Growth, productivity and employment
Productivity comparisons need to be based on a careful definition of the objectives. Labour productivity per hour worked is the best measure of prosperity per effort at any time, but can sometimes be achieved at the expense of unemployment or low capital productivity. Total factory productivity is the nearest measure we have to absolute efficiency, but that does not mean that it is an appropriate policy maximand. Performance can, therefore only be compared by looking at several different measures. Using this conceptual background to compare American, French, German, and UK productivity, the author concludes that between the US and continental economies social choices and trade-offs are the key drivers of observed differences, but that the UK is still behind both the Continent and the US on absolute efficiency. The policy choices implied for the UK are explored.