productivity

This is the American worker's saga. The stuff you're making is getting cheaper. The stuff you need is getting more expensive. That's why you feel so squeezed. "That's a provocative idea," James Manyika tells me on the phone when I read through my theory. "I want to make a key point." The things getting more expensive fall into two categories, he said. You have the failures of productivity, including education, government, construction, and health care. Then you've got natural economic scarcity, like physical living space and crude oil.

"Health care is our most important failure of productivity," he says. "Many of the costs that go into health care are not open to competition. The nice thing about retail is that the costs are transparent. The management fees on your brokerage account are transparent and competitive and competed for. You don't know what the management costs for your health care plan are, because those are opaque. There's less incentive to make them cost effective. That's one reason why you've seen so few gains in health care productivity."

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The presumption in Washington is that as long as we have a growing economy, everything will work out, and if productivity rises, jobs and wages will follow. It turns out that growth and productivity, while not at all evil, are not panaceas, either. GDP growth has been decoupled from job growth. Productivity has been decoupled from wages. What's good for work has been decoupled from what's good for workers.

"What can we do about that?" Manyika said at the end of our talk. I waited for him to say something. We're all still waiting.

via The Atlantic.