Productivity and investments, or why everything goes wrong and it can’t go better

14 September 20222 years ago babelfish

When you feel that Italy is to blame for the "Poor Productivity" of our companies and our workers, remember that in 99.9% what you see is nothing more than a way to blame you and to make Italians look like a people of pelandroni. A way to affirm that you are a low-quality people who have no right to govern themselves. but it must be guided from above, by the enlightened few.

labor productivity depends on a number of factors, primarily investment, and this at the European level. We propose this graph, taken from Demary – Huther on stagflationary risks in the euro area.

It is clear that the productivity of labor depends on capital and invested, here referred to as capital intensity. If you invest, it comes to improving labor productivity and also the so-called “Total productivity of production factors”, a much less indicative measurement, but taken into consideration by some economists. However, it is clear that without investment there is no labor productivity and GDP per capita is also linked to this measure. A ruler should ask himself not why labor productivity is low, but why firms do not increase the intensity of capital in the factors of production. Will it be a tax problem? Will it be a problem of the economic system that is enemy of the entrepreneur from a bureaucratic and control point of view? Could it be that the constraints of the system cannot be overcome? This should be asked by a good ruler and good local administrators.

Then we recall an essential economic law that regulates productivity, the second law of Kaldor or the law of Kaldor-Verdoorn. According to this law, empirically proven even recently , any increase in production leads to an increase in productivity, due to a series of factors ranging from economies of scale to the creation of industrial districts.

So mark it well: be wary of commentators and politicians who try to blame all our problems on productivity. Even if it were true they should above all look in the mirror because they are the main cause of this problem.

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The article Productivity and investments, or why everything goes wrong and it can't go better comes from ScenariEconomici.it .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/produttivita-e-investimenti-ovvero-perche-va-tutto-storto-e-non-potra-andare-meglio/ on Tue, 13 Sep 2022 14:29:45 +0000.