Close-up look at the productivity lag. [Adverse effects of regulations]
The author first notes the five factors advanced by John Kendrick of George Washington University that affect a given industry's productivity: (1) direct relationship to sales; (2) R and D spending pays off; (3) average education of workers; (4) cyclicality; (5) labor union's rigid rules generally retard gains in productivity. From his investigation, Mr. Meadows adds two more: (a) government regulation, and (b) the extent to which industries are converting from electro mechanical production processes to electronic ones. He then surveys briefly the productivity situation in the major industries: food; transportation equipment; nonelectrical machinery; chemicals; primary metals; petroleum; fabricated metal products; electronics; paper; printing and publishing; construction; and mining. The managers of American industry feel that an era of lower productivity was ushered in in the mid-1960s when values of American society began to shift and new regulations arose; generally, the businessmen feel that the regulatory edicts are designed by a corps of bureaucrats who appear to be out of touch with the realities of the marketplace. Edward Denison of Brookings Institution has calculated that, by 1975, new environmental and safety regulations had reduced nation's total factor productivity growth by 1.4% (3-years growth at the old long-term rate), and undoubtedly higher today. Finally, the importance of profits to productivity is pointed out, noting that an Administration that is trying to control profits, and also studying ways to increase productivity, would seem to be working at cross purposes.
- OSTI ID:
- 6384398
- Journal Information:
- Fortune; (United States), Vol. 98:11
- Country of Publication:
- United States
- Language:
- English
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