LABOR’S SIDE |

By UE Research Dept.

- Productivity is not
_ the problem

Why is the first “Labor’s Side” on the
issue of productivity?

Because ‘‘productivity’’ is the
Phoniest issue in economic analysis
ay. Noted American economist, Harry
agdoff, pinpoints the problem this way:

Economists began to try to measure
the nation’s productivity many years
980, thinking this information was
Needed for the models and formulas
that are supposed to explain how the
€conomy works.

‘But since the data required for such a
calculation simply did not exist, a
Makeshift measure was devised which,
though at best a convenient fiction, en-
abled the economists to continue play-
ng their games.

It wasn’t long, of course, before they
Started treating this statistical fiction as

_ represented something real and
Significant.

‘ Y
‘And then, by constant repetition and
wide-spread publicity, the contrived
Measure became a myth that now
Serves both to obscure the actual
_ Causes of staflation and to support
Propaganda for corporate tax relief and
4 reduction in real wages.”

Isn’t the problem of the Canadian
economy due to low productivity?

No. But you would never know that

t_ifyouread the press, listened to most
Politicians or paid attention to the boss.
t they call ‘‘productivity”’ is a mea-
Sure so meaningless that it should be
Own in the dustbin.

Q What is “‘real’’ productivity?
A Productivity’ is supposed to be a
Measure of how. the country’s
Production changes over time as a result of

lk, technology, and of changing inputs of
T, Capital, energy, and other materials.

Q Isn’t that idea okay?

A

Me;

Yes. But that is not what produc-
tivity statistics really measure. To
fin asure productivity, one would have to
da way to determine the total output of
: Ob 1S and services in Canada each year.
| ~Sviously, one can’t just count the
T of transformers and pencils and
ars and dresses and motors, and the
“sands of other products made in
m a, and add them together to get a
fasure of output.
Une problem is worse still with services.
ike with goods, there is often nothing

ofe amt How do you measure the output

Waiter, or teacher, or nurse, or singer,
travel agent?
to Ven in services where there are things
. Sount, the true measure of the service
3 - be it medicine, law, education, enter-
uality, not quantity.
latistics Canada, like government
2 Sa around the world, solves these
‘Odlems by reducing all goods and ser-

Vv é ‘
Sieg their money value in the market

“Qs

A This becomes absurd if you think
about it a minute. According to this

Or

nt, advertising or accounting — is ©

approach, a stockbroker who makes $1-
million a year wheeling and dealing on Bay
St. produces 100 times more services than
a $10,000-a-year child care worker and 50
times more services than a $20,000-a-year
nurse.

Another example would be a doctor
who gives up his $150,000-a-year practice
to earn $50,000-a-year as a professor and
researcher at the University of Toronto
Medical School. Using the market as a
guide, the doctor’s productivity has de-

creased by 67 per cent, even though he ~

may be making a greater contribution to
society.

With respect to goods, imagine two blue
jean manufacturing plants, each with the
same number of workers and producing
the same number of jeans a year. But the
first plant’s jeans have a designer label and
gross $75-million while the second plant’s
jeans are ordinary work pants and gross
$25-million.

According to productivity measures,
the first plant is three times more produc-
tive than the second despite the fact that
the same number of workers produce the
same number of jeans a year. And if al!
garment plants shifted to high fashion, just
think of the increase in ‘‘productivity.”’

The point is that market values are no
guide to the usefulness of goods and ser-
vices, nor necessarily to differences in the
quality and quantity of production. Since
productivity statistics are based on output
measured in market value, they tell us
very little.

You implied other problems with
productivity measures. What are

they?

A The key one is that productivity
measures ignore everything affect-

ing production except the amount of labor

involved.

What’s the problem with just focusing
on labor?

Because that gives the impression
that a volume of production is

A

determined just by how hard people work. -

So when productivity falls, everyone
blames workers.

An example might make it clearer. Im-
agine a construction site in which two
foundations must be dug. After digging the
first with a huge steam shovel, the worker
is told to dig the second by hand.

Even though the worker will be working
much harder, productivity will fall drama-
tically because management has changed
technology from a massive power tool to a
primitive shovel.

But if productivity statistics were pub-
lished for this job site, all you would see
would be a massive drop in output per
hour of work.

In millions of job sites around Canada
the boss makes decisions about what
technology to use, how much of it to use,
what quality of materials are to be avail-
able and how the work is to be organized.
Regardless how hard a worker works,
these decisions have the major impact on
the volume of output. Yet, productivity
statistics simply ignore all this.

And bosses use these statistics to blame
workers for every decline.

But look, wouldn’t Canada still be

better off if workers were more
productive? Wouldn’t that have helped
avoid the economic crisis we're in?

MAN ON THIS MACHINE:

BOSS, WE COULD USE AN ey,

Can't YOU SEE.

ee

1%

IMPoss|BLE/

Whoa! You have just repeated the
boss’ line which is wrong in virtually
every respect.

Q What do you mean?
Let’s look at the issue of greater

A labor productivity, ignoring for the
moment the fact that these statistics are
useless.

What would greater productivity mean
for the 53 per cent of the workforce in
trade, finance, insurance, real estate,
business and personal services? Would it
mean more insurance policies? More bank
loans? More lawsuits? More Kentucky
Fried Chicken outlets? More tax shelters?

In the service sector, we need less
‘‘productivity,”’ not more. We need doc-
tors with time to devote to preventative
medicine, nurses with more time to spend
with patients, and teachers with time to
give more individual attention to school
children. :

Okay, but what about manufactur-
ing?

There is no reason to believe that

increased productivity would have
created a larger economic pie in Canada
during the last 10 years nor that ‘‘ailing”’
productivity is the cause of the current
depression in Canada.

Since so much of the manufacturing sec-

tor in Canada is foreign-owned, a large
part of our economic pie is eaten in the
United States.. Keeping the wealth pro-
duced by Canadians in Canada would do
far more for everyone than bogus efforts to
coerce workers into working harder or
corporate and government attempts to
force them to accept less pay.

But even with the part of the economic

pie that remains here, Canada is one of the

richest countries in the world. The imme-
diate problem with that portion of the pie is
not its size but how it is divided up.
Statistics Canada reports that the top 20
per cent of all income earners in Canada
get 42.5 per cent of the pie. The bottom 20
per cent get only 4.1 per cent of the pie.
A recent study of wealth in Canada re-
vealed that the richest 10 per cent of Cana-
dians held 57.1 per cent of all wealth. The
poorest 40 per cent of Canadians has less
than one per cent of the total wealth.

But still wouldn’t higher productivity
have helped avoid the current reces-

sion?
A It's a depression and the answer to
your question is no!

Throughout the world, productivity
measures have fallen as the economic
crisis has worsened over the last nine
years. But has a slower rate of produc-
tivity. growth caused the decline in the
economy, or has the economic decline re-
duced productivity measures?

In the face of the problems crippling
production in Canada — high interest
rates, massive corporate debts (partly as a
result of a binge of speculative excess in
recent years), foreign domination of most
key sectors, and rapidly escalating energy
costs, it seems strange to blame the eco-
nomic decline on productivity.

Throughout this period, Canada has not
been lacking in productive capacity either.
During the last 10 years, slightly over 15
per cent of the existing capacity has stood
idle. And a record number of workers
have been idle as well.

So why is there all the talk about
productivity being the problem?

Because it is a way of trying to shift

blame onto workers. Almost every-
one assumes that workers’ effort is what
productivity means. So if productivity is
falling, workers must be getting lazier.

If the corporations can sell this idea to
the Canadian people, they gain public
‘support for tough anti-worker policies,
and help allow governments to bring in
anti-worker legislation, like wage con-
trols.

It also sets the stage for corporations ‘o
get massive government assistance in the
form of grants for new technology and
plant reorganization. The taxpayers foot
the bill, and workers get fewer jobs in the
modernized factories.

Finally, it diverts attention from the real
culprits — the government’s high interest
rate and tight monetary policies and the
corporations’ wasteful, inefficient and
selfish business practices that stem from
the profit system itself.

Productivity changes, to the extent
these measures mean anything, are in Pro-
fessor Magdoff's words, ‘‘a byproduct of
the way the profit system operates, cer-
tainly not the cause of capitalism’s fail-
ures.”

PACIFIC TRIBUNE—SEPTEMBER 17, 1982—Page 7