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Total Factor Productivity

Total factor productivity measures residual growth that cannot be explained by production inputs. Its level is determined by the efficiencies of labor and capital in production. Huh? What are you talking about? Basically, it’s a measure of productivity attributed to technological or organizational improvements. Then why didn’t you say that?

As you can see in this chart Your JoeDog cooked up with FRED, total factor productivity has leveled since the late 1990s. In other words, the pace at which humans are replaced by robots has slowed during the Internet Age. More people lost jobs to automation in the 80s and 9os than lose them now. That’s comforting … I guess.

So all the angry monkeys pecking CAPLOCKED rants about automation in the comments sections are simply displaying ignorance. Automation isn’t their foil – it’s bumbling economic stewardship.

There’s no reason to believe that employment won’t return to its 1990s levels if policy makers either increased aggregate demand or made labor scarcer, i.e., spent money or enacted labor laws. Unfortunately the people George Carlin referred to as “the owners of this country” oppose both measures. Blame them, not robots.