The Irish Savant : The productivity paradox

The productivity paradox

The Irish Savant

http://irishsavant.blogspot.com/2020/02/the-productivity-paradox.html

Friday, 7 February 2020

The productivity gains over the last fifty years from information technology, robotics and the 'free' internet have been staggering. It costs today but a fraction of what it used to to produce goods and services. The time and manpower (sorry, personpower) costs of processing an ordinary business transaction, be it bank loan, insurance quotation or invoice payment have been reduced by at least 80% since the fifties. The declines have been even greater in factory production, with many facilities reduced to people-free zones operating 24x7x365 through the use of robotics. Simulation technologies have achieved similar reductions in the time and cost of design and testing.  Farm automation and the Green Revolution have transformed the production of food. And to round off the cost of borrowing has shown a dramatic decline in recent years.

So why aren't we living like stereotypical Frenchmen working 3-hour days and taking four months holidays annually while women luxuriate at home painting their nails with dirt-cheap modern conveniences doing all the work? Au contraire, we're working harder than ever while the stay-at-home mother has now become a derided rarity. And on balance for less reward. Zero Hedge say that "A new report sheds light on [the fact that] 53 million Americans, or about 44% of all US workers, aged 18 to 64, are considered low-wage and low-skilled. Many of these folks are stuck in the gig economy, making approximately $10.22 per hour, and they bring home less than $20,000 per year. An overwhelmingly large percentage of these folks have insurmountable debts. Their wages don't cover their debt servicing payments as their lives will be left in financial ruin after the next recession."

Despite pre-fabricated robot-produced building components and architectural design automation tools house costs today represent a vastly higher proportion of take-home pay than they used to. In Britain this ratio has doubled in just twenty years from four to eight. Little surprise then that the proportion of 25-34 year-old who own their own house has collapsed from 67% in 1991 to 38% in 2016. Despite this more people are working, for longer hours and with less job security. The inflation-adjusted wages of working class Americans is lower today than it was 40 years ago.

Back in the fifties it seemed that most people lived reasonably comfortable lives, the husband worked in a steady usually-unionised job while the wife was a stay-at-home mother. For sure very few people lived in luxury but most owned their home, had one modest car, owned a phone and TV and went on a modest holiday once a year. And this was an economic environment where the norm was to have large families dependent on a single bread-winner. Still, people lived ok.

So why hasn't the spectacular increase in production resulted in everyone rolling in wealth and indolence instead of struggling even to own a house? I don't know but I offer the following as contributory causes:

Wealth is trickling up. A report in Bloomberg claims that the wealth of the top 1% now exceeds that of everyone else combined. The financialisation of the economy must play a major role in this with the extra wealth created by increased productivity and the money magicked up by the central banks being siphoned off by financial speculators. While vast fortunes can be made little or nothing is added to the wealth or lifestyles of ordinary citizens.

Then there's the black/brown/Muslim undertow as White numbers decline in relative terms. These minorities are less productive, commit more crime, have bigger families and are more dependent on welfare. Their rapidly-increasing numbers add to the pressure on housing and healthcare provision. And the affirmative action racket results in a vast army of incompetent leeches draining wealth from productive Whites.

That's my tuppence-worth, but I'm probably biased.

Any other ideas?