If you care about innovation and material progress, you learn to care about productivity growth — because it functions as our best available statistical proxy for those desiderata.
Surfing the net during working hours reflects a kind of akrasia, though, don't you think?
It seems to me that the measured growth in living standards in recent years has probably been understated, because people with office jobs now spend a significant fraction of the day goofing off. But to some extent that's what you'd define as "bad productivity growth", because it's far less satisfying than a shortened work day would be.
(I wish I could remember who it was, but someone recently pointed out that access to the Internet at work hasn't just damaged our attention spans; it's also distorted the way we consume culture. Looking at memes is something that fits readily into the gaps between tasks at the office, but reading a novel isn't.)
So I think you can make a case that intensive surveillance at work is potentially positive. Many people might enjoy their lives more if their employers made them work very hard for five hours a day at an unchanged salary, while prohibiting them from doing anything else at their desks.
I wonder if some corporation might try this as an option for their employees. If a lot of them went for it, it would be evidence that the Internet itself is a source of akrasia (maybe the biggest one) and that people can gain autonomy from freely chosen constraints.
I also wonder if part of the resistance to working from home comes from the desire not just to avoid household distractions, but to avoid the distractions of the Internet itself when it's available in an unsupervised settling. Some people who don't like the idea of WFH might thrive on it if they installed the right blocking software on their desktops.
Very interesting. Yes, I suspect workers' attitude about surveillance might change if accepting it meant shorter hours for the same pay, but I doubt we're going to see many employers offering this deal.
One of the nice things about technology is that it empowers both akrasia and anti-akrasia. You can easily, for example, set "Digital Wellbeing" limits on how much you use particular apps on your phone; and casinos are now, AIUI, often required to consult easily-maintained digital lists of people who have requested that they be denied entry. As we develop new reasons to have to lash ourselves to the mast, we also develop new, fancier, and more comfortable masts to lash ourselves to. One can easily imagine policy taking advantage of these sorts of technologies and mechanism designs to better assist the problem-overuser few with their self-restraint while minimally inconveniencing the moderate-user many.
Nov 28, 2023·edited Nov 28, 2023Liked by Brink Lindsey
Are the "bad" and "ugly" really examples of productivity growth? What you are describing appears more an example of negative internalities and externalities. I touched on this a bit in a discussion on the overconsumption of sugar sweetened beverages (SSBs), which impose costs on both the consumer and third parties:
" people with incomes under $25,000 a year consume about 200 calories of SSBs a day, while those earning $75,000 or more consume under 117."
"In this case, companies profit from SSB sales but do not bear the cost of treating people with Type II diabetes or other ailments that result from those sales. Indeed, it is estimated that 88 percent of the cost of obesity, for example, is borne by third parties."
"In addition to externalities, where third parties incur the cost of decisions, there is a body of evidence that suggests people often understate or do not understand how certain behaviors affect themselves. In this case, how SSB consumption impacts their physical and cognitive health. These are negative “internalities” that also need to be considered when designing a levy."
A tax or levy should, in theory, improve market outcomes by aligning negative internalities and externalities.
"Bad" and "ugly" are definitely examples of measured productivity growth, which doesn't deduct external costs from GDP. If productivity growth is defined instead in terms of human welfare, I think it gets complicated, as both bad and ugly improve some people's welfare at others' expense.
Especially if it paid for giving everyone free Ozempic.
(In fact Ozempic seems to treat akrasia in general, not just the specific symptom of overeating. God knows a tax on casinos would be a good way to pay for it.)
There’s a cousin to the production of akrasia industries that I’d think fall into the same bucket of “bad” growth: companies with a business model that promotes wasteful consumption. This could be the bundling or marketing of goods such that consumers are enticed to buy more than they will actually use, forced obsolescence and related strategies to accelerate the cycle of buying replacement goods, increasing use of subscription models for services that then tend to be underused, etc. What’s the marginal gain from an increase in productivity if it’s profitable but not actually useful?
I think the discussion of “ugly” productivity, at least the externalities’ part is not entirely sound.
“There’s no way to think sensibly about the tradeoffs posed by ugly productivity growth unless you place them in historical context. In the early days of industrialization, when mass poverty was still the norm, it was inevitable that rapid progress and ugly side-effects went hand in hand.”
If this means only that the tradeoffs in the past were different in magnitude, no objection. How much additional cost should we impose on a polluting industrial process to avoid a death depends on average life expectancy and income, but it was not zero even at the dawn of the Industrial revolution. The time to start imposing a gradually increasing non-zero tax on net CO2 emissions was not when coal first began powering industrial machinery in England, or probably not even when Edwin Drake successfully struck oil in 1859 in Pennsylvania, but it was before yesterday.
“Productivity growth isn’t everything,” Paul Krugman famously observed in The Age of Diminished Expectations, “but in the long run it’s almost everything. A country’s ability to improve its standard of living depends almost entirely on its ability to raise its output per worker.”
Of course this ignores the problem of how the benefits are distributed. I guess that is a "diffusion" problem. I wonder if our NIMBY is mainly the realization by folks that the benefits of degrading their back yard will go to a sliver of owners, not them and not the community....just saying.
The "bad" and "ugly" forms are indeed externalizes, but good luck internalizing those externalities. Our regulatory regime is simply too costly, our politics are too slow, and full transparency is impossible. In addition, it may be impossible to bake our ever evolving and diverse values into any internalization effort.
What fraction of workers toil in sectors in which output cannot be readily quantified in economic terms? Government, for example.
Education is another. In that sector, productivity would reveal itself as students completing high school qualification in 11 years, rather than 12, in fewer administrators and teachers per student, etc.
How has that fraction of workers changed over time?
The percentage of federal, state, and local government employees has risen over time, and economic statistics don't even try to calculate productivity growth for them. Productivity growth is calculated for the business sector, and productivity elsewhere is assumed to be flat.
Evidence from the education sector suggests that the assumption of flat productivity is highly optimistic, doesn’t it? Similarly for parts of the health care sector?
Separating productivity statistics for the business sector and the other sectors might be enlightening.
Productivity is measured in dollar terms: productivity growth means more dollars of value produced per unit of labor and capital. So for public K-12 education, the situation is hopeless, because there is no charge to students; government output is measured at cost.
Productivity is measured in dollar terms of the output. With a.bit of creativity, this could be approximated for education. For example, the output of education could be approximated by the estimated present value of the educated person’s future earnings. Or the output of education could be approximated by test score performance.
The absence of these types of estimates from discourse reminds me of a book you wrote decades ago about the Hand. The Hand benefits from “market failure” in the discourse and from “government failure” not being a common term in the discourse.
Yes, it's definitely possible to construct alternative productivity statistics -- for education, you could also use test scores as a proxy for output. But dollar-denominated value-added is the only universal measure of output that can be summed across all sectors of the economy. So for the overall productivity numbers that we pay so much attention to, it would be hard to do dramatically better than we do now -- but it's important to keep in mind what an imperfect measure it is. For K-12 education, it's hard to imagine a methodology that wouldn't come up with negative productivity growth: since average class sizes have been shrinking for decades, the output per teacher would have to be shrinking absent a significant increase in instructional quality, the evidence for which I am unaware of.
Yes, negative productivity growth for K-12 education — and myriad other significant sectors…
Creating a productivity index that allows one to combine dollar-denominated stats with alternative productivity stats seems to me an achievable intellectual goal. But is it, really?
Such an index could be powerful in policy discussions of The Hand.
You conceptually bridge two literatures here -- economic growth and human flourishing -- and you do a good job of it. I'm less enthusiastic about your conclusion: "We’re rich enough that some forms of productivity growth are no longer worth the candle" -- partly because the "we" that you use loses track of the distributional aspects of productivity (and flourishing) gains, and partly because you seem to turn from noting to wishing away the "ugly" requirements of scale. But I see from links in the essay that you treat these problems in posts that I haven't read yet, so I'll stop on this point until I do.
The other observation I have if that you're joining one domain, economic growth theory, that is based on an agreed mathematical model that you appear to accept, with a second, human flourishing, that has no such agreed model. I'm aware that a few economists -- Edmund Phelps comes to mind -- have turned to the flourishing topic in recent years, but I'm not aware of any consensus around it. So your judgment that "we're rich enough" to pick and choose among strands of productivity without plunging ourselves into de-growth seems to be made in the dark. Of course, politics and our desires for social stability and fairness are always compelling us to choose second-best solutions, from the standpoint of growth, in the name of some other good. But we know from experience (and sometimes from models and empirics) what we pay, in growth, for environmental legislation or old-age pensions. Your very breadth of vision puts us in an area where we have no idea what second-best penalty will be incurred.
Thanks for your comments. The problem is that what we can measure (GDP growth) and what we really care about (human flourishing) are two different things, which means we face difficult-to-assess tradeoffs. I agree that too many restrictions in the name or curtailing bad or ugly growth could do more harm than good; likewise, denying that badness and ugliness are problems because GDP is rising will also lead to errors. The permanent problem is a tough one!
Beyond this interesting exploration of the good, bad and ugly aspects of economic progress, there are some broader questions about its relationship to "living wisely and agreeably and well”. Whether there comes a point beyond which even the 'good' kinds might have psychological and social psychological consequences that reduce "human flourishing" in some ways?
"For anyone with even the most basic grasp of history and flimsiest awareness of what are currently the worst places on earth – it would be curmudgeonly not to recognise that life for us is pretty good and has been for a good long time. However the more reflective among us might ponder whether the quantity of human happiness does actually expand to fit the quantity of propitious circumstance or whether happiness is more in the way of a self-levelling constant." https://grahamcunningham.substack.com/p/are-we-making-progress
To put it another way, are there limits to our Western religion of 'Progress'?
"A key thing about all of this is that it’s actually totally fine in moderation."
I think this is part of the problem. Many of these things aren't "totally fine" in moderation. They are simply "less bad". Gambling away a bunch of money and drinking till your hungover isn't actually a good way to spend a weekend, even if you only do it once a year. It would be better to do it zero times a year.
Says who? Plenty of people go on occasional benders and find it pleasurable, and suffer no major functional deficits from doing so-- they are perfectly capable of fulfilling their responsibilities to co-workers and family, for example. Who are you, or anyone, to tell them they're wrong? Their long-term physical and financial health is probably somewhat negatively affected, sure; but a life lived only to maximize long-term health, physical or financial or both, is a dreary life indeed.
Says your own conscious. I think you know the truth.
I understand that he's an annoying little bugger and that we often overrule him, but try not to turn that into some grand act of righteous defiance. Vice is vice. Just because we aren't perfect doesn't mean we can't recognize the good.
Nobody on their deathbed says "I wish I went on a few more benders."
They do by contrast remember fondly a life well lived.
In fact, I think there are plenty of people who on their deathbed wish they had taken more opportunities for hedonistic indulgence of various kinds. You may find it hard to understand those people's values or mentality, but that doesn't make them wrong. Pleasure is part of a life well lived, and the types and extents of pleasures that fit well in a life differ a very great deal from person to person.
Strong column
Surfing the net during working hours reflects a kind of akrasia, though, don't you think?
It seems to me that the measured growth in living standards in recent years has probably been understated, because people with office jobs now spend a significant fraction of the day goofing off. But to some extent that's what you'd define as "bad productivity growth", because it's far less satisfying than a shortened work day would be.
(I wish I could remember who it was, but someone recently pointed out that access to the Internet at work hasn't just damaged our attention spans; it's also distorted the way we consume culture. Looking at memes is something that fits readily into the gaps between tasks at the office, but reading a novel isn't.)
So I think you can make a case that intensive surveillance at work is potentially positive. Many people might enjoy their lives more if their employers made them work very hard for five hours a day at an unchanged salary, while prohibiting them from doing anything else at their desks.
I wonder if some corporation might try this as an option for their employees. If a lot of them went for it, it would be evidence that the Internet itself is a source of akrasia (maybe the biggest one) and that people can gain autonomy from freely chosen constraints.
I also wonder if part of the resistance to working from home comes from the desire not just to avoid household distractions, but to avoid the distractions of the Internet itself when it's available in an unsupervised settling. Some people who don't like the idea of WFH might thrive on it if they installed the right blocking software on their desktops.
Very interesting. Yes, I suspect workers' attitude about surveillance might change if accepting it meant shorter hours for the same pay, but I doubt we're going to see many employers offering this deal.
One of the nice things about technology is that it empowers both akrasia and anti-akrasia. You can easily, for example, set "Digital Wellbeing" limits on how much you use particular apps on your phone; and casinos are now, AIUI, often required to consult easily-maintained digital lists of people who have requested that they be denied entry. As we develop new reasons to have to lash ourselves to the mast, we also develop new, fancier, and more comfortable masts to lash ourselves to. One can easily imagine policy taking advantage of these sorts of technologies and mechanism designs to better assist the problem-overuser few with their self-restraint while minimally inconveniencing the moderate-user many.
Are the "bad" and "ugly" really examples of productivity growth? What you are describing appears more an example of negative internalities and externalities. I touched on this a bit in a discussion on the overconsumption of sugar sweetened beverages (SSBs), which impose costs on both the consumer and third parties:
" people with incomes under $25,000 a year consume about 200 calories of SSBs a day, while those earning $75,000 or more consume under 117."
"In this case, companies profit from SSB sales but do not bear the cost of treating people with Type II diabetes or other ailments that result from those sales. Indeed, it is estimated that 88 percent of the cost of obesity, for example, is borne by third parties."
"In addition to externalities, where third parties incur the cost of decisions, there is a body of evidence that suggests people often understate or do not understand how certain behaviors affect themselves. In this case, how SSB consumption impacts their physical and cognitive health. These are negative “internalities” that also need to be considered when designing a levy."
A tax or levy should, in theory, improve market outcomes by aligning negative internalities and externalities.
"Bad" and "ugly" are definitely examples of measured productivity growth, which doesn't deduct external costs from GDP. If productivity growth is defined instead in terms of human welfare, I think it gets complicated, as both bad and ugly improve some people's welfare at others' expense.
Especially if it paid for giving everyone free Ozempic.
(In fact Ozempic seems to treat akrasia in general, not just the specific symptom of overeating. God knows a tax on casinos would be a good way to pay for it.)
There’s a cousin to the production of akrasia industries that I’d think fall into the same bucket of “bad” growth: companies with a business model that promotes wasteful consumption. This could be the bundling or marketing of goods such that consumers are enticed to buy more than they will actually use, forced obsolescence and related strategies to accelerate the cycle of buying replacement goods, increasing use of subscription models for services that then tend to be underused, etc. What’s the marginal gain from an increase in productivity if it’s profitable but not actually useful?
I think the discussion of “ugly” productivity, at least the externalities’ part is not entirely sound.
“There’s no way to think sensibly about the tradeoffs posed by ugly productivity growth unless you place them in historical context. In the early days of industrialization, when mass poverty was still the norm, it was inevitable that rapid progress and ugly side-effects went hand in hand.”
If this means only that the tradeoffs in the past were different in magnitude, no objection. How much additional cost should we impose on a polluting industrial process to avoid a death depends on average life expectancy and income, but it was not zero even at the dawn of the Industrial revolution. The time to start imposing a gradually increasing non-zero tax on net CO2 emissions was not when coal first began powering industrial machinery in England, or probably not even when Edwin Drake successfully struck oil in 1859 in Pennsylvania, but it was before yesterday.
I only meant that the tradeoffs were different in magnitude, not that they didn't exist.
“Productivity growth isn’t everything,” Paul Krugman famously observed in The Age of Diminished Expectations, “but in the long run it’s almost everything. A country’s ability to improve its standard of living depends almost entirely on its ability to raise its output per worker.”
Of course this ignores the problem of how the benefits are distributed. I guess that is a "diffusion" problem. I wonder if our NIMBY is mainly the realization by folks that the benefits of degrading their back yard will go to a sliver of owners, not them and not the community....just saying.
The "bad" and "ugly" forms are indeed externalizes, but good luck internalizing those externalities. Our regulatory regime is simply too costly, our politics are too slow, and full transparency is impossible. In addition, it may be impossible to bake our ever evolving and diverse values into any internalization effort.
Finally, no discussion of this is complete without quoting Bobby Kennedy's 1968 speech on the inadequacy of GDP. Very much worth the 4 minutes: https://www.linkedin.com/feed/update/urn:li:share:7135403037954600960/
Recommended read. 👇🏼👇🏼👇🏼
What fraction of workers toil in sectors in which output cannot be readily quantified in economic terms? Government, for example.
Education is another. In that sector, productivity would reveal itself as students completing high school qualification in 11 years, rather than 12, in fewer administrators and teachers per student, etc.
How has that fraction of workers changed over time?
The percentage of federal, state, and local government employees has risen over time, and economic statistics don't even try to calculate productivity growth for them. Productivity growth is calculated for the business sector, and productivity elsewhere is assumed to be flat.
Evidence from the education sector suggests that the assumption of flat productivity is highly optimistic, doesn’t it? Similarly for parts of the health care sector?
Separating productivity statistics for the business sector and the other sectors might be enlightening.
Productivity is measured in dollar terms: productivity growth means more dollars of value produced per unit of labor and capital. So for public K-12 education, the situation is hopeless, because there is no charge to students; government output is measured at cost.
Productivity is measured in dollar terms of the output. With a.bit of creativity, this could be approximated for education. For example, the output of education could be approximated by the estimated present value of the educated person’s future earnings. Or the output of education could be approximated by test score performance.
The absence of these types of estimates from discourse reminds me of a book you wrote decades ago about the Hand. The Hand benefits from “market failure” in the discourse and from “government failure” not being a common term in the discourse.
Yes, it's definitely possible to construct alternative productivity statistics -- for education, you could also use test scores as a proxy for output. But dollar-denominated value-added is the only universal measure of output that can be summed across all sectors of the economy. So for the overall productivity numbers that we pay so much attention to, it would be hard to do dramatically better than we do now -- but it's important to keep in mind what an imperfect measure it is. For K-12 education, it's hard to imagine a methodology that wouldn't come up with negative productivity growth: since average class sizes have been shrinking for decades, the output per teacher would have to be shrinking absent a significant increase in instructional quality, the evidence for which I am unaware of.
Yes, negative productivity growth for K-12 education — and myriad other significant sectors…
Creating a productivity index that allows one to combine dollar-denominated stats with alternative productivity stats seems to me an achievable intellectual goal. But is it, really?
Such an index could be powerful in policy discussions of The Hand.
You conceptually bridge two literatures here -- economic growth and human flourishing -- and you do a good job of it. I'm less enthusiastic about your conclusion: "We’re rich enough that some forms of productivity growth are no longer worth the candle" -- partly because the "we" that you use loses track of the distributional aspects of productivity (and flourishing) gains, and partly because you seem to turn from noting to wishing away the "ugly" requirements of scale. But I see from links in the essay that you treat these problems in posts that I haven't read yet, so I'll stop on this point until I do.
The other observation I have if that you're joining one domain, economic growth theory, that is based on an agreed mathematical model that you appear to accept, with a second, human flourishing, that has no such agreed model. I'm aware that a few economists -- Edmund Phelps comes to mind -- have turned to the flourishing topic in recent years, but I'm not aware of any consensus around it. So your judgment that "we're rich enough" to pick and choose among strands of productivity without plunging ourselves into de-growth seems to be made in the dark. Of course, politics and our desires for social stability and fairness are always compelling us to choose second-best solutions, from the standpoint of growth, in the name of some other good. But we know from experience (and sometimes from models and empirics) what we pay, in growth, for environmental legislation or old-age pensions. Your very breadth of vision puts us in an area where we have no idea what second-best penalty will be incurred.
Thanks for your comments. The problem is that what we can measure (GDP growth) and what we really care about (human flourishing) are two different things, which means we face difficult-to-assess tradeoffs. I agree that too many restrictions in the name or curtailing bad or ugly growth could do more harm than good; likewise, denying that badness and ugliness are problems because GDP is rising will also lead to errors. The permanent problem is a tough one!
Beyond this interesting exploration of the good, bad and ugly aspects of economic progress, there are some broader questions about its relationship to "living wisely and agreeably and well”. Whether there comes a point beyond which even the 'good' kinds might have psychological and social psychological consequences that reduce "human flourishing" in some ways?
"For anyone with even the most basic grasp of history and flimsiest awareness of what are currently the worst places on earth – it would be curmudgeonly not to recognise that life for us is pretty good and has been for a good long time. However the more reflective among us might ponder whether the quantity of human happiness does actually expand to fit the quantity of propitious circumstance or whether happiness is more in the way of a self-levelling constant." https://grahamcunningham.substack.com/p/are-we-making-progress
To put it another way, are there limits to our Western religion of 'Progress'?
Thanks for sharing your essay.
"A key thing about all of this is that it’s actually totally fine in moderation."
I think this is part of the problem. Many of these things aren't "totally fine" in moderation. They are simply "less bad". Gambling away a bunch of money and drinking till your hungover isn't actually a good way to spend a weekend, even if you only do it once a year. It would be better to do it zero times a year.
Says who? Plenty of people go on occasional benders and find it pleasurable, and suffer no major functional deficits from doing so-- they are perfectly capable of fulfilling their responsibilities to co-workers and family, for example. Who are you, or anyone, to tell them they're wrong? Their long-term physical and financial health is probably somewhat negatively affected, sure; but a life lived only to maximize long-term health, physical or financial or both, is a dreary life indeed.
Says your own conscious. I think you know the truth.
I understand that he's an annoying little bugger and that we often overrule him, but try not to turn that into some grand act of righteous defiance. Vice is vice. Just because we aren't perfect doesn't mean we can't recognize the good.
Nobody on their deathbed says "I wish I went on a few more benders."
They do by contrast remember fondly a life well lived.
In fact, I think there are plenty of people who on their deathbed wish they had taken more opportunities for hedonistic indulgence of various kinds. You may find it hard to understand those people's values or mentality, but that doesn't make them wrong. Pleasure is part of a life well lived, and the types and extents of pleasures that fit well in a life differ a very great deal from person to person.