Derek Thompson has an interesting piece in the Atlantic about our "productivity crisis." At the end of the piece, he highlights charts showing four areas where costs have risen much faster than inflation over the past few decades, which suggests that productivity growth has been low in these areas. I don't really disagree, but I feel like all of them deserve a little bit of pushback. Here they are:
I don't want to protest too much here. Higher education is no more productive now than it was in the Middle Ages, probably, and a huge number of all those extra medical treatments we demand are useless or even counterproductive. At the same time, I'm not sure it's helpful to describe education and healthcare as industries that have low productivity growth. This suggests that they're laggards who simply refuse to respond to consumer demand for more efficiency. But the truth, I think, is that we as consumers have demanded that universities retain much the same teaching model as they've always had, and we've been willing to back up that demand with ever more dollars. We don't want our kids going to electronic classes and, apparently, we don't want our state governments to subsidize public universities the way they used to either. On the healthcare front, there's been tons of new technology, but we, as consumers, don't want that technology used to provide the same old service at a lower price. We want it used to provide additional services. We've spoken loud and clear on that score.
Anyway, read the whole thing. It's a worthwhile take on some of the problems we face, even if I think there are some caveats to keep in mind. After all, sluggish productivity is sluggish productivity no matter what the ultimate cause. Maybe it's our own fault, but it's still something to face up to.