If there's one thing that everyone in economics is worried about right now, it's productivity.
Put very simply, productivity is the ability to get more done with the same amount of resources. At heart, this is how life gets better; this is how living standards improve.
If you even believe in the idea of progress (I do, for what it's worth), then productivity is what makes it possible.
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So it's a source of constant worry that right now, productivity growth across developed nations is pretty poor and has been for ages.
The good news is that despite the hysterics and the "unprecedented" threat of robots taking our jobs and turning us into bio-organic mulch for their advanced propulsion systems we've been here before.
Today's environment is not as unusual as everyone seems to think
This year's Barclays Equity Gilts study tackles a lot of interesting questions. One of them is the "productivity puzzle". This boils down to: why is productivity growth so appalling right now, even although technology is simultaneously apparently advancing rapidly?
The answer is pretty simple. We just need a bit of patience.
Barclays points out that it takes a long time for new technology to realise its potential. The steam engine was invented about 150 years ahead of its "commercial implementation", notes the bank.
The Edison Electric Illuminating Company of New York "started lighting up parts of Manhattan" in 1882. "This was a truly revolutionary technology." And yet, it took around 30 years before even half of manufacturing premises in the US were electrified. And "the biggest benefits came later when complementary innovations were made".
Meanwhile, it took until the late 1980s for computers to become fully embedded in the business world. At that point they accounted for about 5% of corporate spending on equipment, the "long-run plateau". That was 25 years on from the invention of the integrated circuit.
In other words, new technology might be obviously revolutionary, but it takes a long time for its full impact to be felt. I mean, in our own time, you need only look at the rise of the internet and shopping online specifically to see that this is true. Amazon used to be little more than a promising book shop. Now it's a logistics expert, TV broadcaster, and a destroyer of industries.
Fear of the mob is also nothing unusual
The other thing that's worth pointing out is that people have always been worried about robots or new technology at least taking over, and leaving a mass of unemployed people with nothing better to do than get disgruntled and cause trouble.
In the 1960s, for example, then-President Lyndon Johnson set up a commission to consider the impact of automation on jobs. The notion of the "guaranteed minimum income" reared its head back then too (intriguingly, this was also a period in which a disinflationary era gave way to an extremely inflationary one). People would be put out of work, and they would need something to occupy them.
This is pure fear of the mob. Throughout history, those in power have always fretted that there's a great unwashed mass out there, who can only be kept in check by tossing them bread, putting on circuses, and making sure they have to work bloody hard in between, so that they're too tired to pick up their pitchforks and cudgels.
Why do you think so many Silicon Valley entrepreneurs talk up the idea of basic income? It's because they imagine that they're the ones who the mob would come for first.
Even John Stuart Mill, the great feminist and defender of liberty, baulked at the idea of universal suffrage because it would lead to "mob rule". (A lot of people still agree with him on that point, clearly.)
My point is not that social unrest does not exist, or even that technology doesn't contribute to it. My point is that these fears are inherently human, and therefore they come around time and time again.
And the reality so far has proved to be quite different. Revolutionary new technology has created new demand and, in doing so, resulted in the need for more employees, even as the technology makes the whole process more efficient.
For example, "job creation in the British textile industry went up sharply between 1810-1840, decades after the introduction of the power loom, because demand for textiles exploded as they became cheaper."
And of course, new technologies create new jobs. Cars rendered horse-drawn carriages, and the jobs that went with them, obsolete. But service station staff and car designers replaced dung collectors and farriers.
Today, app developer, data scientist and artificial-intelligence worker are among the jobs that never existed before. Put simply, unless it's actually different this time, advancing technology should merely mean new jobs, rather than fewer ones for human beings to do.
Two key lessons for investors: the end times and attending to the details
What does this all mean for your investments? I think there are two main things worth remembering. Firstly, it's a reminder that it's always easy (and oddly attractive) to believe that we live in "the end times". But often, what look like new phenomena are in fact just history vaguely repeating.
In the details, it's always different this time. But the big picture is usually more cyclical. As the Barclays study puts it: "Historically, society has always found a way to absorb the positive effects of technological change while responding to the challenges such change poses; that is likely to be true in the future as well."
So avoid being sucked in by the idea that you should position your portfolio for extreme scenarios only.
The other key lesson is that, in investment, the details matter. If you want to try to beat the market (which is the goal of an active investor), then you need to get a grip on what really is different this time, and how those changes will pan out.
We may not see mass unemployment and robots taking over. But at the same time, lots of businesses have been and are being disrupted. So either you opt for a passive investment strategy which just gives you exposure to whatever companies are winning at a given time; or you do the homework necessary to understand how these changes are affecting the business models of the companies you want to invest in.
That's the only way to arm yourself so that you can judge whether a company or industry is for example being unfairly punished by a market that doesn't understand how automation and digitisation will affect it, and so creating an opportunity for a better-informed value investor.
It's not easy. Which is, of course, why the passive option is so popular. And there's no shame in that.
John is the executive editor of MoneyWeek and writes our daily investment email, Money Morning. John graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.
He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news. John joined MoneyWeek in 2005.
His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.
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