Wall Street Journal recently reported that "Silicon Valley does not believe that US Productivity is down". http://tinyurl.com/pzmbh7t In the 21st century, productivity growth has been low in all major economies of the world- United States, European Union and Japan are all stagnating. This stagnation has put a lot of stress on retirement systems and healthcare- German workers who are working on Mini-Jobs making $500 a month are certainly not earning enough retirement credits to stay out of poverty. German workers making 2,3000 Euro a month also expect to live a retirement in poverty, in the current system. In the 20th century, the middle class had two victories to bask in: Secure Retirement, in which no one would be living in poverty, and comprehensive best available health care available to everyone. These historic achievements are in danger of slipping away, unless per capita income growth and productivity starts rising again. Accepting the so called "Silicon Valley" analysis is tempting- but perhaps this is just an attempt to invent a new scoreboard. Do we need a new scoreboard or new ideas to unlock economic growth? You can write to me at wladislawapte@outlook.com

1. Does Google Chief Economist, Hal
Varian understand economics?
“Way we are measuring productivity is wrong” – Hal Varian, chief economist, google , PROMOTING A NEW
PARADIGM in the Wall Street Journal, July 16th, 2015
Do we need a crooked scoreboard, or do we need more focus on fundamentals?

2. “
”
To Mr. Varian(Google Chief Economist) and other wealthy brains in the world’s
most innovative neighborhood, productivity means giving people and
companies tools to do things better and faster. By that measure, there is an
explosion under way, thanks to the shiny gadgets, apps and digital geegaws
spewing out of Silicon Valley. Official U.S. figures tell a different story. For a
decade, economic output per hour worked—the federal government’s formula
for productivity—has barely budged. Over the past two quarters, in fact, it has
fallen. Sluggish productivity is raising alarms all the way to Federal Reserve
Chairwoman Janet Yellen.
“In just a few slides, I will show that conventional economics does not need to be fixed, on the
contrary, Silicon Valley view of economic growth is flawed.”
Wladislaw Apte
wladislawapte@outlook.com
Wall Street Journal News, July 16th: "Silicon Valley Doesn’t Believe U.S. Productivity Is Down"

3. Stare at a dish left with pizza tomato sauce dried on it for two days
GDP and Productivity Perspective, By Staring at the dirty dish in the sink

4. THE EVOLUTION OF DISHWASHING OVER 40
YEARS
DISHWASHERS 1985
COULD NOT BE USED WITHOUT PRE-
RINSING
ONLY 30% OF HOMES HAD 1985 OR
NEWER MODEL DISHWASHERS IN 2000
DISHWASHERS 2000
COULD BE USED WITHOUT PRERINSING OR
CLEANING
NOT FOR PIZZA SAUCE LEFT UNRINSED FOR 2
DAYS
ONLY 20% OF HOMES HAVE CIRCA 2000
DISHWASHERS
DISHWASHERS 2014
CAN HANDLE PIZZA SAUCE LEFT UNRINSED FOR 2
DAYS
ONLY 3% OF HOMES HAVE 2014 ERA
DISHWASHERS
40% OF THE HOMES DO NOT HAVE DISHWASHERS

5. Technology diffuses over decades
Circa 2015, 40% of homes in America do not have dishwashers, 80% of homes have dishwashers that are older than 15 years,
Every year better dishwashers-and better use of dishwashers save Americans ten billion dollars. Source: QBOE Analysis
QBOE-Quick Back of Envelope Analysis: 150 million households, 30 seconds fewer per day on
dishwashing, $24 per hour benefit = $10.95 billion productivity increase every year

6. DISHWASHER USE ALSO DOES NOT INVOLVE
PAYMENT, SO UNDERCOUNTING IMPROVED
DISHWASHER USE DISTORTS GDP
DISHWASHER USE REALITY
From 15 hours in 1956 to
15 MINUTES WITH THE BEST
DISHWASHERS in 2015,
Diffusion not Revolution
“Real People” refuse
to trust the
dishwasher, and do
not use all its features
On an average Americans are spending 1000 minutes/16
hours. Less per year. 150 million households, $24 per
hour = 60 BILLION DOLLARS PER YEAR - Perhaps more
than Annual Profit made by Google
INTERNET USE REALITY
1995, Altavista, 1998 Yahoo, 2001
Google, 2014 Google features
demonstrate Diffusion Not Revolution
Majority of people do not want to shop for a car
online, do not believe in using Yelp, Do not use
Paypal, Many people still pay bills by Postal Mail
We are benefiting more from
Internet use every year, but the
improvement is incremental

7. Generic Lipitor cuts heart attacks
•Almost Free- $200 per year
Only 30% of those who should take Lipitor
are on it
Slow Diffusion
Nevertheless saves $120 billion a year
New car prices have risen
slower than inflation
•More gas mileage
Longer life
Better Safety Features
Average US Car age is 10 years
Not everyone drives a “Prius”
But technology is diffusing
Annual benefit due to improvement
$50 billion, considering only
Passenger Cars
Smart Phone use has exploded
•Year-on-Year Search Growth tracks
nominal GDP growth 5%
•1000 Google Searches per year
•Vast Proportion seek to gather
information about news, celebrities,
recipe tips- Non economic
•Perhaps there are 200 economic activity
related searches per person per year
•Difficult to claim economic Impact based
on Searches
UBER AND AIRBNB ACCOUNT FOR
LESS THAN 1% OF PERSONAL
TRANSPORTATION AND LODGING
SPEND, ECONOMISTS ARE RIGHT
IN NOT NOTICING THEIR IMPACT
ON GDP

8. “Better dishwashers, cars, meds to prevent heart disease, better insulated homes- offer benefits, that exceed the latest every single year,
Perhaps everyone of these innovations offer more benefits than ALL of the Google inventions to date. We never count the indirect
benefits of any improved technology for a good reason. Due to slow diffusion of technology, economic impact of most if not all
technology is limited over the short run, making conventional GDP calculations quite robust.
Low per capita and income growth is a reality in the 21st century so far. This is true not just for America, but also for the European Union
and Japan. Low real economic growth is the malaise that is affecting all 40 OECD nations. Some would argue that we do not have a
healthcare or retirement funding crisis- we have a low economic growth crisis.
Economic growth has been a mirage in the 21st century

9. “
Conventional wisdom is right, Productivity increase has been a mirage for the last 15 years. Silicon
valley geeks need to get out of the tech bubble more, and be realistic about their
contribution to the world.
Secure retirement and access to first class healthcare is a cornerstone of American
polity.
We do not need a Silicon Valley that gives America a new fangled crooked scoreboard.
Silicon Valley brains should perhaps use its brainpower to ensure that future generations of Americans
continue to have a secure retirement and first class healthcare affordable to all. “