What’s Really to Blame for the Productivity Slowdown?

Robert Samuelson: “Our thinking about productivity is cockeyed, according to a new economic report. We’re ignoring the real productivity problem: surging costs for health care, housing and education. We need to understand this argument, because it just might be correct.”

“The conventional solution is more innovation, driven by advances in science and technology. We need the equivalent of the invention of the computer chip or the Internet. Nope. That’s too simple, says economist Jonathan Rothwell, author of the report for Gallup, the polling firm.”

“A huge part of the productivity slowdown, Rothwell contends, is the poor performance of these three large sectors of the economy: health care, education and housing. These sectors have gotten bigger, he says, without getting more productive. As their costs escalate, they absorb more of families’ incomes, making it harder to satisfy other wants.”

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