Global Arbitrage and the Productivity Puzzle

Irving Wladawsky-Berger, Aug 07, 2017
Commentary by Stephen Downes

The 'innovation dilemma' has driven a lot of education and labour policy over the last few years with legislators trying out how to wring more productivity out of an increasingly unprepared labour force. But what if the issue of productivity has nothing to do with labour, or technology, at all? That's the argument considered here. Irving Wladawsky-Berger suggests that instead of taking advantage of freer trade and technological progress, companies and their managers are focusing on arbitrage to increase productivity, creating illusory short term gains with long term consequences. "By a misguided policy of suppressing wages and thus throttling mass consumption, unchecked managerial elites may inadvertently cripple the technology-driven productivity growth responsible for their rise," he writes.

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