Here's how to solve the productivity paradox
A culture of government bailouts and constant stimulus is a barrier to technological innovation and dynamism.
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Ruchir Sharma
By late 2020, many economists saw a silver lining in the pandemic. Stuck at home, people were adopting digital technology at an accelerating pace. Productivity was surging. Perhaps the long, debilitating decline in productivity growth was over. Alas, after peaking above 3 per cent the surge collapsed, exposed as a blip typical during the early stages of a recovery, when businesses are slow to hire new workers.
This leaves unsolved a great paradox. Since the computer age dawned in the 1970s, we have lived with a sense of accelerating progress and innovation. Yet as the computer age began, the post-war productivity boom ended. Except for a revival around the turn of the century, productivity has trended downward for more than 50 years.