Mark John reports that economies around the world have failed to boost productivity levels despite $10 trillion of central bank stimulus unleashed since the global financial crisis of a decade ago, according to the WEF (World Economic Forum) think tank.
Productivity, a measure of an economy’s ability to generate growth, has become of a matter of increasing concern among policy-makers around the world as headline growth rates remain weak and fears emerge of a new economic slow-down.
Publishing its annual index of competitiveness based on an aggregate of some 103 indicators (so it will be anyone’s guess which have the most impact!) the WEF urged countries to use fiscal policy and other incentives to boost research and development, workforce skills and infrastructure.
“This makes it all the more important that competitiveness-enhancing policies are adopted that are able to boost productivity, encourage social mobility and reduce income inequality,” she added.
The WEF, which hosts the annual Davos meeting of business and political leaders, compiles its index by aggregating findings from its own surveys and other sources such as the World Bank and United Nations bodies.
Highlighting some of the trends captured by the report, the WEF noted in particular that technological innovation was racing ahead of workforce skills in many countries and urged governments to focus on labor and education policies.
Citing the threat of rising protectionism, the OECD (Organisation for Economic Cooperation and Development) said last month the global economy could be entering a new, lasting low-growth phase – it estimated global growth this year of 2.9%, the lowest since the 2008-09 crisis.
- The WEF is the self-appointed world leading economic think tank
- Nevertheless, they continue with their blinkered view that economic performance can only be measured from the suppliers’ perspective, clocking up their tangible outputs and inputs – the old material world dominated by the agricultural and manufacturing sectors
- It seems the apparent failure of $10 trillion stimulus to boost apparent productivity levels causes none of them to stop and think: “Are we looking at the right picture nowadays?”
- Imagine if they realised the economic world is at a watershed, moving from a material to mental world – a world where service sectors now dominate developed economies – a world where productivity at organisation and national level should be measured by how well one meets customers’ needs (material and mental) whilst minimising all costly inputs, not just labour
- Then, they might find that output/ demand for material stuff has indeed started to level off as many people in the developed world consider they have ‘enough’, no matter how much stimulus is being pumped in – but demand for more new mental stuff is growing rapidly so, overall, demand is growing apace
- It’s just that the WEF, with its 103 indicators, plus all other economists/ experts it seems, plus all their governments, don’t seem to haven’t spotted this
- So the policies needed to boost productivity for the benefit of all are unlikely to be the policies currently followed
- ‘What larks’!