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Bank Of England 'puzzled' By Productivity Gap


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HOLA441

Are you stalking me?? Please don't.

Nominal wages have been rising. Real wages have been falling. Not sure which bit of that is difficult to grasp.

Here's the horse's mouth. They think it's partly the fall in North Sea oil output, partly 'measurement issues' (lol), a goodly chunk of lack of capital investment i.e. we're de-skilling basically and about half is 'haven't a clue'. Fill your boots.........

No; it was a compliment more than anything - that I pay attention to your views - because whilst I have disagree with your projections (eg house prices in my area) and remedies (higher wages, anti-austerity/anti gov cutbacks to public sector/wager... at least from how I've read your position), the outcomes you've forecast have proven to be correct time and time again - including your calls that reflation was on its way from 2009 (terribly so in my area), your stock-market calls, your repeated warnings of gold correction, and more besides. I can only hope my position eventually comes in with hpc.

A dive into Britain’s productivity puzzle uncovers a serious risk to the economy
Jan 26th 2013
...There are worrying signs that Britain’s economy has become bad at performing this allocation. The fact that relatively few firms have failed does not mean British companies are thriving. More firms are making losses, but they are not being shut down. In part this reflects banks’ willingness to cheapen or extend old customers’ credit—keeping dying firms alive to avoid taking a loss themselves. At the same time, credit for new firms with better prospects remains tight.
The danger is that whereas workers are fairly mobile, capital is getting bunged up in inefficient firms while new businesses remain starved of credit. In short, people are working for firms that should not exist. This risks turning a temporary output drag into a long-term reduction in supply.
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HOLA443

Once the burning question of the time was how many angels can dance on the head of a pin- today it's 'productivity'. But since both the nature of angels and the definition of productivity are so subjective the answer depends on who's asking the question and what they have to gain by the answer.

For example the vast amount of work done by women in the home environment is arbitrarily excluded from GDP because it's considered too hard to measure accurately- so such trivia as childcare is not considered to contribute to the nations prosperity? :lol:

So the reality is that 'productivity' is not some objective measure of truth, it's just another political tool to be deployed at need.

Yes they can measure prostitution and drug-taking - and imputed rents - but not the value of a mother* bringing up her children at home. One of the booming aspects of the economy was making women go out to work and needing childcare.

*Or stay at home dads.

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HOLA444

Job losses in two of our most productive industries - finance and oil/gas - being replaced with jobs in less productive industries - I think this explanation was on Newsnight a year or so ago.

What does the finance industry actually produce?

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HOLA447

http://www.bbc.co.uk/news/business-27857472

apparently productivity is 16% below the crash level and the Bank of England is at a loss to explain why....

any knowlegable HPC want to express an opinion?

productivity was exported to China. We concentrated on producing, with high productivity, pieces of paper to pay for their productivity.

It's a game of chicken that can only end badly.

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HOLA449

Yes they can measure prostitution and drug-taking - and imputed rents - but not the value of a mother* bringing up her children at home. One of the booming aspects of the economy was making women go out to work and needing childcare.

*Or stay at home dads.

Or the many thousands of people that do very valued and needed voluntery work.....they are not acknowledged or valued by the state...think of the money they must save in paying wages. ;)

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HOLA4410

Or the many thousands of people that do very valued and needed voluntery work.....they are not acknowledged or valued by the state...think of the money they must save in paying wages. ;)

Important point this. the voluntary sector is absolutely crucial and of immense value to the economy. But it's just something that people do - young, old, people in between jobs or wanting to do something useful. I've seen reports of the worth of the sector so I wouldn't put it past them.

The shame of course for the sector is the hijacking of something that worked well without interference by the various 'Back-to-Work' schemes which I'm afraid if thet are not careful will taint the sector.

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HOLA4412

I think they know what they have created.

Hypothesis II: More persistent factors

Including : Reduced investment in physical and intangible capital. (zombies don't need to eat to survive) and impaired resource allocation (zombies stumble around and groan a lot, but aren't focused on their goal) and unusually high firm survival rates (the undead walk among us!).

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