Over the long run of decades, essentially all of the gains in standard of living are due to higher levels of productivity. On average and over time, what the people of a society produce is going to be closely linked what they can consume. In addition, the many and manifest problems of society are much easier to address in a context of an economy with rising productivity and economic growth, because an economy with flat productivity and zero growth is a zero-sum game, where helping one group always means imposing costs on others. Martin Neil Baily, Barry P. Bosworth and Siddhi Doshi search for "Lessons from Productivity Comparisons of Germany, Japan, and the United States (International Productivity Monitor, Spring 2020, pp. 81=103). These are the three biggest high-income developed
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Over the long run of decades, essentially all of the gains in standard of living are due to higher levels of productivity. On average and over time, what the people of a society produce is going to be closely linked what they can consume. In addition, the many and manifest problems of society are much easier to address in a context of an economy with rising productivity and economic growth, because an economy with flat productivity and zero growth is a zero-sum game, where helping one group always means imposing costs on others.
As a starting point, here's a quick-and-basic measure of productivity: GDP per hour worked. Starting back in 1970, the US economy was way ahead in this measure of productivity: "Germany's aggregate productivity level was 0.72 relative to the United States in 1970, and Japan's aggregate productivity level was 0.40 relative to the US level in 1970." But Germany and Japan had more rapid productivity growth than the US in the 1980s and 1980s, and in fact Germany caught up to US levels. However, since about 1995, the US has reasserted its lead with faster productivity growth than Germany and Japan.
As the authors look more deeply into these patterns, what do they see?
2) These differences in hours worked across countries may also imply something about levels of productivity. For the sake of argument, let's hypothesize that the decline in hours in Germany and Japan tended to be larger for workers with lower skills. If that is true, then the comparison of GDP/hour worked is looking at a broader range of US workers compared with a group that lacks the same proportion of low-skilled workers in Germany and Japan.
3) Of course, West and East Germany combined in the early 1990s, so what "Germany" means as an economy shifts at that time. But overall, the authors write: "The German economy caught up to the US level of productivity in the 1990s and has since remained close behind. Their economy lacks the innovative IT sector of the United States but has other advantages, including strong worker training. German GDP per capita is well below the US level, but that is because German workers have many fewer annual hours of work, and more leisure."
4) Of course, Japan has an economic meltdown for the ages in the early 1990s, from which its economy has arguably never fully recovered. The authors write: "In the 1990s that relative progress [for Japan] stalled out and GDP per hour worked fell further behind the levels achieved in both Germany and the United States. Increasing the level of competitive intensity and driving out low productivity small and large firms would help complete Japan's convergence to the productivity frontier. The Japanese manufacturing sector still has strong productivity performance, setting the frontier level of productivity in some industries, but its relative performance has declined. ... The literature suggests Japan may have had difficulty with software development and the application of IT."
5) One can also do a breakdown of productivity by industry, and look for industries where productivity in one of these three countries seems especially low compared to the others. For the US, the construction and utilities are two industries where low productivity stands out. They write: "Recent productivity growth in the United States has been very slow indeed. There are promising technologies on the horizon but so far the gains are not being realized. The results in this article point to problem industries such as construction and utilities where productivity growth is very low or negative. While it is likely that productivity measurement needs to be improved, there are also underlying problems associated with regulation and a lack of effective competition." I would add my own hobby-horses here for US productivity growth, which include an insufficient commitment to worker training and to research and development efforts.