Productivity and Spinning Wheels

Morning everyone. Apologies for not posting in a while but I have been spending my time getting work done and being blissfully unawares of the presidential election, one of the perks of being able to decide based on a candidates record and not their promises or performance during a presidential debate. For those of you who care, I certainly don't, and do not live under a rock, sometimes I wish I did, pundits, at least at according to slate, Romney wiped the floor with Obama. Once again I want to point to looking at a man's record rather than whatever promise they make during the campaign cycle, it is a far, far better indication of how a man will govern; but I digress.

What I am really posting is the Captain's spinning wheel economic post of and the alarming, though not unexpected point that Americas economy has really not grown all that much, in terms of actual stuff produced, since the early 70s.  I've touched on the deleterious effect government spending has had on our economic growth, but that concerns only GDP not the net domestic product. Some have measured our economy in terms of gold. But the ultimate point is that our economy has not performing to the levels it could or should.

What is interesting is that our lives have improved, not necessarily in terms of real earnings, or the ability to pay for the necessities, shelter, energy, and food. I know this to be true because I wouldn't have survived birth in the 1960s, but I was fortunate enough to have been born in the 1980s. Technology has been the biggest source of improvement for us. And the reason why is that it has made us more productive, which as the Captain pointed out off hand means that far less of our workday is spent doing actual 'work' than in the past.  This is due to our ever increasing productivity, which, until now, has grown with every decade since the 1970s. The reason for our productivity gains rests entirely with technology, computers, word processors, software, cloud informational systems and so on and so forth.

It is technology that allows individuals to buy clothing for far cheaper prices, and at comparably better quality, they we have been in the past.  Yes some individuals will rightly point out that this is due to the exportation of labor intensive industries to more affordable countries, but what also needs to be acknowledge is the increasing automization of these tasks.  Eventually it your clothing will be made in a factory in Raleigh by a machine rather than a textile mill in Shanghai or Ho Chi Minh city; it has already happened with cars so it is only a matter of time until it happens for clothing.

And even outside of automization the information technology industry has certainly buoyed the American middle class. Forget Wal-mart and its low cost shopping. Companies like Ebay, Amazon, Google, and a whole host of others now allow Americans to shop for what they want without ever having access to a brick and mortar store. Want a Brooks Brother 1818 suit but don't want to pay the $ 1,000 price tag? Just go online, exercise some patience and savvy, and you can find whatever you want at a discounted price.  Entire personal business have been built this way and the customer still benefits from the savings.  Remember a time when people used to pay full retail for textbooks? Now you just hop onto Amazon.com.

You also have many small and medium sized business that create entire software programs that streamline, automate, and remove the need for a human being to do busy work. Every single job out there has benefited from time saving programs that allow workers do more in less time. This has allowed companies to become more profitable and help buoy an otherwise difficult economic era. And these new companies have benefited entire cities. My city was a no name logging, fishing, and shipping town until a certain technological monolith came along. However, the regulatory environment threatens these new businesses that allow us to do more for less.

 Environmental regulations and their affects on companies such as Microsoft, Amazon, and Google come to mind, each of these companies rely on cheap energy to power their server centers that store all the data that make their online operations possible. But even without an increasingly hostile, and parasitic, regulatory environment towards these new industries, the fact is that the rest of the world is catching, or has caught, up.  The profits from these industries will be lower and growth more difficult.

I do think that the realities that the Captain has pointed out will become more apparent and start affecting ordinary Americans. For about three decades, the US has enjoyed unchallenged dominance in the nascent computer information industries, however, that position is no longer secure.  Productivity has stalled as the full cycle of new paradigm shifting technologies has run its course. At some point America will have to produce more items to be competitive.  Whether or not we are successful is another story. History is replete with developed nations stagnating and declining. Argentina is perhaps the best example of in the western hemisphere. 

The government will continue to try and address these issues with the same old methods, putting the monetary gas pedal to the floor, but much like a car stuck in quicksand it won't do anygood. The sooner our political leadership realizes that we can no longer drive on the beach the better off we will be, and the sooner we can start real economic growth.