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Chasing Productivity
Everyone who fancies themselves a macro maven likes to muse about labor productivity, but virtually no one pays any attention to the BLS's quarterly estimates of productivity and costs.
That discrepancy (the juxtaposition between, on one hand, macro aficionados' express obsession with all matters productivity and, on the other, the fact that the vast majority of such people couldn't find their way around the relevant government report to save their lives) is a microcosm of the macro space more
“If you’re a business, the notion that comp costs might disappear altogether sounds great… right up until you remember that workers are consumers when they’re not on the clock. It’s hard to buy things without a paycheck.”
That’s not their problem. Their only responsibility is to shareholders. More buybacks please!
Nor will UBI be allowed in the USA. “self sufficiency and personal responsibility” is the guiding philosophy in much of the US.
Rational take.
Rarely do we see UBI mentioned as a solution to increased productivity, however, it is most certainly the most humane way to balance productivity gains. Jesus Christ may yet invite you to his table. The only way you could bury this conclusion any deeper would be to put it in a footnote.
UBI is an idea worth trying and perfecting if possible, for humane as well as practical reasons.
Rookie here, but, didn’t Adam Smith warn that the pursuit of wealth, not tempered by moral and ethical considerations could be destructive? Seems to me USA capitalism is failing in this regard. If a person dares apply ethical/moral decision making to how productivity gains from AI are distributed – immediatley they are communists. Actually, I think we have moved beyond greed to cheating, just don’t get caught or have presidential favor/immunity. Sorry…
Two questions.
First, is it possible to track productivity by industry? I’m thinking of AI. If we see improving productivity in construction or transportation or restaurants, I wouldn’t be inclined to attribute that to AI at the current state of the technology. But other industries might be a better “tell”.
Second, how do the productivity measures adjust for external factors, or do they? If a bank’s net interest income rises because the yield curve shifts, is that counted as increased productivity from bankers? If a miner’s revenue falls because the price of copper slumps, is that counted as decreased productivity from mineworkers? For that matter, if my revenue declines because the S&P 500 does, am I counted as less productive? In the government statistics.
That’s why, in extreme versions of the “AI replaces humans” macro narrative, squaring the circle demands the government institute some version of UBI.
Without UBI, I fear that the only other option is a significant decrease in population. Hopefully, mankind is more “good” than “selfish”.
We have a form of UBI, at least philosphically, with the many social services provided by the government. In these cases the government decides the who and where.where. Apparently half the country thinks that’s un-American. UBI has high social hurdles to overcome.
The most purely evil concept in macro economics is labor productivity sought as a corporate goal. H is correct with his assessment. Zero labor cost is wrong on its face. No money, no consumption, no corporate income. If/whenever productivity grows faster than the income of workers’ pay checks, labor is worse off. It’s a fact with no excuse. The theory is that if because workers turn out more goods per hour, the company’s sales rise and the economy is better off. Same as slavery. Whether the productivity comes from the master with a whip or the substitution of labor by technology, national income and growth will slow. There are two ways to measure GDP, the total income approach, and the total output approach. If those to get out of balance problems will arise. People can’t buy without money and the less you give them as relative pay, the worse off we all are going to be. The most purely evil concept/practice in macro-economics is the share buyback. Both have a common cause, the rise of pure greed! It will be our demise.
Yep, zero labor cost as a goal is bad. I’m not all-in with UBI though, as it looks like a proverbial band-aid while sutures may be required. AI can’t replace veterinarians, plumbers, car washes, storage rental units, but private equity is rapidly buying those businesses and more. The result is higher fees and worker pay cuts (or job elimination). The ability to figure out how to start a (legal) business seems to be lost.