Productivity, profitability and economic insecurity

Abstract

For some time, economists have taken note of a reversal in the historic rise in living standards in the USA and its serious consequences. Namely, for some persons and families, living standards of late have not improved at all and, worse yet, for others their financial fortunes have actually deteriorated. One reason commonly assigned for this economic malaise is a low rate of productivity improvement since 1973. Aims not to pursue this matter along customary lines in an attempt to unravel the “mystery” behind the sluggish productivity figures; rather, to suggest three other lines of investigation. The first points to productivity data which indicate that the aggregate data on productivity conceal important differences in productivity from one industrial sector to another. The second introduces entrepreneurship, which is at the very core of the ongoing industrial revolution, as a critical factor in interpreting productivity information and in accounting for stagnant or falling living standards since 1973. The third calls attention to the various revolutions centring on a redefinition of the meaning of personal rights that have swept across the USA over the past 40 years and how those revolutions have undermined the traditional social values that are foundational as to how economic affairs are organized and therefore how well the economy actually performs.