Why I’m sick of hearing about “productivity”

There is nothing wrong with productivity, I love productivity. But why does this government have to bang on about it like it is an issue they actually have control over.

Increasing productivity implies that we can make more stuff for the same amount of labour and capital – now this is a completely good thing, we can be wealthier without any more work! However, surely when I put it this way alarm bells must start to ring!!!!

The government can, and should, focus on increasing its own productivity within the constraint of its goals. But the ultimate goal of the laws they set up shouldn’t be to “achieve the highest productivity possible”. By doing so, they are making the same mistake that Labour made in the opposite way. When Labour was all about “increasing equity” National’s talk is all about “increasing efficiency” – both sides are ignoring that there is a trade-off between these two.

Reducing income inequality or increasing productivity are not goals persee – as “social happiness” (or more accurately the satisfaction of preferences across a society) is not always increasing in either of these factors. Instead of being told that “the government will increase productivity” I would like to see their set of policies and try to figure out what their view of the social welfare function is.

Trust me, if the sole goal is increasing productivity then they should lower the minimum wage, slash taxes, and slash benefits – however, I am sure that we agree that this will have an impact on some other things we care about. As it is I don’t think National is going down that road – but I find the sole focus on the catch word “productivity” as unnerving as Labour’s sole focus on the catch word “equity”. Such narrow views ultimately lead to poor policy (eg Working for Families 😉 ).