Productivity mismeasurement: it goes both ways

July 4th, 2016 at 10:59 am

Many economists, myself included, argue that among our greatest concerns is the slowdown in productivity growth, as the growth of output per hour (that’s how productivity is measured) is a key determinant of living standards (yes, the distribution of productivity growth is another key determinant; in our age of inequality, growth is necessary but not sufficient to raise middle class living standards and lower poverty; but it sure is necessary!).

Some critics of the slowdown hypothesis argue that we are undercounting output, and thus systematically undercounting output per hour. I and many others find this hypothesis wanting, but an article I read in the NYT this AM got me thinking about a corner of this debate that tends to be overlooked: virtually every mismeasurement argument focuses on how technology is making us better off that are not counted in the national accounts, but some technologies push hard in the other direction.

The article focuses on tech support, which is often not only unbearable and enraging for users trying to find out how to restore their files after their cat erased them, but can be deliberately set up to be so, in order to save costs and discourage their use. One could say the same thing about phone menus in general. They are typically one of the many ways technology is used to externalize labor functions that were formally internal, which is a cost shift onto those of us endlessly pushing buttons in hopes that maybe we’ll find a person, and maybe that person will deign to help us.

If we were accurately measuring the output of tech service industry, such inconveniences would score as a negative.

There are other ways in which we fail to capture quality deterioration in our national accounts. Air travel is often raised as a poster child. Infrastructure deterioration is another. If you try to commute into DC, where parts of the Metro are shut down making our already terrible rush hour traffic even worse, you see an electronic sign over the highway that “helpfully” says, “Rethink your commute.” Perhaps I lack imagination, but I’ve rethought it, and all I can come up with is driving or taking the Metro.

End of the day, technology probably provides us with more mismeasured good stuff than bad stuff. To be clear, and this is very important, to make the case that productivity growth is faster than we think, you have to show that mismeasurement has worsened, and there’s little evidence to support that claim. In fact, there’s some to the contrary–we’re actually doing a little better in capturing tech’s benefits, which sadly implies the slowdown in productivity growth might be even a little worse than we thought.

But anyone seriously considering this mismeasurement hypothesis must consider both sides of the equation. There’s no point in denying the existence of the often hellish worlds of tech support and phone menus.

We’re not ready for the next recession

June 30th, 2016 at 1:07 pm

I know of two policy channels through which to push back on recessions: monetary and fiscal. As I discuss in today’s WaPo, though who knows when the next downturn hits, we’re not ready.

Monetary policy–ie, the Fed’s main tool: its Fed funds rate (ffr)–is very unlikely to have time to reload. I think this is a pretty striking picture of the extent of ffr reductions in past cycles of monetary stimulus.

Source: Federal Reserve

Source: Federal Reserve

But there’s still fiscal policy, right?? See, Congress, US, under subheads: a) dysfunction/gridlock, b) denial of efficacy of fiscal stimulus, c) embrace of fiscal austerity.

Where’s JB?

June 29th, 2016 at 7:51 pm

It’s summer, which means I hit the road to preach the progressive econ gospel to anyone with a town hall and a PowerPt projector. Anyone recognize where I am tonight? Be there and be square!

IMG_0270

Brexit and austerity: they’re connected

June 27th, 2016 at 9:26 am

As I discuss in today’s WaPo, Brexit was a function of many factors:

–PM David Cameron’s reckless, opportunistic political gambit: calling for the referendum back in 2013 to assuage his far right Euro-skeptics in time for the upcoming election.

–Strong anti-immigration and anti-globalization sentiments. The unleashed xenophobia, surely linked to the refugee crisis, is to my thinking the worst part of all of this. Re globalization, UK voters (and probably US ones as well) finally had enough of elite economists and politicians lecturing them that if they only understood “comparative advantage” (the productivity-enhancing benefits of trade) and shut up about “factor price equalization” (the costs of trading with low-wage countries), they’d realize how great expanded trade has been for them.

–The stark polarization between the urban and economically dynamic parts of Britain (Remainers) and the rest (Leavers).

–Distrust of the EU given their mismanagement of the recession and the recovery, which oftentimes seemed wholly unresponsive to the people on the wrong side of their decisions, people that appeared to have little in the way of voice or democratic recourse.

And a big part of this mismanagement, one that hasn’t gotten enough attention, was fiscal austerity.

Sources: IMF, Eurostat

Sources: IMF, Eurostat

What matters next is, if the UK economy is hard hit by the fallout, whether this destructive fever breaks. Odds are, unfortunately, that it will not.

From the joint dept. of: capitalism is remarkable, and we are a very sick society

June 26th, 2016 at 2:37 pm

Today’s NYT mag has a piece about how the proliferation of mass shootings made the term “active shooter” part of our lexicon.

The piece begins by featuring a manufacturer of bullet proof office furniture. For five years, Ballistic Furniture Systems has been developing “bullet-­resistant panels that could be fitted inside chairs, cubicles and doors.”

There is no other economic/political system I know of that is unable (really, unwilling) to take action against gun violence–and to be clear, mass shootings account for a tiny fraction of US gun deaths–while simultaneously developing all sorts of new ways to make money off of it.

I can just hear the pitch: “We offer competitive salaries, a great benefit package, and complete bullet-proof protection should an active shooter show up!”

BTW, just to close this loop of dark irony, the article notes that “Among the many contractors that now offer active-shooter training is G4S, the global ­security firm that employed one Omar Mateen.”

Sorry to get dramatic and maudlin, but I’m increasingly compelled to apologize to my children for the world that “grownups” are leaving to them.