The history of U.S. productivity, in a nutshell

There have been some recent confusions in the comments about the historical record on productivity.  The excellent Alexander J. Field sets it straight, after noting that TFP (Total Factor Productivity) growth in the interwar years was remarkably strong:

…TFP persisted at high although more modest rates during the golden age (1948-73).  But then it ground to an almost complete halt between 1973 and 1995.  Output per hour continued to rise, albeit much more slowly, but this was almost entirely attributable to physical capital deepening.  Data are now available for the entire century, and it is no longer possible to interpret the high rate of TFP advance during the interwar years that prompted the Abramowitz/Solow generalization [TC: the generalization was about knowledge-based progress] as a defining characteristic of the century as a whole.

In this context, think of TFP as the growth due to new ideas, rather than just throwing capital or labor at a problem or production process.  Here is a related Field paper.  It's also wrong to think of the post-WWII period as the peak of progress, rather as Field shows high TFP growth starts post Civil War and the time after WWII is somewhat slower than many previous decades.  The early 19th century, by the way, was not so splendid for TFP.

The critical responses to The Great Stagnation prefer to attack median income measures and in general they are reluctant to talk about total factor productivity.  Yet we are pointed very much toward the same conclusion.  My first post on TGS also considered these issues and you will find some relevant Charles Jones papers here


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