July 8, 2004

The Productivity Boom (That The Media Ignores)

Arnold Kling comments on the astonishing rise of productivity in the American economy during the first 13 quarters of the Bush administration, and why it gets little mention by the press...

The 17 percent productivity growth from the first quarter of 2000 to the first quarter of 2004 stands head and shoulders above the growth rate for any comparable period. In fact, it is better than any eight-year period since 1976. In the first 13 quarters of the Bush Administration, the basic determinant of our standard of living increased by almost as much as during the entire 32 quarters of the Clinton Administration.

As far as I know, President Bush has not claimed credit for the phenomenal productivity growth that has occurred during his Administration. Nor should he. As Dick Cheney said when asked during the Vice-Presidential debate whether he was better off in 2000 than he was four years ago, "Yes, but government had nothing to do with it." Productivity growth in any given Presidential term is affected much more by private sector trends and by policies of previous Administrations than it is by current policies. I think it will be years before we know how much, if any, the Bush Administration's economic policies affected productivity.

The most likely explanation for the faster productivity growth of recent years is the gradual diffusion and exploitation of computer technology.

One reason is that the productivity trend is positive. The media always prefer economic stories which show America going to hell in a hand basket. In the 1970's, we were supposedly running out of oil. In the 1980's, we were being beaten by Japan. More recently, the media have tried to make the outsourcing phenomenon carry the narrative for the story of gloom and despair.

The other reason that the productivity story is not big news is that the current Administration is unpopular with the media. As much as the media is averse to reporting good news, I think that productivity would receive greater coverage if the big gains were taking place on a Democratic President's watch. The upbeat productivity data would "fit" the story of competent Democratic stewardship of the economy. But it would spoil the narrative of the Bush Administration as bumbling and Hoover-sequel to point out that the most fundamental measure of our economic strength is shooting through the roof. It's not that I think that high productivity growth is a partisan story that reflects well on President Bush. But the failure to report on the phenomenon is a partisan story that reflects poorly on the ability of the press to rise above its biases and keep the public informed.