Productivity Gains Won't Win Elections But They Will Secure Growth for Decades
Imagine two farmers, Jack and Jane, who both grow strawberries. Jack works hard all day, handpicking his crop, while Jane has invested in a state-of-the-art machine that can do the job ten times faster. At the end of the day, Jack has harvested 100 pounds of strawberries, while Jane has gathered 1000 pounds.
Who do you think will prosper in the long run?
The answer, of course, is Jane. By investing in productivity gains, she has secured growth for decades to come. She can sell more strawberries at a lower price, outcompeting Jack and expanding her market share. As a result, she will have more money to reinvest in her business, allowing her to buy even better machines, hire more workers, and ultimately grow her profits and economic output.
But why do so many politicians overlook this simple truth?
Productivity gains, by definition, mean that we can do more with less. We don't need as many workers, as much time, or as many resources to accomplish the same task. As a result, many people worry that productivity gains will lead to job loss, inequality, or other negative outcomes, and they resist any policies that might accelerate such gains.
Moreover, productivity gains are often invisible, or at least hard to measure. If a worker gets a 5% raise, everyone around them can see it and celebrate it. If a worker saves 5% of their time, no one might notice. As a result, productivity gains can be hard to sell to voters, who don't always appreciate the long-term benefits of increased efficiency, innovation, and growth.
But make no mistake: productivity gains are the key to sustainable growth and prosperity.
For one thing, productivity gains make our lives easier and more convenient. If we can do more with less, we have more time and energy to do other things, like spend time with our families, pursue hobbies, or start new businesses. In this way, productivity gains create value beyond their immediate economic impact.
For another thing, productivity gains spur innovation. When we figure out how to do something more efficiently, we unlock new possibilities for what we can achieve. We can explore new markets, create new products, and solve new problems that were previously too costly or time-consuming to address. This, in turn, creates new opportunities for growth and employment.
Finally, productivity gains increase our competitiveness in the global economy. If we can produce more goods and services at a lower cost, we can outcompete other countries and expand our exports. This, in turn, generates more revenue and jobs, further reinforcing our economic advantage.
So how can we achieve these benefits?
The answer lies in the productivity agenda. This means investing in education and training programs that equip workers with the skills needed to innovate and operate new technology. It means supporting research and development that advances our knowledge and leads to breakthroughs in science and engineering. And it means creating a policy environment that incentivizes investment and rewards productivity gains, rather than punishing them.
Examples of successful productivity agendas abound. In Finland, for instance, the government has invested heavily in education and research, leading to a booming tech sector that accounts for 70% of their exports. In Germany, many companies rely on apprenticeships and on-the-job training to build a skilled workforce that drives innovation and productivity. And in Singapore, the government has created a business-friendly environment that incentivizes investment and encourages experimentation, leading to a vibrant startup ecosystem.
Productivity gains won't win elections, but they will secure growth for decades to come. By investing in productivity, we can create a more prosperous, innovative, and competitive society that benefits everyone. Let's make sure our leaders understand this, and prioritize policies that drive productivity gains, rather than fearing or ignoring them.
Akash Mittal Tech Article
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