Joye nails productivity symptom but not cause

Chris Joye at Coolabah making some good points.

Trend labour productivity – or the output we are producing per worker – is the worst it has been since World War II. This is partly driven by massive underinvestment in technology and productive capital: on Coolabah’s numbers, Australia has recorded the weakest sustained peacetime growth in its capital stock since the 1930s depression.

This reflects the poorest peacetime public and private sector commitment to new investment as a share of nominal GDP since the 1940s. While many of our companies are cashed-up, Aussie businesses appear focused on paying shareholders rather than buying or building new equipment and technology, creating a profound productivity and inflation problem.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.