{"title":"Reversing Perverse Incentives","authors":"Andrew Smithers","doi":"10.1093/OSO/9780198836117.003.0021","DOIUrl":"https://doi.org/10.1093/OSO/9780198836117.003.0021","url":null,"abstract":"Depressed business investment prevents growth. There are two possible ways to change this. The first is to alter the way senior managers are remunerated. The second is leave the incentives unchanged but change their impact on investment. This chapter deals with the first. Bonus systems for companies could be changed by encouraging them to include productivity targets. Productivity is output divided by hours worked. Both these data are known to companies as output is broadly defined profits plus employment costs. Though known the information is seldom if ever published. The current failure to do so is both the result and the cause of misinformation, as analysts and financial journalists regularly confuse sales with output. The requirement to publish output and productivity data would on its own benefit the economy.","PeriodicalId":134328,"journal":{"name":"Productivity and the Bonus Culture","volume":"75 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128737266","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Results of My Model","authors":"Andrew Smithers","doi":"10.1093/OSO/9780198836117.003.0011","DOIUrl":"https://doi.org/10.1093/OSO/9780198836117.003.0011","url":null,"abstract":"TFP has been on a long-term declining trend and over the most recent thirty- and twenty-year periods has run at 0.9 per cent per annum and 0.8 per cent per annum. Since 1980 TFP has fluctuated around these levels without any clear trend. Compared with estimates from the Congressional Budget Office and other forms of the consensus model, the model described in this book shows large differences. The figures for TFP are significantly lower and on occasion show a different change in direction. The contribution of TFP to labour productivity fell from nearly 100 per cent in the early post-war years to 60 per cent in 2016. Favourable changes in NTV have thus contributed 40 per cent of the improvement in labour productivity over the past twenty years. We are therefore not solely at the mercy of changes in technology but can enhance growth by changes in policy.","PeriodicalId":134328,"journal":{"name":"Productivity and the Bonus Culture","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131443288","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Ageing Populations","authors":"Andrew Smithers","doi":"10.1093/oso/9780198836117.003.0005","DOIUrl":"https://doi.org/10.1093/oso/9780198836117.003.0005","url":null,"abstract":"The changes in demography, together with low investment and poor productivity, have been responsible for the whole of the decline in the trend growth rates of the UK and US economies. Living standards measured by GDP per person are given a boost when the population of working age grows faster than the total population. This favourable change in demography was the situation up to 2008. Until then living standards tended to improve faster than productivity. Since then the total population has been growing faster than the numbers of working age and living standards will now tend to grow less rapidly than productivity. The impact on prosperity has been sharp because we have moved from a favourable to an unfavourable situation.","PeriodicalId":134328,"journal":{"name":"Productivity and the Bonus Culture","volume":"48 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125868505","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Deflation","authors":"A. Smithers","doi":"10.1093/oso/9780198836117.003.0019","DOIUrl":"https://doi.org/10.1093/oso/9780198836117.003.0019","url":null,"abstract":"The demonization of deflation has drawn attention away from the key problem of productivity. It arises from the two errors that deflation causes recessions and that investment responds to real interest rates. Deflation can be a symptom of inadequate demand but it can also occur when demand is strong. The fallacy depends on ignoring history and the importance of inflationary expectations. These were low in the late nineteenth century, allowing output to grow strongly while prices declined. Low expectations today have allowed stable prices to be combined with falling unemployment. But such expectations are very volatile. Should they rise a sharp increase in interest rates will be needed to prevent stagflation. This will be more dangerous today that it was on the previous occasion in 1982, as asset prices are now overvalued and were then cheap and debt levels were low.","PeriodicalId":134328,"journal":{"name":"Productivity and the Bonus Culture","volume":"2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130574192","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Summary and Conclusions","authors":"Andrew Smithers","doi":"10.1093/oso/9780198836117.003.0025","DOIUrl":"https://doi.org/10.1093/oso/9780198836117.003.0025","url":null,"abstract":"Poor productivity poses the major threat to the UK and US economies. It should be but isn’t our main economic preoccupation. Growth does not depend solely on the rate at which technology improves. It can be raised by improvements in policy for which I have three suggestions. The first is to change either the perverse incentives of modern management remuneration, or their impact on the economy. The second is that companies should publish their output and the working hours of their employees. The third is to end the folly of allowing interest to be a deductible expense for corporation tax. The damage to the economy from the bonus culture is currently met with silence. This book aims to get the issue debated, so that the need will become self-evident and be accompanied by the new policies we need.","PeriodicalId":134328,"journal":{"name":"Productivity and the Bonus Culture","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114829383","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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