U.K. Triple-Dipping as Productivity Falls

Moneybox
A blog about business and economics.
Jan. 25 2013 8:59 AM

U.K. Triple-Dipping as Productivity Falls

British Prime Minister David Cameron at Davos, Jan. 24, 2013
British Prime Minister David Cameron at Davos, Jan. 24, 2013

Photo by Johannes Eisele/AFP/Getty Images.

Another bad Gross Domestic Product number from the United Kingdom this morning as Real GDP fell slightly in the fourth quarter, indicating the beginnings of a third dip in the British economy's dismal post-crisis performance.

Yet the interesting thing about the U.K. economy under the Cameron/Clegg coalition is that while you'd hardly say the labor market is amazing, it's not nearly the disaster that the GDP numbers would suggest. In the United States, total economic output is above its pre-crisis peak, but total employment is still slightly below the peak because output per worker has increased. In the United Kingdom, the unemployment rate is slightly better than in America even though GDP is stuck well below its pre-crisis level and actually shrinking. Productivity, in other words, has collapsed. Izabella Kaminska runs down some theories as to why this is, but a lot of them strike me as implausibly general. Considerations about mismeasurement of the welfare impact of digital goods, for example, shouldn't produce a U.K.-only statistical trend. What's needed is an explanation of why productivity would fall in the United Kingdom but not in Canada or the U.S.

Part of the story is declining output of North Sea oil and gas. Part of the story has to do with the U.K. economy's unusual level of financialization. Part of the story has to do with Cameron/Clegg's unwise fiscal austerity policies. But I don't think those considerations really add up as a full account of what's happening.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Smash and Grab

Will competitive Senate contests in Kansas and South Dakota lead to more late-breaking races in future elections?

I Am 25. I Don’t Work at Facebook. My Doctors Want Me to Freeze My Eggs.

The XX Factor
Oct. 20 2014 6:17 PM I Am 25. I Don’t Work at Facebook. My Doctors Want Me to Freeze My Eggs.

Republicans Want the Government to Listen to the American Public on Ebola. That’s a Horrible Idea.

The Most Ingenious Teaching Device Ever Invented

Tom Hanks Has a Short Story in the New Yorker. It’s Not Good.

Brow Beat

Marvel’s Civil War Is a Far-Right Paranoid Fantasy

It’s also a mess. Can the movies do better?

Watching Netflix in Bed. Hanging Bananas. Is There Anything These Hooks Can’t Solve?

The Procedural Rule That Could Prevent Gay Marriage From Reaching SCOTUS Again

  News & Politics
Politics
Oct. 20 2014 8:14 PM You Should Be Optimistic About Ebola Don’t panic. Here are all the signs that the U.S. is containing the disease.
  Business
Moneybox
Oct. 20 2014 7:23 PM Chipotle’s Magical Burrito Empire Keeps Growing, Might Be Slowing
  Life
Outward
Oct. 20 2014 3:16 PM The Catholic Church Is Changing, and Celibate Gays Are Leading the Way
  Double X
The XX Factor
Oct. 20 2014 6:17 PM I Am 25. I Don't Work at Facebook. My Doctors Want Me to Freeze My Eggs.
  Slate Plus
Tv Club
Oct. 20 2014 7:15 AM The Slate Doctor Who Podcast: Episode 9 A spoiler-filled discussion of "Flatline."
  Arts
Brow Beat
Oct. 20 2014 9:13 PM The Smart, Talented, and Utterly Hilarious Leslie Jones Is SNL’s Newest Cast Member
  Technology
Future Tense
Oct. 20 2014 4:59 PM Canadian Town Cancels Outdoor Halloween Because Polar Bears
  Health & Science
Medical Examiner
Oct. 20 2014 11:46 AM Is Anybody Watching My Do-Gooding? The difference between being a hero and being an altruist.
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.