How to Boost Productivity and Make It Last

Economics pundits like me spend a good deal of time worrying about productivity. When discussing the issue, we often begin by noting that in the long run, productivity increases are the only way that living standards can improve. We recount the history of technological breakthroughs like the internal-combustion engine and the invention of electricity that supercharged productivity. And we wring our hands as productivity growth slows. Unless governments take steps to accelerate the pace of innovation and improve economic institutions, we warn, the human condition could stagnate.

We pundits are right to be concerned about slowing productivity growth. But we’re too careless in drawing an equivalence between growth today and wealth in the future. By assuming that more productivity today equals more tomorrow, we neglect the crucial idea of sustainability.