When I was younger, growth was easy to achieve. We had a number of tail winds that helped the economy grow as a matter of course. We didn’t need to do much, just stay in business and the economy grew around us.
Now… not so much.
The tail-winds which aided us in the past have turned into headwinds. How so?
Here are five critical reasons why productivity growth continues to be lacklustre despite all the benefits we reap every day from the digital revolution:
1. Ageing of society at large, as older workers are less productive than their younger peers.
2. The rising cost of servicing the elderly in society.
3. Excessive indebtedness in all economic sectors and the rising cost of servicing that debt.
4. The rising cost of producing the energy we need to spin the wheels every day. It costs more just to do the same things.
5. The fact that the savings freed up by the digital revolution have not been re-invested in reskilling the workers affected to a higher level but have instead been pocketed by CEOs and shareholders .
These used to be tail winds pushing the economy around… now they inhibit growth at every stage.
This also isn’t helped by the west’s current disfunctional focus. JPMorgan has recently completed a major review of US capability to grow. They point out the misfocus in the US economy which could be applied to many western economies. A combination of a massive war machine (which may Have contributed to growth through ensuring a reasonable your peaceful world), outdated infrastructure, various behavioural quirks, high healthcare costs and a dysfunctional legal system are all listed by JPMorgan researchers as reasons why the second stage of the digital revolution may not have quite the impact on productivity that (nearly) everyone expects.
heres an example of the economic behaviour quirks in the US
Overeating and poor nutrition, gun violence, and smoking cost the US economy US$750 Billion per year… moneybthat could be better used to address the headwinds noted above.
Here’s the impact of private health spending;
In the US there is a disproportionate amount spent on private over-treatment and overly high cost of healthcare supported by insurers.
Finally, in the US there is a disproportionately high cost of litigation in business
All of these essentially avoidable costs are assisting the headwinds lower productivity growth.