seems to me many places are stripped t the bone and people are doing the jobs of 2 to 2 1/2 people, not much productivity left to eek out without more advancements in technology
Posted on 11/22/2016 2:55:00 AM PST by expat_panama
Alan Greenspan, the former chairman of the Federal Reserve Board, weighed in last week on one of the pressing issues facing the Trump administration and the country — slow economic growth. Greenspan's explanation is novel and is bound to be controversial. To preview: He blames the welfare state and overall uncertainty for the slowdown...
...average annual productivity gains for four periods since 1950.
ANNUAL PRODUCTIVITY GAINS
1950-70: 2.6% 1970-90: 1.5% 1990-2010: 1.9% 2010-15: 0.4%
As you can see, productivity gains since 2010 have virtually disappeared. At this rate, incomes would double every 180 years. By contrast, they'd double in 36 years if annual productivity increases averaged 2%.
Economists intensely debate what has caused this productivity eclipse...
...An obvious question is whether Greenspan's relationships are correlations, not cause and effect.
Still, there is at least one bit of good news. The forces that move productivity are so complicated — not just investment, but manager and worker skills, research and development, competitive markets and much more — that economists have consistently failed to predict major turns, up or down. The next surprise could be an upturn.
If not, the implications are sobering. As Greenspan put it: "What we are dealing with ... is a huge problem which, as far as I can see, is almost insurmountable." It's hard to disagree.
(Excerpt) Read more at investors.com ...
https://www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/mts0916.pdf
Table 6 Schedule C (page 24)
Actual deficit for 2016 $1.389T NOT the reported $590B
Unless and until we start dealing with the TRUTH there will be no solution.
I wonder what the gains were if one selects the 2nd Reagan term. Ie., once the Reagan reforms had really had a chance to kick in.
Greenspan seems to assume that the welfare state cannot be rolled back, and that the people cannot be inspired.
Just sending illegal criminals back “home” and ending benefits to illegals would help quite a bit.
My personal opinion is that we've reached a point of diminishing returns for productivity. In fact, we may be in such a "technology overload" scenario that productivity actually diminishes even as our productivity tools get more advanced.
re: The forces that move productivity are so complicated
One would expect IT people, if anyone, to make rational decisions. But IT decisions are part of pop-culture and no more logical than choosing which celebrity should be popular.
Fat client is an example; a fad popular in the 90s that negatively impacts current productivity. Fat client disciples are now IT managers. They cling to a very non-productive architecture.
Contrast that with Bill Gates. He never had the best OS; not the best word processor or spreadsheet. But he invented the best rational capitalist marketing system.
Bill Gates capitalism improved productivity. Fat client hurt productivity.
Shovel-ready stimulus is another example. They make no sense in terms of productivity. But they make us feel good.
seems to me many places are stripped t the bone and people are doing the jobs of 2 to 2 1/2 people, not much productivity left to eek out without more advancements in technology
I had thought there might be a buying opportunity in the next couple months but now I’m not as sure. The expectation of a Trump economy might just pull through the shock of ending QE.
No mention of the counter-productivity of the hyper regulatory regime of Obama.
I do think the economy is going to spring back to life. It’s not just the several Trillion parked offshore. There are also Trillions that have been “hiding” from the socialists. Hundreds of thousands have “gone Galt” to one extent or another. As we return to an age where there is some expectation that one can benefit from putting resources to work America will bloom like a mountain meadow in Spring.
Just the emotional expectation of being allowed to prosper vs. “you didn’t build that.”. Remember, the market is based on emotion more than anything else. Emotion is how we make decisions on limited facts. Not always a bad thing. Anyone else notice market volumes almost doubling the last ten days?
I understand that Sir Alan is an extreme lefist party hack and my bet’s that he sees the “hyper regulatory regime” as a good thing.
What happens is those who buy and sell on emotion go broke, and that's how the % serious adults is maintained. Thus the market place ends up being a group of people forced to set aside emotions knowing they'd otherwise soon run out of money and the ability to continue participating.
When government spends, it takes from the productive people.
Greenspan is finally figuring this out?
Ask yourself, when you buy a share in a company, just what facts are available to you?
Since 2008, we’ve had mal-investment because of political mandates, such as pushing solar panel installations that only have ROI because of taxpayer subsidies, diversity and inclusion programs in HR because it meets a preference check box for federal contracts.
As a life long bookkeeper & accounting person, I can tell you that most businesses are saddled by regulations that are poorly written, impossible to interpret & more difficult yet to follow without trepidation about what will happen if we do the paperwork wrong.
Most of this paperwork is just bureaucracy trying to make themselvea important.
I say end the crap & free the businesses to get back to what they do best...
I just can’t get past the line about incomes. Productivity does not drive income.
Increases in productivity increase profitability by reducing costs. To some degree this means the elimination of costs no longer required - such as automation of labor. How would the elimination of labor drive income?
The only explanation is that he is focused on company income and not personnel income - which means that unemployment isn’t addressed by anything he says.
I’m thinking a dead cat bounce - once the QE ends there will be a lull between that and when the Trump changes take effect. I expect late winter/early spring to see a significant drop which, of course, the press will blame on Trump taking office.
So I’m holding off just a bit longer before buying in.
My big challenge is I’m thinking of buying a business and wondering if I delay that or go ahead and try to make a play now. Course first I have to finish convincing the wife.
Do we have shortages? If we don’t have shortages there’s no reason for productivity to grow. In our modern big data world businesses generally have a pretty good idea what sales are going to be and producing more than you’re going to sell is bad business.
Like I say, I had been thinking a buying opportunity was coming but now I’m not so sure.
Productivity lags because the redundancies have been wrung out and the skeleton crews remaining cannot be cut further and remain a going concern with current technology. Productivity gains are a surrogate for employment losses.
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