Jump to content
House Price Crash Forum
Sign in to follow this  
silver surfer

Declining Productivity

Recommended Posts

Here's an interesting article that contains a chart showing European and US productivity trends over the past forty years.

http://krugman.blogs.nytimes.com/2011/01/28/the-wal-mart-decade/

Leave aside the debate about did Walmart drive the recent blip in US productivity, and the big conclusion is that productivity has been trending down in America and Europe for forty years.

Ultimately living standards are exclusively driven by productivity gains.

If productivity grows at about 3% per year then living standards double about every 25-30 years. This was the long run performance in western economies since the industrial revolution, in other words each successive generation was roughly twice as well off as the previous generation. Before the industrial revolution productivity growth, measured across many centuries, averaged only a microscopic 0.02-0.04% a year, so you'd be no better off than your great-great-great grandfather, and your great-great-great grandchildren would be no better off than you.

Add to this slowing productivity the equally alarming fall in income equality (which mean the meagre productivity gains which do accrue are increasingly flowing only to a smaller and smaller percentage of the population) and we're looking at a grim Malthusian future. This will come as a shock as the cheerful scenario we've all become used to is one where you're a lot richer than your parents, and your kids can expect to be a lot richer than you.

Why has productivity slowed? It's a vexing question and no-one has an entirely convincing explanation. But it's clear that the technological advances from the late 19th and early 20th centuries (railways, motor cars, telephones, electrification of factories, etc) brought far greater real productivity gains than those from the second half of the 20th century (computers, internet, accessible air travel, mobile telephony etc). The feeling of growing living standards over the past thirty years has been largely illusory, brought about through more women entering the workplace, longer working hours, and longer commuting times. Strip these out and we're really not much better off than our parents. They had cheaper houses and pensions where as we have iPods and cheap flights.

Who knows what technological marvels the next fifty years might bring? But unless nano technology, bio-engineering, or some other technical seventh cavalry comes galloping along to change things, then we're looking at a future where the average working man will return to his long term status within society, basically a faceless pawn with little hope of a better existence.

In 1900 only 11% of the British population owned their own homes, the vast majority had private landlords, in Britain owner occupancy peaked at a little over 70%, but is now declining again and is currently about 67%. How long before it falls below 50%? My guess is within the next thirty years.

Share this post


Link to post
Share on other sites

What are you defining productivity as? Not GDP surely? That's an incredibly flawed measure, unless you're using it to describe price levels.

I get my housing benefit paid straight to the landlord.

If I let the council pay me into my bank, withdrew the money and paid my landlord, would that boost gdp?

Share this post


Link to post
Share on other sites

That about sums it up....so what, we will just have to learn to live with it...we will have to adjust to the circumstances we find ourselves in...many will find that owning a home outright is not the be all and end all of life...flexibility and adaptability will see us through...no more jobs for life, no more guaranteed pensions paid for by our children.....our so called wealth, growth, productivity, gdp....grew off the back of free and available funds, the products have exhausted the needs of the people...we now have to compete with the rest of the world, instead of growing richer by using the productivity of the rest of the world.......we will have to utilise our own resources to grow in the future, it will not be so easy to buy cheap form others....if we want it we will have to DIY rather than rely on others to make our beds for us. ;)

Share this post


Link to post
Share on other sites

I get my housing benefit paid straight to the landlord.

If I let the council pay me into my bank, withdrew the money and paid my landlord, would that boost gdp?

It would count once either way, because you're still renting from him.

Incidentally, how'd you manage that? I've never come across a landlord that accepts HB.

Share this post


Link to post
Share on other sites

Why has productivity slowed?

Due to the cost of oil?

...uncertainty of the future, higher taxes, possible loss of job, low or no pay rises, lack of finance, higher inflation, saving rather than spending, paying down debt rather than borrowing, putting off expanding...business borrowing fees too high...too much red tape...too many rules and regulations, health and safety, compliance....hard to dispense of employees that do not make the grade, reluctance to take on new staff, higher cost of imports, smaller margins, higher fuel costs, customers spending less, longer payment terms, more bankruptcy, loss of customers ....to name a few reasons.

This country makes it hard for people to be or start their own in businesses... ;)

Share this post


Link to post
Share on other sites
Guest sillybear2

...uncertainty of the future, higher taxes, possible loss of job, low or no pay rises, lack of finance, higher inflation, saving rather than spending, paying down debt rather than borrowing, putting off expanding...business borrowing fees too high...too much red tape...too many rules and regulations, health and safety, compliance....hard to dispense of employees that do not make the grade, reluctance to take on new staff, higher cost of imports, smaller margins, higher fuel costs, customers spending less, longer payment terms, more bankruptcy, loss of customers ....to name a few reasons.

This country makes it hard for people to be or start their own in businesses... ;)

Ahh, so nothing to worry about then ;)

Share this post


Link to post
Share on other sites

Ahh, so nothing to worry about then ;)

I am not worried :P ........the truth hurts some, others are not that worried as long as they are all right......some of the powers that be do not live in the real world, they never have and never will, they live in their payment protected ivory towers. ;)

Share this post


Link to post
Share on other sites
Guest sillybear2

Well the Americans have erroneously been including improvements in the speed of chips as a key component in their productivity improvements down the years - hence Greenspan's much lauded speeches waxing lyrical about the American productivity miracle that explained the dot com stock market boom.

At the same time they also included chip speed improvements in the inflation basket which helped keep the basket of goods inflation so low for so long.

He's got a lot to answer for that guy.

The crafty little hedonic f****r.

Share this post


Link to post
Share on other sites

The crafty little hedonic f****r.

There's worse than that - like the number of nobs and controls ona washing machine, number of spin speeds - all "quality" improvements and thus negative CPI factors. The fact that the increasingly cheap plasatics used make the knobs break and the paper and the thinner stainless steel makes the drum life a lot lower doesn't come into it.

Share this post


Link to post
Share on other sites

It would count once either way, because you're still renting from him.

Incidentally, how'd you manage that? I've never come across a landlord that accepts HB.

My landlord is a housing association. Plenty of landlords in my area do take HB though, they are even cheaper than the housing association too. The only struggle I had was getting it paid direct to the landlord, (they must pay it to the tenant first, except for in exceptional circumstances now - hence my wondering whether it would boost gdp) I ended up writing a five page letter about the cost of food and rate of dole and thus my desire to spend the HB on smart price cheese. They responded with a letter granting my request.

The HB, more specifically the LHA shared room rate is enough to pay the mortgage on a 2 bed house in my area. B2L wet dream. I should write to my MP and demand these houses are bought by the state. It's profitable business, and far cheaper than building new!

Talking about profitable business, I'm a profitable commodity, what with my council tax benefit, landlord benefit, ASDA benefit/food voucher and operation milk a doley (Unemployed training courses at £400+ per person per week cost to dwp, classes of 30+ with £30ish expenses per week per person to get them there on the bus and give them a sarny)

Share this post


Link to post
Share on other sites

My landlord is a housing association. Plenty of landlords in my area do take HB though, they are even cheaper than the housing association too. The only struggle I had was getting it paid direct to the landlord, (they must pay it to the tenant first, except for in exceptional circumstances now - hence my wondering whether it would boost gdp) I ended up writing a five page letter about the cost of food and rate of dole and thus my desire to spend the HB on smart price cheese. They responded with a letter granting my request.

The HB, more specifically the LHA shared room rate is enough to pay the mortgage on a 2 bed house in my area. B2L wet dream. I should write to my MP and demand these houses are bought by the state. It's profitable business, and far cheaper than building new!

Talking about profitable business, I'm a profitable commodity, what with my council tax benefit, landlord benefit, ASDA benefit/food voucher and operation milk a doley (Unemployed training courses at £400+ per person per week cost to dwp, classes of 30+ with £30ish expenses per week per person to get them there on the bus and give them a sarny)

Clearly you don't live in the SE then... but again, "local connection" rules generally prevent any migration for the purpose of seeking public funds for housing.

In other words losing a job is potentially fatal, because £50 a week dole buys you feck all here.

Edit: as a single male anyway

Edited by HPC001

Share this post


Link to post
Share on other sites

Even at 3% gains you will run into the exponential problem at some point.

Have we really seen productivity gains? I mean how can say the bank cashier deal with more customers, I'd like to see how they would see 3% more people YoY.

Some of these productivity gains will be utter crap.

Share this post


Link to post
Share on other sites

Clearly you don't live in the SE then... but again, "local connection" rules generally prevent any migration for the purpose of seeking public funds for housing.

In other words losing a job is potentially fatal, because £50 a week dole buys you feck all here.

Edit: as a single male anyway

If your in need of housing get yourself up North, we still have some pockets of social and affordable housing left. Unemployment is sky high, but when everyone is on the dole there is not much social stigma about it and you can share meals etc. with neighbours quite easily.

Don't get me wrong, things are getting worse, but life is not so bad, you get by. If your in a spot of trouble with regard to immediate housing, send us a message and I'll try and help you out.

Share this post


Link to post
Share on other sites

Ultimately living standards are exclusively driven by productivity gains.

Funny how this does not seem to apply to the oligarchs who raise their pay at a 20% a year clip (for the restrained ones).

Share this post


Link to post
Share on other sites

Why do we need more productivity???

Most of the stuff that we really need rarely needs replacing.

We tend to replace stuff because we feel its design is outdated...

If you go to Denmark or Sweden you'll see lots of 15-20 years old cars on road. And yet most people in the UK are obsessed with getting the latest, the newest... What a waste of money...

Same goes for electrical equipment, clothes, accessories, gadgets, etc...

Share this post


Link to post
Share on other sites
Guest sillybear2

Funny how this does not seem to apply to the oligarchs who raise their pay at a 20% a year clip (for the restrained ones).

Actually this is the cause of the present problems, they're hitting the limits of exponential growth in a stagnant economy, hence falling real incomes and less demand for the working population.

They could kind of get away with it a century ago when overall debt levels were lower, and population and economic growth gave you more breathing space. Today when an oligarch takes a 20% increase and it's unmatched by real growth it's simply a zero-sum game, a tranference of wealth from the workforce.

Share this post


Link to post
Share on other sites

I would say Declining Productivity increases living standards, depending on your outlook. We were both working at okay jobs 2007. Since wife is unemployed and I had to take a NMW almost...... (I will be dropping my hours to part time in March).

Now were are technically less productive however we have an allotment, like going dancing, taking the tandem out in the week.... Life really is what you make it.

My 'Standard of Living' from the viewpoint of happiness, health, and quality time has gone up! Buying sh*t is non-existent (except for manure but that's free for the most part).

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.