The latest U.S. economic numbers show another massive productivity increase. Treasury Secretary John Snow was on ABC’s This Week with George Stephanopoulos yesterday, defending the Bush economic policies in the face of the recent terrible jobs report. [Stupidly, ABCNEWS.com requires you to pay for transcripts of This Week, so I can’t get accurate direct quotations.] To paraphrase, Secretary Snow was defending his past statement that all current economic wisdom says that our current economic growth should create jobs at a rate of around 200,000 per month. Stephanopoulous and George Will tried to get an explanation or clarification of this statement in light of the fact that the economy only created 1000 new jobs last month. They even came tantalizingly close to addressing issues of automation and productivity in the new economy when George Will asked whether our economic wisdom might no longer apply. Unfortunately, Secretary Snow’s responses were devoid of any meaningful explanation for what’s going on, and amounted to little more than empty election-year cheerleading for White House economic policy.
I have yet to see a good big-media attempt to get to the bottom of these huge productivity increases and really explain the underlying economics. As I understand conventional economic wisdom, higher productivity raises our standard of living because it makes our work more valuable, on average. This brings two questions to mind:
- Is the average standard of living a mean or median average? An increasing disparity of wealth between the rich and poor can cause the mean to rise while the median falls — i.e. a few Bill Gateses blow the curve for everyone. It seems like only a median measurement can really gauge our society’s economic well being.
- Why do the theories assume that there’s an infinite amount of work to be done, and how do they break down in the limit as productivity approaches infinity? Do we need to rethink our work-based economy? Are we heading for an economic version of Vernor Vinge’s singularity?