December 18, 2013

WALTER RUSSELL MEAD: The End Of Peak Blue: Productivity Up, Future Uncertain.

Unemployment is high, wages are stagnant, inequality is higher than its been in years, yet America is as productive as ever. Total productivity—essentially measured by how much a worker can produce in one hour—has risen substantially over the past quarter, growing faster than it has since 2009, according to a new Labor Department report.

This is both good news and a sign of the trouble we are in. Basically, it is always good when productivity goes up. Rising productivity means that capitalism is working: some combination of technology, management and competitive drive is enabling Americans to get more done—more widgets made, more meals cooked, more diseases cured—in less time. If absolute poverty is going to be defeated, if more people are going to be freed from repetitive, meaningless work, if humanity is going to have more time for art and culture because it spends less time in drudgery and toil, productivity must continue to rise.

But in times like ours, the link between productivity and wages looks broken. Back in Peak Blue, when the post-WWII model of mass production and mass consumption was working at its best, rising productivity translated very quickly into rising wages for most workers. Unions used those productivity figures to bargain for raises, and competitive pressures in a tight labor market forced employers to offer rising wages along with the trend in rising productivity. There was a close connection between the productivity level and the wage level.

That isn’t true today, and it hasn’t been true for the last thirty years. . . . So does that mean that the link between capitalism and rising living standards has broken down for good? There are lots of people who seem to think so, but history suggests they are wrong.

Read the whole thing. And if you’re looking for responses, try reading Jim Bennett & Michael Lotus’s America 3.0: Rebooting American Prosperity In The 21st Century. Must reading for candidates — of any party — in advance of 2014 and 2016.