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Productivity gap or productivity crap?
Jun. 9th, 2012 10:35 amWhen I was working towards my degree in Public Administration in the 1980s and 90s, I remember one of my professors continually stressing the fact that "productivity" in the technical sense of the word (as opposed to the normal etymological sense that most of us use when we talk about having had a "productive" day - or not) has very little to do with how hard the worker works. It's a point that I think economists and financial columnists would do well to bear in mind as they promulgate their alarmist rhetoric about the growing "productivity gap" between Canada and the U.S. According to this rhetoric, competitiveness and growth are unambiguously good. Shrinkage, or even failure to grow, is bad.
A major problem with conflating the etymological and jargonical meanings of "productivity" is that it simply turns people off. We think we are being told we are spoilt and lazy. Indeed, many high-profile people in the financial world probably do think that while in my view, it is those who have prospered through the sheer luck of accidents of birth, low corporate taxes (remember David Lewis railing about the "corporate welfare bums"?)and(possibly)risky but lucky investments in unfettered capitalist markets who are often the spoilt lazy ones. Well, for better and worse, we do live in a basically capitalist society. I'm not sure I would want it to be otherwise, although I'd definitely like to see some improvements in our social programme infrastructure.
Most of us have probably learned that productivity is the "value" of output per worker. But "value" is measured in terms of what that worker is ACTUALLY paid - which presupposes the worker is paid what he or she is worth - a decidedly circular argument! It might not have been such a bad measure when most of us worked in factories and you could see how fast the pile of widgets beside each worker was growing. But nowadays, when most of us are "knowledge workers", how can we best measure the "value" of professional skills and expertise brought to bear on the capital investment, raw materials, and whatever our modern-day "inputs" may be?
Quantity and quality have always both been important, of course. But in a post-industrial society of white-collar service personnel, quality is proportionately more important and far less cut-and-dried than it used to be. Moreover, LONG-TERM impacts are increasingly more important in measurements of quality, making quality measurements that much more resistant to neat mathematical algorithms. Consider, for example, teacher-to-pupil ratios. Or a doctor's caseload. If you up the number of students in a classroom or patients per family doctor, does the teacher or doctor thereby become more "productive"? The best answer I could give to that would be "It depends."
There are plenty of other issues that remain unaddressed with the standard terminology we learned in Economics 101. What about volunteer work, for example? Or work within the nuclear or extended family unit? I remember a standard multiple-choice question being "What happens to the GDP when a man marries his housekeeper?" The intuitively logical answer might be that since the (housekeeping)services rendered are still the same, NOTHING happens, but the "right" answer is that since the housekeeper is no longer being "employed" and paid a wage, the GDP goes down by the amount of the wages he was previously paying her.
Then if we turn to the (above-board, tax-paying) PAID labour force, there's the fact that historically, women (as well as other disadvantaged groups) have been paid less than men for equal work or work of equal value. Marilyn Waring has written a number of excellent books on this topic (at least one of which was made into a film), including: Women, Politics and Power; Counting for Nothing; and Three Masquerades.
Another point to consider is what's sometimes called "the social construction of skill". If we tell our friends we've had a "productive" morning, we usually mean we've been doing a lot of things OURSELVES - housework, gardening, baking, whatever. In the workforce, however, with its layers of management, the higher-earning people typically are NOT doing much physical work themselves - they're leaving instructions with their personal assistant, they're telling others what to do, or they're reading other people's recommendations as to what to do and deciding which of those recommendations they will adopt and instructing others to "make it so". The doers in the labour force are often making little more than minimum wage.
But let's turn back to the "productivity gap" with the U.S. At one time, Canadian workers were MORE "productive" than their U.S. counterparts simply because Canadian employers had lower payroll taxes. In particular, because we basically have universal health care in Canada, progressive Canadian employers only needed to concern themselves with "supplementary" health care plans while their American counterparts had to provide full health care coverage. If the growing "productivity gap" is due in part to Obama's more progressive stance on medicare, is that such a bad thing? And why keep comparing ourselves to the U.S. anyway? Living in an increasingly open economy, perhaps it would be better to align ourselves with western European workers, who typically offer their workforce six weeks of paid vacation per year in addition to social benefits that many Canadian workers can only dream of.
A major problem with conflating the etymological and jargonical meanings of "productivity" is that it simply turns people off. We think we are being told we are spoilt and lazy. Indeed, many high-profile people in the financial world probably do think that while in my view, it is those who have prospered through the sheer luck of accidents of birth, low corporate taxes (remember David Lewis railing about the "corporate welfare bums"?)and(possibly)risky but lucky investments in unfettered capitalist markets who are often the spoilt lazy ones. Well, for better and worse, we do live in a basically capitalist society. I'm not sure I would want it to be otherwise, although I'd definitely like to see some improvements in our social programme infrastructure.
Most of us have probably learned that productivity is the "value" of output per worker. But "value" is measured in terms of what that worker is ACTUALLY paid - which presupposes the worker is paid what he or she is worth - a decidedly circular argument! It might not have been such a bad measure when most of us worked in factories and you could see how fast the pile of widgets beside each worker was growing. But nowadays, when most of us are "knowledge workers", how can we best measure the "value" of professional skills and expertise brought to bear on the capital investment, raw materials, and whatever our modern-day "inputs" may be?
Quantity and quality have always both been important, of course. But in a post-industrial society of white-collar service personnel, quality is proportionately more important and far less cut-and-dried than it used to be. Moreover, LONG-TERM impacts are increasingly more important in measurements of quality, making quality measurements that much more resistant to neat mathematical algorithms. Consider, for example, teacher-to-pupil ratios. Or a doctor's caseload. If you up the number of students in a classroom or patients per family doctor, does the teacher or doctor thereby become more "productive"? The best answer I could give to that would be "It depends."
There are plenty of other issues that remain unaddressed with the standard terminology we learned in Economics 101. What about volunteer work, for example? Or work within the nuclear or extended family unit? I remember a standard multiple-choice question being "What happens to the GDP when a man marries his housekeeper?" The intuitively logical answer might be that since the (housekeeping)services rendered are still the same, NOTHING happens, but the "right" answer is that since the housekeeper is no longer being "employed" and paid a wage, the GDP goes down by the amount of the wages he was previously paying her.
Then if we turn to the (above-board, tax-paying) PAID labour force, there's the fact that historically, women (as well as other disadvantaged groups) have been paid less than men for equal work or work of equal value. Marilyn Waring has written a number of excellent books on this topic (at least one of which was made into a film), including: Women, Politics and Power; Counting for Nothing; and Three Masquerades.
Another point to consider is what's sometimes called "the social construction of skill". If we tell our friends we've had a "productive" morning, we usually mean we've been doing a lot of things OURSELVES - housework, gardening, baking, whatever. In the workforce, however, with its layers of management, the higher-earning people typically are NOT doing much physical work themselves - they're leaving instructions with their personal assistant, they're telling others what to do, or they're reading other people's recommendations as to what to do and deciding which of those recommendations they will adopt and instructing others to "make it so". The doers in the labour force are often making little more than minimum wage.
But let's turn back to the "productivity gap" with the U.S. At one time, Canadian workers were MORE "productive" than their U.S. counterparts simply because Canadian employers had lower payroll taxes. In particular, because we basically have universal health care in Canada, progressive Canadian employers only needed to concern themselves with "supplementary" health care plans while their American counterparts had to provide full health care coverage. If the growing "productivity gap" is due in part to Obama's more progressive stance on medicare, is that such a bad thing? And why keep comparing ourselves to the U.S. anyway? Living in an increasingly open economy, perhaps it would be better to align ourselves with western European workers, who typically offer their workforce six weeks of paid vacation per year in addition to social benefits that many Canadian workers can only dream of.
