THE BIG (ECONOMIC) STORY

by Virginia Postrel  •  Jun 27, 2004 at 10:44 pm

http://www.dynamist.com/911/the-big-economic-story

On the Nieman Foundation's site, Brad DeLong recently urged journalists to do a better job covering "the big story about the economy during the past four years"--the rapid growth in productivity because of underlying structural changes:

On the structural side, the American economy has been growing fast over the past four years. The productive potential of the American economy has grown at an extremely rapid pace. But the rapid growth has not been the result of high investment (more capital). In fact, the rate of investment has been markedly slower than in the late 1990s. It has also not been the result of any action taken by the Bush Administration. Instead, the rapid growth is the result of:

(a) learning to efficiently use the information-technology capital
(b) becoming smarter about organizing production processes, and
(c) speeding up the pace of work.

This story of positive structural changes in the American economy — the very rapid growth of potential output — is the big story about the economy during the past four years. It's important both at the macro level — why is output-per-man-hour 20 percent higher than it was five years ago? — and at the micro level — how are people today doing their jobs and being 30 percent more productive than their predecessors of a decade ago? The news media aren't covering this well. Yet it's the really big story about the economy in the Twenty-First century.

In today's Boston Globe Ideas section, I look at one piece of that very big story: the spreading use of operations research techniques once confined to theory. (What's operations research? The story explains that too, or tries to without using any math, graphs, or jargon about optimizing subject to constraints or finding interior solutions. For more on the field, see the INFORMS site.)

Of course, very few general-interest publications would let a writer spend nearly 2,000 words writing about operations research--or, for that matter, rising productivity. Brad is exactly right that journalists aren't covering this story, but he doesn't offer any reasons why. As a journalist, let me suggest a few:

1) The productivity story is boring. It isn't really, but editors think it is. There's no obvious conflict, no scandal, no little guy getting hurt (unless you portray rising productivity as throwing people out of work, which is the most common angle). The improvements that drive productivity increases are incremental--hence, not dramatic--and often technical.

2) The productivity story isn't political. Neither George Bush nor Bill Clinton deserves any credit, except for not getting in the way. Not getting in the way is actually a big accomplishment, one many politicians around the world can't claim, but it's bipartisan, hence boring. (See above.)

3) The productivity story is too big. It's less a story than a beat, requiring many different stories to tell. Business beats aren't organized to tell stories like this. They're organized by industry or, occasionally, by field (e.g., marketing). The rare writers who cover economics, including me, reflect the limits of economic scholarship, which mostly deals in aggregates and tends to lag what's going on at the moment. On this score, major props go to USA Today, which recently published its fourth annual report on producivity gains at large companies, with some anecdotal info about smaller enterprises as well.

4) The productivity story is hard to report. If you really want to understand what's going on, you have to spend lots of time with mid-level managers at companies that don't want to talk about their operational secrets. You need to understand operational details that are unfamiliar to most journalists, or, for that matter, economists. Once you've invested all this time, you may or may not have a story that fits accepted journalistic formats--formats that, for all their flaws, do reflect experiential wisdom about what readers will read. As long as David Brooks can go for laughs by invoking "Six Sigma" as a mere buzzword, the productivity story will continue to strike editors as a nonstarter.

Since I am a stubborn freelancer, however, I intend to do what I can to tell this story anyway. Indeed, as many of my NYT columns illustrate, I think there's an even larger story to be told, one that includes not just the measured productivity gains of the past few years but enormous unmeasured gains in (to use the econ jargon) consumer surplus going back further.