Friday, April 28, 2006

Actually, we’re not slackers

Remember, back during the election campaign, all the jabbering about productivity and how sure, you may think the economy is doing great, but really we’re falling behind the U.S. in productivity, the sky is falling, there’s a productivity gap threatening our economic prosperity (and so vote Conservative)? Turns out Stats Can forgot to carry the two and yeah, we’re plenty productive, thanks.

I don’t usually read the business section, but needing something to read on the bus ride home today I had a copy of yesterday’s Globe in my bag, and Report on Business was the only section I hadn’t read (except Auto, but I wasn’t that desperate). Here’s the story I found on the front page:


We're not slackers
HEATHER SCOFFIELD
Globe and Mail Update

Whew.

Last year's productivity numbers, which have been the basis of political platforms, the raison d'être for a long list of policies, and the source of much angst among economists and at the Bank of Canada, are not nearly as bad as once thought.

Statistics Canada issued a correction Wednesday for its 2005 estimate of productivity growth, and the figure is twice as high as previously reported last month.

Productivity for the year actually grew by a strong 2.2 per cent, the statistical agency said, not the mediocre 1.1 per cent published in March. It's the strongest surge since 2000, and means the gap in productivity growth between Canada and the United States narrowed to 0.5 percentage points last year — the slimmest in five years.
(more)

As a business journalist I’m regularly bombarded with press releases and studies bemoaning the “productivity gap” and calling for government tax breaks to encourage Canadian companies to invest more in technology infrastructure as a way of becoming more productive. Unsurprisingly, it’s usually the technology vendors (that sell that infrastructure) behind those studies and releases, and so I’m naturally skeptical.

And even if there were really a “productivity gap” it’s not such a big deal. While we should pay attention to it, productivity is but one measure of the strength and health of an economy. On a number of other indicators Canada is doing quite well, thank-you. And there are also systemic institutional and cultural reasons why we’re not as productive as the U.S. that aren’t going to change.

I myself though had a very productive week, and now I’m planning a relaxing and thoroughly unproductive weekend.

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3 comments:

s.b. said...

That's funny, you're a business journalist and you don't read the business section.

North of 49 said...

I've been skeptical of the so-called productivity gap since I noticed it was always the same (right-wing) commentators pushing the meme -- for what seems like going on twenty-odd years now.

A quick rule of thumb I've found useful: if it's a Fraser Institute talking point, which this certainly is, it's probably 99% fecal matter. Any truth there might be in any proposition put forward by that propaganda mill can only be found through careful fact-checking and analysis, and like as not, you'll find that the nugget or two of truth has been misrepresented, misconstrued, or conflated with a factoid or outright falsehood to "prove" a point to which it is not germane.

Similar reservations apply to any right-wing noise machine, such as the National Post.

I keep wondering: if our productivity vis-a-vis the USA sucks as badly as we're constantly being warned, how is it that our federal government is running a surplus (and several of our provinces ditto), while theirs isn't? Sure, it's just one measure, but still, any hypothesis that claims we are dangerously less productive than our neighbour has to account for all the data, doesn't it, or it's just faith.

A BCer in Toronto said...

That's funny, you're a business journalist and you don't read the business section.

Like nearly every male journalist, in my formative years I wanted to be a sports writer, preferable Canucks beat writer for the Sun or Province. Alas, it didn't quite work out...