Economic Literacy

The Visible Hand in Economics gives a neat lesson in economic literacy on the issue of .

Paul Walker also joins in, dismissing the argument that merely increasing productivity doesn't necessairly boost GDP or wages, and they quote Paul Krugman of all people:

Economic offers no example of a country that experienced long-term productivity growth without a roughly equal rise in real wages. In the 1950s, when European productivity was typically less than half of U.S. productivity, so were European wages; today average compensation measured in dollars is about the same. As Japan climbed the productivity ladder over the past 30 years, its wages also rose, from 10% to 110% of the U.S. level. South 's wages have also risen dramatically over time. (“Does Third World growth hurt First World Prosperity?” Harvard Business Review 72 n4, July-August 1994: 113-21.)

Both major parties in Australia understand the importance of productivity growth. That is why they support the Australian .

The challenge for John Key is to have policies that will help productivity growth.

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