1 00:00:00,160 --> 00:00:03,840 Speaker 1: I think it's pretty incredible. You've been monitoring and involved 2 00:00:03,880 --> 00:00:08,680 Speaker 1: in economic policy making since the Johnson administration. You're just 3 00:00:08,760 --> 00:00:16,640 Speaker 1: revealing how old I am. Welcome to Bloomberg Benchmark. I'm 4 00:00:16,640 --> 00:00:19,720 Speaker 1: your host, Tori Stillwell of Bloomberg News, and I'm joined 5 00:00:19,760 --> 00:00:22,759 Speaker 1: by my colleague and co host Dan Moss. Benchmark is 6 00:00:22,800 --> 00:00:25,400 Speaker 1: a podcast about the economy, and we'll be pulling out 7 00:00:25,440 --> 00:00:28,280 Speaker 1: all kinds of numbers and ideas from around the world 8 00:00:28,320 --> 00:00:30,960 Speaker 1: and sharing them with you in hopefully the least boring 9 00:00:31,000 --> 00:00:34,479 Speaker 1: way possible, so Les's econ one oh one lecture and 10 00:00:34,560 --> 00:00:38,080 Speaker 1: more backyard barbecue Banter. Will be enlisting the help of 11 00:00:38,120 --> 00:00:41,680 Speaker 1: our colleagues from across Bloomberg News, as well as experts 12 00:00:41,720 --> 00:00:44,120 Speaker 1: who are way smarter than us to help break all 13 00:00:44,120 --> 00:00:46,800 Speaker 1: of it down. And for our very first episode, we're 14 00:00:46,800 --> 00:00:49,840 Speaker 1: going to be talking about productivity, which Tori, I thought 15 00:00:49,880 --> 00:00:53,440 Speaker 1: you put it nicely when we were brainstorming topics. You 16 00:00:53,479 --> 00:00:56,760 Speaker 1: said it's possibly the biggest threat to the economy that 17 00:00:56,800 --> 00:01:00,520 Speaker 1: you've never heard of. Well not quite, but we explain 18 00:01:00,720 --> 00:01:04,600 Speaker 1: what this mysterious productivity thing is in a minute. First, 19 00:01:04,760 --> 00:01:08,640 Speaker 1: let's introduced our guests. Our colleague Aki Ito is here 20 00:01:08,680 --> 00:01:12,720 Speaker 1: from San Francisco. Hello, And we also have Barry Bosworth 21 00:01:12,760 --> 00:01:15,560 Speaker 1: with us. Barry is a senior fellow in economic studies 22 00:01:15,560 --> 00:01:19,240 Speaker 1: at Brookings and I really have to just say, I 23 00:01:19,280 --> 00:01:22,959 Speaker 1: think it's pretty incredible. You've been monitoring and involved in 24 00:01:23,080 --> 00:01:27,920 Speaker 1: economic policy making since the Johnson administration. You're just revealing 25 00:01:27,920 --> 00:01:31,959 Speaker 1: how old I am. So let's get right to it. 26 00:01:32,120 --> 00:01:35,640 Speaker 1: The biggest threat to the economy you've never heard of, Akie. 27 00:01:35,959 --> 00:01:39,039 Speaker 1: Aren't you being a little bit harsh there? And if 28 00:01:39,040 --> 00:01:41,840 Speaker 1: you're not, just tell us what it is. Sure, So, 29 00:01:42,040 --> 00:01:47,480 Speaker 1: productivity is pretty simple. It's output per hour. It's everything 30 00:01:47,520 --> 00:01:50,880 Speaker 1: that you're producing in the economy, divided by all the 31 00:01:50,880 --> 00:01:54,720 Speaker 1: time that it takes to actually produce it. So, Tori, 32 00:01:54,880 --> 00:01:59,520 Speaker 1: your favorite food is pizza che pizza specifically, so let's 33 00:01:59,520 --> 00:02:03,360 Speaker 1: say that. Or an owner of a pizzeria, let's say, Yeah, 34 00:02:03,640 --> 00:02:06,520 Speaker 1: you have a bunch of workers who make pizzas for you. 35 00:02:06,520 --> 00:02:09,919 Speaker 1: Your goal is to sell more and more pizzas, but 36 00:02:10,040 --> 00:02:12,680 Speaker 1: at the same time, you don't want to pay all 37 00:02:12,680 --> 00:02:15,640 Speaker 1: this overtime wages to your employees. Your goal is to 38 00:02:15,680 --> 00:02:19,840 Speaker 1: sell more pizzas, but to not have to pay workers 39 00:02:19,880 --> 00:02:22,560 Speaker 1: all these wages. Um. So you're trying to cut down 40 00:02:22,639 --> 00:02:24,799 Speaker 1: on the time that it takes for your workers to 41 00:02:24,960 --> 00:02:27,799 Speaker 1: make these pizzas every day. You could do a couple 42 00:02:27,840 --> 00:02:30,400 Speaker 1: of different things to do that. You could maybe train 43 00:02:30,480 --> 00:02:33,919 Speaker 1: your employees so they can make the pizzas faster and better. 44 00:02:34,600 --> 00:02:37,840 Speaker 1: Maybe you could raise wages for your workers. You can 45 00:02:37,880 --> 00:02:42,320 Speaker 1: attract more experienced pizza makers. Or maybe you could invest in, 46 00:02:42,760 --> 00:02:46,080 Speaker 1: you know, some kind of magical oven if it exists, 47 00:02:46,560 --> 00:02:48,960 Speaker 1: so you can make your pizzas and maybe five minutes 48 00:02:49,040 --> 00:02:52,040 Speaker 1: instead of twenty or twenty five minutes. So, Barry, you 49 00:02:52,120 --> 00:02:54,440 Speaker 1: used to teach at Berkeley, what would you write that 50 00:02:54,480 --> 00:03:03,560 Speaker 1: out of town? Fill in the blanks force here, I 51 00:03:03,600 --> 00:03:05,960 Speaker 1: guess I would always start with there are two measures 52 00:03:05,960 --> 00:03:10,520 Speaker 1: of productivity that are commonly used. I agree the output 53 00:03:10,560 --> 00:03:13,799 Speaker 1: per worker is a very standard one. I think it's 54 00:03:13,880 --> 00:03:18,840 Speaker 1: the most relevant one for workers because increases in productivity 55 00:03:18,919 --> 00:03:22,320 Speaker 1: is what gives room for increasing your real wage, and 56 00:03:22,360 --> 00:03:25,520 Speaker 1: everybody wants to have a higher standard of living. The 57 00:03:25,600 --> 00:03:29,000 Speaker 1: key to that increases of labor productivity. But the one 58 00:03:29,160 --> 00:03:31,120 Speaker 1: thing you mentioned about how you can get it is 59 00:03:31,160 --> 00:03:35,760 Speaker 1: sort of two things. You can have technological innovations, or 60 00:03:36,080 --> 00:03:39,320 Speaker 1: you could simply substitute a lot of capital for the workers. 61 00:03:40,200 --> 00:03:43,240 Speaker 1: If you substitute capital for workers, and so you refer 62 00:03:43,360 --> 00:03:46,960 Speaker 1: to that as total factor productivity, not just the output 63 00:03:46,960 --> 00:03:49,960 Speaker 1: per worker, but the output of the combination of workers 64 00:03:49,960 --> 00:03:53,160 Speaker 1: and capital. Well, then capital has got to get a 65 00:03:53,200 --> 00:03:56,600 Speaker 1: share of that too, and so there's less left over, 66 00:03:57,080 --> 00:03:59,640 Speaker 1: so to speak to given the form of wage increases. 67 00:03:59,760 --> 00:04:03,560 Speaker 1: It's aims like technology, particularly in this digital age, is 68 00:04:03,600 --> 00:04:08,960 Speaker 1: advancing at a dizzying pace. Why have the recent numbers 69 00:04:08,960 --> 00:04:12,920 Speaker 1: from the Department of Labor looked so ordinary? I think 70 00:04:13,000 --> 00:04:16,679 Speaker 1: the reason is that technology is advancing at a dizzying pace, 71 00:04:16,800 --> 00:04:21,440 Speaker 1: but it's trivial. It's people playing games on social networks 72 00:04:21,480 --> 00:04:25,159 Speaker 1: and things like that. It's not comparable, for example, to 73 00:04:25,240 --> 00:04:31,000 Speaker 1: the invention of the automobile, the invention of electric power airlines. 74 00:04:31,279 --> 00:04:35,039 Speaker 1: So you're saying Snapchat, Twitter don't make people more productive 75 00:04:35,160 --> 00:04:39,160 Speaker 1: at work. That's right. It entertains people, but it doesn't 76 00:04:39,200 --> 00:04:41,960 Speaker 1: have a great value in terms of output. And when 77 00:04:42,000 --> 00:04:46,560 Speaker 1: we're talking about productivity, we're talking about things that have value. 78 00:04:47,440 --> 00:04:50,719 Speaker 1: So we have to take every innovation, so to speak, 79 00:04:50,839 --> 00:04:54,039 Speaker 1: and value it by how much revenue is obtained from that. 80 00:04:54,839 --> 00:04:59,080 Speaker 1: And most of these things are pretty trivial uses of 81 00:04:59,200 --> 00:05:04,000 Speaker 1: people's time. Him there are substitution in many respects. Advertisers 82 00:05:04,040 --> 00:05:06,120 Speaker 1: used to assume you were on TV all the time 83 00:05:06,920 --> 00:05:09,280 Speaker 1: and you sat around the directed their ads at you. 84 00:05:09,360 --> 00:05:12,200 Speaker 1: Now they assume you're on Twitter or you're on Facebook. 85 00:05:13,000 --> 00:05:16,520 Speaker 1: But that's not a major shift in output or a 86 00:05:16,600 --> 00:05:20,480 Speaker 1: big increase that society gets from it. It doesn't raise 87 00:05:20,600 --> 00:05:24,440 Speaker 1: standard of livings. Particularly so somebody is sitting in Aloft 88 00:05:24,640 --> 00:05:28,360 Speaker 1: on the West Coast designing apps and they're getting paid 89 00:05:28,400 --> 00:05:32,200 Speaker 1: for it, no question about it. But you're saying, in yesteryear, 90 00:05:32,680 --> 00:05:35,640 Speaker 1: these people would have been working on the next super 91 00:05:35,680 --> 00:05:39,360 Speaker 1: type of semiconductor, something like that, something that would have 92 00:05:39,520 --> 00:05:43,640 Speaker 1: more value. If you think about the revolution of the computer, 93 00:05:43,920 --> 00:05:49,240 Speaker 1: it just dramatically changed the way we worked. Offices were changed. 94 00:05:49,760 --> 00:05:54,200 Speaker 1: Twitter is little feeds of things that's sort of a substitute, 95 00:05:54,240 --> 00:05:56,800 Speaker 1: maybe for a snack. Because you would say, I don't 96 00:05:57,120 --> 00:06:02,719 Speaker 1: see necessarily that social networks have great value in terms 97 00:06:02,760 --> 00:06:06,760 Speaker 1: of adding to GDP. We do include them. The problem 98 00:06:06,960 --> 00:06:10,600 Speaker 1: is that we value them at quite a low level. 99 00:06:10,680 --> 00:06:15,640 Speaker 1: So the increased activity of social networks we measure basically 100 00:06:15,720 --> 00:06:18,279 Speaker 1: by how much the advertisers are willing to pay for it, 101 00:06:18,400 --> 00:06:23,000 Speaker 1: but translate those incremental technological gains into the big issue 102 00:06:23,000 --> 00:06:25,760 Speaker 1: of the moment, which is how come pay roll growth 103 00:06:25,800 --> 00:06:29,039 Speaker 1: of two hundred thousand plus a month isn't translating into 104 00:06:29,040 --> 00:06:32,560 Speaker 1: significant wage gains. I think the fundamental reason for that 105 00:06:33,279 --> 00:06:36,920 Speaker 1: is that productivity is not in a value sense of 106 00:06:36,920 --> 00:06:41,080 Speaker 1: what firms do to produce things adding much output. So 107 00:06:41,279 --> 00:06:44,039 Speaker 1: we have become a society where most of the job 108 00:06:44,160 --> 00:06:50,240 Speaker 1: growth is in retail stores, restaurants, relatively low wage jobs, 109 00:06:50,360 --> 00:06:53,479 Speaker 1: low skilled jobs that don't add a lot of output. 110 00:06:53,760 --> 00:06:57,120 Speaker 1: Let's get an overview of what the trend in productivity 111 00:06:57,160 --> 00:06:59,920 Speaker 1: has been like for this expansion and how that compared 112 00:07:00,080 --> 00:07:02,560 Speaker 1: to previous expansions. And I want to sort of frame 113 00:07:02,600 --> 00:07:06,480 Speaker 1: it this way, as you know, we have some minor 114 00:07:06,560 --> 00:07:09,760 Speaker 1: market volativilty going on at the moment, and you know 115 00:07:09,800 --> 00:07:12,520 Speaker 1: that's obviously a crisis in its own sort of way, 116 00:07:12,760 --> 00:07:15,720 Speaker 1: maybe a short term one, but you know, a lot 117 00:07:15,760 --> 00:07:19,000 Speaker 1: of things that I've read from economists they view productivity 118 00:07:19,000 --> 00:07:21,880 Speaker 1: as a as a long term crisis of sorts. So 119 00:07:21,920 --> 00:07:23,560 Speaker 1: I was wondering if you could just put the whole 120 00:07:23,600 --> 00:07:25,920 Speaker 1: trend in context for us and tell us what it's 121 00:07:25,960 --> 00:07:29,120 Speaker 1: like our concern has been on that long term contest, 122 00:07:29,280 --> 00:07:31,680 Speaker 1: it has slowed down. We came out of World War 123 00:07:31,760 --> 00:07:35,440 Speaker 1: Two and the Great Depression with an enormous number of 124 00:07:35,560 --> 00:07:39,320 Speaker 1: major innovations, and we spent basically up to the mid 125 00:07:39,480 --> 00:07:43,200 Speaker 1: nineteen seventies implementing those ideas, and there was a tremendous 126 00:07:43,240 --> 00:07:47,320 Speaker 1: expansion of American standards of living, and it showed up 127 00:07:47,360 --> 00:07:52,600 Speaker 1: in productivity and in people's real incomes. Since nineteen seventy two, 128 00:07:52,800 --> 00:07:55,720 Speaker 1: then everything slowed down, and I think we'd have to 129 00:07:55,760 --> 00:07:58,400 Speaker 1: be honest, we're not too sure about why that happened, 130 00:07:58,400 --> 00:08:00,880 Speaker 1: despite a lot of studies to try. But then in 131 00:08:00,920 --> 00:08:04,320 Speaker 1: the nineteen nineties mid nineties, there's another big shot, the 132 00:08:04,360 --> 00:08:10,240 Speaker 1: Internet and all the technological innovations associated with communications and computers, 133 00:08:10,640 --> 00:08:13,840 Speaker 1: and there was a big improvement. So the nineteen nineties 134 00:08:13,960 --> 00:08:17,680 Speaker 1: was an era of very rapid growth and productivity, rapid 135 00:08:17,720 --> 00:08:21,840 Speaker 1: growth in people's standard of living, lots of people got jobs. 136 00:08:22,480 --> 00:08:26,200 Speaker 1: The bubble kind of burst. It probably stayed with us 137 00:08:26,280 --> 00:08:30,560 Speaker 1: until the mid two thousand's, but for the last ten years, 138 00:08:30,560 --> 00:08:34,280 Speaker 1: since about two thousand five, we have reverted back to 139 00:08:34,440 --> 00:08:39,080 Speaker 1: that same old pokey growth and productivity that was from 140 00:08:39,200 --> 00:08:42,520 Speaker 1: nineteen seventy two or so up to nineteen seventy five, 141 00:08:43,040 --> 00:08:46,000 Speaker 1: the difference productivity was growing at about two and a 142 00:08:46,040 --> 00:08:49,240 Speaker 1: half percent per year in the good times, and now 143 00:08:49,280 --> 00:08:51,880 Speaker 1: it's growing a little over one. It's not like it 144 00:08:51,920 --> 00:08:55,400 Speaker 1: doesn't exist, but it's about half the rate it used 145 00:08:55,440 --> 00:08:58,560 Speaker 1: to be, and that means you're real incomes are going 146 00:08:58,679 --> 00:09:02,640 Speaker 1: up much more slowly. And they is the problem ondly 147 00:09:02,679 --> 00:09:06,360 Speaker 1: one of perception. And we keep thinking, wow, if I 148 00:09:06,400 --> 00:09:08,439 Speaker 1: think we could get back to the way things were 149 00:09:08,440 --> 00:09:11,160 Speaker 1: in the nineties, But you seem to be saying that 150 00:09:11,880 --> 00:09:15,440 Speaker 1: the nineties and the period that preceded that were an 151 00:09:15,440 --> 00:09:19,320 Speaker 1: anomally and this actually is the normal. That's the big 152 00:09:19,400 --> 00:09:22,400 Speaker 1: argument among economists. We haven't settled there. There is which 153 00:09:22,520 --> 00:09:26,760 Speaker 1: which economists too think the nineteen nineties was just a 154 00:09:26,760 --> 00:09:31,480 Speaker 1: brief bubble, as they put it, bound the burst, and 155 00:09:31,520 --> 00:09:36,599 Speaker 1: we've now returned to the sort of sluggy no major innovations, 156 00:09:37,240 --> 00:09:41,160 Speaker 1: the big ideas have been thought of, etcetera. And others 157 00:09:41,160 --> 00:09:43,880 Speaker 1: who are much more optimistic that there's been a little 158 00:09:43,920 --> 00:09:48,760 Speaker 1: pause because of the Great Recession shocked a lot of firms. 159 00:09:48,800 --> 00:09:51,760 Speaker 1: They postponed their investment in new ideas, but it will 160 00:09:51,760 --> 00:09:55,319 Speaker 1: come again, and so they point to things like robots, 161 00:09:55,920 --> 00:10:00,200 Speaker 1: increased reliance on those forms of technologies that could be 162 00:10:00,240 --> 00:10:05,080 Speaker 1: another big wave of productivity gains, which saw do you want. 163 00:10:05,600 --> 00:10:07,520 Speaker 1: I hate to say that I chicken out and I'm 164 00:10:07,559 --> 00:10:10,120 Speaker 1: in the middle, but I think basically I'm with the 165 00:10:10,400 --> 00:10:15,120 Speaker 1: pessimist on the whole. I do not see innovations of 166 00:10:15,160 --> 00:10:18,959 Speaker 1: the magnitude that we used to observe. It is true, though, 167 00:10:19,120 --> 00:10:22,240 Speaker 1: that they take a very long time to be fully 168 00:10:22,400 --> 00:10:25,840 Speaker 1: introduced into the economy. We have an idea, but it 169 00:10:25,840 --> 00:10:28,800 Speaker 1: will take decades. Like the computer existed for twenty to 170 00:10:28,920 --> 00:10:31,480 Speaker 1: thirty years before it really began to have a big 171 00:10:31,520 --> 00:10:35,199 Speaker 1: effect on people's lives. So maybe three D printing or 172 00:10:35,800 --> 00:10:39,640 Speaker 1: the hyper loop could be artificial intelligence one of those 173 00:10:39,679 --> 00:10:42,000 Speaker 1: things that's just taking a really long time to actually 174 00:10:42,080 --> 00:10:44,560 Speaker 1: get on the ground. Well, these are all buzzwords that 175 00:10:44,600 --> 00:10:47,320 Speaker 1: people throw around. I mean, what do you think they name? 176 00:10:47,440 --> 00:10:51,880 Speaker 1: Really those ideas are going to improve things on but 177 00:10:51,960 --> 00:10:56,720 Speaker 1: they're small. They're just not the magnitude and sweep. When 178 00:10:56,760 --> 00:10:59,440 Speaker 1: you think of what is our history composed of, the 179 00:10:59,440 --> 00:11:04,680 Speaker 1: invention of electricity just dramatically changes everything. Is anything happened 180 00:11:04,720 --> 00:11:08,760 Speaker 1: like that, and so I don't think recent events have 181 00:11:08,880 --> 00:11:12,520 Speaker 1: been the big breakthroughs. I would argue, in fact, that 182 00:11:12,559 --> 00:11:17,080 Speaker 1: we put so much restrictions on innovation as people try 183 00:11:17,120 --> 00:11:21,199 Speaker 1: to capture it as rents, that it is much harder 184 00:11:21,320 --> 00:11:23,520 Speaker 1: to come up with new ideas and implement them than 185 00:11:23,559 --> 00:11:26,440 Speaker 1: they were in the past because everybody says, oh, that's mine, 186 00:11:26,520 --> 00:11:29,760 Speaker 1: you can't I patented it, and you try to. We 187 00:11:29,920 --> 00:11:35,240 Speaker 1: sue a great deal today just over that idea. So, Tory, 188 00:11:35,360 --> 00:11:38,040 Speaker 1: let's us step back a little bit, and you know, 189 00:11:38,080 --> 00:11:40,640 Speaker 1: if you were talking to your uncle or maybe to 190 00:11:40,720 --> 00:11:46,160 Speaker 1: your friends, why should normal ordinary Americans care about this 191 00:11:46,320 --> 00:11:49,800 Speaker 1: nerdy statistic here on productivity? Why should they care that 192 00:11:49,880 --> 00:11:52,600 Speaker 1: this is slowing down? I think it goes back to 193 00:11:52,640 --> 00:11:55,960 Speaker 1: the point that Barry you mentioned earlier. A more productive 194 00:11:56,080 --> 00:11:58,800 Speaker 1: worker has way more bargaining power when it comes to 195 00:11:58,800 --> 00:12:01,920 Speaker 1: their wages. I think, if you know, going back to 196 00:12:01,920 --> 00:12:04,680 Speaker 1: the pizza example, if you can show that you make 197 00:12:04,800 --> 00:12:08,040 Speaker 1: five pizzas per hour and so and it only makes one, 198 00:12:08,600 --> 00:12:11,400 Speaker 1: why shouldn't you be paid more? But it's also this 199 00:12:11,480 --> 00:12:13,760 Speaker 1: idea that's hoping you could expand on a little bit 200 00:12:13,800 --> 00:12:17,520 Speaker 1: of how productivity in the context of rising wages also 201 00:12:17,559 --> 00:12:21,240 Speaker 1: helps keep inflation and control. No, it's a big offset. 202 00:12:21,320 --> 00:12:23,760 Speaker 1: I mean, if if we don't have any productivity growth 203 00:12:23,760 --> 00:12:26,000 Speaker 1: and we just give wage increases, all they're going to 204 00:12:26,080 --> 00:12:28,959 Speaker 1: pass forward into higher prices and we'll be back into 205 00:12:29,000 --> 00:12:32,600 Speaker 1: the same problem we had decades ago of high inflation. 206 00:12:33,400 --> 00:12:37,120 Speaker 1: So rapid productivity like in the nine nineties, it did 207 00:12:37,240 --> 00:12:40,240 Speaker 1: help hold down inflation. That's the big break. In fact, 208 00:12:40,320 --> 00:12:44,160 Speaker 1: with the history of inflation and industrial countries, I would 209 00:12:44,240 --> 00:12:47,720 Speaker 1: argue it's gone so far that inflation is just not 210 00:12:47,800 --> 00:12:53,000 Speaker 1: a significant issue anymore most industrial societies. And we're worrying 211 00:12:53,040 --> 00:12:57,160 Speaker 1: about yesterday's problem. The much more fundamental one is that 212 00:12:57,480 --> 00:13:00,720 Speaker 1: we are not getting these games and people standard up 213 00:13:00,800 --> 00:13:04,240 Speaker 1: living and actually living better for hour of work than 214 00:13:04,240 --> 00:13:06,840 Speaker 1: they used to in the past. You know. I read 215 00:13:06,880 --> 00:13:10,200 Speaker 1: this incredible report that the White House released, um I 216 00:13:10,200 --> 00:13:13,040 Speaker 1: think it was earlier this year. They said that, uh, 217 00:13:13,080 --> 00:13:16,080 Speaker 1: if productivity had been growing at the pace that it 218 00:13:16,240 --> 00:13:20,719 Speaker 1: was between nineteen and nineteen seventy three, um one, productivity 219 00:13:20,800 --> 00:13:23,680 Speaker 1: was going really quickly, the media and household in the 220 00:13:23,760 --> 00:13:27,800 Speaker 1: U S would be earning thirty thousand dollars more per year. 221 00:13:28,360 --> 00:13:31,800 Speaker 1: Thirty thousand I could buy a lot of really fancy bicycles. 222 00:13:31,800 --> 00:13:36,200 Speaker 1: With that, there is also the argument that a lot 223 00:13:36,240 --> 00:13:40,000 Speaker 1: of the innovation isn't being properly measured, and that's why 224 00:13:40,040 --> 00:13:42,160 Speaker 1: the productivity stats are coming in low. What do you 225 00:13:42,160 --> 00:13:46,280 Speaker 1: think of that argument. It's a problem. It's very hard 226 00:13:46,320 --> 00:13:51,360 Speaker 1: to evaluate how important it is. But with computers, for example, 227 00:13:51,400 --> 00:13:55,280 Speaker 1: the original difficulty was that we weren't capturing the productivity 228 00:13:55,280 --> 00:13:59,120 Speaker 1: growth and computers back in the early nineteen nineties, and 229 00:13:59,120 --> 00:14:02,480 Speaker 1: a lot of the ovation that we now point to 230 00:14:03,240 --> 00:14:08,360 Speaker 1: with communications and computers is because we devise better ways 231 00:14:08,520 --> 00:14:14,360 Speaker 1: to measure the technological change. And people worry that we're 232 00:14:14,400 --> 00:14:17,000 Speaker 1: not doing well on that, but I think we're very 233 00:14:17,080 --> 00:14:19,760 Speaker 1: aware of it. We spend a lot of more effort 234 00:14:19,800 --> 00:14:23,320 Speaker 1: by the statistical agencies to try to adjust for these things. 235 00:14:23,520 --> 00:14:25,800 Speaker 1: I think we do better than we did in the past. 236 00:14:27,120 --> 00:14:30,800 Speaker 1: So I'm not of a view that you can just 237 00:14:30,920 --> 00:14:34,360 Speaker 1: explain this away as a measurement problem. I think you 238 00:14:34,480 --> 00:14:38,040 Speaker 1: see it in the discontent of people about improvements in 239 00:14:38,040 --> 00:14:41,200 Speaker 1: their life standards. They do not think that there that 240 00:14:41,320 --> 00:14:44,960 Speaker 1: their real incomes are rising, and I think their perception 241 00:14:45,120 --> 00:14:47,720 Speaker 1: is correct. It's not just a measurement problem that you 242 00:14:47,720 --> 00:14:50,400 Speaker 1: can tell, oh, but you're really much more excited than 243 00:14:50,440 --> 00:14:54,400 Speaker 1: you realized over social networks. I don't think that that 244 00:14:54,480 --> 00:14:58,760 Speaker 1: can resolve this problem, but we have to grant that 245 00:14:59,080 --> 00:15:05,240 Speaker 1: really measuring technological change and incorporating it into the quality 246 00:15:05,320 --> 00:15:09,720 Speaker 1: of the product is extremely hard to do. Underlying all 247 00:15:09,800 --> 00:15:14,000 Speaker 1: the surveys of consumer sentiment that we've seen that show 248 00:15:14,360 --> 00:15:16,800 Speaker 1: people just don't feel as good as they used to. 249 00:15:17,480 --> 00:15:20,320 Speaker 1: It's all about productivity, do you think I think a 250 00:15:20,320 --> 00:15:23,400 Speaker 1: lot of it. I think the in society that the 251 00:15:23,400 --> 00:15:26,560 Speaker 1: people who do feel good about what's happened are the 252 00:15:26,600 --> 00:15:28,920 Speaker 1: people who have had big gains in their real incomes, uh, 253 00:15:29,320 --> 00:15:33,000 Speaker 1: the success stories, so to speak, and the people who 254 00:15:33,000 --> 00:15:36,920 Speaker 1: are discontent as the stagnation where life has been disappointing. 255 00:15:37,680 --> 00:15:40,600 Speaker 1: If you go to a country like say, take an 256 00:15:40,600 --> 00:15:44,600 Speaker 1: extreme example of China, there's just been an enormous expansion 257 00:15:44,640 --> 00:15:47,480 Speaker 1: that people standard of living and the things they enjoy. 258 00:15:47,800 --> 00:15:50,680 Speaker 1: They're not complaining about the lack of productivity growth. Their 259 00:15:50,720 --> 00:15:54,280 Speaker 1: life is getting better every day, and it's because they're 260 00:15:54,320 --> 00:15:59,600 Speaker 1: generating enormous improvements and productivity. It's easy to do because 261 00:15:59,640 --> 00:16:02,800 Speaker 1: all you have to do is copy. It's much harder 262 00:16:02,920 --> 00:16:06,840 Speaker 1: in the United States. We're at the technological frontier. So 263 00:16:06,920 --> 00:16:09,480 Speaker 1: you can't copy anybody anymore. You have to come up 264 00:16:09,520 --> 00:16:12,440 Speaker 1: with a new idea, and it's hard to do that. 265 00:16:12,920 --> 00:16:18,560 Speaker 1: Let's rewind back to the early nine nineties, when, if 266 00:16:18,600 --> 00:16:22,760 Speaker 1: memory serves, there was this debate that America was getting 267 00:16:22,880 --> 00:16:26,640 Speaker 1: left behind, that the nation's best days were in the past. 268 00:16:27,680 --> 00:16:32,480 Speaker 1: Japanese products were dominating, the Asian economic and business model 269 00:16:32,840 --> 00:16:36,120 Speaker 1: was on the rise, the West was in decline, and 270 00:16:36,320 --> 00:16:39,320 Speaker 1: little did we know it, but at precisely that point, 271 00:16:39,720 --> 00:16:43,360 Speaker 1: the next big technological way, the next big productivity boost, 272 00:16:44,040 --> 00:16:47,880 Speaker 1: was happening in garages, and not just garages on the 273 00:16:47,920 --> 00:16:51,600 Speaker 1: West coast. So how do we know that the next 274 00:16:51,640 --> 00:16:55,280 Speaker 1: big technological and productive spurt isn't already with us? And 275 00:16:55,320 --> 00:16:57,960 Speaker 1: we just can't see it. That's why we always have 276 00:16:58,080 --> 00:17:01,800 Speaker 1: to be a little doltful about any of our claims 277 00:17:01,880 --> 00:17:04,119 Speaker 1: about what's going to happen in the future. I think 278 00:17:04,240 --> 00:17:08,120 Speaker 1: your point is completely justifiable that if you went back 279 00:17:08,160 --> 00:17:12,159 Speaker 1: in the early nineteen nineties, we used to comment a 280 00:17:12,240 --> 00:17:15,560 Speaker 1: famous quote by an American economist, as you can see 281 00:17:15,600 --> 00:17:19,879 Speaker 1: the influence of computers everywhere except in productivity, and just 282 00:17:20,040 --> 00:17:22,160 Speaker 1: about the time he said it there was an explosion 283 00:17:22,200 --> 00:17:27,160 Speaker 1: of productivity. You know, I'm still trying to figure out, Barry, 284 00:17:27,200 --> 00:17:30,400 Speaker 1: whether you're an optimist or a pessimist. You've come close 285 00:17:30,480 --> 00:17:33,800 Speaker 1: to showing your hand at times in this broadcast. I think, 286 00:17:33,880 --> 00:17:38,320 Speaker 1: basically I'm a pessimist when it comes to the productivity. 287 00:17:38,119 --> 00:17:42,680 Speaker 1: I think we're moving away from being truly an innovative society. 288 00:17:42,680 --> 00:17:46,960 Speaker 1: Whereas you said, people came up with ideas in their garages, 289 00:17:47,600 --> 00:17:51,199 Speaker 1: and we're being captured by large enterprises that try to 290 00:17:51,280 --> 00:17:55,320 Speaker 1: claim everything is owned, and we're becoming a society that 291 00:17:55,359 --> 00:17:58,480 Speaker 1: we're running around seeking rents from everybody else in the 292 00:17:58,520 --> 00:18:02,800 Speaker 1: world rather than innovating, and I think that's discouraging for 293 00:18:02,840 --> 00:18:06,959 Speaker 1: the future. On that note, thank you so much, Barring. 294 00:18:08,280 --> 00:18:10,639 Speaker 1: In the meantime, you can find us on the Bloomberg 295 00:18:10,720 --> 00:18:14,000 Speaker 1: terminal Bloomberg dot com as well as on iTunes, and 296 00:18:14,160 --> 00:18:16,760 Speaker 1: while you're there, please please please take a moment to 297 00:18:16,920 --> 00:18:20,320 Speaker 1: rate the show that helps other listeners find us and 298 00:18:20,359 --> 00:18:22,760 Speaker 1: also tell us what you find. You can reach us 299 00:18:22,800 --> 00:18:26,399 Speaker 1: and follow us hopefully on Twitter at Dan Masty, scene, 300 00:18:26,640 --> 00:18:30,840 Speaker 1: at Tory Stillwell and at Aquito seven and until next time. 301 00:18:30,880 --> 00:18:34,440 Speaker 1: If you find yourself hankering for more economic analysis, see 302 00:18:34,440 --> 00:18:38,920 Speaker 1: your Bloomberg terminal, or visit us at www dot bloomberg 303 00:18:39,000 --> 00:18:43,000 Speaker 1: dot com. You're a really nice radio voice. Well, thank you.