What is productivity and why is the UK's so poor?

Larry Elliot in The Guardian

The shortfall in productivity compared with other developed economies has long been Britain’s economic achilles heel. It is a problem that Conservative and Labour chancellors have been grappling with for decades.

Productivity is a guide to how good a country is at delivering the goods and services that are bought and sold. Technically, it is the rate of output per unit of input, measured per worker or by the number of hours worked. In layman’s terms, it is a measure of what goes in and what comes out.

In some sectors, productivity is easy to measure. A factory that makes 1,000 cars a day with 50 workers is twice as productive as a factory that requires 100 workers to do the same job. In other parts of the economy, assessing whether productivity has improved is harder and less objective.

At face value a fast-food joint that employed the same number of chefs to cook the same number of hamburgers as they did a year earlier would not be showing any increase in productivity. But if the quality of the hamburgers improved, that would be a productivity gain and statisticians would try to capture the improvement in the official figures.

There are a number of ways in which a firm can make itself more productive. It can invest in new machinery that makes the production process more efficient. It can employ more highly skilled staff. It can train workers so that they can fully exploit the equipment they are using.

It is through productivity improvements that living standards rise. For many years, the annual increase in productivity in the UK averaged around 2%, although there were periods when it was lower and periods when it was higher.

Each year since the early 1990s, the Office for National Statistics has published an international comparison of productivity. This showed that UK productivity was 9% lower than the average of the other six members of the G7 (the US, Japan, Germany, France, Italy and Canada) but this gap narrowed to 4% by the time of the 2007 financial crisis.

Since then, however, productivity in the UK has barely grown and the gap with the rest of the G7 has widened to 18%. The gap with Germany is 35% and with the US 30%.

There have been a number of explanations for the dramatic deterioration in productivity: the availability of unskilled cheap labour has deterred firms from investment; the poor quality of UK roads, railways and broadband network; the shrinkage of the financial sector, which had been a source of high-productivity jobs in the boom before the 2007 crisis; and the misallocation of capital to “zombie” firms kept alive by ultra-low interest rates rather than to dynamic new enterprises.

The government’s autumn statement document states that improving productivity is the “central long-term economic challenge” for the UK. Philip Hammond, the chancellor, has identified better infrastructure, technology and skills as the foundations for doing so, which is why he unveiled a new £23bn national productivity investment fund and backed Sir Charlie Mayfield’s productivity council in his autumn statement. But this is a goal that requires long-term investment and commitment.

Jeremy's Anthem for 2017

by Girish Menon

I’m not afraid of  Brexit

I’m not worried about Trump

I’m not scared of boundary changes

Don’t care about opinion polls

I don’t bother with Tony

Nor his many cronies

Half a million volunteers

Are my army

Largest party in the EU

I won’t let you down

I believe in socialism

Universal basic income

World class NHS

Pure air, water and food

A safe place to live

For all who live here

Half a million volunteers

Will each bring thirty new voters

Largest party in the UK

I won’t let you down

I said don’t go to Iraq

I did not fudge my bills

I do not hate the wealthy
The media hate me

But the youth relate to me

And I am full of energy

Half a million members

Will spread the good word

A fair government in the UK

I won’t let you down.

-----

Universal Basic Income explained

Brexit Facts for your Christmas Dinner

Dan Roberts in The Guardian


Avoiding politics at the dinner table may prove harder than ever this Christmas for families on opposite sides of Britain’s intergenerational Brexit divide.

Voters over 65 were more than 50% more likely to vote to leave the European Union than those under 34, and polls suggest opinions have hardened since. Divorce lawyers have already warned that differing views on the subject are also an added source of stress in many marriages.

At Thanksgiving, when American families gathered for the first time after the equally divisive election of Donald Trump, the New York Times was so worried it published a list of “election facts to keep handy for holiday discussions”. In the interest of similarly avoiding a post-truth Christmas in the UK, here is a festive bluffer’s guide to latest twists and turns of the Brexit debate to keep by the crackers:

 Whose Idea was it again?

Six months on from the referendum we know a lot more about the demographics of the electorate. A recent study by NatCen Social Research found the people most likely to vote leave were those without formal educational qualifications (78%), those with a monthly income of less than £1,200 (66%) and those in social housing (68%). Voters against EU membership were also more likely to be white, male, and readers of the Sun or the Daily Express. Anyone brave enough to point this out over Christmas pudding should bear in mind that just 9% of leave voters said they were regular readers of the Guardian. Remainers were also heavily concentrated in London, Scotland and Northern Ireland, but in a minority elsewhere.

Will it ever actually happen?

In private, one European finance minister puts the chances of the Brexit “experiment” being abandoned as high as 25%. Scotland’s first minister, Nicola Sturgeon, has proposed the radical solution of Scotland staying in the single market even if the rest of the UK leaves. In London, it is hard to find anyone in any doubt that the UK government will at least have to give full Brexit a very good try before the next general election. There is always a risk that unforeseen events – another financial crisis or a wider EU unravelling, for example – can intervene, but the likelihood is they won’t. This is happening.

What about that legal challenge?

A supreme court judgment on the government’s right to start divorce proceedings by invoking article 50 without consulting parliament is due in the middle of January. The government is expected to lose, but the impact of the case has been undermined by growing signs that it could easily assemble enough MPs to pass the necessary legislation. An amendment to a Labour motion calling for more transparency in the process saw just 23 Labour MPs vote against their party whip in protest at the very idea of invoking article 50.

Weren’t we meant to be eating baked beans in candlelight by now?

The Guardian’s latest Brexit barometer confirms that many of the more dire economic projections of the impact of a leave vote have yet to come to pass. That does not mean they won’t, though. There are already worrying signs of anxietyabout Britain’s future trading arrangements that can be seen in the slumping value of sterling. EU negotiators are also threatening to extract a £50bn divorce settlement as the price of agreeing a post-membership deal which our ambassador has warned could take a decade. In the meantime, banks and carmakers are warning of an exodus if a transitional arrangement is not agreed to soften the “cliff edge”. Don’t throw out the candles just yet.

So, what’s the plan?

Ah. This is where lunch could get awkward. The truth is we don’t have one yet. Theresa May has said she will give a speech in January setting out the broad aims of Britain’s negotiating position. The Brexit minister, David Davis, has said he will publish a slightly fuller, but not very full, outline for parliament to debate in March. The prime minister also admitted to the Commons liaison committee on Tuesday that leaving the EU without any sort of agreement on the terms of divorce let alone future relations was one of several contingency plans that Whitehall was preparing for. There is now talk of soft Brexit, hard Brexit or “train-crash” Brexit, with the smart money increasingly on something between the last two.

What To Do After You Graduate College

Gary Vaynerchuk

I’m scared. I’m scared because I know exactly what happens around this month every year. There are so many of you who have graduated (or will be graduating) and still have no idea what you want to do with your life. And you know what? That’s ok! Most people don’t. You shouldn’t be stressed about that. What I’m scared about is that you don’t realize that you are entering the greatest 5-year window of your life.

If you are 22 years old, regardless if you’re graduating from college or not, there are two things you should keep in mind. The first is to acknowledge that you are entering some of the greatest years of your life. The second is that this is the moment when you don’t go practical—don’t take the “safe” route. This is NOT the time to get the job Mom always wanted you to get. This is NOT the time to try to maximize as much money as you can make so you can save up to buy a sick ride. This IS the time, however, to realize that you have a five-year window (three for some, eight for others) for you to attack the life that you want to win.

Something else that scares me is the naïveté of what the world is like after graduation. I am by no means saying that “winning” is going to be easy. It’s not. What you’ve been doing for the last 16 years is easy. Classes and school are easy because they’re structured. The world? It’s hard. It changes every day.

The fact is that the world is going to be exactly the way it is going to be without regard to the way you thought it would be, think it should be, or whatever big plans you’ve already made for yourself. Your parents might have already told you it’ll be one way, but they don’t really know. They just want you to do what they think is best, which usually means avoiding big risks. But, what you need to recognize is that now is the time when you can afford to take those risks.

What I wrote above is going to contradict what I’m about to tell you now. Even though the real world is hard, the next five years of your life will be the opposite. These will be the best and easiest years of your life because it’s your chance to attack what you love and try out what you want to do. Why? Because you don’t have all the baggage.

Look, I understand you might have college loans. I respect that financial debt is a real hardship. You may have to live up to the expectations of your parents. That’s mentally hard—fake hard. You may have many other obligations, but this time is exactly when you can live with 4 roommates in a basement and eat fast food.

Most of you don’t have children yet. Most of you are not married and have not yet promised your life to someone else. So, this is the time before the world has sucked out all your hopes and dreams. You still have this window—the next five years to help you achieve your goals.

Time is the number one asset and now is when you have the most flexibility to use it.

I’m sure some people will leave comments about their loans or whatever other financial obligations they might have. Again, I respect that. But one way or the other, that loan is going to be there whether you build something for yourself or not in these five years. I truly believe that you can wake up on your 26th or 27th birthday, start being practical, and still pay off your loans and any other debts. While I’m sure those obligations might have compounded interest, leaving the opportunity of “going for it” in those five years (especially if you have entrepreneurial DNA) is a mistake and actually lacks practicality.

Yet, so many of you are so hungry for short term gains right after college. For example, you would rather take the job that maximizes your pay at $3,000 more a year, despite the fact that you would have enjoyed a lower paying job more suited for you. For what? For a new iPhone? A slightly nicer apartment? You get to live life one time.

(By the way, you can work at night! This is when you put in your 18 hours a day to make the life that you want happen. That’s practicality.)

Promise me, all you youngsters who are reading this, that you understand that the land grab for happiness starts right now. You don’t have to worry about getting “that job.” What you should do is go and travel and learn. Go and start that business you always wanted. Travel with those three friends and start that band. This is the time to be massively risk oriented. There will be plenty of time to be risk averse later. Now is the time to understand what’s actually happening and map your behavior to something that will impact you for the next 80 years of your life.

When you are in your early 20s, this is when you can grind at your highest level because you don’t have the baggage that comes later in life. It’s harder for the 42 years olds to listen to this advice. At that point, you can’t just wake up tomorrow and say “let’s go” because little Sally has soccer practice and you have a million other things that are holding you down.

If you are lucky enough to be graduating today without any clue what about what you want to do with your future, no one’s ever been luckier than you. Please recognize that.

What's in a Taimur name?

by Girish Menon

I am an Indian Muslim

I have the right to religious freedom

I have the right of parental choice

It's within my freedom of expression

So why crib about my name choice?

I have named my son Taimur

Others chose similar warmongers

I have the right of parental choice

Ashoka, Alexander or Aurangzeb  

So why crib about my name choice?

Remember, you’re half a Tagore

A man Iqbal despised

Taimur's a hero two nation theorists love

Something your father despised

Hence we crib about your name choice!

Delhi, after Sack of Timur Lang

Basic Income

Yanis Varoufakis

World’s largest hedge fund to replace managers with artificial intelligence

Olivia Solon in The Guardian


The world’s largest hedge fund is building a piece of software to automate the day-to-day management of the firm, including hiring, firing and other strategic decision-making.

Bridgewater Associates has a team of software engineers working on the project at the request of billionaire founder Ray Dalio, who wants to ensure the company can run according to his vision even when he’s not there, the Wall Street Journal reported.

“The role of many remaining humans at the firm wouldn’t be to make individual choices but to design the criteria by which the system makes decisions, intervening when something isn’t working,” wrote the Journal, which spoke to five former and current employees.

 

Ray Dalio, president and founder of Bridgewater Associates. Photograph: Bloomberg/Bloomberg via Getty Images

The firm, which manages $160bn, created the team of programmers specializing in analytics and artificial intelligence, dubbed the Systematized Intelligence Lab, in early 2015. The unit is headed up by David Ferrucci, who previously led IBM’s development of Watson, the supercomputer that beat humans at Jeopardy! in 2011.

The company is already highly data-driven, with meetings recorded and staff asked to grade each other throughout the day using a ratings system called “dots”. The Systematized Intelligence Lab has built a tool that incorporates these ratings into “Baseball Cards” that show employees’ strengths and weaknesses. Another app, dubbed The Contract, gets staff to set goals they want to achieve and then tracks how effectively they follow through.

These tools are early applications of PriOS, the over-arching management software that Dalio wants to make three-quarters of all management decisions within five years. The kinds of decisions PriOS could make include finding the right staff for particular job openings and ranking opposing perspectives from multiple team members when there’s a disagreement about how to proceed.

The machine will make the decisions, according to a set of principles laid out by Dalio about the company vision.

“It’s ambitious, but it’s not unreasonable,” said Devin Fidler, research director at the Institute For The Future, who has built a prototype management system called iCEO. “A lot of management is basically information work, the sort of thing that software can get very good at.”

Automated decision-making is appealing to businesses as it can save time and eliminate human emotional volatility.

“People have a bad day and it then colors their perception of the world and they make different decisions. In a hedge fund that’s a big deal,” he added.

Will people happily accept orders from a robotic manager? Fidler isn’t so sure. “People tend not to accept a message delivered by a machine,” he said, pointing to the need for a human interface.

“In companies that are really good at data analytics very often the decision is made by a statistical algorithm but the decision is conveyed by somebody who can put it in an emotional context,” he explained.

Futurist Zoltan Istvan, founder of the Transhumanist party, disagrees. “People will follow the will and statistical might of machines,” he said, pointing out that people already outsource way-finding to GPS or the flying of planes to autopilot.

However, the period in which people will need to interact with a robot manager will be brief.

“Soon there just won’t be any reason to keep us around,” Istvan said. “Sure, humans can fix problems, but machines in a few years time will be able to fix those problems even better.

“Bankers will become dinosaurs.”

It’s not just the banking sector that will be affected. According to a report by Accenture, artificial intelligence will free people from the drudgery of administrative tasks in many industries. The company surveyed 1,770 managers across 14 countries to find out how artificial intelligence would impact their jobs.

'This is awful': robot can keep children occupied for hours without supervision



“AI will ultimately prove to be cheaper, more efficient, and potentially more impartial in its actions than human beings,” said the authors writing up the results of the survey in Harvard Business Review.

However, they didn’t think there was too much cause for concern. “It just means that their jobs will change to focus on things only humans can do.”

The authors say that machines would be better at administrative tasks like writing earnings reports and tracking schedules and resources while humans would be better at developing messages to inspire the workforce and drafting strategy.

Fidler disagrees. “There’s no reason to believe that a lot of what we think of as strategic work or even creative work can’t be substantially overtaken by software.”

However, he said, that software will need some direction. “It needs human decision making to set objectives.”
Bridgewater Associates did not respond to a request for comment.