1. Introduction Lecture – Sept. 6th 1.docx.pdf

1. Introduction Lecture – Sept. 6th 1.docx.pdf - SOCI 235...

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Unformatted text preview: SOCI​ ​235​ ​–​ ​Technology​ ​and​ ​Society Introduction​ ​Lecture:​ ​Growth​ ​in​ ​Productivity​ ​–​ ​Sept.​ ​6th ​ Graph​ ​#1 ● Shows​ ​growth​ ​in​ ​productivity​ ​over​ ​time​ ​in​ ​the​ ​U.S.,​ ​U.K.,​ ​and​ ​Canada​ ​over​ ​time ● Raises​ ​the​ ​question​ ​–​ ​what​ ​do​ ​we​ ​mean​ ​by​ ​productivity,​ ​and​ ​how​ ​can​ ​we​ ​measure​ ​it? ● UK​ ​is​ ​highest​ ​in​ ​1870,​ ​gradually​ ​becomes​ ​lowest ● U.S.​ ​reaches​ ​the​ ​same​ ​level​ ​of​ ​productivity​ ​GDP​ ​per​ ​person​ ​an​ ​hour​ ​as​ ​the​ ​U.K.​ ​in​ ​1890 ● Hour​ ​of​ ​work​ ​in​ ​1978​ ​reaches​ ​$8.50​ ​dollars​ ​of​ ​goods​ ​produced​ ​in​ ​the​ ​U.S. ● Canada​ ​–​ ​relatively​ ​the​ ​same​ ​trend​ ​as​ ​the​ ​U.S.,​ ​overtakes​ ​the​ ​UK​ ​in​ ​1950,​ ​then​ ​becomes the​ ​middle​ ​ground,​ ​tends​ ​to​ ​lag​ ​behind​ ​a​ ​bit​ ​between​ ​1973​ ​and​ ​1978 ● Suggests​ ​increments​ ​in​ ​living​ ​standards Productivity​​ ​–​ ​measure​ ​of​ ​how​ ​much​ ​output​ ​you​ ​get​ ​from​ ​some​ ​input​ ​–​ ​ratio​ ​of​ ​output​ ​to​ ​input ● Labour​ ​productivity​​ ​–​ ​output​ ​per​ ​unit​ ​of​ ​labour​ ​input​ ​where​ ​the​ ​input​ ​is​ ​usually​ ​hours but​ ​may​ ​be​ ​employees o How​ ​to​ ​improve​ ​productivity​ ​of​ ​employees​ ​–​ ​better​ ​technology,​ ​machinery, equipment​ ​(also​ ​incentive,​ ​innovation,​ ​logistics) o Labour​ ​productivity​ ​may​ ​rise​ ​because​ ​there​ ​are​ ​additional​ ​inputs​ ​–​ ​these additional​ ​inputs​ ​are​ ​capital​ ​equipment o Not​ ​adequately​ ​measured​ ​because​ ​it​ ​does​ ​not​ ​take​ ​into​ ​account​ ​the​ ​productivity enhancement​ ​of​ ​commercial​ ​equipment ● Total​ ​factor​ ​productivity​​ ​–​ ​output​ ​per​ ​unit​ ​of​ ​all​ ​inputs​ ​–​ ​including​ ​both​ ​labour​ ​and capital o Rises​ ​in​ ​productivity​ ​will​ ​usually​ ​be​ ​associated​ ​with​ ​increases​ ​in​ ​living​ ​standards ● Measurement​ ​–​ ​why​ ​does​ ​it​ ​matter? GDP​ ​–​ ​compare​ ​productivity​ ​by​ ​dividing​ ​GDP​ ​/​ ​inputs​ ​=​ ​measure​ ​of​ ​GDP​ ​per​ ​capita​ ​or​ ​per​ ​hour of​ ​work​ ​(this​ ​is​ ​a​ ​measure​ ​of​ ​productivity) ● Why​ ​does​ ​GDP​ ​per​ ​hour​ ​of​ ​work​ ​matter?​ ​–​ ​Living​ ​standards,​ ​interested​ ​in​ ​that​ ​outcome because​ ​it’s​ ​how​ ​we​ ​get​ ​better​ ​off GDP​ ​can​ ​be​ ​measured​ ​by​ ​summing​ ​these: 1. Expenditures​​ ​(total​ ​expenditures​ ​required​ ​to​ ​buy​ ​final​ ​output)​ ​=​ ​consumption​ ​+ investment​ ​+​ ​government​ ​+​ ​net​ ​exports 2. Income​ ​=​ ​wages​ ​+​ ​rent​ ​+​ ​profits​ ​+​ ​interest Is​ ​real​ ​GDP​ ​a​ ​good​ ​measure​ ​of​ ​living​ ​standards? 1. Government​ ​expenditure a. Government​ ​spends​ ​$​ ​on​ ​roads,​ ​hospitals,​ ​senator’s​ ​salary,​ ​hockey​ ​arena​ ​to attract​ ​tourism​ ​to​ ​Quebec​ ​City b. When​ ​gov.​ ​spends​ ​$,​ ​the​ ​purchases​ are​ ​involuntary;​ ​people​ ​are​ ​compelled​ ​to​ ​pay taxes,​ ​then​ ​gov.​ ​uses​ ​those​ ​tax​ ​dollars​ ​to​ ​buy​ ​roads,​ ​build​ ​arenas,​ ​etc. c. Article​ ​by​ ​Tyler​ ​Cowan​ ​–​ ​difficulty​ ​with​ ​government​ ​expenditures​ ​is​ ​that​ ​there​ ​is no​ ​limit​ ​to​ ​what​ ​they​ ​can​ ​supply,​ ​the​ ​government​ ​is​ ​deciding​ ​on​ ​behalf​ ​of​ ​what the​ ​people​ ​want d. When​ ​gov.​ ​makes​ ​decision​ ​to​ ​spend​ ​money,​ ​this​ ​is​ ​not​ ​validated​ ​by​ ​private consumers e. How​ ​do​ ​we​ ​value​ ​government​ ​expenditures​ ​in​ ​GDP​ ​calculations​ ​–​ ​at​ ​cost f. Stresses​ ​that​ ​the​ ​U.S.​ ​wastes​ ​a​ ​lot​ ​of​ ​government​ ​expenditures g. As​ ​the​ ​share​ ​of​ ​government​ ​spending​ ​rises,​ ​so​ ​GDP​ ​tends​ ​to​ ​overstate​ ​living standards 2. Private​ ​expenditure a. Some​ ​expenditures​ ​cannot​ ​be​ ​viewed​ ​as​ ​improving​ ​well-being​ ​–​ ​ex.​ ​gasoline used​ ​while​ ​in​ ​a​ ​traffic​ ​jam b. Mortgage​ ​–​ ​after​ ​its​ ​been​ ​paid​ ​off,​ ​home​ ​ownership​ ​doesn’t​ ​show​ ​up​ ​in​ ​GDP totals​ ​but​ ​this​ ​is​ ​a​ ​huge​ ​and​ ​major​ ​source​ ​of​ ​well-being/living​ ​standards c. Improvements​ ​in​ ​quality​ ​–​ ​Hedonic​ ​indexes:​ ​take​ ​quality​ ​improvements​ ​into account​ ​by​ ​1)​ ​when​ ​same​ ​good​ ​is​ ​available​ ​on​ ​market​ ​distinguished​ ​by​ ​whether or​ ​not​ ​a​ ​quality​ ​improvement​ ​is​ ​present​ ​the​ ​price​ ​margin​ ​between​ ​the​ ​good​ ​with the​ ​quality​ ​improvement​ ​and​ ​the​ ​good​ ​without​ ​it​ ​can​ ​be​ ​treated​ ​as​ ​the​ ​value​ ​of the​ ​improvement​ ​and​ ​2)​ ​subsequent​ ​inflation​ ​adjustments​ ​can​ ​be​ ​offset​ ​by​ ​the value​ ​of​ ​additional​ ​quality​ ​contained​ ​in​ ​successive​ ​versions​ ​of​ ​the​ ​good d. Expenditures​ ​on​ ​illegal​ ​activities​ ​(drugs,​ ​prostitution,​ ​bribes)​ ​–​ ​Italy​ ​now​ ​includes these​ ​expenditures​ ​in​ ​their​ ​GDP​ ​reports,​ ​U.K.​ ​has​ ​been​ ​moving​ ​towards​ ​including expenditures​ ​on​ ​prostitution Expenditures​ ​can​ ​have​ ​spillover’s​ ​–​ ​negative,​ ​or​ ​positive​ ​consequences​ ​to​ ​which​ ​no​ ​price​ ​is attached,​ ​pollution​ ​is​ ​an​ ​example​ ​of​ ​a​ ​negative​ ​outcome Issues​ ​with​ ​GDP: 1.​ ​Wasted​ ​expenditures​ ​do​ ​not​ ​always​ ​result​ ​in​ ​improved​ ​living​ ​standards 2.​ ​What​ ​happens​ ​when​ ​the​ ​mortgage​ ​is​ ​payed​ ​off? ● Property​ ​is​ ​no​ ​longer​ ​generating​ ​expenditures​ ​–​ ​does​ ​not​ ​have​ ​one​ ​that​ ​will​ ​be​ ​showing up​ ​in​ ​GDP​ ​calculations 3.​ ​Capital​ ​equipment​​ ​–​ ​problem​ ​is​ ​that​ ​it​ ​may​ ​deteriorate,​ ​but​ ​beneficial​ ​overall 4.​ ​Research​ ​and​ ​development​ ​expenditures ● Benefits​ ​are​ ​likely​ ​to​ ​be​ ​harvested​ ​years​ ​down​ ​the​ ​line​ ​to​ ​when​ ​they​ ​are​ ​made ● Question​ ​is​ ​–​ ​how​ ​do​ ​we​ ​deal​ ​with​ ​benefits​ ​from​ ​these​ ​expenditures​ ​in​ ​future​ ​years? o Not​ ​very​ ​well​ ​–​ ​difficult​ ​to​ ​manage,​ ​Canada​ ​incorporated​ ​RND​ ​into​ ​its​ ​GDP​ ​2012 o RND​ ​produces​ ​a​ ​flow​ ​of​ ​benefits​ ​–​ ​but​ ​not​ ​all​ ​of​ ​it​ ​does,​ ​quite​ ​a​ ​bit​ ​produces nothing​ ​at​ ​all ▪ Difficult​ ​to​ ​decide​ ​what​ ​to​ ​assign​ ​benefits​ ​to 5.​​ ​Vice​ ​–​ ​gambling,​ ​prostitution,​ ​etc. ● Question​ ​of​ ​whether​ ​or​ ​not​ ​we​ ​should​ ​include​ ​vice​ ​in​ ​GDP o How​ ​do​ ​we​ ​go​ ​about​ ​doing​ ​this? ● It​ ​is​ ​still​ ​benefiting​ ​and​ ​influencing​ ​the​ ​GDP Changes​ ​in​ ​living​ ​standards​ ​over​ ​the​ ​19​th​​ ​and​ ​20​th​​ ​centuries ● 1870​​ ​–​ ​people​ ​spent​ ​the​ ​bulk​ ​of​ ​their​ ​income​ ​on​ ​food o No​ ​longer​ ​the​ ​case,​ ​now​ ​people​ ​only​ ​spend​ ​most​ ​of​ ​their​ ​income​ ​on​ ​food​ ​if​ ​they are​ ​‘poor’ o Very​ ​limited​ ​variety​ ​of​ ​goods,​ ​seasonal,​ ​preserved​ ​foods o Amount​ ​of​ ​space​ ​–​ ​limited,​ ​packed​ ​into​ ​small​ ​accommodation o No​ ​running​ ​water,​ ​washrooms​ ​were​ ​outside o No​ ​electricity,​ ​limited​ ​access​ ​to​ ​gas ● 1900​ ​–​ ​work​ ​week​ ​was​ ​still​ ​57​ ​hours o No​ ​retirement​ ​provisions o Square​ ​footage​ ​of​ ​accommodation​ ​was​ ​small,​ ​frequently​ ​poorly​ ​ventilated o We​ ​see​ ​all​ ​sorts​ ​of​ ​improvements​ ​in​ ​the​ ​20​th​​ ​century o Gordon​​ ​–​ ​improvements​ ​in​ ​living​ ​standards​ ​between​ ​2nd​ ​ ​ ​half​ ​of​ ​19​th​​ ​century​ ​to th middle​ ​of​ ​the​ ​20​ ▪ From​ ​1870-2010,​ ​the​ ​#​ ​of​ ​people​ ​per​ ​household​ ​fell​ ​(more​ ​space), streetcar​ ​developed​ ​(living​ ​further​ ​from​ ​work,​ ​get​ ​properties​ ​that​ ​were larger),​ ​tenement​ ​housing​ ​increasingly​ ​replaced​ ​with​ ​single​ ​family​ ​homes, decline​ ​in​ ​#​ ​of​ ​lodgers​ ​that​ ​had​ ​been​ ​necessary​ ​to​ ​supplement​ ​household income,​ ​home​ ​ownership​ ​increased ▪ From​ ​1890​ ​to​ ​1970​ ​–​ ​development​ ​of​ ​networked​ ​house,​ ​1)​ ​electricity,​ ​2) running​ ​water,​ ​3)​ ​flush​ ​toilets,​ ​4)​ ​central​ ​heating​ ​–​ ​these​ ​all​ ​attributed​ ​to improved​ ​living​ ​standards ▪ Gordon​ ​argues​ ​GDP​ ​increases​ ​association​ ​with​ ​these​ ​developments underestimate​ ​the​ ​improvement​ ​in​ ​living​ ​standards​ ​they​ ​brought ▪ From​ ​1910​ ​to​ ​1970​ ​-​ ​ ​appliances​ ​became​ ​widely​ ​available​ ​–​ ​radios, washing​ ​machines,​ ​fridges​ ​–​ ​transformed​ ​domestic​ ​conditions​ ​at​ ​the​ ​time ▪ Switch​ ​to​ ​electric​ ​lighting​ ​–​ ​from​ ​candles,​ ​to​ ​gas​ ​lamps,​ ​(both​ ​these​ ​were a​ ​fire​ ​hazard,​ ​and​ ​gas​ ​in​ ​particular​ ​created​ ​a​ ​deterioration​ ​in​ ​domestic​ ​air quality)​ ​to​ ​electric​ ​light​ ​–​ ​this​ ​created​ ​an​ ​enormous​ ​improvement​ ​in​ ​living standards ● Gordon​ ​argues​ ​this​ ​contribution​ ​to​ ​GDP​ ​underestimates​ ​their contribution​ ​to​ ​living​ ​standards Productivity​ ​Growth​ ​–​ ​MATTERS ● Countries​ ​have​ ​varied​ ​rates​ ​of​ ​productivity​ ​growth​ ​and,​ ​consequently,​ ​in​ ​their​ ​living standards ● Raises​ ​the​ ​question:​ ​what​ ​are​ ​the​ ​institutional​ ​bases​ ​of​ ​productivity​ ​growth​ ​differences? What​ ​produces​ ​rising​ ​labour​ ​productivity? 1. More​ ​capital​ ​equipment​ ​per​ ​worker​ ​–​ ​more​ ​bookkeepers​ ​have​ ​calculating​ ​machines, more​ ​carpenters​ ​have​ ​power​ ​saws,​ ​etc. 2. Better​ ​capital​ ​equipment​ ​per​ ​worker 3. Better​ ​organization​ ​of​ ​production​ ​so​ ​that​ ​people’s​ ​time​ ​is​ ​used​ ​more​ ​effectively 4. Better​ ​training​ ​and​ ​education​ ​so​ ​people​ ​can​ ​do​ ​their​ ​work​ ​better​ ​and​ ​efficiently​ ​use​ ​the capital​ ​equipment​ ​with​ ​which​ ​they​ ​are​ ​provided 5. Improved​ ​product​ ​quality,​ ​may​ ​or​ ​may​ ​not​ ​show​ ​up​ ​in​ ​GDP​ ​output ...
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