'Without continual growth and progress, such words as improvement, achievement, and success have no meaning,' Benjamin Franklin said. Growth in productivity in the U.S. has been slowing over the past 50 or so years, except for the decade starting in the mid-1990s. And over the past 10 years, it has been increasing at only 1.3% per year. Much of the rest of the developed world has suffered a similar deceleration in productivity. from a combination of factors. This last element—often measured simply as the increase in output that cannot be explained by increases in labor or capital—is attributed to better technology, better management, and better institutions. That’s been partly a function of the law of big numbers: It gets more difficult to grow – whether it’s jars of peanut butter sold, sales forecasts completed, iPhones assembled – as the baseline level increases each year. Selling those additional 10 Vitamixes (after selling 1,000 already) to post 1% growth this year becomes more difficult each year – in the same way that being just that tiny bit more productive each year becomes a more Sisyphusian challenge each year. And the one-off bump in efficiency thanks to the rise of the computer age has mostly run its course. While there will always be some new technology to improve efficiency (digitization, the cloud, artificial intelligence... take your
everything that we did last time during the period... and then do even more. It’s that even more that matters, without which we’re an utter failure. And growth means that we have to do that this year... And then restart the growth clock the next year. And then do even more the following year. And so on. It’s Sisyphus, the Greek mythological figure condemned to roll a boulder up a hill for eternity – and every time he got close to the top, it would roll back down, and he’d have to start all over. Put through a modern growth prism, if Sisyphus didn’t get a little bit closer to the top this time – well, he’s a total failure. Soon, though, we’ll have to get used to the “failure” of not growing. That’s because the two key drivers of growth – productivity and people – are running on fumes. HOWMUCH MORE PRODUCTIVE CANWE BE? Productivity is a reflection of the efficiency of an economy’s workers. If more people in a country are doing economically productive things like making widgets, frying French fries, or selling mops – and they’re doing it more efficiently than they did in the past – the overall economy will grow. As think tank Brookings explains... [Productivity growth] can happen because workers become more skilled or more educated (increases in human capital), because workers have more physical capital to use in their efforts, or because of an overall increase in productivity
American Consequences
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