Productivity and the bonus culture
Andrew Smithers (Author)
Living standards in the UK and US are in danger of falling. A decline in growth due to poor productivity and an unfavorable change in demography has weakened the stand of liberal democracy, and voter dissatisfaction is encouraging populist policies that threaten even worse outcomes. Whilst living standards once grew faster than productivity they now grow more slowly, and the working population is no longer growing faster than the population as a whole. To avoid falling living standards the productivity problem must be addressed. Andrew Smithers argues that faster productivity does not depend, as many suggest, on technology; it also relies on investment. Current growth theory is based on a faulty model which has induced pessimism about our ability to encourage more growth. Productivity and the Bonus Culture sets out a revised model which demonstrates that weakness in productivity is the result of the bonus culture, and suggests ways to change this flawed system so that investment is encouraged and growth returns. -- Provided by publisher
Print Book, English, 2019
First edition View all formats and editions
Oxford University Press, Oxford, 2019
xx, 169 pages : illustrations ; 24 cm
9780198836117, 0198836112
1057783548
The legacy of the financial crisis
What I seek to show
Poor productivity and damaging demography
The cause of poor productivity
Ageing populations
Other influences on growth
The problem of income inequality
Two models of growth
Investment and the stock of capital
Description of my model
The results of my model
Testing the proposed model
Investment, the capital stock, and economic policy
The bonus culture has raised the hurdle gate
The added impact of misinformation
Implications for growth
Management and shareholder interests
Distractions from serious debate - Deflation
The UK is similar to the US
Reversing perverse incentives
Changing the economic impact of current incentives
Misinformation adds to risks for the economy
The economic consequences of higher investment
Summary and conclusions APPENDICES: A.1. The impact of real and nominal interest rates
A.2. Measurement of the net capital stock and depreciation in the UK and the US
A.3. The Gini Coefficient
A.4. The formulae for NTV
A.5. US profits as published are habitually overstated
A.6. The Balassa-Samuelson effect
A.7. Abolishing ACT caused a large rise in the effective rate of corporation tax
A.8. Why profit margins in mature economies are expected to revert to their mean