Productivity growth is some combination of literal technology and social technology, Byrne Hobart says:
The former is pretty easy to understand: physical technologies from wheels and pulleys to RFID and EUV allow us to get more results from a given amount of effort. Social technologies cover a wide range of other behaviors that can affect economic outcomes, from high-level ones like trustworthiness and punctuality to more granular ideas like accrual accounting, performance-based compensation, post-mortem memos, and the like.[1] Other elements include general attitudes: at the level of companies and countries, having people in charge who think that the institution they’re responsible for will last a long time, but could fail if they make a mistake, will tend to produce better results than the vague hope of retiring before things go off the rails. The concept of productivity growth itself is an instance of productivity growth: just by having a new mental model, you can slice up your statistics on economic growth to figure out how much of it to attribute to the gradual accumulation of buildings, equipment, roads, ships, etc., to general population growth, and to the sometimes-mysterious extra factor that makes the sum of these equal more than their parts.
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In the very long run, employment rates have been surprisingly stable everywhere we’re able to measure them—it’s surprising and counterintuitive that over the last two centuries of extreme technological, institutional, and cultural change, roughly 90-95% of people who want a job can find one most of the time. In many countries automation has increased formal employment when the alternatives were either agricultural work, working in the informal sector, or rent-seeking. And in a sense that’s even true of rich countries’ industrialization; the US was much more corrupt historically, and certainly the late 19th century and early 20th centuries had some egregious abuses of government power for private gain, but after a while it started to get obvious to most people that there was simply more money in positive-sum activities than in negative-sum ones—and that tolerating the negative-sum behaviors was a drag on overall growth.
That actually extended to politics, too; the relationship between labor and capital is an easier one to navigate when the question is “how fast do each of us get rich?” rather than “how can I protect my piece of the shrinking pie?”
The story of economic growth is usually a story of overlapping S-curves in adoption, and the first derivative of that S-curve, which measures the new deployment of a technology, tends to peak and decline. As long as something else is taking off when another technology peaks, that’s tolerable; it doesn’t avoid recessions, but a recession also forces people to leave declining sectors and join growing ones instead.
If he searches he will find that the political jobs and political economy based jobs increased exponentially.
Productivity growth: I can’t see how social technology comes into it at all, except as a jive word that gets clicks. The word he means is systems. The point he seems to miss is that a society as a whole can be more productive, factors like high-trust, education, transport infrastructure and law-and-order being important.
I hate regime economists.
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