Productivity or populism, a difficult choice.

"Economics pundits like me spend a good deal of time worrying about productivity," wrote Prof Noah Smith. That is because productivity has become stagnant, despite the fast changing advances in technology. But, maybe parameters for measuring productivity are incorrect, because sustainability is not being measured. "Suppose you're an entrepreneur who can invest in a gold mine or an online retail business. The gold mine will eventually run out,.... Each may make the same profit in the first five years -- or the gold mine may even make more -- but 50 years down the line, there's a better chance the online retailer will still be generating a profit." Fossil fuels will eventually run out but solar energy will last indefinitely if we develop the technology to store it. Action to control climate change will give returns for a long time to come. This is supported by Rajivlochans who wrote that for India to become wealthy we must think long term. "The process of creating wealth has far more to do with improving productivity and efficiency than merely the building of bridges, roads and airports or even setting up factories worth billions of dollars." To improve productivity we must improve output which needs a highly skilled workforce. "The data shows that any increase in skills, even in agriculture, can lead to a 30% rise in incomes. In the manufacturing sector, the increase in income is of the order of 80-95%." Ownership of property has to be clearly defined so that people can borrow against it and providing information to citizens increases wealth creation. The trouble is that our politicians and civil servants passionately believe in keeping everything secret because that gives them power over citizens. Till today on one knows what went on between Jawaharlal Nehru and Lord Mountbatten in the run up to independence. "White households earn at least five times more than black households," said President Jacob Zuma. "...only 10% of the top 100 companies on the Johannesburg Stock Exchange are owned by black South Africans." This despite strong affirmative action for over 14 years, known as Black Economic Empowerment. Why? "The problem is that production requires not just capital and labour, but also knowhow -- a factor of production ignored by Marx and his acolytes. Knowhow is the capacity to perform tasks. It exists only in brains," wrote Prof Ricardo Hausmann. Unforunately, "Knowhow is transmitted and accumulated slowly..." Politicians are reluctant to undertake economic reforms because they maybe unpalatable to some people, wrote Prof Vivek Dahejia. It is much easier to carry out populist policies as long as the economy is growing. But, populism does not create jobs. It does win elections, though.