LSE Events | Andrew G Haldane | The Productivity Puzzle

Productivity growth has weakened across a number of economies over recent years, particularly in the UK. Does this reflect a slowing of innovation? What role can public policy play in supporting productivity growth?
Andrew G Haldane is the Chief Economist at the Bank of England. He is also Executive Director for Monetary Analysis, Research and Statistics, and a member of the MPC. Andrew has responsibility for research and statistics across the Bank.
Andrew has an Honorary Doctorate from the Open University, is Honorary Professor at the University of Nottingham, a Visiting Fellow at Nuffield College, Oxford, a member of the Economic Council of the Royal Economic Society, a Fellow of the Academy of Social Sciences and a Member of the Research and Policy Committee at Nesta. Andrew is Chairman and co-founder of Pro Bono Economics, a charity that matches volunteer economists with charitable projects.
Andrew has written extensively on domestic and international monetary and financial policy issues and has published over 150 articles and four books. In 2014, TIME magazine named him one of the 100 most influential people in the world.
Wouter den Haan is Co-director for the Centre for Macroeconomics and Professor of Economics at LSE.
The Department of Economics at LSE (@LSEEcon) is one of the largest economics departments in the world. Its size ensures that all areas of economics are strongly represented in both research and teaching.
The Centre For Macroeconomics (@CFMUK) brings together world-class experts to carry out pioneering research on the global economic crisis and to help design policies that alleviate it.

[@bq4416]

The ending of the talk revealed a lot - there was essentially a trade off choice that was made in the UK, between greater employment OR greater (marginal) productivity - the choice was obviously employment as it is safer, politically! However, I would say that the marginal productivity would have had a snowball effect; the 3% (marginal) productivity increase would've increased year on year and after several years we'd have been substantially more productive. Also, I'd like to flag that there is a relative distinct difference between innovation and automation! The rate of automation alongside the rate of innovation may also be indicative of the slowdown in productivity (?). The difference between automation & innovation: automation is the use of technology/management to streamline and support traditional [repetitive] tasks & roles whereas innovation is the classic disruptive innovation that renders the traditional tasks & roles obsolete and delivers new, unimaginable ways to operate and increase operational efficiency... it'd be good to see what Andy's thoughts are on that. Andy does seem to allude to the decrease in productivity correlating to monetary policy; just a loose observation : it's funny how productivity starts falling the world over when innovations in credit/banking/finance occur and realisations of demand & supply interdependencies are taken notice of (as well as take effect).

[@kingofbadgers3019]

Awww but you forget, We are all dead in the long run. The hit to AD caused by a loss of 1.5 million jobs would have depend the rescission and most likely hit the poorest and least skilled workers. The government could have only raised interest rates then with the promise to buy up or train spare labour and as the BOE and government are separate bodies (for justifiable reasons) such a brake from what was the neolibral narrative would have been impossible at the time.

[@eoinleen1]

Really excellent talk!

[@lindadada-dadadal9864]

Thank you so much! This has provided me much knowledge on productivity and what one of the MPCs is like in real life :) very useful talk indeed

[@salemgheit2293]

That lag bit in terms of the time needed for innovation to be diffused and captured by TFP is crucial. We may yet to wait for some time so that TFP can capture much of the ideas and innovations of the latest information revolution.

[@tusharmehra7272]

28:48

[@seaterjohn]

Unbelievably bad. Haldane is indeed a terrible speaker, as noted by an early commenter. Besides being slow and halting, he has an air of being Moses coming down from the mountain with the latest revelations from God himself, an air that I find especially annoying because in fact Haldane has nothing to say and evidently has no understanding of the topic. I have spent the last 25 years or so of my career as a professor of economics working on growth and development. Most of what Haldane says is old hat, known for decades. For two quick references, see Gregory Clark's book "A Farewell to Alms" (2007) for a discussion on the historical data and Robert Gordon's "The Rise and Fall of American Growth" (2016) for a discussion of the decline in the growth rate over the last 70 years. There also are lots of articles in books and in the economics journals on the determinants of productivity growth, both the theory and the evidence. No one knows for sure why growth rates recently have declined, but there is quite a lot of evidence that increasing regulation and rising tax rates play a big role and maybe explain everything.

[@GonzoTehGreat]

Andy is an awful public speaker who is painful to listen to. He should talk slowly enough to be clearly​ understood but not with so many pauses that he fragments each sentence to such an extent, it actually becomes harder (instead of easier) to follow what he is saying!

[@porkbroth]

TheShreester I agree with your comments but I think that awful might be a bit harsh

[@GonzoTehGreat]

John Wright Perhaps that was a bit harsh but I expect better from someone who does so much public speaking. If you have a more appropriate adjective to describe him I'm all ears :-)

[@BOZ_11]

it's fine for me, but u should put the playback speed on 1.25x

[@markpurslow7446]

his oration isnt the question here but ive heard a lot worse

[@hxi7141]

Painful recent experience: for a similar entry finance role, my friend in NYC has a starting pay of 80-90k USD, mine here in London is 35k GBP, almost half😅. No wonder top talented individuals more and more chose the states instead of here