Arnold Kling  

The Productivity Story

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Is productivity growth the most overlooked economic story? Brad DeLong thinks so, and Virginia Postrel agrees.

The productivity story is boring. It isn't really, but editors think it is. There's no obvious conflict, no scandal, no little guy getting hurt (unless you portray rising productivity as throwing people out of work, which is the most common angle). The improvements that drive productivity increases are incremental--hence, not dramatic--and often technical.

In addition to the problems cited by Postrel, there is the fact that productivity growth is a long-term story. Although with DeLong citing a gain of 20 percent in four years, the impact of productivity growth no longer takes decades to be felt, there are no decisive days or weeks in the productivity story.

Mostly, I believe that journalists tend to be negative, and productivity growth is too much of a positive-sum game to register with them. I think that the left is much more inclined to see the economy in zero-sum terms, where redistribution matters more than growth.

Speaking of the press, here is an email I sent to the Washington Post ombudsman this morning.

I am a long-time subscriber and I like to read all points of view, but today's front page really troubled me.  It contained two news-analysis articles, each of which read like a rally for opponents of President Bush.

The article on "health care vs. tax cuts" made it sound as if the only way I can spend more of my money on health care is if the government does it for me.  The fact that people who have more discretionary income from tax cuts could choose to spend that income on health insurance or health care or something that is more important to them is left out.  In that article, you quote Bruce Bartlett, who I know is completely disillusioned with President Bush for his *failure to cut spending* even more.  He is disgusted with Bush for spending so much and thinks that Kerry would not be any worse.  If you want to print a quote from Bartlett supporting your "analysis," then you ought to spell out where Bartlett is coming from, instead of making it sound like Bartlett is a Bush supporter on fiscal policy.  Or find someone else to quote to balance the article.  

Then there is the "analysis" which claims that the Bush doctrine has been undermined by events in Iraq.  If anything, the Bush foreign policy has been undermined by relentless attacks in the media, such as your front page (which consistently runs editorials that are more anti-Bush and anti-war than what appears on your editorial page).   The article is very selective and unbalanced in its choice of "experts" to quote.  Robert Kagan is written off as an "Administration supporter," while all of the critics of the Administration are not labeled as such.  Instead, for critics one sees things like "nonpartisan Brussels-based group," which is a standard way for the liberal media to identify left-wingers (and having Googled the International Crisis Group, my sense is indeed that is what they are).

I believe that the Post could do two things to remedy this.  One is to simply drop the pretense of unbiased journalism, and simply say that the front page is used to promote the opinions of your reporters and editorial staff.  Ultimately, I think that this is the most honest approach.

If you wish to try to hang on to the myth of an unbiased front page, then I think you ought to hire a conservative to scrutinize the front page before it is printed.  That way, some of the bias will be caught ahead of time, rather than leaving it up to the readers.

UPDATE: James Glassman has a recent perspective on media bias.

For Discussion. Of the various reasons offered for the failure of the press to focus on productivity and economic growth, which do you find most persuasive?

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CATEGORIES: Growth: Consequences

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The author at PRESTOPUNDIT -- "excellent" says 2blowhards "must readings" says Nick Schutz in a related article titled A letter to the Washington Post. writes:
    "I am a long-time subscriber and I like to read all points of view, but today's front page really troubled me. It contained two news-analysis articles, each of which... [Tracked on June 28, 2004 2:07 PM]
COMMENTS (24 to date)
Dave Thomas writes:

I think that the left is much more inclined to see the economy in zero-sum terms, where redistribution matters more than growth.

Isn't Delong a Berkeley economist? That's as left as they come, before falling off the coast.

Chris writes:

Yes, Brad's at Berkeley and he is left of center, but he's still an economist. That keeps him from going entirely loony at least when it comes to stuff like this. When he strays out of econ is when he goes Krugman on us.

pawnking writes:

IMHO, there are two reasons the mainstream press does not report good news on the economy: First, because it can be difficult to understand, and most journalists don't bother. Other than the WSJ, I can't think of any news source which I would give much credibility to when they are speaking on the economy. This dovetails with the second reason, bias. The old saying that if you line up all the economists in a row, they'd still all point in different directions serves biased journalists very well. If the economy is slow, they'll be sure to focus on a slow growth or decrease in the GDP. Economy booming? They'll cite economists worried about inflation. High productivity = the little man getting squeezed out of a job. Low productivity equates with the nation falling behind other countries. It goes on and on.

The fact is the "economy" cannot be measured with one statistic, or even a focused group of them (ala Kerry's "Middle Class Misery" index). I consider myself more savvy than most on economic matters, but still the subtilties escape me 4 times out of 5. Any respectible mainstream journalist will tell you upfront that most economic indicators are mixed and opinion does not equal fact, but there are few enough of those anyway.

The answer: All of the above AND ignorance.

Why ignorance? Many journalists simply do not understand economics in general nor productivity in particular. Productivity is more than automation, outsorcing, etc. It's mostly the aggregate result of millions of subtle improvements. What kind of improvements? Many journalists don't understand. And even if they do, they don't understand the impact on wages and investment returns, on standards of living, on the new industries made possible by slack capacity in the workforce.

But yes, the lack of sex appeal and anti-Bush bias also play major roles.

Xixi writes:

I cancelled my subscription to the Washington Post last year. It was just more paper than my bird needed in his cage and I got tired of their liberal bias.

Cableguy writes:

Great analysis. Unfortunately, those editors will throw out your letter along with hundreds of similar letters. These guys never learn, until they get fired, retire or die.

Nathan Moore writes:

I found your points quite, well, on point. Positive economic news is being buried on a repeated basis. Whether this ceremonial burial process is related to ignorance or bias is anyone's guess, though I would propose it's a combination of the two.

Thanks so much for the great work!

Nathan Moore

Lee writes:

Here's the interesting part: As the Internet blogging community (mostly libertarian/conservative), alternative cable news outlets (Fox News), and AM talk radio (again, mostly conservative) continue to hit the liberal media right where it hurts -- namely, in the wallet -- the mainstream liberal media's practically unanimous response is to become even shriller and more liberal.

I've always opined that liberals would rather be liberal than successful. It's fascinating to watch this play out in real time.

Bham writes:

As MediaTenor reported a few weeks ago, the major news media outlets stopped using economic news as a "front page" story in February, when the economy started showing irrefutable evidence that it was improving. Apparently, the economy deserved front page attention only when it had a negative political dimension. (Our local paper ignored the remarkable news from the Institute of Supply Management on June 1st. The paper used the weather forecast page to report the equally remarkable news about job creation that BLS released later in the week.) There's a little more to this treatment of good economic news than simple reporter ignorance. Possibly it's that good news doesn't give the editor a chance to point out the things in this cruel world that need change. I suspect it's something less altruistic, because good economic news was on the front page when a different administration was in the White House. Arnold King is on target when he suggests that WaPo hire a conservative to do a reality check on it front page stories.

eric writes:

Productivity as a story is counter to the common journalistic mindset that everything is getting worse or at a turning point.

Larry Jones writes:

Productivity just isn't sexy.

Daniel writes:

The issue here is that, being ignorant of basic economics (and much else), the media allow their "friends" to write these stories. They cut and paste from the experts (as determined by the acclamation of their media peers) and can't make independent assessments of the technical content. They assume the content is correct because it came from an "expert"; they know they are using an "expert" because it’s the same guy that was widely quoted for the last major story.

Mike writes:
Positive economic news is being buried on a repeated basis.

I agree completely with this assessment. This leads to a somewhat interesting thought - could it be Clinton's greatest economic achievement was that he was a Democrat? Given that our last 4 quarters of growth are comparable to the best numbers in the Clinton presidency, the degree of economic pessimism in the populace is amazing. I think the level of positive economic reporting was much higher during his term (someone do the research?) and this led to a very high level of consumer confidence. How much better would our economy be right now if the economic news was even somewhat objective?

Mike writes:

I think the reasons we see very little reporting on economic growth are a combination of the following factors (in order of importance):

1. Bad-news bias (good news isn't "news")
2. Hatred of President Bush
3. Ignorance of all things economic
4. Media favorites to quote tend to be fellow left wingers and therefore guilty of factor 2.

John writes:
High productivity = the little man getting squeezed out of a job. Low productivity equates with the nation falling behind other countries. It goes on and on.

The leftstream media always find the negative angle whenever they report on business, particularly when a Republican holds the White House. F'rinstance, here's their take on any price point for any given product:

Priced higher than competition = Gouging, monopoly
Priced same as competition = Collusion, price fixing
Priced lower than competition = Dumping, restraint of trade

It's a wonder anyone pays attention to anything they have to say.

bruce writes:

get real, have a conservative vet the front page?

Jervic Ninehammer writes:

If it bleeds it leads. Infotainment strives to avoid anything with intellectual content, as boredom is not a fungible commodity. Politics is presented as a turgid drama in which the evil corporate greedheads make granny eat dog food. Productivity can be counted in place of sheep when insomnia strikes.

Lee A. writes:

I missed the part that explains exactly how the Bush foreign policy has been undermined by relentless attacks in the media.

Assistant Village Idiot writes:

Herr Professor, I would argue in favor of a combination of the "not sexy" and "zero-sum" offerings above.

Anecdote is more powerful than statistics to most people, but this can be presumed to be even more true of those who make their livings crafting stories. I think it is safe to assume that their SAT-V's were higher than their SAT-M's.

It is difficult to write a good story, but it is difficult in a different way to think in terms of graphs, equations, and logic. Journalists are better at the former than the latter. This has a deeper significance. It causes them to value that type of intelligence too highly. This in turn allows them to rationalize that they do not need to learn more to understand more. Humility is one of the roots of learning.

DSpears writes:

"could it be Clinton's greatest economic achievement was that he was a Democrat?"

"The leftstream media always find the negative angle whenever they report on business, particularly when a Republican holds the White House."

I think you're on to something here. Could the psychology of having the president be somebody that the overwhelming majority of the press voted for be responsible for a couple of points of GDP, due to good news actually getting to the American people? I'm not willing to go that far, but the tech bubble was as much a psychological phenomenon (irrational exuberance) as it was a monetary one. I still lean firmly towards the latter explanantion, but it's an interesting thought experiment.

From "income inequality" and the "rich are getting richer, the poor are getting poorer" and The "middle class is disappearing", to "maufacturing is on the decline in America" to "we have a trade deficit and it's going up" to "millions don't have health insurance" to "we are racking up too much personal, corporate and govenment debt"...... and the list goes on and on. All of these trends continued at the same pace from the early 1980's until today with little change. But during Clinton's presidency nobody talked about them any more. Why is that?

Now granted, many of these "issues" were not issues at all, and many are contradicted by the facts. But regardless, the "homeless" suddenly ceased to be a problem in 1993, although none of the conditions that lead to the (vastly overblown)alarm had changed in the least.

The press simply stopped reporting on them. All of these "problems" magically reappeared as soon as Bush was sworn in, even before the recession started to really take effect. For instance, Manufacturing employment peaked in late 1998, long before anybody even knew that there could be such a thing as President George W. Bush.

Mike writes:

Dspears wrote:

But regardless, the "homeless" suddenly ceased to be a problem in 1993

I remember an article on by Brent Bozell that detailed the breakdown in the number of stories on the homeless that the networks made each year. Here is the money quote:

Consider these facts: During the Clinton administration the networks broadcast an average of 16.5 reports on the plight of the homeless per year. Contrast that with how many homeless stories the networks ran while George H.W. Bush was president: an astounding average of 52.5 per year. By 1995, the network evening news shows ran only nine stories on homelessness. That's because when a Democrat is in the White House it no longer is a problem worthy of coverage. Suddenly, with Republicans back in control, we now see World News Tonight, along with The Washington Post and The New York Times, running stories about rising homelessness in major cities.

This is but one example of many, and I agree that the psychology did play a large role in the tech bubble of the late 90's. Hundreds of articles were written on the "new economy," and these had to have some effect on consumer confidence. Feel free to view the chart at

Lawrance George Lux writes:

Productivity gains find little reportage due to the actuality of the event: Producers do not operate in the Short-run according to a simple Economic Supply model. They pass on all the additional costs of increased Productivity to the Consumers, being extremely reluctant to revert to the normal Supply Cost model. Journalists see higher Product Prices, greater Profits to the Producers, and no visable expansion and distribution of wealth. lgl

DSpears writes:

I am convinced that productivity is the fundamental requirement for economic health. But productivity is a nebulous concept. It doesn't have the sizzle of mergers and acquisitions, or IPO's or high tech internet gadgetry or CEO's with huge personalities. What most of the rest of the world does not seem to grasp is that America's great productivity advantage isn't produced by GE or Microsoft and it certainly doesn't come from the government.

It comes from Walmart. It comes from Dell computer. It comes from paying a little bit less for everything you have to or want to buy.

Productivity is blocking and tackling. It's designing a logistical system that saves the company 1% of warehousing costs every year. It's designing a product that can be made with 25 fewer parts and can be assembled using 17 fewer labor-minutes. It's reducing the number of invoice forms that a company has to fill out from 7 to 2. It's reducing the time it takes to change over an assembly line form 3 days to 3 hours. It's Wal-mart buying 50,000 flower pots and saving 3 cents on each over their competitors.

But the hardest thing to grasp about productivity is that it is NOT one big thing all at once but billions of little things done over many years. It is not a neat little story that can be told in 500 words or less or on a one minute segment on CNN.

Productivity is NOT sexy. And the Short attention span theater that is our popular media just doesn't have the ability to grasp such a thing and neither do most average people who don't regularly visit internet eocnomic discussions.

Robert Schwartz writes:


Baby, I love you, but this is not good for your heart. The media have sold it out for the election. They have let all the stops out. They view this as their last chance to save America from Bush=Hitler.

They believe that all of their resources must be dedicated to this goal and if they fail, then they will pack their bags and flee the doomed country to France. There is no turning back. There is no November 3rd.

Fairness? What is fairness in a fight to the finish? Sufice it to say that the first six months of 2004 have only been a warm-up for the stretch run to the election.

Me. I am betting "red" and "over." I think that the piper will be around for a payment in the form of bad ratings and reduced circulations come next spring. But, we shall se what shall see.

Meanwhile, Arnie take my advice, lots of anti-oxidant vegetables, long walks and naps. Avoid newspapers and televisions. Listen to classical music and read Jane Austin novels.

Your health is the most important thing. Be Well.

Your Friend,

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