I was encouraged to find an article stressing the importance of U.S. labor productivity in the latest issue of Foreign Affairs, produced by the Council on Foreign Relations in New York. (The CFR’s agenda includes national competitiveness.) The piece, produced by a former member of George W. Bush’s Council of Economic Advisers and a former economics writer in the Wall Street Journal’s Washington bureau, hits familiar notes about better training of the workforce, along with a few curious side jaunts (arresting climate change and repealing the Trump 45 tax cuts). What I didn’t find was a case for removing impediments to more productive use of both labor and capital, which often as not impinge on the public sector because it is subject to more direct political constraint. I have in mind such obstructions as those that hamstring modernized air-traffic control by the chronically tech-lagging Federal Aviation Administration (the notorious Elon Musk is now on that case). Also–and more often the local level–there are the legacy strictures that prevent government services from adapting to changed circumstances. It’s very difficult to close a public school, for example, even when neighborhoods change, so they stay open for too few students to attend. Likewise, as a recent report from the Reason Foundation explains, transit lines do not adjust as passenger traffic demand shifts, because discarding or diminishing routes is too difficult. Constituencies organize and legislators clamor. Failing that interference, lawyers are retained to tie matters up in court. The Foreign Affairs authors refer admiringly to China’s productivity leaps, which partly stem from the Communist Party’s leeway to force changes over democratic resistance. (This power also deters innovation, but that’s another topic.) You can be confident that the People’s Republic will employ self-driven vehicles on a mass scale long before the U.S. does, even though the software is pioneered here. A full picture of America’s productivity lags should encompass not only inputs (R&D money, as per the article) but outputs, and why those can’t be realized as quickly as they were in less politically “engaged” eras.
https://www.foreignaffairs.com/productivity-everything-slaughter-wessel
Tim W. Ferguson 