this post was submitted on 11 May 2025
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I appreciate that you recognize that so-called ‘labour productivity’* is primarily a measure of the quality and technological level of the capital that the labour is working with.
Too often, comparative measures of labour productivity and discussion focuses on hours worked, vacation days etc.
These are very much second-order.
Education levels are not second-order but Canadian workers are more literate and better educated across the board than the US manufacturing workers.
So, the real question in manufacturing (as it is in housing construction), “Why is the Canadian private sector so unwilling to invest in ongoing technological upgrading let alone innovation?”
Higher cost of labour drives capital investment to increase productivity in order to make more profit with less labour time. Lower cost of labor allows profits be made with lower productivity. Cost of labour in Canada is lower as far as I'm aware. One obvious difference is free healthcare which is not only paid by employers in the US but is also significantly more expensive.
The problem in Canada is that the apprentice program is government-controlled and monitored. If Canada put a lot more money into apprentice training, the Canadian tech industry would love to have them. It is not the wage rate that is the impediment, it is the training involved to get there. It is not the Canadian private sector that is the problem, it is the Conservative sector that just does not want to spend public money in training the work force. Private companies have absolutely no say in how Canadian high schools are operated, and what their spending priorities are.
And again agriculture and farming productivity has nothing to do with manufacturing productivity, nor with the statistics for the manufacturing sector.
Agricultural productivity is relevant insomuch as the economic definition of ‘labour productivity’ was developed for that context.
It’s a measure of return of labour to capital.
It is NOT measure of how productive the human capital of a population is.
You and others here are mistakenly confusing human capital which includes investments in
with labour productivity.
Also, you are very far off the mark if you think that Canada’s education and skills training is in any way inferior to that of the United States. On every possible measure from literacy to cognitive skills and abilities, the Canadian adult population is better than the US in international comparisons such as by the OECD.
Skilled trades programs are arguably better in Europe but not in the USA.
Agriculture is relevant only as far as you proclaim to to be. The discussion is neither about agriculture nor agricultural productivity. Yield per acre is now a much better indicator of agricultural success than farm labor productivity.
I have absolutely no idea where you got the notion that I thought Canada's educational system is inferior to that of America. That notion is just silly. What I am saying is that the government is not putting enough public money into our highly successful and highly effective apprenticeship programs. A program is only as influential to our economy as the number of students who can get into it.
Fair enough.
There are genuine questions about whether or not the federal government should have given in to the provinces and territories in the 1990s regarding vocational and labour market training.
Both of these, and post secondary, are federal jurisdiction or shared jurisdiction at best. (But accreditation of professional associations and credentials is provincial.)
The federal government did its best to continue to directly fund these kinds of programs but the provinces, especially but not exclusively Quebec, felt strongly that this was preventing them to set their own socioeconomic development priorities.
It sounds like both the CPC and LPC federal parties had platforms that look to have the federal government step back into this space.
One has to wonder if they view the agreements they made to transfer labour market training to the provinces and territories as something they can pull back or wind up…
On the agriculture point, let’s say I am more than qualified to speak to economic terminology.
So, it may be pedantic, but it’s important to understand where economics definitions come from.
Some like labour productivity and economic rents are irrevocably tied to their origins in agricultural economic concepts.
Which means that when applied to a manufacturing or service economy, peoples’ intuition about their meaning can be very wrong.
When we’re teaching economics, we talk about ‘developing economic intuition’ but it would be much easier for students if we didn’t have to counter so many counterintuitive terms.
Or maybe the field should be less 'Ivory Tower' and more concerned with modern economics.
Compare the battle between MMT and Friedman, and all the old rules and definitions go out the window. To Friedman, it is profit at all costs, to MMT it is social well being at all costs. With MMT, productivity is irrelevant in any analysis no matter what the definition, and to Friedman productivity is irrelevant except as an input cost. Friedman would ratter get rid of all labor as a needless input cost, no matter how productive they were, and MMT would rather have full employment, no matter how low their productivity was.
If you are a student of Business Admin. or have an MBA, then the old definitions are just swept aside. it is how to make money by using money, not on how to make money by making things.
When it means 'money in your pocket', the applied meaning takes on an entirely different perspective than when it means 'marks towards graduation'.
Speaking of definitions, my pet peeve is the use of 'decimate' to indicate total or near total annihilation, when at its roots it means 'one in ten destruction'. I am told that the English Language evolves, and so to the definitions in all fields, including economics, evolve.
Whatever the problems with the old definitions, and they are numerous, they remain the way the national accounts are published in OECD countries.
But so are too the conventions of generally accepted accounting principles for financial accounting.
These are the way our data sources are framed so to do meaningful data analysis and interpretation we have to know them.
Business schools are not immune or exempt from understanding where the data comes from and how it’s constructed. Any good business school in whatever tradition will make sure its students understand that at least.
It’s one thing be such a pedant as to make students switch from conventional and do basic microeconomics with the P and Q axes reversed (as they logically should be), just to correct a deeply embedded error in the history of economic practice - and there are profs out there who do that.
It’s another thing to be insistent on what is actually in a measure that calls itself ‘labour productivity’ and is used by uninformed or deliberately misleading business press in Canada to beat on the labour force itself when the structural issues are completely different.
It would be worth discussing if the business press didn’t constantly misinterpret the meaning of measure.
Ahhh, words of wisdom from the minds of the hard-core dogmatic 'as it was, so shall it always be' cult. It depends if you are teaching history or modern wealth management.
You absolutely are missing the point.
It doesn’t matter what we’d like it to be.
Claiming a statistical account measures chickens when it measures albatrosses and then making inferences about chickens, would be silly.
Likewise, using labour productivity figures from the national income accounts.
Nothing to say that the points you and others are raising aren’t both much more relevant and interesting.
But when the business press drags out labour productivity comparisons as if they have anything meaningful to say on the subject, it’s a non sequitur to the conversation you’d really like to have.
When the business press brings out ANYTHING as if they have anything meaningful to say on the subject is a non-sequitur...
The business press just uses doubletalk to either support or reject the current governance policies. The super=rich ignore it, because by the time it gets into the business press it is too late and they have made their move months ago.