9.7.04

TIME CRUNCHES. Arnold Kling looks at the national income and product accounts, notes historically rapid productivity growth.
As far as I know, President Bush has not claimed credit for the phenomenal productivity growth that has occurred during his Administration. Nor should he. As Dick Cheney said when asked during the Vice-Presidential debate whether he was better off in 2000 than he was four years ago, "Yes, but government had nothing to do with it." Productivity growth in any given Presidential term is affected much more by private sector trends and by policies of previous Administrations than it is by current policies. I think it will be years before we know how much, if any, the Bush Administration's economic policies affected productivity.

The most likely explanation for the faster productivity growth of recent years is the gradual diffusion and exploitation of computer technology. For example, as Virginia Postrel pointed out, "computers have finally gotten powerful enough to collect the data and deliver the problem-solving solutions that [Operations Research] has been promising since the heady days of the New Frontier. Beginning in the 1980s, when American Airlines demonstrated that airlines could save billions of dollars using O.R. techniques to design their schedules, O.R. has become an increasingly important, though largely invisible, contributor to rising productivity."

An Econ Log post offers some additional thoughts, and some comments worth a look.

Perhaps the productivity story has not attracted much attention because, as noted here, everybody is too tired -- in which case today's productivity has eaten future seed corn. Perhaps there is something to that Bolshevik complaint about speed-ups. There certainly are efficiency gains to seek elsewhere.

Consider the latest round of proposals to subsidize caregivers, which remind me of the 1972 Demogrant redux. Laura at Apartment 11-D asserts,
Parenthood is enormously expensive and is at the root of most social inequality today. If you are at all concerned with these issues, then finding a way to lessen the gap between M and P is essential. In this context, Alstott's $5,000 grant seems very small indeed.

Harry at Crooked Timber has been thinking about the same problem, and receiving many comments. One key observation:
I am more moved by a quite different, and much more openly perfectionist, kind of argument for subsidizing primary caregivers, which I can only sketch here. It is grounded in the idea that the structure of social institutions unnecessarily and contingently penalizes the primary caretaker and makes it the case that she/he faces ongoing disadvantages relative to her spouse (and relative to other non-primary caregivers). There is simply no reason to take the institutional status quo as authoritative. The idea is that we want to set things up so that primary caretaking does not have a set of costs attached to it such that one who takes it up is massively disadvantaged within the marriage and if the marriage ends. Why? First, we think that primary care-giving for children is a good thing to do. It is not just one choice among others, but something which has distinctive and intrinsic value, and should be socially validated and encouraged. Second, it will be more rewarding, other things being equal, for both the caregiver and the child if it is done in ‘favourable conditions’; circumstances in which the caregiver is not putting his or her future security excessively at risk. So it is wrong for social institutions unnecessarily to attach great disadvantages to this choice.

Presumably the set of social institutions that involved Dad working, Mom minding the kids, and parents staying together for the sake of the children, which takes advantage of the Say Aggregation Principle to ensure that one wage earner could support a family, and which makes unilateral dissolution of marriage less attractive, are not the set of social institutions envisioned in these discussions. There are, however, other institutional changes to consider, including reduced reliance on the treadmill career path, which might in fact be productivity enhancing as people might have less reason to look for ways out of productive but extremely time-consuming jobs. (Regular readers will correctly note that I have played this tune before: perhaps with sufficient notes on the horn the walls will come tumbling down.)

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