Measurement Economists all agree that productivity is key. We don't, however, know how to measure productivity very well. And our mistakes do not fall evenly. Productivity gains in finance, however, have been counted simply as zero. Because we couldn't figure out how to measure it, we didn't.
Health care is a similar giant beast that defies productivity accounting.
For example, laser surgery for cataracts is simply faster, cheaper and hugely better than previous practice. It is a studied case in the difficulties of measuring productivity gains in the health sector5. If one begins adding finance, health care, government, and education, the proportion of GNP in our service economy that defies productivity measurement is, to say the least, significant. The E-conomy is not about soft macroeconomic landings, smooth growth, permanently rising stock prices, government budget surpluses, or permanently low rates of unemployment, interest and inflation. It is a succession of structural shifts and disruptions.