The Off Topic Topic

[Tamas]

I think the key factor for the UK's numbers, is this:


Solving productivity is probably the biggest challenge with the UK economy right now, especially because by international standards the UK was already pretty low pre-financial crisis. In the G7 only Japan and Canada are lower.

It's one of those things with lots of theories about causes but no real consensus - it's probably a combination of loads of factors which means we need to do everything and hope that collectively it works.

Luckily property prices have skyrocketed in the same period so everything is fine.

[Sheilbh]

Luckily property prices have skyrocketed in the same period so everything is fine.

Not in comparison to 1990-financial crisis. It's a similar-ish trend of shifting onto a lower, slower trajectory post-2008:

[The Minsky Moment]

One interesting fact about the UK economy post-08 is the sharp growth in employment rates - the percentage of the adult population that is employed. The rate now stands at 76%, well higher than at any point in the last 40 years.    In comparison the US rate is barely 60%; France is high 60s.  My guess is if you look at what is going on with the employment rate that will tell you something about productivity growth rates.

[Tamas]

One interesting fact about the UK economy post-08 is the sharp growth in employment rates - the percentage of the adult population that is employed. The rate now stands at 76%, well higher than at any point in the last 40 years.    In comparison the US rate is barely 60%; France is high 60s.  My guess is if you look at what is going on with the employment rate that will tell you something about productivity growth rates.

I'd first look at the measurement used to obtain those numbers. IDK how it was earlier but the last X years, it's something silly like working one day in a week to be considered employed. Maybe it's just the goalposts which have been moved.

[Josquius]

Tbh productivity measures in general always fill me with unease.

With a traditional job like working in a factory it's pretty easy to see 1 hour of work makes 1 hour of stuff.

But for modern high GNP add jobs it's a lot less clear cut. Somebody who chills 4 days a week and only works 1 might come up with the billion pound idea whilst someone killing themselves working 7 days a week might produce very little of worth. The tracking of time to production just doesn't hold up so well.
Hell, even measuring what constitutes work. Is it work when I read a book as part of my training time? Are team building meetings work?

[Sheilbh]

That's been the definition for a while I think it's ONS data and definitions - the glossary is here:
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/methodologies/aguidetolabourmarketstatistics

But it is part of the UK labour market generally behaving strangely since the crisis - huge employment growth, rising employment rate but very weak wage growth (and very weak productivity). In terms of employment rate the UK's got the same level as Canada, Australia, Japan or Germany and has tended to bounce around the 70+% area for a while.

Of course, the other side is that's arguably an area where the US has had something weird going on because my understanding is that historically they normally had a higher employment rate than Europe but it fell strongly during the crisis and hasn't really recovered - and the US is now behind many European countries:


I think US economic inactivity rate is also unusually high - though starting to fall - and actually peaked in 2016, which is a long time after unemployment peaked. I'm not sure what the breakdown is in that group and what the causes are.

But for modern high GNP add jobs it's a lot less clear cut. Somebody who chills 4 days a week and only works 1 might come up with the billion pound idea whilst someone killing themselves working 7 days a week might produce very little of worth. The tracking of time to production just doesn't hold up so well.
Hell, even measuring what constitutes work. Is it work when I read a book as part of my training time? Are team building meetings work?

Yeah it's really difficult with services generally - and very, very difficult with public services. For example the UK has broadly moved to a method of recording productivity in public services that was recommended at a European level but not adopted by all countries yet because it's really complicated - but they try to look at the outputs rather than the inputs, with some quality adjustment.

But it leads to slightly perverse results like healthcare and education productivity falling during the pandemic (I think the NHS had the largest fall of all sectors in the economy in productivity in the first wave) which is, of course, nonsense.

Obviously it's really important to be able to measure public sector productivity and performance - that is more than just we spend x amount on it. But that's really tough to measure.

In a country like the UK where our economy is about 80% services productivity is probably quite tough to work out for statisticians.

[Tamas]

On a macro economics podcast I heard a guy stipulating one possible reason in the US for worker shortage is the asset rallies during the pandemic allowing people early(ier) retirement.

[Syt]

 

[The Brain]

Much like nuclear weapons its power is in the having, not the using.

[The Minsky Moment]

That's been the definition for a while I think it's ONS data and definitions - the glossary is here:
But it is part of the UK labour market generally behaving strangely since the crisis - huge employment growth, rising employment rate but very weak wage growth (and very weak productivity). s productivity is probably quite tough to work out for statisticians.

Productivity is just output divided by number of workers.  If you add more workers, if the productivity of those marginal workers is less than the existing average, then that will tend to pull productivity down.  So it isn't unusual to see a sharp rise an employment rates paired with declining productivity.

Conversely, if you conceive of productivity as being driven by processes of replacing less productive labor with automated processes, then increases in productivity may be associated with declines in employment rate.

To be clear, I am not making any statement about what specifically is happening in the UK case, nor am I stating a general rule associating employment rate with productivity.  Just pointing out certain potential relationships.

[Syt]

Much like nuclear weapons its power is in the having, not the using.

Looking at their website, it looks like one of those shops selling mostly decorative knick-knack of all kinds. A friend once dragged me into one of those in a local mall. I had never felt so uncomfortable and alien in a shop before. Just tons of dust-catchers and items to give your home what I suppose they propagate as "contemporary" look.

Imagine this shop page, but as a large, sandalwood scented and insufficiently lit maze: https://www.depot-online.de/de/c/deko-wohnen-486

[The Brain]

Much like nuclear weapons its power is in the having, not the using.

Looking at their website, it looks like one of those shops selling mostly decorative knick-knack of all kinds. A friend once dragged me into one of those in a local mall. I had never felt so uncomfortable and alien in a shop before. Just tons of dust-catchers and items to give your home what I suppose they propagate as "contemporary" look.

Imagine this shop page, but as a large, sandalwood scented and insufficiently lit maze: https://www.depot-online.de/de/c/deko-wohnen-486

Jesus.

[Sheilbh]

Productivity is just output divided by number of workers.  If you add more workers, if the productivity of those marginal workers is less than the existing average, then that will tend to pull productivity down.  So it isn't unusual to see a sharp rise an employment rates paired with declining productivity.

Conversely, if you conceive of productivity as being driven by processes of replacing less productive labor with automated processes, then increases in productivity may be associated with declines in employment rate.

To be clear, I am not making any statement about what specifically is happening in the UK case, nor am I stating a general rule associating employment rate with productivity.  Just pointing out certain potential relationships.

Yeah - that all makes sense and I think issues with productivity is probably linked to hours worked rising as well which is where I jumped in on that. I think the productivity point is the big one that has lots of impacts.

I suppose it could also explain subdued wage growth for a decade, even if employment rate is increasing and there's low unemployment.

[Jacob]

So apparently Denmark 🇩🇰 beat Canada 🇨🇦 in world cup hockey qualifying group play.

[DGuller]

So apparently Denmark 🇩🇰 beat Canada 🇨🇦 in world cup hockey qualifying group play.

How does that make you feel?