noughties.

One explanation may lie in the increase in labour demand, and tight labour market in many areas and sectors led to employers being less choosy in their hiring practices.

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