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The Great Productivity Puzzle

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111–120 of 123 posts

Re: The Great Productivity Puzzle

#111

This is yet another review of Robert Gordon's The Rise and Fall of American Growth . Incidentally, William Nordhaus also just published one.[1] Of the good: Gordon's book is a tour-de-force of the past 150 years (nearly) of economic progress in the US, and documents impacts on everyday life meticulously and engagingly. I and numerous reviewers, several of whom I strongly suspected to disagree, find the case he makes…

> Is energy a fundamentally different economic input? What is the relationship of energy to economic growth? I am particularly interested in this. My intuition tells me that energy is special because it is the only thing that the laws of physics says cannot be recycled. And that, given enough energy, everything else can be.

Technically, it is entropy sinks that you mean, not energy. Energy is quite recyclable given a sufficient entropy sink.

Re: The Great Productivity Puzzle

#112
post #73

Earlier quoted context omitted.

The goal is not to boost productivity but to boost GDP growth of which productivity growth is one component. A larger population, all other things being equal, leads to more GDP growth. All things are not equal when you compare India and US, so that comparison is not relevant. Compare US with current number of people vs US with 10 times fewer people. Which one is better ?

Assuming you mean GDP per-capita ... maybe? I suspect that GDP is highly correlated with productivity, anyway. Which way does the causality go? Why should the US not have many fewer people and why couldn't that be better? There's nothing magical about 315 million people. A much smaller population would be better for ecosystems, global warming, etc. I'd demand the proviso that the population shouldn't be decimated ove…

I am talking about better not in some sort of philosophical sense, but in terms of GDP and GDP per capita

Re: The Great Productivity Puzzle

#113
post #73

Earlier quoted context omitted.

Assuming you mean GDP per-capita ... maybe? I suspect that GDP is highly correlated with productivity, anyway. Which way does the causality go? Why should the US not have many fewer people and why couldn't that be better? There's nothing magical about 315 million people. A much smaller population would be better for ecosystems, global warming, etc. I'd demand the proviso that the population shouldn't be decimated ove…

I am talking about better not in some sort of philosophical sense, but in terms of GDP and GDP per capita

Even then you haven't proven your point: might not GDP per capita go up if the population goes down?

Re: The Great Productivity Puzzle

#114
post #113

Earlier quoted context omitted.

I am talking about better not in some sort of philosophical sense, but in terms of GDP and GDP per capita

Even then you haven't proven your point: might not GDP per capita go up if the population goes down?

GDP per capita for those remaining indivuduals would only go up if those who disappeard were somehow destroying GDP per capita for those who remained. How is that possible in any reasonable state of the world ? As long as those who disappeared where on average non zero marginal product, then their disappearance would lower GDP per capita for the remaining ones

Re: The Great Productivity Puzzle

#115
post #98
post #74

What frustrates me about articles like this (even professional ones -- this simplifies for a general audience) is that they only look at one side of the equation. Low inflation is the opposite side, and it's interesting. Yes, GDP$ per unit hour has not gone up much, but the flip side is that the economic value of the output has gone down . If you look in terms of PPP, workers are doing better: fewer labor hours go in…

Completely agree: automation is already changing the employment landscape. The number of people who tell me how the unemployed truck driver or factory worker can become a robot designer boggles my mind. It's a total break-down in the ability to see quantities vividly for what they are. I grew up in a field where orders of magnitude were the first class citizen and it's clear that order of magnitudes more people do mu…

Automation has always increased employment in the long term. And maybe it will this time as well: the truck drivers will not become robot designers but their kids could, instead of becoming truck drivers as well.

The fact is that we don't live in the long term so although truck driving and coal mining are shitty jobs (and absolutely should be automated or eliminated) we have to take care of the current practitioners (both financially and finding a way for them to preserve their dignity) as their employment goes away.

Separately I don't think we'll need all that many robot designers either.

Re: The Great Productivity Puzzle

#116
post #99

Earlier quoted context omitted.

No.

Seems to me certain goods, such as food and living costs have been inflating rather rapidly, but others such as technology and services have not. I have also seen certain geographic markets more affected by this than others. Mind sharing your reasoning behind a flat no?

Because the numbers don't tell that story. There are plenty of numbers online you can look at from the commerce dept bureau of statistics, and if you don' trust them there are various third parties with axes to grind (on both sides) who can give you other numbers. Having lived through high inflation (though thankfully never hyperinflation, which is insane) I can tell you it's really no fun and very obvious.

Clearly there is geographical variation! But low inflation is considered a trap by many mainstream economists (I disagree but appreciate their reasoning).

Just look at the number of hours of typical labor required to buy many goods (TVs, meals, etc) and compare it to your parents' time and you can see the low inflation in action.

Re: The Great Productivity Puzzle

#117
post #106
post #74

What frustrates me about articles like this (even professional ones -- this simplifies for a general audience) is that they only look at one side of the equation. Low inflation is the opposite side, and it's interesting. Yes, GDP$ per unit hour has not gone up much, but the flip side is that the economic value of the output has gone down . If you look in terms of PPP, workers are doing better: fewer labor hours go in…

You can examine the whole issue of productivity growth and wage growth in real terms (that is, taking inflation out of the picture by deflating using some inflation measure, either a GDP deflator or consumer price index or so) instead of in nominal terms. While the article doesn't explicitly mention it, I'd assume that they're looking at productivity in real, not nominal figures, precisely to disentangle the effects…

Sorry I meant using PPP baskets (same economy but over time) to nominalize hourly production since this is a productivity discussion. The difficulty of coming up with CPI inflators (a very hard job!) is that the basket of goods people purchase changes. But you can see that the labor hours required to manufacture a car has plummeted (forget that today's car is so much better than a car of 1950) -- and forget the fall in maintenance costs too.

I think a lot of the productivity mystery lies is due to artifacts in the shitty tools we have. For example, GDP is like the Dow Jones indices: designed to be easy to calculate with pencil and paper, plagued by necessary changes in their own baselines over time (mostly: what is counted and what is not), not terribly reflective of what we really want to know, and yet it would be stupid to discard them because we'd lose any time series. Everybody knows they are broken but nobody has any idea yet what would be better.

It's not like I have a great idea of what we should be using instead ettither. But I fell it's foolish to say "we have strong qualitative signals but since we can't find them in our model they are bogus". Especially since we all know our current theories are woefully incomplete and perhaps even inaccurate.

Those who don't see the productivity advance aren't idiots: those who, like me, believe in those signals justifiably have a large hurdle to leap.

Re: The Great Productivity Puzzle

#118

This is yet another review of Robert Gordon's The Rise and Fall of American Growth . Incidentally, William Nordhaus also just published one.[1] Of the good: Gordon's book is a tour-de-force of the past 150 years (nearly) of economic progress in the US, and documents impacts on everyday life meticulously and engagingly. I and numerous reviewers, several of whom I strongly suspected to disagree, find the case he makes…

> Is energy a fundamentally different economic input? What is the relationship of energy to economic growth? I am particularly interested in this. My intuition tells me that energy is special because it is the only thing that the laws of physics says cannot be recycled. And that, given enough energy, everything else can be.

There are various inputs to productive processes (economic or otherwise): time, labour, raw materials, capital, information, and energy. Possibly land space or area.

Of these, time passes (whether you do something or not). Capital is generally not immediately consumed (you might consider enzymes in biological processes as similar). Information isn't consumed (though may decay with time). Raw materials are transformed but fundamentally continue to exist.

The distinction is energy, and in particular energy derived from fuels rather than flows.

The most-mined material on Earth is coal. Oil and gas follow closely. After these, it's sand, gravel, aggregate, and rock -- we never truly left the stone age, we just process our stone far more effectively.

After processing iron ore, you're left with iron or steel, which can, at least theoretically, be recycled. Other materials operate similarly.

Fuel for living beings (that is food) is part of a flux attached to solar power (and mineral cycling), which is renewed annually.

Fuel-based energy isn't. Coal, oil, or gas, once burnt, won't re-accumulate until recharged, on scales of 1,000 to 1,000,000 or more times longer than their use-cycle (that is, we're using coal, oil, and gas 1,000 to 1,000,000 times faster than they were originally laid down). There's a wonderful paper exploring this, Jeffrey S. Dukes, "Burning Buried Sunshine" (2003), availble at stanford.edu, highly recommended.

Vaclav Smil also gets into this dynamic, I in his book Making the Modern World, in which he excludes from consideration food and fuel as materials of the modern world (along with air and water):

Exclusion of food and fuel is justified not only because these two large consumption categories have been traditionally studied in separation (resulting in a rich literature on achievements and prospects) but also because they simply are not sensu stricto materials, substances repeatedly used in their raw state or transformed into more or less durable finished products.

Unlike raw biomaterials (wood, wool, cotton, leather, silk), metals, nonmetallic minerals, and nonrenewable organics (asphalt, lubricants, waxes, hydrocarbon feedstocks) foodstuffs and fuels are not used to build long-lasting structures and are not converted or incorporated into the still increasing array of ephemeral as well as durable industrial, transportation, and consumer items. Foods are rapidly metabolized to yield energy and nutrients for human growth and activity; fuels are rapidly oxidized (burned) to yield, directly and indirectly, various forms of useful energy (heat, motion, light): in neither case do they increase the material stock of modern societies.

Re: The Great Productivity Puzzle

#119

Earlier quoted context omitted.

> Is energy a fundamentally different economic input? What is the relationship of energy to economic growth? I am particularly interested in this. My intuition tells me that energy is special because it is the only thing that the laws of physics says cannot be recycled. And that, given enough energy, everything else can be.

Technically, it is entropy sinks that you mean, not energy. Energy is quite recyclable given a sufficient entropy sink.

Exergy is energy available for work.

Entropy is the degree of disorder in a system.

Emergy is source energy (which must be defined in a formal definition, e.g., typically solar emergy) which is bound up in a particular product or energy source.

Re: The Great Productivity Puzzle

#120
post #42

Earlier quoted context omitted.

Is that a "why is there so much office work" question, or "why are there so many people travelling to offices"? On the former: perhaps the Jevons Paradox at work, or something alligned with it, Baumol's Cost Disease and Amdahl's Law both come to mind. The Jevons Paradox notes that as a thing becomes cheaper , the total amount of it demanded can increase . A particularly noteable case of this is the cotton gin ("cotto…

Re "Jevons Paradox". That doesn't mean employment goes up. There's a little book, "Chapters on Machinery and Labor", from a century ago which outlines three ways this worked out. The "good case" was mechanized typesetting, the Linotype. This produced a huge increase in print shop productivity and a huge increase in the amount of printed material. The result was an increase in printing employment (That lasted until th…

Very sadly, that little book wasn't published a century ago, but in 1926. Two years after the 1924 copyright blackhole cutoff.

https://www.worldcat.org/title/chapters-on-machinery-and-lab...

TIA finds no matches: https://archive.org/search.php?query=Chapters+on+Machinery+a...

SciHubbed review http://www.journals.uchicago.edu.sci-hub.bz/doi/10.1086/2539...

I'll have to get and scan that.

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