Introduction To Public Policy – Charles Wheelan

There is no definitive answer on what factor or combination of factors caused the productivity slowdown of the 1970s. 2. A “new economy”? The 1980s ushered in the era of the personal computer and the many attendant improvements in information technology. But there was a curious impact—or lack of impact—on productivity. America’s productivity growth remained stubbornly low into the 1990s, prompting Robert Solow, a Nobel laureate in economics, to remark in an oft-repeated comment, “You can see the computer age everywhere but in the productivity statistics.”

How could the personal computer not make Americans more productive? It just took a while, apparently. In the second half of the 1990s, productivity growth—labor productivity in particular—began to pick up sharply. Economists now believe that the productivity benefits of new technology operate with a lag; workers and firms need time to adapt their ways of doing business to take full advantage of new technological opportunities. What will happen to American productivity growth going forward? Some experts have predicted that the wave of recent innovations could lift productivity growth to 3 or 4 percent a year.

In 2003, The Economist predicted a more modest long-term annual average growth rate of 2.5 percent, noting at the time, “But even that rate would be a huge gain over the 1.4% average growth of the two decades to 1995. And such an increase would have a colossal impact on wealth creation, dou- bling real incomes every 28 years instead of every 50.”’° Private-sector productivity grew 1.8 percent in 2007 and 1.9 percent in 2008.

If policy makers could learn with some degree of certainty how to “turn up” pro- ductivity growth—in the United States or anywhere else in the world, particularly in the world’s poorest countries—the positive impact on human lives would be enormous. 1. How can rising real per capita income in the United States be reconciled with the introduction at the beginning of the chapter, which showed that real wages have been falling for some workers for more than two decades?

2. Consider some jobs in a modern economy—from selling airline tickets to writ- ing poetry. How have the firms and individuals who do these tasks become more productive over the past twenty years? 3. Would it be possible for a country to have negative productivity growth? What would that mean and how might it happen? 4, Explain why a nation’s per capita income—and, therefore, its standard of living— cannot deviate for any significant period of time from its GDP per capita.

16. “Paradox Lost,” The Economist, September 13, 2003.

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W. Norton & Company stands as the largest and oldest publishing house owned wholly by its employees. Copyright © 2011 by Charles Wheelan All rights reserved Printed in the United States of America First Edition Editor: Jack Repcheck Editorial Assistant: Jason Spears Managing Editor, College: Marian Johnson Project Editor: Christine D’Antonio Production Manager: Benjamin Reynolds Developmental Editor: Carol Flechner Electronic Media Editor: Eileen Connell Design Director: Rubina Yeh Book Designer: Fearn Cutler de Vicq Composition: Roberta Flechner Drawn art: John McAusland The text of this book is composed in Bulmer with the display set in Gotham Manufacturing by Courier—Westford, MA Library of Congress Cataloging-in-Publication Data _Wheelan, Charles J.

Introduction to public policy / Charles Wheelan. — 1st ed. p.cm. Includes bibliographic references and index. ISBN 978-0-393-92665-1 (hardcover) I. Policy sciences. I. Title. H97.W48 2011 320.6–de22 2010024278 W. W. Norton & Company, Inc., 500 Fifth Avenue, New York, N.Y. 10110-0017 Www.wwnorton.com W. W. Norton & Company Ltd., Castle House, 75/76 Wells Street, London W1T 3QT 253 455 s6n7 280900 For My Parents pig roan wt <= Sac - a . mary on yo a a ae “ ih Ns tn Changs Dal Moet ies arena: rh ot Se Be bts tae Nunta ite geile) hectare lites a an fe shah ares : tee tne ag > nagar Caen, The fiw soe Rs Mic 1 te eae ‘ i ae 7 carta ete woth brsily iy phaes 4 ea Me eee it in arpa.

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