The Productivity Puzzle - shall we give them the answer?

[satch]

Anecdotal answer. Friend was working 40 hours per week earning 100 and say productivity 110 as he works hard and fast so produces 44 hours worth. In the last telephone call he has decided to cut his hours to 30 and will earn slightly less say 95 rather than 100 but will work at an even hard and faster rate say 115 when at work .... but for 30 hours so produces 34.5. There you have it 5% reduction in cash but a 20% reduction in output / productivity. Apply to rest of country.

[Great Guy]

Tbh, reduce unskilled immigration and productivity would soar... Grenfell Tower showed that third worlders are living in social housing in prime areas of London. Economically it doesn't make sense to let non productive people live in the "best" areas of London. 

Give social housing to essential workers etc and give the third worlders plane tickets back home.

 

[No Duff (troll)]

10 hours ago, null; said:

 

Thanks, good link. This was my favorite from the comments that sums it up nicely:

"It’s clearly safe to say that a fair chunk of the recovery has been down to an accounting trick.

I’ve often thought they’ll start imputing taxi fares next,you know where you could have taken a cab but drove your car."

 

Spot on.  

John Williams from shadowstats.com is the man to listen to.  An ex insider who works out the correct current numbers based on the methods used before most of these tricks.  US focussed but same here.  He is often interviewed by the non BS sites and on Youtube.

http://www.shadowstats.com/

Nice man.

[sancho panza]

1 hour ago, No Duff said:

Spot on.  

John Williams from shadowstats.com is the man to listen to.  An ex insider who works out the correct current numbers based on the methods used before most of these tricks.  US focussed but same here.  He is often interviewed by the non BS sites and on Youtube.

http://www.shadowstats.com/

Nice man.

 

12 hours ago, No Duff said:

Me neither TBH.  Goes in and out of my head each time, between which I just remember it's silly and annoying.

But this'll do:

https://notayesmanseconomics.wordpress.com/2016/05/23/the-problem-that-is-imputed-rent-and-hence-gdp/

Aka scraping the bottom of the barrel!

 

Dare I suggest we have a GDP thread to run alongside the Productivity thread.

 

I'd also lik to see a CPI/RPI thread so that I can increase my understanding of that as well.These are all separate issues that should be considered on their own as well as together imho.

11 hours ago, null; said:

 

Thanks, good link. This was my favorite from the comments that sums it up nicely:

"It’s clearly safe to say that a fair chunk of the recovery has been down to an accounting trick.

I’ve often thought they’ll start imputing taxi fares next,you know where you could have taken a cab but drove your car."

 

I remember that quote from reading the original thread .Very funny.

[sancho panza]

On 07/07/2018 at 09:33, No Duff said:

All spot on. 

Attended an IFS seminar last year with an odd scratching of heads about productivity.  Odd because it surely is obvious to any independent and free thinking economist - or I'm a rubbish one.

Everything has been done to lower labour costs, resulting in the subsitution of capital for labour (i.e. the car wssh effect).  Total GDP rises but per capita, in this UK case, does not.

I say "in this case" because this new labour is not paying its way, otherwise capita GDP would increase sufficiently to cover the increased social costs attributable to this additional labour.  The problem is social costs are not correctly accounted for in the anyways questionable GDP statistic.  This may not happen in say Germany if, due to demographics, labour is required to operate capital (machines) rather than substitute capital.  Or they have indeed been sold the UK model.

Allowing for taxation, lower per capita GDP signifies an increase in the present net national burden (social infrastructure such as police, roads, health, benefits, utilities, etc) and in the future (state pensions and the crowding out effect of private pensions).  The net burden increases because this additional labour is not paying its way.  Their marginal tax revenues are less than their true marginal social costs.  And of course, much to the proponents' delight, such social costs are hard to measure (assuming, incorrectly they ever are) but you and I feel them every day.

Furthermore, lower productivity of the type we have increases income and wealth inequality, the latter never discussed by the profession and yet key in the BoEs flaky justification for QE.

There was a deliberate policy under the Blair government and onwards to go for a low wage economy, especially via FOM.  It suited the politicians (increased fake total GDP, lower unemployment, client state, voter base, tax substitution from capital (corporate) to people (income), reduced imports of capital goods), and suited corporates (lower costs, including investment costs, higher profits but lower corporate tax).  It was supported by some fake economists.

I say "fake" economists because every progressive economist knows true GDP growth, is the only way to increase the absolute "size of the pie".  Any other talk is fake as it just involves moving income and wealth around, where one can only gain at the expense of another.  This is what we have seen here in the UK with the increased income and wealth inequality and increased direct and indirect (e.g. fees) real (allowing for inflation) taxation.  Those few accustomed to growing wealth have continued to do so but only at the expense of the many.

It is all also symptomatic of our short term financing model - the City - as opposed to that say in Germany.  That in itself is part of a rentier system - such a rentier system, at least towards its extreme, and growing real GDP,  are incompatible.

I could go on, but suffice to say productivity and GDP are key to everything.  And I say that not from a belief in its supremacy but as the basis for the majority of debate.  I have hinted that GDP is an imperfect measure - it is indeed pretty hopeless in its concept and actual measurement.  So lets debate what it is, in this low conflict slow growth world of ours (if not everyones), and what it should be.  Social costs inclusion being one such issue.

Super post No Duff old chap.Super.

I can't really argue with any of it but you sum it up a lot better than I could so I've highlighted the bits I enjoyed.

I look forward to a concetrated debate on both inflation measures and GDP.

Both have been used to cover a mass of evils but I'm not Shaun Richards and much as I enjoy the comments section of his blog,the debate moves on each day by the time I can ask my questions

 

[No Duff (troll)]

1 minute ago, sancho panza said:

Dare I suggest we have a GDP thread to run alongside the Productivity thread.

Surely too interelated to be separated, productivity essentially being based on GDP and GDP being based on, inter alia, inflation.  Not that any of the stats are accurate.  We're well passed those innocent times.

 

[sancho panza]

19 minutes ago, No Duff said:

Surely too interelated to be separated, productivity essentially being based on GDP and GDP being based on, inter alia, inflation.  Not that any of the stats are accurate.  We're well passed those innocent times.

 

I'm not so sure.The problem is that with a thread for a specific issue eg GDP calculation,we can focus solely on that and it's a massively complex issue when you get into the way weightings are calculated, rents are imputed, RD double counted etc etc

Productivity -to my admittedly untrained mind-is output /hours worked. So GDP does form an intrinsic part of the discussion as it's  the proxy for output but I'm interested in delving more deeply into GDP calculations and wouldn't want to dilute a productivity thread with it.

I guess it's also a reference point for me.Got a question on GDP-post it there.Got a question on consituent parts of RPI/CPI-post it there and so on and so on.

Whilst GDP discussion would involve discussion of deflators used, I wouldn't want to lose a really educational set of posts on inflation in the middle of a GDP thread.

Sorry to sound pedantic,but I'm mostly self taught and thus use these forums as a means to educate myself and pick up the best of the minds of the readership.

I suggested to Shaun Richards once that he start a forum but he's a busy guy and it's not really his style.

The internet is really lacking a useful forum for those who really want to dig beneath the misrepresentations of the govt and the MSM- i mean beyon Shaun Richards blog and maybe Mish,where do you read anything that questions imouted rents beign 12% of GDP?

[No Duff (troll)]

1 hour ago, sancho panza said:

Super post No Duff old chap.Super.

I can't really argue with any of it but you sum it up a lot better than I could so I've highlighted the bits I enjoyed.

I look forward to a concetrated debate on both inflation measures and GDP.

Both have been used to cover a mass of evils but I'm not Shaun Richards and much as I enjoy the comments section of his blog,the debate moves on each day by the time I can ask my questions

 

Bum, just lost me long post of a rant before it got posted.  

In summary:

. Ta

. The national stats lost all credibility a long time ago.  Things like the OBR are there to try a maintain the illusion of authority and respectability - but the emperor has no clothes

. A whole industry of finance, politicians, and the media are dependent on these numbers regardless of their authenticity - ignore their childish chatter

. 1.0% or 0.7% or even more or less GDP.  Who cares.  That's an inappropriate level of precision even if the numbers were authentic - look at trends and appropriate orders of magnitude instead

. Validate data trends by comparing disparate data sets such as GDP and wealth equality and look out the window to see if the data makes sense - hypothesise, validate, adapt

. My professors told me to sneer at the French national stats because they were cooked while ours, like our bobbies and BBC, were the best - oh the conceit and/or the fall from grace

. The game is rigged.  Move on.  It's increasingly about politics and not economics and politics is about power - we only need to understand history and politics, RIP economics

. As with trading versus investing, the big money is made with the trends not the minute swings or data - DB has it right, build the model, monitor the markers, and adjust accordingly as the journey unfolds

. To understand the detailed mechanics is to no more than understand the slight of hand of the card sharp - a probably pointless endeavour

. To be crude but accurate - you can polish a t*rd all you like but it's still a t*rd

. We are moving to an era where the norms are no more and yet we still play by them (latency), like when you and I failed to fully internalise what we knew the introduction of QE meant and to fully act accordingly - time is better spent thinking about the impossible than the current

. What feels more relevant today - planning for rationing, price and capital controls, forced bond purchases, bail ins, pension fund raids, changes to legal titles, etc or the derivation, accuracy and relevance of the OBRs latest growth forecast

. Other rant stuff!

 

 

[sancho panza]

26 minutes ago, No Duff said:

Bum, just lost me long post of a rant before it got posted.  

In summary:

. Ta

. The national stats lost all credibility a long time ago.  Things like the OBR are there to try a maintain the illusion of authority and respectability - but the emperor has no clothes

. A whole industry of finance, politicians, and the media are dependent on these numbers regardless of their authenticity - ignore their childish chatter

. 1.0% or 0.7% or even more or less GDP.  Who cares.  That's an inappropriate level of precision even if the numbers were authentic - look at trends and appropriate orders of magnitude instead

. Validate data trends by comparing disparate data sets such as GDP and wealth equality and look out the window to see if the data makes sense - hypothesise, validate, adapt

. My professors told me to sneer at the French national stats because they were cooked while ours, like our bobbies and BBC, were the best - oh the conceit and/or the fall from grace

. The game is rigged.  Move on.  It's increasingly about politics and not economics and politics is about power - we only need to understand history and politics, RIP economics

. As with trading versus investing, the big money is made with the trends not the minute swings or data - DB has it right, build the model, monitor the markers, and adjust accordingly as the journey unfolds

. To understand the detailed mechanics is to no more than understand the slight of hand of the card sharp - a probably pointless endeavour

. To be crude but accurate - you can polish a t*rd all you like but it's still a t*rd

. We are moving to an era where the norms are no more and yet we still play by them (latency), like when you and I failed to fully internalise what we knew the introduction of QE meant and to fully act accordingly - time is better spent thinking about the impossible than the current

. What feels more relevant today - planning for rationing, price and capital controls, forced bond purchases, bail ins, pension fund raids, changes to legal titles, etc or the derivation, accuracy and relevance of the OBRs latest growth forecast

. Other rant stuff!

 

 

You make a very valid set of points along the same theme.

I trade and speculate and do so mainly on momentum but there is a bit if me that loves understanding exactly how it's been done.

 

 

I loved this analogy and I think it really sums up where I am in my mind

' To understand the detailed mechanics is to no more than understand the slight of hand of the card sharp'

Despite your clear and logical logic,I still yearn to understand more fully the slight of hand.I can't help it.I know the figures are utter crap but still long to fully understand how they're put together.I'm time poor these days but I'ds till spend it trying to learn how GDP/Inflation data have been distorted.

[sancho panza]

@No Duff

I'm obsessed with this chart at the minute.Picture paints a million words about where we are-societally,economically.

[No Duff (troll)]

13 hours ago, sancho panza said:

......Despite your clear and logical logic,I still yearn to understand more fully the slight of hand.I can't help it.I know the figures are utter crap but still long to fully understand how they're put together.I'm time poor these days but I'ds till spend it trying to learn how GDP/Inflation data have been distorted.

That's because you have a commendable sense of decency.  John Williams on Youtube is the go to guy.  He did a brilliant recentish piece.

[No Duff (troll)]

13 hours ago, sancho panza said:

@No Duff

I'm obsessed with this chart at the minute.Picture paints a million words about where we are-societally,economically.

Never in my career have trading and investing been so far apart, indeed opposite.  You may trade such charts while invest for the inevitable bust.  And "bust" can mean many things other than just a collapse in share price.

[sancho panza]

https://uk.reuters.com/article/uk-britain-economy-productivity/uks-productivity-problem-rears-its-head-in-early-2018-idUKKBN1JW14Z

LONDON (Reuters) - British productivity contracted at the fastest pace in a year in early 2018, reversing some of the gains made last year and highlighting a long-standing problem in Britain’s economy, official data showed on Friday.

There were also signs of the kind of inflation pressure that the Bank of England is expected to douse by raising interest rates.

Productivity in Britain has stagnated since the global financial crisis, even more than in most other advanced economies, and has played a key role in squeezing Britons’ living standards.

 

Over the past 10 years, productivity growth was the weakest since modern records began and appears to be the slowest since the early 1820s, when Britain was emerging from the Napoleonic wars.

From January through March, output per hour worked fell by 0.4 percent quarter-on-quarter, the biggest decline in a year, following a 0.6 percent rise in late 2017, the Office for National Statistics (ONS) said.

Some of the weakness might reflect a broad economic slowdown during snowy and icy weather in early 2018, but analysts said they saw the same old picture emerging from Friday’s data.

“The relapse in productivity ... after the rebound in the second half of 2017 is particularly disappointing as there needs to be sustained improvement to ease concerns over the UK’s overall poor productivity record since the deep 2008/9 recession,” Howard Archer, chief economic adviser to the EY ITEM Club consultancy, said.

 

Weak productivity growth means Britain’s economy is less able to expand without generating inflation.

The Bank of England has judged the economy will struggle to grow much faster than 1.5 percent a year before it starts to overheat — one reason why it thinks interest rates will need to rise over the next few years.

The ONS said output per hour worked in the first quarter was 0.9 percent higher compared with a year ago. Productivity growth by this measure has yet to even touch its pre-crisis peak.

Friday’s data showed unit labour costs - a measure of how much it costs to produce a given amount of output, and a key driver of inflation - rose by an annual 3.1 percent in the first quarter, the biggest increase since late 2013.

 

“On this measure at least, (BoE) hawks are right that labour-based inflation pressures are broadening,” Simon French, chief economist at Panmure Gordon, said on Twitter.

On Thursday, BoE Governor Mark Carney said inflation pressures had continued to mount as the BoE expected, and that there was widespread evidence that slack in the economy had been largely used up.

[spygirl]

On 07/07/2018 at 21:34, One percent said:

The reason for the massive push to post school education and training (and the raising of the school leaving age to 18) is to mask the massive youth unemployment figures. 

Nope.

Its a sop to keep teachers - a Labour core voting block - in ungainful employment.

And Im serous about that.

The fall out of all this pointless education forced to 18, FE spending on people who should have learnt at 16, 80% of pointless HE - is going to be huge.

 

 

[No Duff (troll)]

45 minutes ago, spygirl said:

Nope.

Its a sop to keep teachers - a Labour core voting block - in ungainful employment.

And Im serous about that.

The fall out of all this pointless education forced to 18, FE spending on people who should have learnt at 16, 80% of pointless HE - is going to be huge.

 

 

Education sector - some of the biggest barnacles on the ship HMS GB!

[spygirl]

On 11/07/2018 at 14:34, sancho panza said:

https://uk.reuters.com/article/uk-britain-economy-productivity/uks-productivity-problem-rears-its-head-in-early-2018-idUKKBN1JW14Z

LONDON (Reuters) - British productivity contracted at the fastest pace in a year in early 2018, reversing some of the gains made last year and highlighting a long-standing problem in Britain’s economy, official data showed on Friday.

There were also signs of the kind of inflation pressure that the Bank of England is expected to douse by raising interest rates.

Productivity in Britain has stagnated since the global financial crisis, even more than in most other advanced economies, and has played a key role in squeezing Britons’ living standards.

 

Over the past 10 years, productivity growth was the weakest since modern records began and appears to be the slowest since the early 1820s, when Britain was emerging from the Napoleonic wars.

From January through March, output per hour worked fell by 0.4 percent quarter-on-quarter, the biggest decline in a year, following a 0.6 percent rise in late 2017, the Office for National Statistics (ONS) said.

Some of the weakness might reflect a broad economic slowdown during snowy and icy weather in early 2018, but analysts said they saw the same old picture emerging from Friday’s data.

“The relapse in productivity ... after the rebound in the second half of 2017 is particularly disappointing as there needs to be sustained improvement to ease concerns over the UK’s overall poor productivity record since the deep 2008/9 recession,” Howard Archer, chief economic adviser to the EY ITEM Club consultancy, said.

 

Weak productivity growth means Britain’s economy is less able to expand without generating inflation.

The Bank of England has judged the economy will struggle to grow much faster than 1.5 percent a year before it starts to overheat — one reason why it thinks interest rates will need to rise over the next few years.

The ONS said output per hour worked in the first quarter was 0.9 percent higher compared with a year ago. Productivity growth by this measure has yet to even touch its pre-crisis peak.

Friday’s data showed unit labour costs - a measure of how much it costs to produce a given amount of output, and a key driver of inflation - rose by an annual 3.1 percent in the first quarter, the biggest increase since late 2013.

 

“On this measure at least, (BoE) hawks are right that labour-based inflation pressures are broadening,” Simon French, chief economist at Panmure Gordon, said on Twitter.

On Thursday, BoE Governor Mark Carney said inflation pressures had continued to mount as the BoE expected, and that there was widespread evidence that slack in the economy had been largely used up.

Ive been reading this sort of crap since 2004.

These pointless fucking macro economist could save a forest of tress if they read this:

https://www.housepricecrash.co.uk/forum/index.php?/topic/206806-tax-credit-sad-face/

Since 2004 the UK has been paying ~50% of the working age pop with school age kids to do fuck all for 16h/w.

Its been topped by then importing ~6m migrants to so the fucking same.

The productivity of people working FT inthe private sector is fucking Herculean.

These are the poor fucker propping all the useless TCers and bloated public sector up.

 

 

[XswampyX]

We have an answer!

Quote

“The average [British] worker is working less than we thought before,” said Nadim Ahmad, one of the authors of the report. He added that this means they must be working more productively and so “wellbeing” is likely to be better than official estimates suggest.

The issue has become a focus for British economists and policymakers because a slowdown in productivity improvements since the 2008 financial crisis has been blamed for lacklustre wage growth and slow growth in tax receipts.
 

So there we go. The British worker is a lazy cunt that treats work like a holiday.

Fucking fantastic. I knew it would be the workers fault.

Quote

The UK’s statistical agency makes very few adjustments to self-reported estimates of people’s usual hours, but French number crunchers adjust survey responses to include holidays, sick leave, strikes and work done in the “illegal economy”.
 

You waht? Prozzies 'n' drug pushers again?

Here :- https://www.ft.com/content/017a99aa-fc72-11e8-ac00-57a2a826423e

[macca]

Before JOB went mad on Brexit!

Remain voters are missing the reality of our failing economic model.. 

 

low paid, low skilled, low tax, high benefit cost migration is destroying the country.. It’s cheap slaves for big business propped up with £32 billion working tax credits, child benefits and £27 billion housing benefits.. 

 

You replace a £1.5 million automatic car wash with 7 blokes with sponges.. A JCB with 10 blokes with shovels, an automated multi million pound farm equipment with 30 blokes with baskets.. 

 

You are not making us richer, you are making us poorer., Your stifling investment, your replacing 1 engineer fixing a car wash on £30k a year, 1 driver in a JCB on £35k a year, 1 machine operator on £28k a year.. 

 

With 47 blokes on minimum wage, benefits, using infrastructure and services who will need pensions and elderly care that they will never contribute towards! 

 

All so the rich can have their cheap Labour and spend £100 on buckets, sponges, shovels and baskets.. Avoiding investing in millions of £’s of equipment and factories.. 

 

The establishment want to stop Brexit for themselves, not for the good of the country.. Look at our debt that keeps rising, living standards that keep falling.. 

 

[PaulParanoia]

7 hours ago, macca said:

Remain voters are missing the reality of our failing economic model.. 

 

low paid, low skilled, low tax, high benefit cost migration is destroying the country.. It’s cheap slaves for big business propped up with £32 billion working tax credits, child benefits and £27 billion housing benefits.. 

 

You replace a £1.5 million automatic car wash with 7 blokes with sponges.. A JCB with 10 blokes with shovels, an automated multi million pound farm equipment with 30 blokes with baskets.. 

 

You are not making us richer, you are making us poorer., Your stifling investment, your replacing 1 engineer fixing a car wash on £30k a year, 1 driver in a JCB on £35k a year, 1 machine operator on £28k a year.. 

 

With 47 blokes on minimum wage, benefits, using infrastructure and services who will need pensions and elderly care that they will never contribute towards! 

 

All so the rich can have their cheap Labour and spend £100 on buckets, sponges, shovels and baskets.. Avoiding investing in millions of £’s of equipment and factories.. 

 

The establishment want to stop Brexit for themselves, not for the good of the country.. Look at our debt that keeps rising, living standards that keep falling.. 

 

Awesome summary of where we are at.  And it's not just "1 engineer fixing a car wash on £30k a year, 1 driver in a JCB on £35k a year" that's being replaced.  As this model is repeated across the country, it's also all the people who would have been researching, manufacturing and selling the JCB and Car Washes that are affected.