The boost in productivity in recent years has been achieved by cost cutting, in particular, downsizing. And cost cutting does not produce real long-term gains in productivity. Rather, it leads to onetime increases in efficiency, as the surviving members of a workforce generate more output. If U.S. companies don't share the fruits of growth, Roach contends, the federal government may impose new regulations and embrace reflationary policies. Both courses of action would hurt the hard-won competitiveness of U.S. business.
Roach calls for a new productivity agenda in the United States.
Public and private investment in education and technological innovation are essential. But corporate America must also swallow its medicine by rebuilding capacity and hiring new workers. A continued fixation on downsizing will wipe out opportunities for growth. All rights reserved .