By common assent, economists do not agree on much. I have lost count of the number of jokes about economists whose punchline ends “and they still couldn’t reach a conclusion”. That is why Harry S Truman, when President of the United States, famously yearned for a one-handed economist. Whether or not this critique is fair, the issue I will discuss tonight is one on which economists do agree: productivity matters.
At this point, it is customary to wheel out the following, now rather over-used, Paul Krugman quote: “productivity isn’t everything, but in the long run it is almost everything.” Despite its over-use, this quote does have one important virtue, something not to be taken lightly in this post-fact, post-truth world: it is empirically verifiable and appears to be factually accurate. Let me illustrate that with a simple example.