Share the Wealth: How to End Rentier Capitalism by Philippe Askenazy

Author:Philippe Askenazy
Language: eng
Format: epub
Publisher: Verso

The Poverty of Productivity Measurements

The answer to this question is obscured by considerable technical difficulties in measuring productivity. To fully address them would require an enormous collective effort, which nevertheless will not be undertaken in the absence of pressure from scholars and public authorities. The staff in the world’s statistical services devoted to productivity are meagre. In the United States, the Bureau of Labor Statistics, which has to issue thousands of series, still only had a budget for seventy-five full-time positions in 2012. As in most OECD countries, fiscal austerity dictated a reduction in numbers. In 2016, the BLS had only fifty-eight full-time posts: statistical rigour was sacrificed to fiscal rigour.

Beyond these human resources considerations, the measurement of productivity poses major theoretical and practical problems. Here are a few illustrations of the point.

A first way of framing labour productivity, which unfortunately is unduly common in debates, is as nominal value-added per hour worked: the apparent productivity of labour. 1 If we use this indicator, we expose ourselves to a circular argument (‘corresponding to low productivity is low labour cost’). The circularity is complete in the case of non-market services. In fact, nominal value-added in them is conventionally measured as the monetary sum of compensations, of taxes after subsidies, and the consumption of fixed capital (capital obsolescence): if wages and labour costs do not increase, neither does apparent productivity. The relationship between apparent productivity and wages is then purely numerical.

We find a significant circularity in market services for which prices are adjusted to remuneration, or even constitute that remuneration. Thus, the apparent value-added of a psychoanalyst is equal to the sum of payments by clients, reduced by the cost of overheads (electricity, housekeeping, and so on). If the psychoanalysts increase the price of consultations, and hence their remuneration, we will observe an apparent increase in their productivity.

The use of apparent productivity also results in strange situations that emerge from tax regimes. Let us take a cleaning lady working in Cannes for second-home owners. When she goes to the second home owned by an American resident, she receives the net sum (let us say) of €10 per hour, and her employer has to pay around €8 of social contributions in addition. Her hourly value-added, and hence her apparent productivity, is numerically €18. However, when she goes to the home of a working French resident, the latter will still pay €18, but will enjoy €9 of tax credit. The total employer cost of the hour worked is thus €9; and in national accounting (the current norm) the value-added is therefore €9. In short, the apparent productivity of the service delivery for the American is double what it is for the Frenchman, for exactly the same service and the same pay!

The fragility of the notion of apparent productivity explains the preference among economists for a different measure of productivity, expressed in volume terms. The idea is to ignore price effects and capture the volume of services or goods supplied. In the case of the

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