This is a blog I prepared a few years ago, and never published.  In the light of current concerns about productivity, I’ve decided to publish it, even though it’s a draft. I think it’s a pretty good draft.

The Tories, sadly, will win the next election because they have made most of the public believe four things that aren’t true.  Firstly, that the 2008 crash was caused by the Labour Party, rather than banks in New York.  Secondly, that the right response to this is raising taxes and cutting public services, when we learnt in the 1930s that in these circumstances these are the last things to do – the government should maintain its spending to keep employment and demand high.  Thirdly, that the UK government has been successful in managing a recovery from the crunch, when they have done less well than most.  Lastly, they have got people – and especially journalists, for whom deficit mania means they do not have to prepare for interviews when talking to politicians – to think that the most important economic issue is the budget deficit (or the National Debt, a different thing) when the main problem is productivity.

I am aware that there are many people who would agree with me on the first three points.  The last one has only recently (and marginally) crept into public debate – for example, this blog, posted last week, and this one too.  Productivity basically means output per head, and the news for the UK is not good.  The Labour shadow Business minister points out that the average French worker has produced by Thursday the output that a UK worker needs all week.  This is a nice way to start thinking about productivity, though not technically the last word.  After all, a foreign worker could be more productive – create more wealth, make more stuff, do more things – with the aid of better but very expensive machinery.  In this case, greater labour productivity might be outweighed by inferior capital productivity.  But the problem in the UK is that we have poor labour productivity and poor capital productivity.  Our people produce less value, and so do our machines.  The LSE’s Centre for Economic Performance have recently identified UK’s poor productivity as “probably the greatest challenge facing our economy”.

Why does this matter ?  Because our productivity determines our standard of living.  We can only consume what we produce – unless, that is, we are into selling off assets (which we are in a big way – ever wonder why the French own our dustbins, the Arabs our football teams and the Russians Kensington ?).  There is also a minor moral point, in that if we are producing things inefficiently – taking more fuel or more equipment than others seem to need – we are using more of the world’s resources than necessary – and that includes the time and effort of our people.  The superior productivity of overseas economies can be taken in improved living standards (Germany, USA) or in increased leisure (France – interesting that the BBC’s economics guru Robert Peston could complete a full programme on the awfulness of the French without mentioning that they are more efficient than the British).

The UK Commission for Employment and Skills’ recent report acknowledged that the UK has usually been behind that of its industrial competitors.  But it also noted that the gap, rather than closing, has recently been widening.  And it’s not that other countries are shooting away – here’s a discussion of the problem from an American eye – they are stumbling, but we still fall behind.  The LSE worries about the “danger that low pay and productivity could become entrenched”.  This should be surprising.  The UK is not a low skills economy.  We actually have a high proportion of well qualified people, and the growth in jobs has been at the upper end: “productivity has crashed despite the UK’s highly skilled workforce”.  It attributes the problem to ‘multi-factor productivity’, which basically means they don’t know.  It’s not that the UK worker has inferior equipment (that was thought to be true in the 50s and 60s, when the problem first became obvious).  They then say:

An important backdrop to productivity performance is that we have a workforce which has never been so well qualified. If we have a better-educated workforce, then we have to look at how their talents are being applied: the workplace must have played a role in that productivity slowdown.

I think this must mean that the UK workforce is poorly managed.  What else could it mean ?  We have the people, they have the skills, they have the equipment, but they are not performing well.  If that is not down to poor organisation, I don’t know what is.  It is worth recalling the various excuses that UK management has used to explain why it does not perform well.  It was because we were outside the EEC’s fast growing market (we joined). It was because investment was costly (we gave investment tax breaks). It was because trades unions prevented efficient work practices (we disempowered trade unions).  Tax rates were too high to incentivize talented individuals (we slashed the top rate of tax).  The Commission, and credit to them for telling the truth in a world and government dominated by rich executives, agrees.  “The UK clearly has a deficit in management quality, and this is likely to be a key factor explaining the productivity gap with other countries  such as Germany and the USA”.  The deficit is at the bottom end – the UK has a tail of poorly run enterprises, and other countries do not.

What can we do about all this ?  One thing is to make the problem publicly known, and talk about it rather more than Jeremy Clarkson or politicians’ kitchens.  A good start would be improved financial support for small business training and investment.  We are the only major economy without a special bank for small enterprises.  Mind you, firms have little incentive to replace people with machines when they can get workers so cheap – only Greece and Portugal have lower hourly wages, and we can always rely on immigration to stop them edging up.  Investment in research and development is poor compared with other countries: not just industrial research, but government R&D.  No major party has committed itself to safeguarding the science budget: with 10% of world research, 4% of world scientists, we invest less than any other G8 country.  Worse, I suspect, is the way that technical and further education is being savaged.  I nearly said decimated then, but decimated actually means ‘cut by 10%’ and the adult skills budget this year is being cut by 24%.  For a country with an ageing population and a productivity gap, it is difficult to think of a more foolish policy.  Even if you believe in the nonsense of balancing the books, this is not a necessary part of austerity, forced by budgetary constraints.  Mick Fletcher points out that the giveaways to whisky and beer in the last budget could pay for substantial improvement in skills training – and throttling back on pensioner bonds could avoid any need for cuts there at all.

The authors of the LSE report conclude:

The UK’s longstanding productivity underperformance has been heightened since the global financial crisis. ‘To meet this central policy challenge, the UK needs a long-term framework for investment and innovation. This ties in with many other policy areas, not least ensuring that there is an adequate supply of skills and a strong infrastructure network. 

And even Robert Peston – who seems to have swallowed the austerity pill without a blink – recently wrote a BBC column entitled “productivity is almost everything”:

… it would be a pretty foolish government that neglected to take any steps to improve productivity. And calibrating the balance between austerity and productivity-enhancing measures is perhaps the most important judgement for the next government. If we could only boost productivity, there would be no need to ink in any more austerity in Wednesday’s budget. So how on earth do we improve output per worker? 

Well, Robert, why not make your next documentary about international comparisons one that looks at why France has higher productivity than us, rather than worrying about the wickedness of their longer lunch-hours.

 

Now, there’s a reason I’m releasing less wisdom than normal, and that reason is Twitter.  This takes away the urge to blog for a number of reasons.  The first is to find that my views are not unique, and the things that annoy me annoy others.  I don’t need to explain about the national debt or the deficit or the causes of the 2008 credit crunch or the idiocy of Brexit, because others are doing it, and some of them are doing it better. Very much better.

Another reason Twitter diminishes my output is that I can explain my views on the world, or react to others’ views,  whilst lying in bed or sitting in my favourite armchair.  Now that the number of allowed characters has doubled, you can even include subtlety and/or irony. And, of course, Twitter gets more readers than blogs, especially if you’re part of a national debate run by a celeb columnist. Don’t think I’ve ever had a ‘like’ from an major economist or Times columnist on my blog, but I have on my tweet.

Twitter does, however, have disadvantages.  The first is that it enrages you.  I have given up reading it last thing at night, because you can’t get to sleep with all that adrenalin pumping.  The second is that it is often inaccurate.  I’m not talking just about fake news, though there is plenty of that about.  Last week there was a terrorist attack in Oxford Street, only, er, there wasn’t.  People retweet non-quotations from great men and women (I’ve written before about that, but it still amazes me that people can believe that Sophocles or Pliny agreed with the current Republican agenda in such a detailed way).  Obviously posed videos show mankind’s essential badness, or goodness.  There’s one going the rounds at the moment where a dog rescues a woman from a mugging, which would be more convincing if the camera weren’t to follow the fleeing miscreant in a way no security camera could or would.

Trolls are always there, too.  Sometimes its people who simply cannot believe the possibility that they might be wrong.  Recently, I corrected a tweet that claimed that the richest 1% paid 27% of government tax, by pointing out in a caring way that it was probably just talking about income tax, and when you take all taxes into account, the tax system is broadly proportionate.  “I’d like to see the details of that”, the author spluttered, so I sent him the details, charts and all.  His response was to say that tobacco and alcohol taxes are essentially voluntary, so the poor are obviously choosing to pay more tax.  This response not only missed the point (in practice the bulk of indirect tax comes in things that are not voluntary like council tax, petrol tax, insurance tax etc.), but moved on from his first assertion, which had been proved plainly wrong.

However, right wingers who can’t bear to say “I want to keep all my money, and to hell with society” and so have to invent excuses (if you lower taxes you’ll raise more money; let the rich keep their money, and it’ll all trickle down to the poor; successful societies have low tax rates) are to be expected, and in their easily understood blend of idiocy and selfishness are not the worst.  I have found three other areas where you can be sure of greater abuse.  These are:

• Any suggestion that Israel might have a right to exist, or that its opponents are not angelic. I won’t argue my views now, but this is an area where sensible dialogue is not possible. No-one changes their minds, and the (true) assertion that being anti-Zionist is not the same as being anti-Semitic is often put under great strain.  I’m a gentile with a degree, but have been called a Zionist moron on line (in a debate that was not about Israel).
• Green stuff. I recently attended a lecture by George Monbiot, of whom I’m a fan.  I tweeted that it was a great event, but that sadly the only group taking the opportunity of energising local lefties en masse were those trying to prevent the removal of trees by Sheffield’s roadsides.  The reaction was as if I had advocated murdering their children. The first reaction – that just because you wanted fewer trees removed didn’t mean you were impervious to other issues (true) – became a collective howl.  And, er, the fact is that (in a world of shrinking welfare funds, wars in Yemen and Syria, staggering growth in inequality, health service cuts and so on) no other issue was raised. And the tree issue was absurdly exaggerated. Rather than saying that the council had mishandled a necessary programme, some seemed to say the tree issue illustrated the decay of late stage capitalism.  Others people claimed that the street I had named in my defence as needing treatment was just fine.  Indeed, they pushed their grandchildren’s’ prams or disabled husband’s wheelchair down there frequently (non-Sheffield readers will not realise this is mendacious nonsense).Similar reaction when I suggested, after a hairy journey in autumnal dusk – that cyclists and pedestrians would benefit from wearing more easily visible clothes in murky November weather.  Angry respondents said it was cars that should be painted in hi-viz colours, as they were the criminals responsible for crashes; indeed, car drivers are the ones who should be made to wear helmets.  These answers – tweeted with many ‘likes’ – share two things. They don’t relate to my comments (I never mentioned compulsion or helmets), and they would do nothing to reduce road casualties.  Sadly, when a car hits a cycle, it is the cyclists who gets hurt.  But the feeling of personal worthiness seems to have overwhelmed these obvious points, and the knowledge that most cyclists own cars.
• Right wing fans of Friedrich von Hayek. I once remarked that Marx had been proved wrong when he said that the working class would get progressively poorer under capitalism, and so was no longer seen as a faultless guru.  However, von Hayek was wrong in saying that social democracies with welfare states would become more and more tyrannical, less and less free, yet has not been discounted for an equally flawed prediction.  Nowhere in the world – certainly not the right wing autocracies – enjoys the freedoms of European social democracies.  You’d have thought this was an uncontroversial statement, yet … wow !  Fritz’s fans piled in.  They either denied he held these views (how can this be ?  A simple quotation from his books – indeed the very title of “Road to Serfdom” – shows that he did), or felt it was outrageous, almost blasphemous, to suggest the god of neo-liberalism had misspoken.  This wasn’t just one response, but a stream, and some very abusive.

I guess the thing these three themes have in common is tribalism, the warm feeling of knowing that you have a gang of mates who will leap in waving the same broad sword of truth as you are bearing.  These tribes have a clutch of common views, and I guess their list of Twitter reading will have few deviants from the approved wisdom.  If you are against fracking, you must be against nuclear power (not logical, as Mr Spock might say); if you oppose capital punishment, you must favour freer abortion.  Oh, and the other supporting driver is virtue – the feeling that your views are not just sensible policy prescriptions, but represent moral excellence. The danger here is that anyone who disagrees with you is not only mistaken but wicked.

And that way lies a very dark path indeed.