The Minister for Cultural Progress recently announced a new initiative to increase the productivity of classical musicians. Musicians, it seems, have been lagging behind other sectors of the economy. While forestry, mining, and manufacturing have all shown gains in efficiency in recent years, musical production has remained stubbornly stuck at the same level as when it was invented hundreds of years ago. The minister has therefore ordered that all music shall henceforth be played at double speed, allowing musical output to increase by 100 per cent.
This apocryphal story demonstrates both why traditional economic measures are not appropriate in today's economy, and why we should expect - and welcome - certain sectors to occupy an increasingly large fraction of the economy.
Let's start with the idea of increasing efficiency. If new equipment and varieties of crops allow a farmer to produce twice as much as before, that benefits everyone through cheaper food (so fewer go hungry), more profit to the farmer and more efficient use of arable land (leaving more available for wildlife).
The only people who lose in this scenario are the less efficient farmers, who are driven out of business.
Is this a good bargain? Nobody asked the farmers but society has embraced this approach and farmers have suffered the consequences.
When we talk about coal mining, the same logic applies, with the added benefit that every worker displaced from coal mining is another worker who won't get lung disease or be killed in a mining accident. Again, nobody asked the miners and many of them would not see this as a good deal, as they would rightly argue that their long-term health is less of a concern than tomorrow's paycheck.
Is there a logical conclusion to these trends? Yes, there is: we can see a time coming when all kinds of occupations have been replaced by machines or computers. Indeed, we are not too far from a time when humanity's basic needs - notably food and shelter - could and probably will be provided with minimal human labour.
A huge question is how we will re-organize society when there are essentially no more jobs in food production and transportation, energy production, or manufacturing, but that's a topic for another day.
There are, however, large sectors of the population that work in people-centred occupations. Your hairdresser. Your dentist. Your entertainers. Your lawyer. And, yes, your university professor.
Although you would be happy if their services were cheaper, in none of of these occupations would you want higher productivity, because the value you derive from them comes from the personal attention you receive. At least for hairdressers and entertainers, you wouldn't want them to be faster.
Similarly for school teachers: yes, we could have a system in which one teacher hooks up 100 kids to a computer system for the day, perhaps administering mild sedatives so they don't get fidgety. That would reduce the cost of school. It might even improve learning outcomes. But I wouldn't allow my kids to go to such a school. Would you?
I want my children to have personalized, human interaction with a teacher and the other children. I don't want the system to be faster, I don't want the teachers to be paid less. This is a part of the economy, like musicians, that resists efficiencies in the way that economists want to measure them. As everything else becomes more efficient, these service parts of the economy will take up a larger and larger share.
The problem here is not that services can't be rendered more efficient, it is that the way we measure economic production - through GDP - was useful when it was invented to optimize manufacturing in the Second World War but no longer serves the needs of society.
For example, GDP does not account for the work parents do raising their children, unless they swap parental responsibilities with their neighbours and pay each other. According to economists, parenting has no value to the economy.
Oddly, the consequences of bad parenting are valuable, because if you have to pay for medical treatment, to repair damage that a child has done, or for their therapy, that improves the economy. Similarly for devastating storms and earthquakes: each one gooses the GDP.
Spending time at church with your neighbours? Not so much.
What kind of sick person would invent an economic measure that values tragedy and devalues community and human bonding?Click here to see more...