Everything You Wanted To Know About Improving Productivity, @JohnMcDonnellMP, But Were Afraid To Ask …

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The lead actor in the production to improve productivity in any workforce is the employer of the aforementioned workforce not the Government …
Except where the Government is an employer.

I was recently asked for my view on the first response from Dorkins to The Economist: The Productivity Puzzle:

“I don’t get what the huge productivity mystery is supposed to be. The UK is a country in which productive work is not really rewarded due to the system of rents (high near employment centres) and taxes (mostly raised from labour). Many people quite sensibly respond to this by avoiding heavily taxed productive work as much as possible (e.g. doing the minimum number of hours required to qualify for tax credits) and instead focus their efforts on extracting rents from other people (e.g. arranging their living arrangements to maximise benefit and tax credit income, becoming BTL landlords).

Maybe if there was some kind of reward for productive work (higher net income, better standard of living, ability to buy secure housing) then people would do more of it?”

The neo-liberal fallacy in a nutshell?  The assumption that people act like calculating machines, 24/7, and so make such fine (selfish?) calculations at each and every opportunity.

Incidentally, if this year I earn £20,000 gross and £18,000 net and you cut my taxes next year so I net £19,000 for working no harder, why should I work any harder than I do now?  I am £1,000 better off without working my fingers any further to the bone.  Neo-liberal argument hoist by its own petard?

Poor productivity in the UK economy, as measured as at national level, is most likely to be down to ongoing poor investment in research and development, capital and labour.  Deming, amongst others observed, that most workers only have control over about 10% of their workload and so their productivity is not within their capacity to improve, except very marginally.

British management, which notoriously cuts investment in capital and labour (and advertising), research and development, at the first sign of a downturn in the economy, has the major responsibility for the poor productivity of its staff.  And in 2008, and thereafter, it yet again cut significantly its investment in staff training.  You reap what you sow.

Real world economics has a tendency to trump neo-liberal theory every time, perhaps because it studies the real world and then theorises rather than trying to impose its (politically motivated) theories on the real world?  In this instance, it helps if one understands what economists mean by productivity:

“An economic measure of output per unit of input.  Inputs include labor and capital, while output is typically measured in revenues and other GDP components such as business inventories.  Productivity measures may be examined collectively (across the whole economy) or viewed industry by industry to examine trends in labor growth, wage levels and technological improvement.

Productivity gains are vital to the economy because they allow us to accomplish more with less.  Capital and labor are both scarce resources, so maximizing their impact is always a core concern of modern business.  Productivity enhancements come from technology advances, such as computers and the Internet, supply chain and logistics improvements, and increased skill levels within the workforce.”

Read more at: Productivity

You will notice that working harder and/or longer hours do not figure in the above!  Neither does increasing the number of entrepreneurs as that might actually reduce productivity averaged out across the economy.

Improving productivity is about working smarter not becoming a latter day Stakhanovite.

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Jess Phillips still the go to woman @JeremyCorbyn for how @UKLabour may exploit Tory tax embarrassment

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There is the content for a hard hitting Labour Party Political Broadcast in this piece, In the Name of the Father, the Son and the Spirit of the Law!

Why is Labour’s leadership, especially Seamus Milne, incapable of putting the point over in the manner of a Jess Phillips?

Too middle class?

Too fond of calling tax fraud, tax evasion?

Too out of touch with the concerns and prejudices of average voters?

Too distracted by thoughts of Ikea kitchens when planning a Party Political Broadcast?

Tax being the price we pay to live in a civilised society is a nice homily, but most of us, most of the time, want to live in one at the cheapest possible price. We are only human, after all.

However, we also resent people benefiting at our expense. Tell us that, if others, like Cameron, paid more tax then we could pay less then you will get our attention!

Tell us that the smartly dressed guy in the expensive suit, next to us in the queue at A&E, pays next to no tax and that we are paying for his treatment then you will get our attention!

Appealing to people’s self interest, to get their attention, may be distasteful to some now in the Labour Party, but it is a way of starting conversations that will result in winning votes. It is, in part, why the Tory Party has been in power for much of the last 300 years or so.

Incidentally, I do say, could pay less …

Get the voters’ attention and we might persuade them to forego the temptations of a tax cut in favour of an increase in public spending.

Update from Jess Phillips, Labour MP for Birmingham Yardley

If I Were King of the Forest – The Tale of a Cowardly Lion

Jess Phillips Shows How to Exploit Tory Tax Avoidance Discomfort to Electoral Advantage #InOurBritain

Standard

There is the content for a hard hitting Labour Party Political Broadcast in this piece, In the Name of the Father, the Son and the Spirit of the Law!

Why is Labour’s leadership, especially Seamus Milne, incapable of putting the point over in the manner of a Jess Phillips?

Too middle class?

Too fond of calling tax fraud, tax evasion?

Too out of touch with the concerns and prejudices of average voters?

Too distracted by thoughts of Ikea kitchens when planning a Party Political Broadcast?

Tax being the price we pay to live in a civilised society is a nice homily, but most of us, most of the time, want to live in one at the cheapest possible price. We are only human, after all.

However, we also resent people benefiting at our expense. Tell us that, if others, like Cameron, paid more tax then we could pay less then you will get our attention!

Tell us that the smartly dressed guy in the expensive suit, next to us in the queue at A&E, pays next to no tax and that we are paying for his treatment then you will get our attention!

Appealing to people’s self interest, to get their attention, may be distasteful to some now in the Labour Party, but it is a way of starting conversations that will result in winning votes. It is, in part, why the Tory Party has been in power for much of the last 300 years or so.

Incidentally, I do say, could pay less …

Get the voters’ attention and we might persuade them to forego the temptations of a tax cut in favour of an increase in public spending.

Update from Jess Phillips, Labour MP for Birmingham Yardley

If I Were King of the Forest – The Tale of a Cowardly Lion

Everything You Wanted To Know About Productivity, @JohnMcDonnellMP, But Were Afraid To Ask …

Standard

I was recently asked for my view on the first response from Dorkins to The Economist: The Productivity Puzzle:

“I don’t get what the huge productivity mystery is supposed to be. The UK is a country in which productive work is not really rewarded due to the system of rents (high near employment centres) and taxes (mostly raised from labour). Many people quite sensibly respond to this by avoiding heavily taxed productive work as much as possible (e.g. doing the minimum number of hours required to qualify for tax credits) and instead focus their efforts on extracting rents from other people (e.g. arranging their living arrangements to maximise benefit and tax credit income, becoming BTL landlords).

Maybe if there was some kind of reward for productive work (higher net income, better standard of living, ability to buy secure housing) then people would do more of it?”

The neo-liberal fallacy in a nutshell?  The assumption that people act like calculating machines, 24/7, and so make such fine (selfish?) calculations at each and every opportunity.

Incidentally, if this year I earn £20,000 gross and £18,000 net and you cut my taxes next year so I net £19,000 for working no harder, why should I work any harder than I do now?  I am £1,000 better off without working my fingers any further to the bone.  Neo-liberal argument hoist by its own petard?

Poor productivity in the UK economy, as measured as at national level, is most likely to be down to ongoing poor investment in research and development, capital and labour.  Deming, amongst others observed, that most workers only have control over about 10% of their workload and so their productivity is not within their capacity to improve, except very marginally.

British management, which notoriously cuts investment in capital and labour (and advertising) at the first sign of a downturn in the economy, has the major responsibility for the poor productivity of its staff.  And in 2008, and thereafter, it yet again cut significantly its investment in staff training.  You reap what you sow.

Real world economics has a tendency to trump neo-liberal theory every time, perhaps because it studies the real world and then theorises rather than trying to impose its (politically motivated) theories on the real world?  In this instance, it helps if one understands what economists mean by productivity:

“An economic measure of output per unit of input.  Inputs include labor and capital, while output is typically measured in revenues and other GDP components such as business inventories.  Productivity measures may be examined collectively (across the whole economy) or viewed industry by industry to examine trends in labor growth, wage levels and technological improvement.

Productivity gains are vital to the economy because they allow us to accomplish more with less.  Capital and labor are both scarce resources, so maximizing their impact is always a core concern of modern business.  Productivity enhancements come from technology advances, such as computers and the Internet, supply chain and logistics improvements, and increased skill levels within the workforce.”

Read more at: http://www.investopedia.com/terms/p/productivity.asp#ixzz3cDZ7K300

You will notice that working harder and/or longer hours do not figure in the above!  Neither does increasing the number of entrepreneurs as that might actually reduce productivity averaged out across the economy.

Improving productivity is about working smarter not becoming a latter day Stakhanovite.