Virtue is not rewarded

Posted by: Michael Mandel on November 13

Take a look at this chart. The blue bars are U.S. manufacturing productivity growth, and the crimson bars are U.S. manufacturing output growth.

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The good news: Manufacturing productivity is growing faster than ever before (or at least the last forty years)

The bad news: Unlike the past, virtue is not rewarded. Despite higher productivity, output has lagged way behind.

These numbers come out of the government’s new report on international manufacturing productivity.

According to the report, U.S. productivity growth in manufacturing between 2000 and 2005 averaged 5.8% per year. Only Korea (7.1%) and Sweden (5.9%) had faster manufacturing productivity growth among the countries studied (which did not include China). Interestingly, these two countries had much higher output growth than the U.S.

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Reader Comments

Brandon W

November 13, 2006 11:22 AM

After spending too much time this weekend trying to simply track down an employee to help me find a toner cartridge for my laser printer, I realized there's a lot of productivity increase because everyone has cut so much staff. The people left over are required to do more. Wah-lah! Higher productivity. At least, until the customers get too annoyed. Companies keep finding ways to push the workload off on to their *customers*, disguised in "customer choice" propaganda. How many times have you fought with a U-Scan at the grocery store and wondered how this "customer choice" is helping you? It's not. They've just passed some of their expenses off on you. Is it any wonder why our lives have become ridiculously hectic? We're busy running around absorbing expenses from corporations so their earnings can look better and their stock price can go higher.

But humans aren't numbers. Their comes a point of physical limitation and I think we're just about there. The disease rates in this country are directly related to stress. Our healthcare costs-per-capita are twice (or more) any other nation's yet our health quality is lower and mortality rates are higher than most industrialised nations because we're stressed out of our minds absorbing costs. It's killing us. And that's what all these dramatic productivity numbers mean.

Brandon W

November 13, 2006 11:25 AM

Actually, I meant our health quality is lower and our mortality rates are higher. But errors like that are what happens when you're trying to do 3 things at once. (Brandon..made the fix..MM)

Bill Conerly

November 13, 2006 01:40 PM

What do you mean virtue is not rewarded? Is the only possible reward an increase in output greater than the increase in productivity? If that were the case with farmers, we'd be drowning in grain. For the manufacturers, the reward consisted of profits, or at least staying in business in a competitive world. For consumers, the reward is lower costs of manufactured goods. For the macro economy, resources were released from the high productivity sectors so that we could produce more in the low productivity sectors. Putting a moral tone on this is like complaining that it's immoral for gravity to pull me down to earth when I trip.

Kartik

November 13, 2006 08:08 PM

I think China's factory productivity growth rate has grown by over 10% in 2000-05. I read this in Tom Friedman's book "The World is Flat". I believe it to be accurate.

Thus, while US productivity growth has been rapid, it has still been slower than China, and hence output has lagged.

Paco

November 18, 2006 10:19 PM

At almost full employment, what are you expecting? Do you wish workers to be less productive? That's like asking Americans to buy an SUV so we can sell more gasoline, or over extending our credit so others may benefit by our demise.

How ironic... As mentioned by Dr. Milton Friedman, that profit remains essential to the continued success of any enterprise or endeavor. That is being virtuous. Where there is profit, there are choices in life.

Productivity merely means work is being down, not whether it is profitable.

Thank you for your interest. This blog is no longer active.

 

About

Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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