The Productivity Debate
GDP is up over 8% in the last quarter. Jobs aren't growing nearly as fast. Sure its early in the economic rebound cycle and jobs take longer to come back, but I think there is something more going on. I think the big investments that corporations made in information technology over the past 10 years are finally producing the desired effect - more efficient operations. In other words, more productivity.
Steve Roach disagrees in a column in today's New York Times.
He thinks we aren't measuring productivity correctly. He makes some excellent arguments as to why the government's statistics are badly flawed. And he says we are all just working harder for the same amount of compensation. And he's likely right about all of that.
But he doesn't make any arguments to refute the notion that information technology makes corporations more efficient and therefore more productive. It seems obvious to me that the rapid diffusion of technology in our society - ATMs instead of tellers, EZ Pass instead of toll booth operators, eTickets instead of airline counters, metrocards instead of tokens, etc, etc - is leading to more productivity.
And it seems to me that this trend is accelerating. It's great news if you are a corporation that knows how to integrate information technology into your business. And it's great news if you are a supplier of information technology. But it's bad news if you are a low skilled worker whose jobs are being replaced by a computer. And it may be bad news for our country if we can't replace those jobs with something better for these people.
Which is why I think Steve Roach is doing everyone a disservice by calling into question the productivity story. If its not true, then we don't have to face these painful issues facing our society. And knowing the politicians and policy makers in our society, they'll postpone facing up to the truth as long as they can credibly do that.