Tag Archives: research

Pushing Productivity

As I’ve talked to people about An Extraordinary Time, I’ve received a lot of questions about what government can do to improve productivity. Some readers have gone so far as to accuse me of advocating “no-growth economics” — and, not surprisingly, these critics tend to have their own favorite policy prescriptions which, they promise, will reinvigorate productivity growth and raise living standards.

So let me lay out my argument once more. I don’t assert that government is powerless to improve productivity. I do assert that productivity growth comes largely from innovative ideas put to use in the private sector. Government plays an important role in this. It’s very clear that government spending on education is important in developing a more highly skilled workforce. Government support for scientific research can have a payoff in terms of innovation, as Mariana Mazzucato has shown. Government spending on transportation infrastructure, when managed wisely, makes it easier and cheaper for producers and retailers to move goods and expand labor markets, giving workers a greater choice of jobs and allowing employers to draw on a larger pool of potential employees.

The challenge for policymakers, though, is that the timing and magnitude of these effects are highly unpredictable. It’s a good bet that if more students complete university degrees today, we’ll see some payoff in terms of higher productivity in the future. But when? And how much? We can’t answer those questions. With respect to research and development, it’s very clear that scientific discoveries themselves have no direct economic benefits. What matters is turning these discoveries into new products, services, and ways of doing business, and there is no way to predict whether that will happen or how important those innovations will prove to be. In this respect, the U.S. productivity boomlet of the late 1990s and early 2000s is instructive: the unexpected rise in the rate of productivity growth was attributable, in part, to research in computing and communications that had received public funding decades earlier. As president at the time, Bill Clinton was able to claim the credit for stronger economic growth, but he didn’t really have much to do with the public-sector investments that made it possible or with the private-sector innovations that drew on those publicly funded discoveries to bring our economy into the Internet era.

Through history, there have been a handful of developments that have led to extremely large increases in productivity: think of the steam engine, the electric light, the construction of the Interstate Highways. Bob Gordon, in his wonderful book The Rise and Fall of American Growth, highlights the importance of the the public water systems built in the early twentieth century in rapidly improving public health. For the most part, though, productivity improvement arrives slowly due to marginal improvements in technologies and business processes. When it comes to economic growth, lightning does not strike often.

So when a politician promises to make the economy grow faster, beware. Yes, everyone agrees that it’s easy to juice the economy in the short term: a big tax cut, some added deficit spending, or a cut in interest rates all are likely to do the trick, at the risk of unfortunate consequences a year or two hence. But over the long run, higher living standards depend overwhelmingly on the growth of workers’ productivity. Regardless of what governments do, in most times and in most places productivity grows slowly, which means that living standards improve only gradually. Like it or not, this is, as I assert in my book, the trajectory of an ordinary economy.

A New Survey Finds….

When it’s a slow day out in medialand, you can always count on a survey to provide “news” to fill empty space. It’s well known that much so-called public opinion research is bogus, using non-random samples and asking questions that are designed to elicit particular responses. But even honest attempts to measure public opinion in a neutral way can founder on unanticipated problems. One of these recently caught my eye.

The subject, in the case, was financial literacy. Surveyors working for the central bank of the Netherlands wanted to know how much average households understand about basic financial matters. As part of a longer survey, half the participants were asked the following question:

*Buying a company stock usually provides a safer return than stock mutual fund. True or false?

The other half were given the question this way:

*Buying a stock mutual fund usually provides a safer return than a company stock. True or false?

It may seem to you that the second question was nothing more than the contrary of the first. yet the share of people answering correctly was twice as great when the question was asked the first way as when it was asked the second way. How could this have been? The answer, the researchers speculate, is that a large number of respondents may have been unfamiliar with words in the question. When the subject of the question was “company stock,” enough people apparently were sufficiently familiar with the concept not to find it “safer” than the alternative. When the subject was “stock mutual fund,” however, they did not know enough to make a judgment about its safety–even though they were comparing stock mutual funds to individual company stocks in both questions.

This finding is a good warning for those of us who consume media–-and for those who produce it. Surveys, even when well designed and carefully conducted, may not tell us what they claim to tell us. Skepticism is always in order, because we never know how the people surveyed understood the questions they were asked.

The survey I mention above is cited in Annemaria Lusardi and Olivia Mitchell, “The Economic Importance of Financial Literacy,” Journal of Economic Literature 52 (March 2014).

Making Archives Customer-Friendly

If you want to get historians upset, just mention NARA. NARA is short for the National Archives and Records Administration, and its main job is running the National Archives. The Archives is a treasure trove of papers, films, photographs, and digital materials documenting the work of the U.S. government. It is also a difficult place to do research. Although NARA has made strides putting certain types of records online, particularly military records–a very large proportion of Archives users want information related to their own or a relative’s military service–the vast bulk of NARA’s holdings is stored in acid-free boxes on the shelves of the main Archives at College Park, Maryland, or at other facilities around the country. Locating a needle in the vast haystack that is College Park requires access to hundreds of looseleaf binders, known as finding aids, which for some reason NARA has never been willing to post online.

Using the Archives as a researcher, it is fair to say, is not a customer-friendly experience. Say a researcher thinks the records of the U.S. Maritime Administration might be helpful. NARA’s website reveals only that College Park houses 357.2 Headquarters Records of the Maritime Administration 1947-69. The researcher must now buy a plane ticket, reserve a hotel room, and come to College Park. There, the finding aids in the textual records room might include a binder or two for the Maritime Administration, with listings such as “Office files of Joe Smith, deputy assistant administrator for shipbuilding, 1951-53.” By the time the researcher has received a few boxes of Joe Smith’s records, he or she has lost several hours of precious research time in College Park. The boxes may not even have records that relate to the topic, meaning that the researcher will have to order more boxes and wait again. And it’s highly possible that someone has determined that the material is security-sensitive, meaning that the researcher must file a Freedom of Information Act request and wait for months to see whether the records will be opened. (The obsession with “security” can go to ridiculous extremes; when I was researching my book The Great A&P, I found that boxes of records relating to a 1940s court case were under seal in College Park, even though everything in the boxes had originally been introduced in open court–and even though many of the same records were available, unsealed, at the National Archives branch in Chicago.)

I recently encountered a very different approach to customer service at the Bundesarchiv, the German Federal Archives in Koblenz. A few weeks ahead, I’d sent an email outlining the research I was doing and the types of records I wanted to see. An archivist wrote me back, attaching a list of records he thought might be relevant. I selected a few, which were waiting for me when I arrived. Fifteen minutes after I walked in the door, I was taking notes.

Instead of finding aids in looseleaf notebooks, the Bundesarchiv has a computerized catalog for use on-site. On the left side of the screen is a schematic of the archive’s holdings that opens into greater and greater detail, so the researcher can specify a search across the entire government’s records or those of a particular subagency. The right side is a search engine that enables the researcher to look by author or keyword, within a desired time period, within whatever records group has been specified on the left. A few seconds later, the system, known as Invenio, spits out a list of relevant records. The researcher can then immediately order the records through Invenio. There are none of the paper call slips required by NARA, which occasionally have errors that lead to the wrong materials being delivered.

I don’t know whether a system such as Invenio is practical at the National Archives. I do know that the system makes it easy to do historical research. Perhaps NARA has something to learn.