Productivity rises if allowed not because it is planned

Not that we’ve an official position on the legal change here but:

If Maxime Chapoutier sold his new red and white wines in France, he would provoke an outcry and risk arrest.

The bottles, made from a blend of French and Australian grapes, are ­illegal in his homeland under strict laws against mixing EU and non-EU fruits. In Britain, however, selling the “provocative” cases is perfectly acceptable now that the UK is no longer bound to food and drink rules set by Brussels.

That we get the chance to have Skippy - and no, not the peanut butter - flavoured wines may or may not be a benefit. That it is possible to undertake the experiment is a benefit.

Everyone’s managing to come around to Paul Krugman’s point - productivity isn’t everything but in the long run it’s pretty much everything. It’s most certainly the determinant of our long run living standards. Gaining more value from each input - that’s total factor productivity - or more value from each hour of labour - labour productivity - determines, absolutely, the living standard we can gain from total resources or an hour of human labour.

This does not advance by people in government - or anywhere else in fact, Ms. Mazzucato - having grand plans about what everyone should do. It comes from tens and hundreds of millions of people experimenting, having a go. We then do more of what works and less of what doesn’t and there we are - living standards rise.

One lovely little proof of the government path is our own such announcing that we’re to carpet the country in AI data centres the same week as some tiny Chinese firm shows that we need 10% of the data centres for AI we’ve just announced we’ll carpet the country with.

The true driver of that long term productivity rise is such as this vintner. If it’s worthwhile then sure, it’ll be some tiny addition to productivity. 0.001% or something, add or subtract zeroes - as with the grapes - to taste. But if the 70 million in this country just carry on such experimentation, if the 70 million in this country retain the freedom to so experiment then that will indeed drive productivity forward by the one and two percent a year that doubles living standards in a generation.

That’s how the last century worked and assuming we retain liberty that’s how this one will too.

Woth musing over how much richer we’d all become if the 400 million in the European Union also had that liberty…..

Tim Worstall

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Why, yes, Professor Mazzucato *is* wrong, why do you ask?