Saturday, August 7, 2021

Sagging Productivity Will Fuel Stagflation

People Like Working From Home
For years businesses shouted they were seeing huge gains in productivity but the truth is that productivity can be difficult to measure. Before long, that will bring front and center the issue of how sagging productivity can help fuel stagflation. Covid-19 may shine a bit of light on this with many people now working at home, do not be surprised if companies are forced to ask, what are these employees really doing? 

While it is easy to recognize places where huge gains are being made, productivity can suffer from something akin to the leaky bucket syndrome. I contend that over the last few years society, in general, has seen overall efficiency drop in many areas. This has been papered over by a slew of claims about how this and that are being handled much better. 

The hype we hear often ignores the reality that many of the new systems touted as gains carry with them a lot of negatives. With the onslaught of computers and word processing the garbage in garbage out pipeline has exploded. This has resulted in a simple search for information dropping the person searching into a loop that circles back upon itself at the same time it renders little in the way of helpful information. The effect of this is evident in government, it is not uncommon for laws and bills flowing from Washington to run thousands of pages in length. In hindsight, while the old way of typing and copying was inefficient compared to modern methods, it did limit the number of pages a person could create.

The truth be told, many of us have wasted a full day or more on a machine that is malfunctioning or simply refuses to do our bidding. The idea we save time by not fixing something discounts the cost and waste created when we are forced to throw away an item that still has a great deal of useful value. Sometimes I have to wonder whether people will ever look up from their cell phones long enough to realize a lot of things are not working. 

What You Get When People Don't Care
Saving a few dimes by outsourcing the payment of our local utility bills means those jobs no longer remain in our community. Also, getting answers takes longer for the consumer that ends up paying more in both time and effort. Public transportation based on tax-supported empty buses crisscrossing town on the half-hour does more damage to the environment than many of its supporters are willing to admit. 

Another example is continuing to have the money-losing United States Postal Service rush to every mailing address in America six days a week delivering junk mail that people often don't want. Industries have grown up around this so-called public service. Advertisers exploit this. Where I live, even our tax-funded entities such as the park department, public school system, and state university feed into the waste by putting out glossy notices and thick books touting all that they are offering as a "public service."

The fact is in our current easy money economy a company's value is often no longer being closely linked to productivity. Stock buybacks using low-cost loans and bonds have both led to driving the stock market higher. Still, this is more about how big companies often exhibit a lack of skin in the game mentality. This is also being fueled by employees that don't expect to be with a company for very long in a society where many people move from company to company. These people seldom care if a job holds up over time or what happens after they move on.  

In some ways, society has moved toward a nonchalant attitude towards companies that simply fail to impress. This can also be seen in non-profit concerns and quasi-government agencies, both seem to be having a difficult time finding good leaders to carry out their missions. The one thing most are able to do, however, is to pay these figureheads far more than they are worth. 

The market may be a little bit soggy when it comes to the importance of productivity because so much of what the talking heads are focused on is tapering, tapering, and tapering. The recent flow of free easy money from the Fed has washed away much of the common sense of which Main Street was originally based. Having employees that are, productive, responsible, and knowledgeable has a great deal of merit.

The huge problem before us is that tapering is easier said than done and politically unpopular. QE has made the wealthy and powerful much richer and they "control the strings." Risk can build slowly and while some people predict a massive deflationary cycle may happen in the future as defaults surge, it is just as likely inflation is being baked into the whole financial system. This makes stagflation the most probable scenario we face in the future.

(Republishing of this article welcomed with reference to Bruce Wilds/AdvancingTime Blog)


  1. I get a trade publication that exemplifies the rot that is going on throughout or society. And this last issues was a real "woke" masterpiece about women in the industry. The whole point of the entire issues was women in the work force and reading some of these jobs titles makes it abundantly clear that many of these jobs, and I'll bet they are all in the $150K+ a year range, are really just "make work jobs" to give all these over educated women jobs. examples. These are all real world "titles"

    Administration and risk manager
    corporate talent acquisition manager
    Employment engagement and change manager
    continuous improvement manager
    vice president of people
    director of continuous improvement and training
    corporate sustainability director
    Senior category leader
    Director of client experience

    The whole publication is just fill of "jobs" that add nothing and seem, like I said earlier, like make work jobs for people with degrees in nonsense.

    How does this add to productivity? Seems like just a drain IMHO

  2. Productivity has always been easier to measure in industrial settings which have greater ease for monitoring and control, so as these settings have largely been offshored and 'service' jobs replaced many factory jobs, productivity is more elusive.
    With the increased technological distractions - mobile phones which are also newspapers, TV, film and books as well as casual conversation machines - in many folks' pocket during their working day, the potential for decreased productivity is hardly surprising; I think people live it, but do not always realise just how much the smart phone has impacted(distracted) society.
    I am not sure why/if you think 'tech'alone has increased laws and bills, as unless it is a plagiarized 'cut and paste', the original still has to be composed, or if a bad faith deliberate insertion of bulk verbiage to obfuscate or hide content.
    Also, I am unclear how bonds play a part in stock buy backs?
    The advertising glut is a sham which I think is a part of the phoney advertising 'go along to get along'/ 'commercial expectation'.( be a 'player' or else [?] )
    Even children have these weapons of mass distractions/ smart phones, and can watch the Homer Simpson like ethic i.e. lazy me!! to,d'oh!!, aspire to, as well as the violence/bad behaviour/sexualized filth, which may be another surprise demographic time bomb we are oblivious to.
    As society gets more complex, the distractions multiply.