[spangry]

Yeah, there's a lot of problems with measuring economic productivity. Almost to the point where I wonder if it's informative at all. In Australia, we've had a 10 year slump in measured productivity (MFP). During the same period, commodity prices were at all-time historical highs and we were raking in a tonne of national income (as our exports are heavily weighted towards commodities).

Guess which sector has been the biggest drag on MFP? Yep. Commodities. Because market prices were so high, it was profitable to throw a crap-load of inputs to extract fairly marginal outputs. Hence the drag on MFP. Now that the 'mining boom' is over, our national productivity will probably rise while our living standards fall due to the sharp reduction in national net income.

Productivity should not be seen as an end in itself, although it seems to dominate political discourse on the economy. I wonder if there are more sensible (and calculable) metrics that we could use...