That's the key to the productivity problem
Are you more worried about someone doing you job better? or cheaper?
The answer to that question, to me, is at the heart of the productivity problem. At its core, productivity rises when we get better at doing something.
For most of the past 100 years, the fear was someone doing it better because wages were generally the same. Now, it's all about competing with third world countries on labor cost, and it's impossible.
The same question can be asked of companies. They aren't focused on making a better product at the same price, they're focused on building an equivalent product more cheaply. Or they're worried about someone doing whatever they're doing at a fraction of the cost and trying to hang on as long as possible.
If you're a worker, the globalized system isn't a great incentive to learn and improve. For companies, it's not an incentive to build something better. Because no matter how good you get, it's almost-impossible to compete with someone who will work for 10% of the cost. And companies may feel like any investment they spend in development and technology will be stolen or copied.
What's even scarier is a robot doing it.
Asked on Friday what keeps him up at night, Atlanta Fed President Dennis Lockhart said, "There is a growing disconnect between our human capital, what it's capable of and the demands of modern employment."
He pointed to the difficulties of competing with automation and how it's necessary to invest in workers to keep up. But at what point do people just give up? The pace of change is terrifying and there's a cloud of hopelessness in portions of the labor and business market.
On Thursday new RBA Governor Philip Lowe highlighted how the same trends are affecting wages. Workers in the western world, he said, have avoided asking for pay rises because they're afraid in an increasingly globalized labor force that doing so might close down the factory.
