WASHINGTON—The Information Technology and Innovation Foundation (ITIF), the leading U.S. innovation policy think tank, today released the followed statement from its president, Robert D. Atkinson, on the 2016 Q3 productivity data released by the U.S. Bureau of Labor Statistics:
U.S. productivity growth is finally up, after three disappointing quarters in a row. But if we want to keep this momentum going, we need to establish a national productivity strategy. So why aren’t conventional economists calling for a plan to bolster productivity—the only sustainable driver of economic growth?
From Paul Krugman to Alan Blinder and Gregory Mankiw, economists have all resigned themselves to thenotion that the government can’t do anything to improve productivity. They’re wrong. Government can kick-start productivity with stronger tax incentives for machinery and equipment investment, increasing support for R&D on automation technologies, and then following through with an industry-by-industry approach to ensure companies adopt better technologies.
Conventional economists go wrong because they view productivity as a market problem, where their market-based solutions aren’t working. But productivity is actually a technological and organizational problem, so we need to adjust our approach to public policy accordingly. A concerted effort on the part of government could substantially increase productivity growth by significantly increasing public and private investments in the kinds of research and development that create better tools of production, and then by following through with an industry-by-industry strategy to ensure firms adopt them.
Learn more in ITIF’s May 2016 e-book, “Think Like an Enterprise: Why Nations Need Comprehensive Productivity Strategies.”
