Over the last three economic quarters for the first time in many years the U.S. economy demonstrated negative productivity gains. This means that, instead demonstrating steady improvements in productivity, as the U.S. economy has witnessed over the last few decades at record levels in comparison to most of the world, we now demonstrate the same poor to absent productivity gains that have plagued Europe and many other Western democracies for over a decade earlier.
The decline in national productivity during the Obama administration has, indeed, been remarkable, yet, found little attention in the national media. When the issue was addressed, it was mostly dismissed as a temporary and irrelevant phenomenon, since the country’s amazing technological advances, ultimately, had to translate into productivity gains, as they have done in the past.
Suddenly, the tone of the debate, however, appears to be changing. At least partially this can be attributed to public concerns expressed by Federal Reserve that lack in productivity gains will impede growth of the national economy. But, like the national media, the Federal Reserve appears puzzled by the rapidly declining productivity of the nation. They shouldn’t be.
National productivity can be defined as the sum of the national work product per time unit. The more the country produces per time unit of work, the more efficient the national economy produces its national growth product and the more competitive the nation will be vice versa other nations with lower efficiencies.
This is not different from our personal efficiency in completing tasks, whether at work or at home. A crucial component of being efficient in completing our tasks, as everybody will acknowledge, is our ability to prioritize: What is more important, of course, should be tackled first, while less important tasks will follow when time allows. In other words, to prioritize certain tasks over others because of their importance is an essential component of productivity.
We here argue that our society is rapidly losing the perspective on relevance as to what is and is not important. As a consequence, we lose our ability to prioritize and, therefore, become progressively more inefficient in producing work product. The consequences appear obvious and deeply worrisome: Unless we, as a society, strive to regain proper perspectives in prioritizing importance within our daily lives, including our political lives, we will face continuous declines in national productivity and, therefore, at best economic stagnation.
Examples for loss of perspective of relevance abound: In middle and high schools, emphasis on political correctness outweighs in importance the learning process. On the political front, teachers’ unions receive political priorities over the product schools are meant to produce, – properly educated students. Poorly educate graduates will, of course, lower the country’s productivity. In colleges, this trend has reached paradoxically excessive levels, when students are more concerned about being given “safe spaces” to be kept away from the realities of the world, than attaining proper educated to join the work force. The contribution of college education to poor national productivity is further enhanced by the excessive and still disproportionally rapidly rising costs of college education.
Increasing loss of perspective is, however, also demonstrated by government. As valid an accusations of racisms against law enforcement may be in some municipalities, prioritizing solving this problem over the murder of thousands of African American youths in inner cities, like Chicago, Baltimore and Washington, DC, demonstrates obvious loss of perspective of relevance. Allowing such a circle of violence, unemployment and poor education in inner cities not only to fester but to get worse, is not only inexcusable but very obviously reduces the nation’s productivity.
As important as international trade agreements may be for the growth of the economy, to reach such agreements without considering and preparing for negative consequences of such agreements on the U.S. labor market also demonstrates complete denial of what should be priorities. Take, for example, the Obama administration’s directed efforts to bankrupt the coal industry, its handling of the Keystone Pipeline and the billions of dollars wasted on clean energy companies that went bankrupt.
To favor productivity, as valid as concerns about Global Warming may be, government interventions have to be rational and cost effective. The world’s climate will not improve if the U.S. closes one coal mine, while China and India open 10 new ones at the same time. Nor will the nation’s productivity be enhanced if laid off miners, willing to work, become unemployed recipients of government handouts. Similarly, productivity will not be improved if oil has to be transported by rail rather than through a pipeline, since rail transport is not only much costlier but also prone to more accidents and, therefore, environmentally more damaging. Crony-capitalism, when government chooses winners and losers, also has never been shown to improve a nation’s productivity. To the contrary, when big corporation and government get together, it usually sucks productivity out of the U.S. economy.
In summary, unless the nation comes to its senses, and starts to understand that productivity levels have been lagging behind what this country historically has been able to achieve and, going forward, have to be dramatically improved if we, ever again, want to be the beneficiaries of a growing national economy, our economic picture will remain bleak and, probably, will even continue to deteriorate.
This is as much a wakeup call for Millennials, apparently the most spoiled and “entitled” generation in history, as it is for business and government. Our priorities in life have to return to what makes sense, and produces results before we waste our time (for an average of three hours every day) on Facebook or on chasing Pocahontas through the streets of our cities. Most importantly, however, our government structures have to recognize that a hierarchy of priorities is dictated not by political expediency but by proper perspectives on what is more important for success and, therefore, should be prioritized.