Productivity improvement has not only increased incomes but also released more discretionary income to buy non-basic stuff – goods and services that people ‘like to have’ on top of those they ‘must have’
The result is G7 office workers and carpenters, teachers and taxi drivers, all earn on average so much more than they do in India or Africa, say
It has also had an enormous impact on most people’s lives
In the middle of the last century, over 40% of G7 family expenditure went on food and clothes – today, it’s only 10 to 15% for such basics
Economist Robert Gordon recalled: “Not a single urban home was wired for electricity in 1880, but by 1940 nearly 100% had mains power, 94% had clean water, 80% had flush toilets and 56% had refrigerators”
Now, thanks to continuous productivity improvement, what once were luxuries only a few could enjoy – albeit in developed nations – have now become affordable necessities for the many
Equally, they also enjoy longer and healthier lives
