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July 08, 2004
Productivity Continues to Improve; But Don't Give credit to Washington
Productivity continues to improve in the US, but as Arnold Kling asserts, don't give credit to policy makers in Washington.
"As far as I know, President Bush has not claimed credit for the phenomenal productivity growth that has occurred during his Administration. Nor should he. As Dick Cheney said when asked during the Vice-Presidential debate whether he was better off in 2000 than he was four years ago, 'Yes, but government had nothing to do with it.' ....The most likely explanation for the faster productivity growth of recent years is the gradual diffusion and exploitation of computer technology."
I might go a little further and suggest that there is one government policy that increases productivity: A policy of governmental "hands-off" in relation to economic development. The more government tries to steer, cajole, or otherwise manipulate economic activity, the more it tends to stifle productivity and entrepreneurial economic development.
Posted July 8, 2004 04:46 PM
Comments
Oh my. What an unfortunate blog posting.
To begin, one should take anything emanating from TCS with a large boulder of salt. Kling asserts: 'As far as I know, President Bush has not claimed credit for the phenomenal productivity growth that has occurred during his Administration.'
If one keeps their eyes closed, it's possible to miss what's in plain sight. When one decides not to look and claims there's nothing to see--it's dishonest. Repeating the dishonesty of others is either sloppy or equally dishonest. A simple Google search easily reveals that Bush has claimed credit for productivity claims. Why, there's even a Tennessean article where Bush claims credit.
Of course, high productivity growth rates are pretty weak beer when one considers the poor numbers for job growth. Perhaps you--as a professor--could inform your readers as to the correlation between productivity and job growth?
Posted by: Jadegold at July 8, 2004 07:47 PM
Every time I hear this extreme "hands-off" philosophy advocated in business classes (which, by the way, happens all the time, with no opposing view offered - not a very balanced educational presentation, is it?), I think of conditions that have caused governmental intervention into economic affairs in the US: the Robber Barons and the Standard Oil Trust, slavery (which by the way was profitable), the Triangle Shirtwaist Factory Fire, filthy conditions in the food preparation industry that prompted federal intervention, the Women's Movement (beginning with right to vote!) conditions that caused Civil Rights activism, etc. etc.
In the United States, poverty was somewhere between 33% and 45% before New Deal legislation. In 1950, in post-war "prosperity"' it stood at about 30% in the US - the richest country in the world.
Granted there is no clear answer to problems like the ones above. Governmental assumption of economic policy certainly has its flaws, but it is just not true that "hands-off" governmental policy produces a healthy , trouble-free society.
Posted by: Cindy at July 9, 2004 09:51 AM
I fear that I overreacted to this, and I apologize. I should have asked, "What do you mean by 'hand off'?'
Posted by: Cindy at July 12, 2004 12:44 PM
"The more government tries to steer, cajole, or otherwise manipulate economic activity, the more it tends to stifle productivity and entrepreneurial economic development."
No proof or supporting references for this.
It's a little amusing because Kling attributes the productivity growth to the diffusion and expoitation of computer technology. Gosh, I forget...what private company created and developed the internet?
Posted by: Jadegold at July 12, 2004 02:10 PM
The Internet was developed by the private sector building on the foundation of Arpanet, which was initially created by the government to link defense research labs in and outside of government. Arpanet was small, slow, non-graphic and virtually useless outside its niche. The private sector - entrepreneurs - developed the Internet into what it is today.
Posted by: Steven Forrest at July 13, 2004 06:49 AM
So, Steven..what you seem to be telling us is that the Federal Govt. created the Internet and then the private sector leveraged off this public sector innovation.
I guess the operative question for you would be to ask why the private sector--the entrepreneurs--didn't create the Internet in the first place?
Posted by: Jadegold at July 16, 2004 11:56 AM
at Belmont University in Nashville, Tennessee. He consults with a variety of businesses on start-up and growth related issues, and with larger corporations on re-establishing entrepreneurial cultures within their organizations. Dr. Cornwall's current research interests include entrepreneurial finance and entrepreneurial ethics. He has authored or co-authored four books.
