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Goldman "Picks Apart" The Labor Paradigm: 50 Years Of A Productivity Paradox
“Let me put this in perspective. For the total economy, productivity growth was 2.7% from 1920 to 1970, 1.6% from 1970 to 1994, 2.3% from 1994 to 2004 during what we call the dotcom era, and just 1.0% from 2004 to the second quarter of 2015.1 So the productivity growth of the last 11 years was not only slower than in the dotcom era, but even slower than in the so-called slowdown period beginning in the early 1970s.”
That’s from Robert Gordon, a professor of economics at Northwestern University and it comes courtesy of Goldman who has taken a close look at declining labor productivity in the US.
As the Vampire Squid notes, falling productivity is something of a paradox. That is, better technology and advances in efficiency should by all rights have increased productivity but apparently, a number of factors are intervening to short circuit the system. Here's Goldman's full interview with Gordon.
The reason for the slowdown after 1970 is straightforward: we simply exhausted the productivity benefits of prior innovations. In the late 19th century, hugely important “general purpose” technologies, like electricity and the internal combustion engine, were invented. Then there were major developments in entertainment and communication in the form of the telephone, telegraph, radio, motion pictures and television. We made major breakthroughs in health. And we vastly improved working conditions. All of that came together between 1920 and 1970. The last three spin-offs of the great inventions— interstate highways, commercial air travel, and air conditioning in most businesses—were also largely complete by 1970.So at that point we had run through the productivity payoffs.
Allison Nathan: Why has productivity growth stalled?
Robert Gordon: Let me put this in perspective. For the total economy, productivity growth was 2.7% from 1920 to 1970, 1.6% from 1970 to 1994, 2.3% from 1994 to 2004 during what we call the dotcom era, and just 1.0% from 2004 to the second quarter of 2015.1 So the productivity growth of the last 11 years was not only slower than in the dotcom era, but even slower than in the so-called slowdown period beginning in the early 1970s. The reason for the slowdown after 1970 is straightforward: we simply exhausted the productivity benefits of prior innovations. In the late 19th century, hugely important “general purpose” technologies, like electricity and the internal combustion engine, were invented. Then there were major developments in entertainment and communication in the form of the telephone, telegraph, radio, motion pictures and television. We made major breakthroughs in health. And we vastly improved working conditions. All of that came together between 1920 and 1970. The last three spin-offs of the great inventions— interstate highways, commercial air travel, and air conditioning in most businesses—were also largely complete by 1970. So at that point we had run through the productivity payoffs.
We have also now run through the payoffs of the digital revolution that followed. Between 1980 and 2005 there was a total transformation of business practices from paper and filing cabinets to flat screens and search engines. But that transition is over. And the temporary revival of productivity during the dotcom era was uniquely concentrated in a very short span, with remarkably few gains in productivity growth since. We’re using software and computers now that are very similar to the ones we used ten years ago. So it is no surprise that productivity growth has been slower over this decade.
Allison Nathan: Are the productivity statistics simply failing to account for the impact of new technologies?
Robert Gordon: Many consumer benefits are clearly missing from the GDP statistics. But GDP has always suffered from this fault. For example, GDP completely failed to capture the transition from the horse to the motorcar and the enormous benefits that resulted from an environment free of horse manure droppings in the streets. If anything, I think a case could be made that what productivity statistics failed to capture 1 Note from GS Research: The figures cited here are for the overall economy; corresponding numbers for the US nonfarm business sector (the conventional measure) tend to run about 0.4 pp higher. in the first 50 years of the 20th century was larger and more important than what is missing now. At that time, we left out the benefits of conquering infant mortality; of going from the 60-hour work week to the 40-hour work week; of the new ability to travel with a car. In any case, what we’re seeing now is more of the same: a general failure to translate new inventions into GDP, and therefore into productivity measures.
Allison Nathan: Should we be measuring productivity differently?
Robert Gordon: I think it’s impossible to quantify the benefits of new inventions. Economists have done experimental work on specific inventions like tractors, and it is possible to come up with ballpark estimates. But quantifying those improvements has always been difficult. And the hypothetical measurement of the benefits of more recent inventions like smartphones and tablets is probably more difficult than most.
Allison Nathan: Could we be experiencing delays in seeing the effects of new technologies on productivity?
Robert Gordon: Yes, we could be seeing some of this dynamic. For example, the rollout of electronic medical records has been very slow even though we have had the necessary technology for a good 15 years. But the real delay happened in the early 2000s. Despite the sharp drop in the stock market and a tremendous collapse in high-tech investment from 2000 to 2003, productivity growth was very rapid throughout the whole decade from 1994 to 2004, reflecting the delay in learning how to make full use of the internet, which was first introduced in the early 1990s. My favorite example is the introduction of airport check-in kiosks, which took place between 2001 and 2005 using technology that had been invented a decade earlier.
Allison Nathan: You argue that recent technological developments don’t hold a candle to the breakthroughs of the past. Are the world’s best innovations truly behind us?
Robert Gordon: In my view, the inventions of the century from 1870 to 1970 utterly changed human life in a way that now is taken for granted. When you consider the immense progress in getting rid of disease, filth, manure; the advances in health with antibiotics and treatments for heart disease and cancer; the liberation of women from the chores of doing laundry with a scrub board; the transition away from steel workers working 12 hours a day, six days a week, there really is no comparison with the inventions taking place today. Smartphones and social networks are entertainment and not basic to human life. But “best” is subjective. Some people may think it is more important to have a social network than indoor plumbing.
Allison Nathan: Some would say that the productivity contributions of past inventions, particularly during the industrial revolution, did not properly account for environmental or other costs. What are your thoughts? Robert
Gordon: More than overstating productivity growth during the industrial revolution, I think we have understated the growth of productivity from 1970 to the turn of the 21st century when we had major improvements in air and water quality mandated by legislation. We have incorporated part of this clean-up into productivity statistics in a very subtle way by accounting for emissions control devices on auto engines. But most of the improvements in the environment are missing from GDP. That being said, the costs of current technology are probably lower than the costs of past industrialization, so these types of omissions are likely less prevalent today. Allison Nathan: Are there any areas of innovation that hold substantial promise in your view? Robert Gordon: Most of the excitement is centered on artificial intelligence and robots. Robots are nothing new. The first industrial robot was introduced by General Motors in 1961. Since then, robots have steadily replaced human labor in manufacturing, and they continue to create more rapid productivity growth in the manufacturing sector than in most of the service sector. Another place where robots are gradually appearing is warehousing. But they don’t fetch individual items and bring them to a station for packing; they simply pick up an entire tier of shelves and bring it to a person who selects the right item and manually packs it. Developments in robotics have so far been unable to duplicate the actions of the human hand, even for many tasks that human beings do intuitively. So the gradual arrival of robots in the economy is very slow. As far as artificial intelligence, computer technology has already steadily replaced human jobs. Think of the disappearing travel agent and reservation clerk, or, more recently, the legal associate. So there is a lot of excitement about technological change, but it is taking place at a very measured pace, especially to the extent that it is replacing human labor.
Allison Nathan: Will these innovations be sufficient to boost productivity?
Robert Gordon: Not meaningfully. I expect productivity growth over the next quarter-century of 1.2%, slightly above the 1.0% growth rate of the last 11 years but still below the 1.4% rate over the past 45 years if you take out the dotcom decade, which was an unusual period that I don’t think will be repeated. That difference of 0.2% is the contribution of slower innovation compared to history. Keep in mind that this slowdown already occurred in the last ten years. So I am basically predicting more of the same, not some new arrival of stagnation.
Allison Nathan: How important is the pace of productivity to your overall outlook for US economic growth?
Robert Gordon: It's absolutely central. By definition, growth in real GDP is equal to growth in productivity plus growth in hours of work. The growth in hours of work is limited by population growth and growth in the number of hours that each member of the population works. The latter is going to be shrinking over the next 25 years due to the retirement of the baby boomers. So while US population growth should be about 0.8% per year, we can only expect growth in hours of work of 0.4%, much lower than what we observed in the latter part of the 20th century. Adding that to the 1.2% I expect for productivity growth, my projection for growth in real GDP is 1.6% a year. This is just the same as the last 11 years, but it is only half of the 3.2% growth rate we experienced from 1970 to 2004. Allison Nathan: You seem skeptical of technological tailwinds and more focused on economic headwinds. Which headwinds concern you the most?
Robert Gordon: I see four main headwinds to economic growth. The first is rising inequality. Our winner-take-all society provides very high payoffs to the top rock stars, CEOs, lawyers, and so forth. And at the bottom, we have machines gradually but steadily replacing workers, and an erosion of manufacturing jobs from globalization and trade. So the gap between the very top and the mass of people in the middle and the bottom continues to widen inexorably. The second headwind is the end of the great expansion of education that brought Americans from completing only an elementary school education in 1900 to a great majority having a high school education by around 1970. There has been a gradual increase in the share of young people going to college, but the United States has fallen from its previous position of leadership in global education and now ranks about 16th among nations in the percentage of its young people completing a four-year college degree program. The third headwind is the demographic shift I mentioned of baby boom retirement pushing down overall hours worked. And the final headwind, also related to aging, involves federal government expenditures on Social Security and Medicare increasing faster than the shrinking workforce’s ability to provide the tax revenue to finance these benefits. This will eventually necessitate tax increases and/or benefit reductions, which will cause people’s after-tax disposable income to grow even more slowly than their pre-tax income. Allison Nathan: Does your outlook owe more to a measured pace of innovation or to these headwinds?
Robert Gordon: Quantitatively, the headwinds are more important. That said, there is a whole list of policies that would help address them, from a more progressive tax system and increased spending on pre-school education to massive immigration reform. And many of those proposals also deal with productivity by raising the quality of human capital.
Allison Nathan: You are often described as a “technopessimist.” Is that a fair characterization?
Robert Gordon: I would certainly classify myself as a technopessimist. But, if you think about it, the terms techno-optimist and techno-pessimist belie the meaning of the words optimism and pessimism. Techno-“optimists” are predicting a future of massive technological unemployment with a quarter or half of the labor force unable to find jobs. Under the hood of their optimism, they are deeply pessimistic about the future of work. I think that technological change is proceeding slowly, just as it has over the past decade, which should allow us to keep our unemployment relatively low. So under the hood of my technopessimism, I'm very optimistic about the future of work. Where I see the real problem is not in finding a job for everybody, but in finding good jobs for people, and in dealing with the inevitable rise of inequality.
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How I do enjoy reading about bankers discussing how to squeeze more work out of their serfs in a given day.
quite....
in the field of financial fraud and stealing
at the root of the monetary system there is a limit.
they have found the limit. without productive and intelligent
employment of bullshit, all the bullshit in the world is just
bullshit.
Robert Gordon has been a pioneer of this concept.
Academic Paper
http://www.nber.org/papers/w18315.pdf
Ted Talk
https://www.ted.com/talks/robert_gordon_the_death_of_innovation_the_end_of_growth?language=en
Just received this today. A three year old dormant account. I really was laughing all afternoon. I haven't replied to them. Why should I? Sorry for long email copy.
Dear Client:We are writing to share with you important information about a security compromise involving a database containing some of your personal information, as well as steps we are taking in response, and the resources we are making available to you.
What Happened
Federal law enforcement officials recently informed us that they’ve been investigating cybersecurity crimes involving the theft of information from Scottrade and other financial services companies. We immediately initiated a comprehensive response.
Based upon our subsequent internal investigation coupled with information provided by the authorities, we believe a list of client names and street addresses was taken from our system. Importantly, we have no reason to believe that Scottrade’s trading platforms or any client funds were compromised. All client passwords remained encrypted at all times and we have not seen any indication of fraudulent activity as a result of this incident.
Although Social Security numbers, email addresses and other sensitive data were contained in the system accessed, it appears that contact information was the focus of the incident.
The unauthorized access appears to have occurred over a period of several months between late 2013 and early 2014. We have secured the known intrusion point and conducted an internal data forensics investigation on this incident with assistance from a leading computer security firm. We have taken appropriate steps to further strengthen our network defenses.
What Happens Now
Federal authorities had requested that they be allowed to complete much of their investigation before we notified clients. In coordination with them, we are now able to alert you of this incident. We are fully cooperating with law enforcement in their investigation and prosecution of the criminals involved.
Notices like this one are being sent to all individuals and entities whose information was contained in the affected database, and we have included here information about steps you can take to protect yourself.
Information about this incident is available online athttps://About.Scottrade.com/CyberSecurityUpdate, and we will update that web page if new data becomes available.
What You Can Do
As always, we encourage you to regularly review your Scottrade and other financial accounts and report any suspicious or unrecognized activity immediately. As recommended by federal regulatory agencies, you should remember to be vigilant for the next 12 to 24 months and report any suspected incidents of fraud to us or the relevant financial institution. Please also read the important information included on ways to protect yourself from identity theft.
We encourage clients to be particularly vigilant against email or direct mail schemes seeking to trick you into revealing personal information. Never confirm or provide personal information such as passwords or account information to anyone contacting you. Please know that Scottrade will never send you any unsolicited correspondence asking you for your account number, password or other private information. If you receive any letter or email requesting this information, it is fraudulent and we ask that you report it to us atphishing@scottrade.com. Be cautious about opening attachments or links from emails, regardless of who appears to have sent them.
Identity Theft Protection
As a precaution, Scottrade has arranged with AllClear ID to help you protect your identity at no cost to you for a period of one year. You are pre-qualified for identity repair and protection services and have additional credit monitoring options available, also at no cost to you.
You can call AllClear ID with any concerns about your identity at855.229.0083. This hotline is available from 8:00 am to 8:00 pm (central) Monday through Saturday.
We have also included additional steps you could consider at any time if you ever suspect you’ve been the victim of identity theft. We offer this out of an abundance of caution so that you have the information you need to protect yourself.
We are very sorry that this happened and for any uncertainty or inconvenience this has caused you. We know that incidents like these are frustrating. We take the security of your information very seriously and are committed to continually strengthening and evolving our defenses based on new and emerging threats.
Sincerely,
Scottrade
Brokerage products and services offered by Scottrade, Inc. - Member FINRA and SIPC.
AllClear ID Identity Theft ProtectionWe have arranged to have AllClear ID help you protect your identity for one year at no cost to you, effective Oct. 2, 2015. You are pre-qualified for AllClear SECURE identity repair and protection services and have additional credit monitoring options available with AllClear PRO, also at no cost to you.
AllClear SECURE: The team at AllClear ID is ready and standing by if you need identity repair assistance. This service is automatically available to you with no enrollment required. If a problem arises, simply call 855.229.0083 and a dedicated investigator will do the work to recover financial losses, restore your credit and make sure your identity is returned to its proper condition.
AllClear PRO: This service offers additional layers of protection including credit monitoring and a $1 million identity theft insurance policy. To use the PRO service, you will need to provide your personal information to AllClear ID. You may sign up online athttps://scottrade.allclearid.com or by phone by calling 855.229.0083.
This hotline is available from 8:00 am to 8:00 pm (central) Monday through Saturday.
Please note: Additional steps may be required by you in order to activate your phone alerts and monitoring options.
Important Identity Theft Information: Additional Steps You Can Take to Protect Your Identity
The following are additional steps you may wish to take to protect your identity.
Review Your Accounts and Credit Reports
Regularly review statements from your accounts and periodically obtain your credit report from one or more of the national credit reporting companies.
You may obtain a free copy of your credit report online atwww.annualcreditreport.com by calling toll-free 1.877.322.8228, or by mailing an Annual Credit Report Request Form (available atwww.annualcreditreport.com) to: Annual Credit Report Request Service. P.O. Box 105281, Atlanta, GA, 30348-5281. You may also purchase a copy of your credit report by contacting one or more of the three national credit reporting agencies listed below.
• Equifax, P.O. Box 740241, Atlanta, Georgia 30374-0241. 1.800.685.1111.www.equifax.com • Experian, P.O. Box 9532, Allen, TX 75013, 1.888.397.3742.www.experian.com • TransUnion, 2 Baldwin Place, P.O. Box 1000, Chester, PA 19016.1.800.916.8800. www.transunion.comConsider Placing a Fraud Alert
You may wish to consider contacting the fraud department of the three major credit bureaus to request that a "fraud alert" be placed on your file. A fraud alert notifies potential lenders to verify your identification before extending credit in your name.
Equifax: Report Fraud: 1.800.525.6285 Experian: Report Fraud: 1.888.397.3742 TransUnion: Report Fraud: 1.800.680.7289Security Freeze for Credit Reporting Agencies
You may wish to request a security freeze on your credit reports. A security freeze prohibits a credit reporting agency from releasing any information from a consumer’s credit report without written authorization. However, please be aware that placing a security freeze on your credit report may delay, interfere with, or prevent the timely approval of any requests you make for new loans, credit mortgages, employment, housing or other services. If you have been a victim of identity theft, and you provide the credit reporting agency with a valid police report, it cannot charge you to place, lift or remove a security freeze. In all other cases, a credit reporting agency may charge you up to $10.00 each to place, temporarily lift, or permanently remove a security freeze.
To place a security freeze on your credit report, you must send a written request to each of the three major consumer reporting agencies by regular, certified or overnight mail at the following addresses:
• Equifax Security Freeze, P.O. Box 105788, Atlanta, GA 30348 • Experian Security Freeze, P.O. Box 9554, Allen, TX 75013 • TransUnion Security Freeze, Fraud Victim Assistance Department, 2 Baldwin Place, P.O. Box 1000, Chester, PA 19016To request a security freeze, you will need to provide the following:
• Your full name (including middle initial, Jr., Sr., Roman numerals, etc.) • Social Security number • Date of birth • Address(es) where you have lived over the prior five years • Proof of current address such as a current utility bill • A photocopy of a government-issued ID card • If you are a victim of identity theft, include a copy of either the police report, investigative report, or complaint to a law enforcement agency concerning identity theft • If you are not a victim of identity theft, include payment by check, money order, or credit card (Visa, MasterCard, American Express or Discover only). Don’t send cash through the mail.The credit reporting agencies have three business days after receiving your request to place a security freeze on your credit report. The credit bureaus must also send written confirmation to you within five business days and provide you with a unique personal identification number (PIN) or password, or both that can be used by you to authorize the removal or lifting of the security freeze.
To lift the freeze to allow a specific entity or individual access to your credit report, you must call or send a written request to the credit reporting agencies by mail and include (1) proper identification (name, address, and Social Security number), (2) the PIN number or password provided to you when you placed the security freeze; and (3) the identities of those entities or individuals you would like to receive your credit report or the specific period of time you want the credit report available. The credit reporting agencies have three business days after receiving your request to lift the security freeze for those identified entities or for the specified period of time.
To remove the security freeze all together, you must send a written request to each of the three credit bureaus by mail and include proper identification (name, address, and Social Security number) and the PIN number or password provided to you when you placed the security freeze. The credit bureaus have three business days after receiving your request to remove the security freeze.
Suggestions if You Are a Victim of Identity Theft
• File a police report. Get a copy of the report to submit to your creditors and others that may require proof of a crime. • Contact the U.S. Federal Trade Commission (FTC). The FTC provides useful information to identity theft victims and maintains a database of identity theft cases for use by law enforcement agencies. File a report with the FTC by calling the FTC’s Identity Theft Hotline: 1-877-IDTHEFT (438-4338); online athttp://www.ftc.gov/idtheft; or by mail at Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Ave., N.W., Washington, D.C. 20580. Also request a copy of the publication, "Take Charge: Fighting Back Against Identity Theft" fromhttp://www.ftc.gov/bcp/edu/pubs/consumer/idtheft/idt04.pdf. • Keep a record of your contacts. Start a file with copies of your credit reports, the police reports, any correspondence, and copies of disputed bills. It is also helpful to keep a log of your conversations with creditors, law enforcement officials, and other relevant parties.Take Steps to Avoid Identity Theft
Further information can be obtained from the FTC about steps to take to avoid identity theft through the following paths:http://www.ftc.gov/idtheft; calling 1-877-IDTHEFT (438-4338); or write to Consumer Response Center, Federal Trade Commission,600 Pennsylvania Ave., N.W., Washington, D.C. 20580.
Maryland residents can learn more about preventing identity theft from the Maryland Office of the Attorney General, by visiting their web site at http://www.oag.state.md.us/idtheft/index.htm, calling the Identity Theft Unit at 410.567.6491, or requesting more information at the Identity Theft Unit, 200 St. Paul Place, 16th Floor, Baltimore, MD 21202.
North Carolina residents can learn more about preventing identity theft from the North Carolina Office of the Attorney General, by visiting their web site at http://www.ncdoj.gov/Help-for-Victims/ID-Theft-Victims.aspx, calling 919.716.6400 or requesting more information from the North Carolina Attorney General’s Office, 9001 Mail Service Center Raleigh, NC 27699-9001.
Vermont residents may learn helpful information about fighting identity theft, placing a security freeze, and obtaining a free copy of your credit report on the Vermont Attorney General’s website athttp://www.atg.state.vt.us
Massachusetts residents are reminded that you have the right to obtain a police report and request a security freeze as described above. The consumer reporting agencies may charge you a fee of up to $10 to place a security freeze on your account, and may require that you provide certain personal information (such as your name, Social Security Number, date of birth and address) and proper identification (such as a copy of a government-issued ID card and a bill or statement) prior to honoring your request. There is no charge, however, to place, lift or remove a security freeze if you have been a victim of identity theft and you provide the consumer reporting agencies with a valid police report.
DATS CALLED FULL AND MOTHER FUCKING FAIR....DISCLOSURE BABY...
and 99.8% of the populace that GITS this shit.....throws it away
Much said to explain the obvious. Guess it takes an expert to make stuff real?
Inequality is bad when all the players apply and prepare themselves equally and then obtain different/unfair/unjustified outcomes. But when available jobs do not match available workers then equality/inequality is no longer a factor. It's a different and disconnected problem.
It's coming. They are manufacturing honeypots for you to give them information. Start finding a alternative way to access the Internet. If I should disappear, you'll find me in the Deep Web
;)
work harder for less pay. hmm.
Joe Bernier of Scottrade. fund team for Goldman Sachs.
http://www.bizjournals.com/stlouis/stories/2009/09/14/tidbits2.html
Find Waldo. Hint: John Koch.
'Hugely important' general purpose technology innovations (electricity generation and internal combustion) together with their related spin-offs described above have resulted in extreme productivity gains in the making of human flesh.
To curtail and reverse this undesirable trend internal combustion engines will be phased out as emission pollution dynamics become better understood and electicity generation will be marginalized to insignificance by CAGW mania.
A very prehistoric approach in collecting slave taxes. They have hidden it from education books, let the bullets fire upon the theives.
Great chart. President Eisenhower in 1965?
Couldn't be that having a completely fiat currency hurts productivity, could it? Nah, we can't admit that.
Productivity arising from technology and medical advancements is one thing but perhaps there is another reason why productivity gains are taking a back seat.
Could it be the case that the work ethic has faltered at least among a section of the working population. Could it be that too many workers are wasting time talking on the phone, playing games or watching porn at their employer's expense?
And the other problem is that perhaps too may graduates of the current education system are actually dumber and less capable than their parents and grandparents were.
One employer was recently complaining that too many of his workers were on "happy" substances and this was affecting their work quality and quantity.
I'd agree with that, some days I really don't do nearly as much work as I should do.
On the flip side I look out there and wonder if I'm being paid in anything worthwhile, the new people coming into the workforce today have stagnant wages and often high debts, but are supposed to be able to buy with that the necessities and some luxuries of life, things like a house and a holiday now and then. Add to that the less free political life we have today, where it suddenly becomes almost illegal to put forth a viewpoint on something that is not accepted by a certain group and the result is apathy on everything. Enoch in the 1960's UK lamented on this fact that letters from his constituents were often anonymous because they feared consequences even though their actions in raising issues for their MP were entirely lawful.
The problem there is that it starts feeling like they are pretending to pay us, and in return it feels good pretending to work. Maybe a result of all this soviet style central bank economic planning is that we all go soviet in response.
'
'
' Output / People = Productivity
Now with robots?
Output / 0 = Infinite
•?•
V-V
The problem is when you reach maximum efficiency. Look at super cars.
You can spend a million plus and go from 0 to 60 in 2.5 seconds or you can pay 2 million plus and do it in 2.2 seconds. No amount of money will produce a street legal car that can do this in under 2 seconds. There are limits.
It is the discovery of oil that enabled the increased productivity in the 19th Century and onward. But the energy potential in a barrel of oil has not improved over time so there is a maximum benefit that can never be exceeded. Therefore productivity has to become stagnant at some point and then decline as the availinility of oil prohibits its use in ways we are used to.
And that barrel of oil took very little effort to get years ago, one barrel of oil in 1900 oilfields would provide us with 100 in return, now we get 3 to 10 back.
We can scale our operations up to keep production high, but that means more effort for the same result, I would say this is a significant factor causing falling productivity. So while technology improves, much of its improvements are lost in the declining return on investment.
The productivity chart is also spikey for a reason, new technologies give rapid increases in productivity, but as they age so do the increase in benefits they bestow decrease.
Take silicon for example, Intel is the market leader and has a roadmap down to 7nm, however at this point the oxide insulation thickness is 2 atoms thick, therefore the technology is practically at a dead end and nano tubes are other oddball technologies are mentioned (info given by vendor, not tin foil hat brigade!). This point will be reached in the next 5-6 years at a guess (3 new process technologies time), on top of that too the benefit of each process technology has been diminishing, a look at Intels new top end CPU's shows this, the productivity benefit of a new CPU has been declining for some time now.
Its hard to know what to bet on because there is always the chance of a new technology appearing, but on our present course a bet increasing debt being paid back by ever increasing growth (growth being the paradym of the last few decades) is as unfounded as a Dennis Gartman stock prediction.
We live in interesting times.
I would argue that smartphone apps and social media have made us LESS productive than 15 years ago!
Name one invention or new porduct in the last 10 years that wasn't just a inhancement or upgrade of a previous invention.
Translation - Old fucks just die already. Demographic imbalance. Enough said.
Correction: Eisenhower was not President in 1965, but the Chart reports this in Error.
Construction was authorized by the Federal Aid Highway Act of 1956, and the original portion was completed 35 years later, although some urban routes were cancelled and never built.
Is productivity important?
We employ armies of advertising and marketing men to get people to buy products that they don't need.
We have massive over production already and have to desperately try and create demand for it.
The whole system needs a re-think.
So productivity started suddenly dropping in 1971.
Something else happened in 1971, what was it?
Oh, yeah... we changed our money to make it less real.
But that couldn't have affected the economy, could it?
The article strikes me as academically-crafted disinfo.
I like the "breakaway civilization" meme of Richard Dolan, JP Farrell and CA Fitts. I think Star Trek was/is a decent approximation to a plot point of where we could have headed - had the oligarchy not decided to go with a post-modern serfdom ... and all the sexy stuff we have all seen in magazine articles across many years somehow never seems to make it out of the laboratories, etc. Nick Cook (Jane's aviation) has written The Hunt for Zero Point - which suggests that zero point energy and anti-gravity m a y have been within our grasp (perhaps for a while) - and buried very deeply in the blackprojectworld.
I fail to believe that the whole world collectively turned its back on any idea that would provide free energy, a bit of skepticism is healthy, but too much is deep into the tin foil hat territory.
While our capitalism is imperfect, it is still there, there is still a market that rewards people who provide things that people want, and allocates resources to such people, while thre is a lot of misallocation of resources occuring via central planning, the market is not completely dead. While I do believe there are likely technologies we ought to have invested in such as getting energy from space applications, I do not believe that they were easy in the past, or will be easy to do today.
We do as a society waste epic amounts of resources on completely frivilous activities, such as turning 22 men kicking a bag of wind around in a field into a multi billion dollar industry, or a handful of people sailing/driving pointless vehicles to nowhere in particular, or blowing up 7th century religious primitives in some far away desert with hitech guided missiles that cost more than superyachts. And I do keep waiting for the realisation that now the financial tide has gone out and revealed the scale of waste the more extravigant activities need to be scaled back to something a bit more appropiate, but I remain disappointed as the average joe seems fine with paying to watch multi-millionaires kicking the same bag of wind week in, week out, I guess a final financial reckoning isn't happening quite yet.
But the popcorn is brought ready and waiting for it.
The transition of the United States from being a largely crude oil independent country to a very large crude oil importer was becoming glaringly obvious by 1971. That's the very, very important and ominous trend, exacerbated by spending on the Vietnam War and the war on poverty under President Johnson, that ultimately drove President Richard "Tricky Dick" Nixon to the politically expedient decision to make the US dollar a completely fiat currency. A supermajority of the population either largely misunderstood or were completely baffled by the ramifications of abandoning the Bretton Woods currency agreements. The vast majority of the US population still doesn't understand our fiat currency or the Federal Reserve System.
Most importantly, very few people understand that all of the cheap crude oil lying in easily accessible supergiant fields had been discovered by circa 1965 and that many of those fields are in severe decline or have already been been pumped dry. That's the BIG problem. Shale oil are the dregs of the crude oil fields. And, not surprisingly, economisseds do not even consider crude oil relevant in their economic models! Our economic problems are largely the consequences of that replacement of cheap crude oil, ~US$20 (2015) per barrel, by expensive crude oil, ~US $145 (2008) or ~US $128 (2014) per barrel. The current low prices of ~US $50 per barrel are the result of financial exhaustion on the part of consumers. It doesn't help that Saudi Arabia at their current domestic crude oil usage trend will be a net importer of crude oil by about 2023.
"The transition of the United States from being a largely crude oil independent country to a very large crude oil importer was becoming glaringly obvious by 1971. That's the very, very important and ominous trend..."
I think much simpler than that. We have gone from working to not working. All due to twisted government policies.
Idiots! Productivity growth has slowed to a crawl because the typical employee spends a third to a half of their work day tending to their social media farm...
>> For the total economy, productivity growth was 2.7% from 1920 to 1970, 1.6% from 1970 to 1994, 2.3% from 1994 to 2004 during what we call the dotcom era, and just 1.0% from 2004 to the second quarter of 2015.1
That is quite ambiguous. Does the writer mean productivity growth was 2.7%, inflation adjusted (and by what measure) for the entire period 1920-1970? Or does the writer mean 2.7% per annum, not inflation adjusted (and if so in which currency)?. Either way the numbers given are unhelpful. If inflation adjusted then contradictory, but if annual inflation adjusted then they are more a measure of average inflation over the years than a measure of productivity in any useful sense.
I do wish authors would take the trouble to avoid ambiguity and give sources when they quote figures.
Sorry, bu this guy is a moron and another concerned about wealth inequality and no doubt his proposed solutions will create more. Too many people are sitting around on their couches watching TV. Put there by government through welfare programs and government tax and regulatory policies which have rendered the workforce completely noncompetitive compared to many parts of the world. And, he wants young people to take out more loans for college when the jobs simply are not there. Change the government policies first, then it might be worthwhile.