The Productivity Conundrum Surfaces Again

Ask nine of ten economists what is the biggest controversy today, and apart from whether or not the Fed will keep raising interest rates, they are likely to respond "Productivity!"   In other words, is it really decreasing or is this merely a figment of our measuring tools and perceptions?  Never mind the ubiquitous smart phones and apps which facilitate most of the mundane actions of our lives, the BLS (Bureau Of Labor Statistics) keeps insisting that productivity is declining and has been over the last decade.

As TIME economic columnist Rana Foroohar observes (p. 20, Sept. 5):


"The BLS numbers are a big deal. With birthrates falling and immigration down, productivity needs to go up or we'll soon be worse off economically than our parents."

Foroohar goes on to assert that "the slowdown in productivity is now widely seen as one of the big factors in America's tepid recovery."

But I already put forward subtle physical reasons for this, namely that one can't reduce productivity simply to human labor but also to the quality of energy used to expedite that labor. This includes a whole spectrum of machines as well as the fuel- sources they need to run on.

What we already know, and this isn't even up for debate, is that the EROEI or energy returned on energy invested, has been steadily decreasing for almost two decades.  In the case of oil alone, what used to engender an EROEI of 16:1 to 19:1 several decades ago is now headed for 5:1. This means less efficient energy use and by extension less efficient use of human labor to produce whatever products or services are needed by a complex, mainly industrial economy. Take everything from MRI machines, to automobiles (and auto factories) , to passenger jets, a lower energy EROEI means a lower productivity for the manufacture of all of the above, because it takes much more energy to produce each unit.

Based on this, one sees that the retirement of higher skilled Baby Boomer workers is not fully to blame for the situation, nor is it the more laid back lifestyle choices of many millennial workers. Even if the Boomer workers remained on the job and the millennials all turned into workaholics it would not solve the problem and increase productivity.

Why isn't digital technology making a productivity difference? The basic reason is that no matter how much digital gizmos a company has if they lack access to higher EROEI sources they will still remain behind the productivity eight ball. And as author Matt Savinar has observed, ultimately all those digital apps, laptops, etc. depend themselves on the quality of the energy sources - as anyone can attest to when the power goes out.

The mistake "homo economicus"  continues to make, then, is confusing advancing technology with advanced energy supply. The point Savinar made ('Life After the Oil Crash') is that no amount of computer or other technology will make a dime's worth of difference if there isn't adequate energy to run all those devices on.

Just consider for reference the monumental snafu that occurred when Delta commercial planes across the nation were brought to a halt because their central ticketing  and coordinating center in Atlanta went down. This was ultimately traced  a blown electronic component, though Delta originally attempted to blame the power company.

Never mind, hundreds of flight connections were missed and millions of man hours lost because of this blown component. Now  consider, as Savinar implores us to do, what would happen if an entire power grid went down because of a massive blackout owing to excessive demand on the grid or lack of the high quality oil to run it.

No wonder then, that Northwestern University's Robert Gordon has posited that the Industrial  Revolution (at the turn of the 19th century) had a vastly bigger effect on productivity, economic growth than the so-called "PC revolution" in the 20th. Think about it! The former meant transition from the impossibly laughable energy of whale oil to kerosene, coal etc., a mammoth jump in the EROEI of available energy sources. The latter transpired over a period of roughly 20 years over which the EROEI of oil actually decreased from 16:1 to roughly 10:1 according to Savinar. So no wonder even millions of computers were not able to match the sheer change in productive output that accompanied the Industrial Revolution- and within the scope of the latter's purview we include the internal combustion engine, electricity, and indoor plumbing.

Gordon argues, and he's correct, that by the time the digital revolution got under way- say in the 80s- the big payoff in productivity began shrinking. Meanwhile, the PC-computing payoff basically has "come and gone" dissipating by 2004, when EROEI reached below 10:1 and fracking began as a last desperate effort to snare the vestigial ""riches" of oil - along with deep sea drilling.

Foroohar interjects certain techie skeptics who insist the BLS just isn't "counting productivity correctly". She adds:

"They argue the BLS is still too focused on the production of physical goods  missing hard to count benefits of the digital revolution".

But still, that misfires since as Savinar observed all that these benefits did is to expedite speed of transactions a bit (like in fractional stock trades and flash trades) but ultimately these too are hostage to EROEI and  energy quality. Thus, let too many flash trades be made in an increment of time delta t, and the whole system can't handle them. Then you see a flash crash like occurred in 2010. So in the end, it's all smoke and mirrors.

Foroohar points out this is also the conclusion of the Fed and IMF based on their own study. Thus, digital computing just doesn't make that big a difference .

Foroohar also points out:

"What we know for sure is that America's biggest run up in productivity occurred from 1945 to 1973, when there were major public investments in education, infrastructure, and worker training ".

But those investments didn't just occur in a vacuum. They were ultimately supported by the highest ever EROEI oil which hit as high as 19:1 in the early 1970s.

And as Foroohar's last statement puts it:

"Nobody us suggesting that productivity isn't rising because individuals aren't working hard enough. On the contrary, most economists believer the American blue and white collar workers alike are firing on all cylinders."

Indeed they are. It's just that the base energy they have to work with, to power their cars, computers or other machines, keeps declining in quality.

The next time you get into a debate with a co-worker or online econ aficionado about productivity be sure you bring up this aspect. It will render the discussion more serious, and they ought to thank you for that!

WHO'S The REAL "DEVIL'S DISCIPLE" ? The BLS OR Mitt ROMNEY?

“YEEEESSS, MITT! YOU ARE DOING A WONDERFUL JOB WITH YOUR LIES! MISLEAD EVER MORE INTO MY THRALL!”

- THE DEVIL, AKA SATAN

 Let us begin by reciting the quote from a huge Willard Mitt Fan and follower who used it to open his blog concerning the new job numbers (as "lies") but which REALLY are foursquare applicable to the LIAR who turned up for the debate on Wednesday night: AKA Mitt Romney!

Anyway, the quote of the moment is:

"John 8:44, "ye are of your father the devil,...and abode not in the truth, because there is no truth in him. When he speaketh a lie, he speaketh of his own: for he is a liar, and the father of it."

Yes, yes oh yea and BINGO a million times over! Thy FATHER is the DEVIL!  Mitt Romney! How thou hast LIED and LIED and deceived the people in thy performance Wednesday night. All the lies I documented in a previous blog: http://brane-space.blogspot.com/2012/10/how-to-win-debate-lie-and-lie-again.html


SO WHY would sane Americans elect to the highest office of the land a primary disciple of the DEVIL – to employ the meme of the Reichy blogger, since “when he speaketh a lie (e.g. denying his $5 trillion tax cut) he is a liar and “there is no truth in him”. Of course, one must ponder why a claimed “religious person” would opt to willingly follow a LIAR in the first place – and by extension, the FATHER of LIES, the Devil himself. Maybe, because as Alan Watts once noted, in ‘Behold the Spirit’, those who pass themselves off as righteous are often the ultimate protectors of evil and lies. Hence, "wolves in sheep's clothing".

But I get ahead of myself. The issue is the recent Jobs report numbers by the Bureau Of Labor Statistics showing unemployment rate has now gone down below 8% to 7.8%. The immediate release of the news, by a non-partisan statistical bureau – which has no skin in the game for either Reeps or Dems, had assorted Conservo brains popping open like ripe melons.

Hearing bombastic bullshit attacks from Rushbo Limbaugh, is of course, expected. I mean what would his dittohead followers do if he didn't rip anything positive coming from Jobs stats? They depend on it, especially since they're all suffering from 'Obama Derangement Syndrome', and they'd stop listening to the swine if he didn't meet their delusionary expectations - whether on global warming, Obama's background, or jobs -unemployment stats.

But then we also beheld snarky senility in full bloom with former GE CEO Jack Welch who blabbed about his distrust of those “Chicago guys” and that the numbers “smelled cooked”. This fossilized job destroyer needs to get a fuckin’ grip. Obama’s team had nada to do with the preparation of those stats, and indeed, the conspiracy blabbers were shot down last night when on the ABC News Report the investigation team actually visited the offices of the BLS.


Did they find Obama campaign minions or lurkers behind the computers and in the cubicles? Nope! Only statistical wonks and geeks crunching numbers! The ABC reporter actually spoke with the female economist who prepared this month’s report. A raving Obama ‘zombie”? Nope, a steady eyed woman of maybe 40 years old with eye glasses – like many Nerds- and a diligence for statistics. No political axes to grind!

This was confirmed by her BLS boss, who roundly asserted that if any employee so much as remotely attempted to skew the numbers toward one party, s/he would be fired on the spot, also prosecuted. Meanwhile, former BLS commissioner Keith Hall told the AP that any such "manipulation" would be essentially "impossible" given the vast number of civil servants who helped amass the data, the majority of whom aren't political appointees. Even the center-right Denver Post in its op-ed today took Welch down a few notches, as it noted (e.g.  http://www.denverpost.com/opinion/ci_21708718/editorial-rays-hope-unemployment )

"We have no quarrel with people who argue that the nation's jobs market is still not good — pointing out the number of people who are underemployed or have stopped looking for work altogether, for example. But those like former General Electric CEO Jack Welch, who challenged the new report as somehow politically manipulated without offering a shred of proof, strike us as sore losers."

Welch himself is perhaps the biggest manipulator as blogger Richard Eskow noted on Smirking Chimp today:

"if anyone should know about "cooking the numbers" it's Jack Welch. Manipulating information to influence an election? He should know about that too. There were well documented stories that he pressured staffers in NBC's newsroom - who were also his employees - to declare his friend George W. Bush the winner of on the night of the disputed 2000 election."

Got that, Reepos? (Especially that particular blogger who I happen to know checks in here daily) SORE LOSERS! Deal with it!

But in Reepoland, where reality is always the first casualty - since their denizens all inhabit fantasy bubbles-  this is what we’ve come to expect: endless conspiracies spun to parse their skewed, whacko perspective. From the Obama birthers who insisted Obama was a “Kenyan” – despite being born in Hawaii and proving it over and over with full birth certificates validated by the state, to the ‘deather’ nuts who didn’t accept Osama bin Ladin was really offed, to the current  ‘Jobbers’ now who say the BLS “cooked” the job number to make Obama’s path to re-election easier.

Willard’s lie –loving followers insist a 0.3%  uptick isn’t that “big” a deal – well true, except that 8% has always been a prime psychological threshold which has now been crossed- and along with rising stock prices and 401k balances and rising home prices shows an economy definitely in improvement mode. But these jackasses aren't prepared to accept anything positive, because to do that means they may not see the end of the man (first African-American President) they hate....yes, for the color of his skin, his intellect, and qualities which these Neandertals lack.

They also bitch about a declining number of new jobs each month, but this is for two reasons that escape them in their officious blogs: 1) An increasing number of baby boomers have retired and hence are no longer counted in the work force, and (2),  more of the formerly unemployed - as even Peter Morici on 'The Cycle' admitted yesterday – have now begun home based businesses! Hence, by definition, they’re also no longer unemployed. In other words, the BLS would be doing us all an injustice and truly skewing the stats if it left them on the rolls. I also invite these naysayers to please consult my earlier blog to do with statistics and how significance is determined:  http://brane-space.blogspot.com/2010/10/cult-of-statistical-significance.html

Note in this respect that the BLS statisticians are not 'computing significance' so much as compiling data by conducting actual interviews then inputing the data into their computers. They do it monthly, and must take note of those who say they're now retired, no longer have full time jobs, or who have started their own businesses. An especially crazy meme that's also erupted in this jobber frenzy is that Democrats were called who deliberately lied to the BLS interviewers in order to deliberately bring down the stats. No, you can't make this shit up, seriously!

But these nimrods can't have it BOTH ways! If they assert on the one hand the numbers "aren't all that great" it means they tacitly accept them at some level. Then, they are not allowed to appeal to "lies" to try to dismiss them. Either you dismiss them as part of some nutball conspiracy, OR you accept them but ok....say they're not all that great. You aren't allowed to play both cards at the same time!


At some point the Reepos will have to join the world of realists, which will mean finally accepting global warming, as well as the fact that their standard bearer Mormon candidate is a congenital LIAR who can't be trusted - especially with the leadership of this nation.

What these bloggers need to do is follow their own advice and also see who the real DEVIL’s disciple and spewer of lies is, and hint: It ain’t the BLS!