Productive Thinking
Part of my job is thinking about ways that technological innovation can enhance productivity. That is, how can we sustain or increase current levels of economic output with less people and/or less work? As I wrote in the previous post, “less people” is a demographic fact. Whether it’s a good fact or not is a matter of opinion. However, historically, population growth has been the primary driver of economic growth. Only in the past 40 years (and specifically in the past 10 years) has productivity growth contributed more to wealth creation than increasing numbers in the workforce.
And “growth” doesn’t mean overconsumption: it means the ability to sustain our current standard of living, which provides the underlying basis for our social and political values. The United States would be a very different place if we couldn’t count on finding the items we want and need conveniently and affordably at hand, or if important services were simply unable to keep up with demand because there were no qualified people available to work in those areas. Human nature being what it is, I doubt that people would lower their expectations in a graceful or rational way. I think the more likely outcome is political repression, violence, scapegoating of vulnerable populations, and descent into a kind of zero-sum thinking that would only guarantee the situation gets worse.
In the face of a shrinking population, the only way out of this trap is continual, dramatic increases in the productivity of labor. This could involve several things:
- People working harder, or longer hours.
- People getting less pay for the same work (productivity = output/input, so lowering the input value of labor is one way to increase the number).
- Capturing time and effort currently wasted, or
- Making work itself easier through technology, enabling people to do more with the same or less effort and time.
Economically, it doesn’t matter which condition materializes, so long as productivity goes up. Politically and socially, however, I think there’s an overall preference for options 3 and 4.
Clearly one of the biggest areas of waste in the American economy is the average number of hours per day/week/year that workers spend sitting in traffic during their commute to work. This is actually fairly easy to address. The idea of the “corporate headquarters” and the structured workday are leftovers from the era of industrial manufacturing, when it was necessary to have your workforce together in the same place at the same time.
Recent innovation in communications and information technology (CIT) have made it both possible and practical for workers in service and information roles to work productively and collaboratively off-site – indeed, even off-shore. Employers have been using this technology as a way to reduce labor costs by outsourcing, effectively increasing productivity by tactics (1) and (2) above, often to the detriment of workers. But there is a limit to the productivity benefits of outsourcing, not least the aggregate decrease in consumer demand that will eventually result from continuous downward pressure on wages.
Decentralization has a much greater long-term upside. There are still some benefits to co-location for non-manufacturing industries, and some occupations that can’t be done by remote-control, but they are considerably fewer than the huge number of businesses that require workers to show up at a specific time and place for no reason other than force of habit.
By taking advantage of CIT for communication and collaboration, including mature or nearly-mature technologies like email, instant messaging, the Internet, application sharing and videoconferencing, businesses gain significant flexibility in their ability to mobilize talent, since they are no longer limited to the local labor pool or workers willing and able to commute to the office every morning. Workers have more flexibility to structure their work time around family and other obligations, while reclaiming the hours and energy lost to the black hole of commuting. Communities get stronger because people who spend more time at home and in the neighborhood will likely take more of an interest in their habitat, rather than treating it as a bedroom and repository for their stash of loot. The ecological and economic benefits of having fewer cars on the road speak for themselves. As someone who has worked productively from home for the past 12 years, I’m here to tell you, it’s the Real Deal.
In terms of enhancing the capabilities of workers, here too, technologies are in development to automate or simplify many low-value or unproductive activities that currently leach productivity in insidious ways. The healthcare system is famously unproductive, in part because of its continued reliance on the least efficient means of information storage, retrieval and communication: paper. Efforts are underway to implement technology for healthcare in new and interesting ways, including adoption of electronic health records (EHRs), which will not only squeeze many of the inefficiencies out of the system, but also address some of the qualitative problems of healthcare delivery and make the experience more consistent for patients, doctors and administrators.
The differences in methods of driving productivity come down to money. For business owners, it is preferable to put as much of the burden as possible on workers, by working them harder and paying them less. Technology improvements require investments. Big technology improvements that require buy-in from a number of interested groups and society at large require huge investments of the sort that can only be mustered using the coercive power of taxation.
What’s been dazzlingly frustrating about the past five years is that, in the face of known demographic problems and the rapid and undeniable growth in the productivity of technology (2.5% since 2000, up from an average 1.75% between 1960 and 1999), is the political opposition to new investment. The Republican Party and its big business base are determined to carve productivity growth out of the flesh of American workers to the fullest extent possible before investing any private – much less public – capital in technology. This dynamic of stagnant or falling wages, outsourcing, and extreme reluctance to invest in new capacity describes and defines the Bush economy, regardless of the alleged stimulative effects of Bush’s tax policies.
In 2000, Al Gore seemed to recognize that we had a brief historic opportunity to commit to the kind of public investments necessary to create the infrastructure for continued productivity. Whether or not he “invented” the Internet, Gore was certainly one of its strongest proponents, and one of the few politicians who seemed to understand its transformative potential beyond just a massive virtual shopping mall and soapbox. He grasped the uniqueness of the moment in history in 2000 when America had achieved a pinnacle of financial solvency that could be neither sustained nor duplicated, and understood the use to which those resources could be put to address known future needs without putting undue burdens on future generations.
I don’t think Bush’s rejection of these ideas was sinister or systematic (though I am willing to entertain that possibility). It was simply a gut-level assertion of tribal hatred against all things Democrat – the good ideas and the bad – and the fanatical execution of an ideology without pausing to consider the real-world implications. As such, it was not only spectacularly and historically unwise and irresponsible, but utterly gratuitous. The impulsive aggrandizement of right-wing Republicanism following the 2000 election came at the long-term cost of American prosperity, and squandered a once-in-a-generation (if that) chance to actually solve rather than patch long term problems.
Because of decisions made in the recent past, the implacable problems of economic and productivity growth facing America in the next ten years are substantially more challenging, and at far greater risk of a negative outcome. It is possible that market forces will provide what government cannot, but the area of coordinated public investment is one where the market has been historically weak. What Bush has done, however, is take issues out of the realm where they could have been solved through strategic planning and investment, and into the realm of hope. He has made faith-based economists of us all.
11:14:01 AM 
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