Yes, of course productivity is flatlining

Just one tiny quote:

with productivity flatlining for 15 years

Vast amounts of deliberate policy are being deployed to insist that productivity flatlines. This being something that folk just aren’t getting - or being told.

This is not, by the way, some complaint about diversity officers who do nothing useful, council clipboard wielders who positively prevent anything from happening. These exist but we’re not on one of our dyspepsia kicks here, this is a simple matter of definitions and arithmetic.

Take the Green Party’s longstanding insistence:

“Figures from our Green MEPs show that investment in renewable energy would create far more jobs than nuclear power. These jobs would be far more secure in the future as they would come from many investment projects at many different scales, rather than the tiny number of huge deals involved in building new nuclear plants.

“Meeting our 2020 wind targets alone would create up to 130,000 jobs and the opportunities in solar power are massive, with more than 100,000 potential jobs installing solar panels across the UK. We are lagging behind our European neighbours already. In Germany there are 250,000 jobs in renewable energy but here we have 26,000 at best.

This has the unusual advantage, among Green Party policy insistences, of actually being true. Renewables produce more jobs per TWhr of electricity produced than fossil or nuclear. Therefore installing solar or wind instead of fossil or nuclear lowers productivity.

Productivity is defined - defined note - as output at market prices divided by labour hours to gain that output. So, a TWhr of electricity is worth whatever it is and if we now have more jobs producing that TWhr of electricity then labour productivity in electricity production has declined.

That’s simply a definitional truth.

Whole economy productivity is calculated by GDP divided by labour hours. That’s just what it is. So, we move to more labour heavy methods of producing GDP then productivity declines. That’s just maths.

As we’ve been known to say, jobs are a cost, not a benefit. But the point here is not to make some right wing, or free market, or we’rebeingpaidbythefossilfuelcapitaliststosayit point, rather this is all simply definitional.

To switch back the other way for a moment. Much of modern economic policy is concerned with externalities. Those CO2 emissions, those pollutions, the unfairnesses in life which are not well dealt with by pure market economies. Some of those dealings with we agree with, others we don’t. But again, that’s not our point here.

Externalities are, by definition, those things which do not appear in market prices. They do not appear in GDP therefore - which is calculated at market prices. So, the more we deal with externalities then the lower productivity will go.

For, by our standard and mutually agreed definition of productivity - again, labour hours in, output out at market prices - we are carrying the costs of dealing with those externalities in the labour hours put in without measuring the output from them in that market price measure of output.

Again, this is not a political point, it’s purely definitional.

The entire climate change problem is that standard economic accounting doesn’t include the costs of boiling Gaia. So, now we do the work - create those jobs in solar - to not boil Gaia. But standard economic accounting doesn’t include the benefits of not boiling Gaia but does the costs of not doing so. That’s just what an externality means.

So, as we address externalities then productivity declines. Not because we should not address externalities. Not because climate change is, or is not, some WEF cooked up nonsense. Or even, a catastrophic threat to the very existence of our species.

We are addressing externalities. We are, when we do so, measuring the labour costs of our doing so and not the output of our doing so. Therefore productivity declines as we address externalities.

QED.

Again, just to beat up on the dead equine again, this does not mean we should not address externalities. It illuminates precisely nothing in the debate about whether to have solar or nuclear.

What it does do is enlighten us as to one of the reasons why productivity numbers are flatlining. We’re addressing non-market costs - those externalities - so when we measure productivity by market output we’re not capturing the benefits of those actions while we are the costs.

This is just definitions and maths - not even maths, it’s arithmetic.

By addressing externalities we reduce measured productivity. Which makes the commonality between those shouting that we must address externalities and those whining about capitalism’s failures as productivity flatlines, well, it’s cakeism, isn’t it?