Is Productivity Oversold?

Economic journalists used to tout computer-driven productivity gains as revolutionary. Now they’re pooh-poohing them. Does this mean the recession has begun? Three years ago, David Wessel and Bob Davis of the Wall Street Journal published a persuasive book called Prosperity: The Coming Twenty-Year Boom and What It Means To You. Its thesis was that the United States had entered an era of technology-driven economic growth that was comparable to the dawn of electrical power at the turn of the century. Now John Cassidy of The New Yorker and Phillip Longman of U.S. News and World Report have written persuasive essays claiming that the current productivity boom is oversold. Cassidy’s, which goes further than Longman’s and calls the productivity boom a “mirage,” may be overstating the case. One of Cassidy’s more provocative points is that even the newspaper industry has seen “little or no increase in productivity” due to computers:

In the past decade or so, laptop computers, faxes, and the Internet have revolutionized news gathering, and satellite technology has transformed the printing and distribution side of the business. It’s hard to believe that these changes wouldn’t have made people working in newspapers more efficient, but they haven’t. Between 1987 and 1997, the latest period for which the Bureau of Labor Statistics has figures, productivity in the newspaper industry fell by 2.3 percent a year.

The stated productivity decline between 1987 and 1997 appears to be essentially correct. (Chatterbox isn’t sure he’s looking at precisely the same data– this chart runs only through 1996–but newspaper output per hour in 1996 was indeed only 77.4 percent of what it was in 1987.) Still, the period from 1987 to 1997 may not be the best one to look at, especially if the end date is really 1996. Nineteen ninety-six was the year Chatterbox, then a newspaper reporter, learned how to use the Internet. This was too late to qualify Chatterbox as an Internet pioneer but well before most of Chatterbox’s colleagues in the journalism business learned to surf the Web. Largely because Chatterbox spent an inordinate amount of time in 1996 acquainting himself with this marvelous new technology–he’d only just mastered using a mouse, too–Chatterbox wasn’t particularly productive that year. Now that Chatterbox has a few years of Internet surfing under his belt, however, he’s more productive than ever before. Obviously, writing a daily online column has something to do with that. But if Chatterbox were working for a newspaper, he has no doubt he’d be more productive there, too. Just about everyone Chatterbox knows who works for a newspaper in 2001 is more productive than he or she was in 1987. (Incidentally, by saying they’re “more productive,” Chatterbox isn’t saying they’re producing better work. More doesn’t mean more accurate, or more timely, or more thoughtful; it just means more copy.)

The thesis of Longman’s essay is that the productivity gains of the late 20th century, though real, are dwarfed by the productivity gains of the early 20th century. Longman imagines Ozzie and Harriet traveling by time machine to the present day:

They’d recognize the telephone and need only a second to realize we now use push buttons instead of rotary dials. They’d recognize the television even if, like most everyone else these days, they’d have trouble programming the VCR. They might be startled by the gas mileage obtained by a modern automobile, but they would have no trouble knowing how to drive one. Picking up the morning newspaper, they might be puzzled by references to AIDS and genetically modified food but would understand references to nuclear power, air conditioning, plastics, jet airplanes, rockets, radar, and even computers.

Then Longman imagines the Nelsons traveling by time machine to the year 1900:

Without the benefit of penicillin, even a small cut could prove fatal. Life expectancy at birth was but 47.3 years, compared with 68.3 years in 1950. Most doctors lacked any scientific training, and the bottles in their bags contained little more than alcohol and opiates. Lack of refrigeration, poor sanitary conditions, and adulteration meant millions died from spoiled or tainted food. … Even affluent households were illuminated with gaslights that were expensive to run and prone to explosion. Without electricity, there were no laundry machines, vacuum cleaners, or other mechanical means to purge the household of dirt and germs. The air stank of coal dust, manure, and rotting garbage thrown from windows. Only the super-rich could afford a car, and the vast majority of families did without indoor plumbing. …

Longman concludes that Ozzie and Harriet would never survive this harsh environment. His larger point is that ours is an age not of “great new inventions” but of “re-engineering and manufacturing previously existing machines and gadgets with ever greater efficiency.”

So who’s right–Wessel and Davis (whose view is shared by Fed Chairman Alan Greenspan) or Cassidy and Longman? Chatterbox doesn’t have time to figure it out–he’s gotta go write another item!