chapter  2
8 Pages

Falling Behind: The Productivity Problem

One of the greatest shocks to our national ego has been the dawning realization that when it comes to standards of living, America is no longer number one. Indeed, in the world ranking of average standards of material well-being, we are probably something like number ten, and if Japan continues to catch up with us, we will soon become number eleven. In some cases, such as Saudi Arabia or Abu Dhabi, this ranking is a statistical artifact, produced by averaging together the astronomical incomes of a small ruling clique with the still abysmal living standards of the masses of the population. But that is not the case with industrialized nations such as Sweden or Switzerland or Denmark, nor will it apply if and when Japan overtakes us. The basic reason, of which we are uncomfortably aware, is that American productivity is today lower than that of a number of other advanced nations. We simply produce less per person than they do.