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The Great Productivity Puzzle

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Re: The Great Productivity Puzzle

#91

Post by MagnumOpus »

morgante wrote: post #87
TeMPOraL wrote: post #57

Earlier quoted context omitted.

> Are marketing cost and G&A (general and administrative) increasing as a fraction of cost of goods/services sold? Perhaps it's the overhead of capitalism. Marketing has a special feature - in a competitive market, it becomes a zero-sum game. You're putting an ever-increasing amount of money into it, but getting only marginal gains out of it. It's a coordination problem. As the industry grows, you end up with chains…

Except advertising is a stable share of GDP over time. It just shifts channels.

Constant share of GDP for a constant value add is bad. It means there have been no productivity gains. (Which is the main point of the productivity puzzle.) Or more likely, the productivity gains have been eaten up by need to increase the amount of ads in a zero-sum market for attention.

My hypothesis: the optimal amount of advertising spend on a big-picture basis is far less than the actual amount, maybe by an order of magnitude - but a competitive market economy won't get there without some heavy disincentives applied by the state or the public (no tax deductions; "centralized" neutral marketing by journals, blogs, Amazon reviews and clubs like Consumer Reports or Stiftung Warentest; heavy penalties for astroturfing/perverting such neutral reviews etc.).

Re: The Great Productivity Puzzle

#92

Post by wazoox »

Problem: how is productivity measured? The example given is pretty transparent, however, if a doctor sees 20 patients a day instead of 15, his productivity is up, but does he do a better job overall? Productivity can enhance up to some point; you can't indefinitely build more cars every day for instance.

Final stance: there is no such thing as infinite growth on a finite planet.

Re: The Great Productivity Puzzle

#93

Post by freddref »

Spooky23 wrote: post #51
Animats wrote: post #14

Something that's puzzled me for a while: why haven't we hit "peak office" yet? Why are there still so many people working in offices? By now, we should have many abandoned office blocks, much as we have abandoned factories in the Rust Belt. But that's not happening. We have all this office automation, but too many people in offices. Are marketing cost and G&A (general and administrative) increasing as a fraction of c…

A: It's more productive, and easier to supervise employees. 75% of knowledge worker telecommuters that I've run across who aren't doing tracked tasks are doing very little. We do have a lot of empty office blocks, especially in midsized cities. Even in NYC, there are plenty of mid rise buildings that are minimally occupied, as automation ate up the armies of clerks who once inhabited them.

I would guess many people see "office work" as a form of UBI, where people self-regulate how much they work. Office blocks may not be physically empty, but the amount of work getting done appears to vary drastically. Lot of (logical) places to hide in large enterprises.

Re: The Great Productivity Puzzle

#94

Post by [deleted] »

Animats wrote: post #14

Something that's puzzled me for a while: why haven't we hit "peak office" yet? Why are there still so many people working in offices? By now, we should have many abandoned office blocks, much as we have abandoned factories in the Rust Belt. But that's not happening. We have all this office automation, but too many people in offices. Are marketing cost and G&A (general and administrative) increasing as a fraction of c…

[deleted]

Re: The Great Productivity Puzzle

#96

Post by dsr_ »

MagnumOpus wrote: post #91
morgante wrote: post #87

Earlier quoted context omitted.

Except advertising is a stable share of GDP over time. It just shifts channels.

Constant share of GDP for a constant value add is bad. It means there have been no productivity gains. (Which is the main point of the productivity puzzle.) Or more likely, the productivity gains have been eaten up by need to increase the amount of ads in a zero-sum market for attention. My hypothesis: the optimal amount of advertising spend on a big-picture basis is far less than the actual amount, maybe by an order…

For the majority of the age of advertising -- basically since newspapers came along -- nobody knew how effective any given advertisement was.

Now we have actual feedback, and the results are tremendously disappointing to everyone except two categories: companies who are completely unknown, and companies who are part of a dominant 2-10 vendor market.

If you are completely unknown, any advertising improves your situation.

If you are a market leader battling for the top few slots in a giant consumer marketplace, huge spending can change consumer perception a little. Getting 2% more sales at the expense of your competitors may be worthwhile.

But the bread-and-butter of advertising was everybody in between those two extremes, and the actual effectiveness is now known to be basically zero.

Re: The Great Productivity Puzzle

#97

Post by wodenokoto »

gumby wrote: 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…

but aren't the US experiencing very high inflation?

Re: The Great Productivity Puzzle

#98

Post by redwood »

gumby wrote: 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 mundane automate-able work than will be able to contribute on the design side of the next era's production systems.

To your point: the way to fix these problems is to make sure that everyone, irrespective of their ability to make money selling their labor, is able to consume a fair amount. Hence the need for a basic income for all: the higher the better. The quicker we break from the moralistic perspective that everyone should "work" in a world where not everyone can, the quicker we can create a world that is about "the pursuit if happiness" again.

Re: The Great Productivity Puzzle

#99

Post by redwood »

wodenokoto wrote: post #97
gumby wrote: 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…

but aren't the US experiencing very high inflation?

No.

Re: The Great Productivity Puzzle

#100

Post by redwood »

Animats wrote: post #14

Something that's puzzled me for a while: why haven't we hit "peak office" yet? Why are there still so many people working in offices? By now, we should have many abandoned office blocks, much as we have abandoned factories in the Rust Belt. But that's not happening. We have all this office automation, but too many people in offices. Are marketing cost and G&A (general and administrative) increasing as a fraction of c…

You might argue that we did: when folks actually had offices. Now the cram-em-in open floor-plan approach is sort of the "now we use less office per person" era.
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