Innovation, research and the UK’s productivity crisis

My article on the UK’s productivity slowdown has now been published as a Sheffield Political Economy Research Institute Paper, and is available for download here. Here is its introduction/summary:

The UK is in the midst of an unprecedented peacetime slowdown in productivity growth, which comes on top of the nation’s long-standing productivity weakness compared to the USA, France and Germany. If this trend continues, UK living standards will continue to stagnate and the government’s ambition to eliminate the deficit will fail. Productivity growth is connected with innovation, in its broadest sense, so it is natural to explore the connection between the UK’s poor productivity performance and the low R&D intensity of its economy. More careful analyses of productivity look at the performance of individual sectors and allow some more detailed explanations of the productivity slowdown to be tested. The decline of North Sea oil and gas and the end of the financial services bubble have a special role in the UK’s poor recent performance; these do not explain all the problem, but they will provide a headwind that the economy will have to overcome over the coming years. In response, the UK government will need to take a more active role in procuring and driving technological innovation, particularly in areas where such innovation is needed to meet the strategic goals of the state. We need a new political economy of technological innovation.

SPERI-Paper-28-Innovation-research-and-the-UK-productivity-crisis cover

UK productivity – still no sign of recovery

The UK’s Office of National Statistics today released the latest figures for labour productivity, to the end of 2015. This shows that the apparent recovery in productivity that seemed to be getting going half way through last year was yet another false dawn; productivity has flat-lined since the financial crisis, with the Q4 2015 value actually below the peak achieved in 2007. This performance puts us on track for the worst decade in a century. Poor productivity growth translates directly into stagnating living standards and lower tax revenues for the government, meaning that, despite austerity, all their efforts to eliminate the fiscal deficit will be in vain.

As this is perhaps the most serious economic problem currently facing the UK, it’s good to see the issue becoming more widely discussed. It’s an issue I’ve been thinking about for some time; my post on the political implications of the productivity slowdown, as revealed by this March’s budget and its aftermath, is here: The political fallout of the UK’s productivity problem. Last summer, I wrote a series of blogposts exploring the origins of this productivity slowdown. I’ve written a draft paper based on a substantially revised and updated version of those posts:

Innovation, research, and the UK’s productivity crisis (1.4 MB PDF).

quarterly productivity Q4 2015

Labour productivity: output per hour. ONS Labour Productivity Dataset, 7 April 2016.

“Against transhumanism” – a round-up of reactions so far

It’s about three months since I released my free ebook “Against transhumanism: the delusion of technological transcendence”, and I’m pleased to see from my log files that since then it’s been downloaded more than 10,000 times (many of these may, of course, be repeat customers, or indeed sentient bots roaming the web looking for laughs).

I’m grateful to many people for recommendations on blogs and twitter, and I should give special thanks to Dale Carrico, whose original suggestion it was to put the e-book together, and on whose own arguments chapter 5 in particular draws heavily. A review from transhumanist Giulio Prisco finds a surprising amount to agree with, and some interesting comments below the line.

There was a generous review from the economist Diane Coyle: The future is multiple, not singular; she describes the book as “a brief, compelling demolition of the idea that digital technology is hurtling us towards a ‘singularity’”.

The e-book was the subject of an interview with Russ Roberts on EconTalk, which over the course of more than an an hour covered transhumanism, brain uploading, the concept of emergence in physics, economics and biology, and the economics of technology and innovation more generally. There my insistence on the importance of government intervention for radical innovation collided with my interviewer’s position favouring small government and free markets.

Finally, the online magazine Demos Quarterly published a dialogue between me and Zoltan Istvan, the American writer, futurist, philosopher and transhumanist who is running for US President under the transhumanist banner in the 2016 election. Here’s an extract from my opening statement:

“Technological progress isn’t inevitable, nor is the direction it takes pre-ordained. Transhumanism as a movement appropriates the achievements that technology has made already, and uses these to give credibility to a series of future aspirations that aren’t so much extrapolations of current trends, but the fulfillments of ancient human desires. People have longed for a transcendent world of material plenty and everlasting life for millennia, and these wishes don’t become any more likely to be fulfilled by being dressed up in a new language of science.”

Here’s the link to the e-book (Note added 6/4/2016 – this version is a smaller file than the original version, with thanks to Seb Schmoller for optimising the PDF)
Against Transhumanism, v1.0 (PDF 650 kB).
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Steel and the dematerialisation (or not) of the world economy

The UK was the country in which mass production of steel began, so the current difficulties of the UK’s steel industry are highly politically charged. For many, it is unthinkable that a country with pretensions to be an economic power could lose its capacity to mass produce steel. To others, though, the steel industry is the epitome of the old heavy industry that has been superseded by the new, weightless economy of services, now supercharged by new digital technologies; we should not mourn its inevitable passing. So, is steel irrelevant, in our new, dematerialised economy? Here are two graphs which, on the face of it, seem to tell contradictory stories about the importance, or otherwise, of steel in modern economies.

USA_steel_per_dollar_GDP
The “steel intensity” of the economy of the USA – the amount of steel required to produce unit real GDP output (expressed as 1000’s of 2009 US dollars).

The first graph shows, for the example of the USA, the steel intensity of the economy, defined as the amount of steel required to produce unit GDP output. Continue reading “Steel and the dematerialisation (or not) of the world economy”