The Greek productivity paradox

The Greek productivity paradox

Back in 1987, famed economist Robert Solow remarked that you could see the computer age everywhere except in productivity.

The “productivity paradox” deepened further in 1993 when another US economist estimated that while America’s computing capacity increased a hundredfold in the 1970s and 1980s, labor productivity growth slowed from over 3% in the 1960s to roughly 1% in the 1980s.

As expected, Solow’s paradox was debated extensively by economists before productivity skyrocketed and the labor landscape was transformed in the next two decades (1990-2010). Thousands of mid-level executive jobs were scrapped, prompting Jeremy Rifkin to write “The End of Work” in 1995, while the model of worker-entrepreneur started gaining ground fast with the development of new electronic platforms like Uber etc.

We won’t go into the many problems technology can cause for workers – loss of jobs and job security – because, as was the case with the productivity paradox, there’s a time lapse between the adoption of new technology and its final result. A balance will eventually be found that will, however, be the result of a political or civic movement.

On the other side of the equation, new production tools pave the way for more profits, but then competition dictates that these benefits are passed on to the consumer either by reducing the cost of a product or service or by eliminating the cost of some transactions, such as, for example, in banking.

The “Greek production paradox” is somewhat different to Solow’s. In this country, the computer age is evident everywhere, except in our pockets. Banks, for example, have seen their costs plunge thanks to the proliferation of web banking. This is not passed on to their clients, however, who have to pay instead. Transactions that used to be free at the counter (banks were saddled with payment of rent, utilities, payroll etc) are now conducted by the clients, who also have to pay for the privilege. Not to mention the irrational nature of the charges: paying a 40-euro utility bill costs the same as paying a 2,000-euro one; 0.50 euros.

What these charges are, effectively, is a tax on consumers who have failed to revolt against them and an admission of the cozy relationship between the state and the banks – and this a state that is absolutely teeming with authorities dedicated to consumer protection.

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