It’s a common concern among productivity freaks, and I include myself in that esteemed group, that as evolving economies shift from manufacturing to services, productivity growth is likely to slow due to inherent differentials in the pace of output-per-hour (i.e., productivity) between the two sectors.
As economist William Baumol, an early writer about this dynamic, famously quipped, “you can’t play the Three Minute Waltz in two minutes.”
Well, of course, you can…but it’s not what most of us would recognize as an “efficiency gain.” In other words, there are inherent barriers to productivity growth in the services that don’t exist in the factory sector, where churning out more widgets/hour is consistent with greater efficiency.
I’ve often discussed this in the context of education. You can double a teacher’s output-per-hour by doubling her class size, but again, most of us would not recognize that as true value-added.
Which is why I was interested in this piece from today’s WaPo on the allegedly highly productive “math emporium” model they’ve been using for over a decade at VA Tech. It’s a massive computer-driven math instructional factory that takes place in a mall! Yet, according to the piece, it kind of works.
This may be a sui generis case, unique to mostly introductory-level stuff. And I’m very sympathetic to the students and parents shelling out serious bucks and wondering if this is what they thought they were buying. But the piece does suggest one solution to the service-sector productivity riddle.
I don’t know about you, but most conversations I have about politics these days have two predictable outcomes: tears, and frustration with the increasingly corrupting influence of money in politics. I know—it was always so—but the combination of highly concentrated wealth and more venues for that wealth to influence the system are making it worse now.
E.J. Dionne writes that NY State offers a hopeful solution (the government matches small contributions and there are some limits to contributions and spending). I don’t know if it’s enough to offset the damage being done by Citizen’s United, but that’s precisely the kind of problem we ought to be trying to solve right now.
The NYT has a piece on the President’s “We Can’t Wait” agenda, which I haven’t heard about for a while, but which I consider quite important. It’s a gridlock buster, asking the question: given that too many in Congress are sworn to block any legislation the White House proposes, what can the administration accomplish through rule changes, executive order, etc.—measures that don’t require Congressional approval?
If my old friends over there are listening, allow me to suggest two items for the agenda:
–Sign a high-road-contracting executive order, of the type I describe here. Why not improve the quality of the millions of jobs we create when we outsource government functions to the private sector–something we do a ton of? Such an EO should stress the better production we the taxpayers get when we contract with firms that obey labor laws, train their workers, and lower their turnover and vacancy rates through better compensation.
–Recess appoint a replacement for FHFA director Ed DeMarco that is less congenitally opposed to trying a program of principal reduction. DeMarco’s been spinning his wheels for way too long on this—something about needing more time to crunch the numbers, but that was already over a month ago. It seems at this point like he’s stonewalling and I don’t understand why the White House is standing for it.
Ending this review on an upbeat note, check out John Harwood’s hopeful report on the likelihood of budget deal to avoid the fiscal cliff that’s looming at the end of this year.
One correction: John—an excellent political reporter (with strong political economy antennae)—in his discussion of a bipartisan health reform proposal by Sen Ron Wyden and Rep Paul Ryan, suggests that those who opposed this effort didn’t have a problem with the policy. They just didn’t like the election-year timing of politics.
Not so. The Wyden/Ryan plan for Medicare reform has the potential to ultimately gut the program through cost shifting onto beneficiaries and through adverse selection (leaving the sickest patients for the Medicare program while culling the more healthy ones for private plans).
Read about the flaws in the policy, not the politics, here.