Productivity Problems: Is ‘Shunning Technology’ Really the Main Villain?

Andy Kessler, a very smart and generally insightful guy, has a recent WSJ column titled ‘The is One Puzzling Job Market’ and subtitled ‘Why has productivity lagged for so long? Because huge sectors shunned technology.’

This assertion doesn’t feel right to me.  In the case of the healthcare industry, for example, Kessler says “Medicine is unproductive. It’s a doctor-intensive chronic-disease-treatment business. But with prevention and diagnostics to find disease early, perhaps we’d need fewer oncologists and cardiac surgeons.” Perhaps, but it’s not as if diagnostics–mammograms, for example–have been ignored.  Prevention can involve, for example, better diets and obesity reduction–these things are really more about accurate science, proper statistical analysis, and honest and effective public communication than they are about technology per se.

A major technology initiative in healthcare of the the last decade or two has been the wide use of electronic medical records.  While these do have considerable potential, the current implementation reality is different.  I don’t think I have ever heard or read a physician or other healthcare professionals who had anything good to say about these systems.  The perceived productivity impact is negative.

It is certainly true that telemedicine has great potential for productivity improvements, and also probably for better paytient outcomes, since it makes it far easier to get an appointment than is the case with traditional practice approaches.  But some of the same advantages can also come from local clinics with an emphasis on quick availability and more use of nurse practitioners and other alternatives to the need to see physicians for every visit.

As another example of an industry with poor productivity, Kessler cites education.  I think we can agree on the poor productivity. But is the problem really lack of technology? How about the massive administrative overheads, the insistence on instructional methods that don’t work very well (in teaching reading, for example), and the overweening power of the teachers’ unions?  Indeed, schools have been quite eager to spend money on ‘technology’.   The kind of projects that Michael Schrage referred to as ‘sparkly tools’ will not do much good until these other problems are addressed.

In transportation, there are indeed technology improvements that can be made in air traffic control and, for railroads, in rail car tracking and hot-bearing detection to prevent derailments, for example.  But there are also physical infrastructure issues–no matter how great your air traffic control system is, an airport’s capacity is going to be limited by the number of parallel runways, and, in some wind conditions, the availability of crosswind runways.  There are also management and process issues–in freight rail, for example, is the current vogue employment of very long trains, now under the banner of ‘precision scheduled railroading’, really a good idea from the standpoints of productivity and market growth?

Kessler says:  “Bell Labs invented the transistor in 1948, but its parent, AT&T,  had 10 to 20 years of old vacuum-tube inventory and so delayed using transistors.”  This claim makes no sense to me.  I can’t imagine that any company, even AT&T would have built up a 10-20 year inventory of just about any commodity, let alone inventory of items in a field which was already known for rapid change.  And early transistors weren’t cheap, and did have their limitations.

There is indeed an apparent paradox when you consider all the technological improvements of recent years–and then look at the productivity numbers.  But I suspect that much of the cause for this disconnect will be found in:

Mediocre or outright bad management. There is a tremendous amount of wasted motion and effort in a lot of organizations today. There’s always some of this, of course, but my sense is that it’s been getting worse, rather than better.  See for example this article about Google, written by a guy whose startup was acquired by that company.

Google has 175,000+ capable and well-compensated employees who get very little done quarter over quarter, year over year. Like mice, they are trapped in a maze of approvals, launch processes, legal reviews, performance reviews, exec reviews, documents, meetings, bug reports, triage, OKRs, H1 plans followed by H2 plans, all-hands summits, and inevitable reorgs. 

Unwise mergers and acquisitions.  Although company combinations can be beneficial, too often they are done under sets of assumptions that turn out to be, shall we say, optimistic.  How much productivity is lost as a result of all the legal and finance work done to enable these combinations and in the organizational disruption that often follows?  (And then, in some cases, to unwind them via a spinout?)

Excessive regulation, particularly ideologically-driven regulation.  In Washington, DC, childcare workers will now be required to have associates’ degrees.  There are many other examples of pointless education and training requirements.  And the ‘industrial strategy’ programs favored by the Biden administration are very likely to direct resources into politically-favored…but not particularly productive..companies and entire industries.

Bad technology implementations.  There are a lot of examples of technology implementations that seemed promising, but resulted in either complete failure or marginal…if any…productivity gains.  Often, there problems are a result of failing to systematically think about the overall business process and the potential people problems involved.  See the sad story of Target Canada, and Zeynep Ton’s description of retail inventory systems that carry meaningless balances because the work of the checkers, and the way in which the feedback loop from goods availability to sales numbers worked, is not properly understood.

There are certainly many technologies now available, and becoming available, that can greatly enhance productivity.  But it is difficult for any technology or combination of technologies to improve productivity enough to overcome the drag of the structural problems sketched about..and many others.  As Lewis Carroll said, we must run as fast as we can just to stay in place, and if we want to go anywhere, we must run twice as fast as that.  Unless we do something about the sources of the persistent backward motion.

Your thoughts on productivity and technology?

“How Twitter Pushed Stakeholders under the (Musk) Bus”



This paper provides a case study of the acquisition of Twitter by Elon Musk. Our analysis indicates that when negotiating the sale of their company to Musk, Twitter’s leaders chose to disregard the interests of the company’s stakeholders and to focus exclusively on the interests of shareholders and the corporate leaders themselves. In particular, Twitter’s corporate leaders elected to push under the bus the interests of company employees, as well as the mission statements and core values to which Twitter had pledged allegiance for years.
Our analysis supports the view that the stakeholder rhetoric of corporate leaders, including in corporate mission and purpose statements, is mostly for show and is not matched by their actual decisions and conduct (Bebchuk and Tallarita (2020)). Our findings also suggest that corporate leaders selling their company should not be relied upon to safeguard the interests of stakeholders, contrary to the predictions of the implicit promises and team production theories of Coffee (1986), Shleifer-Summers (1988) and Blair-Stout (1999).

There is tension between the interests of owners and those of other “stakeholders”, which is why the interests of non-owner stakeholders require justification as in the linked article. The authors beg the question — they assume stakeholder interests are comparable to owner interests — then find a problem because Musk values his ownership interest in Twitter above the interests of the people he bought out and of the company’s non-owner employees. So what should Musk get in exchange for the $billions he spent? Arguments for more stakeholder rights are arguments for less property rights.

Miscellaneous Business/Economics/Energy Items

Apple is going to make Watches and MacBooks in Vietnam.  (More precisely, Apple suppliers will make the products there.  “Make” in this context meaning mostly “assemble”, I think.)  Apple is also planning to produce the iPhone 14 in India, with only about a 2-month lag from its initial production in China.

Intel will be partnering with Brookfield Infrastructure Partners to help pay for factory expansion projects, with Brookfield contributing up to $30 billion.  Most immediately, the money will pay for the expansion of Intel’s Ocotillo manufacturing campus in Chandler, Arizona, with Intel funding 51% and Brookfield funding 49% of the total project cost.  (This is pretty different from BIP’s typical investments, which tend to involve such things as railroads, toll roads, pipelines, and electricity transmission)

A useful overview of planned and in-development fabs, worldwide.

Electricity prices, marginal costs, and the last kilowatt.

Texas has banned BlackRock and several other firms from doing business with the state.

Finland may be facing power outages this winter.  On the other hand, if their Olkiluoto 3 nuclear power plant goes into production at the end of the year, as planned, this should help a lot.  Another plant is planned, taking total nuclear contribution in Finland to 60%.

Also,perhaps a way could be found to harness the power from their PM’s very high-energy dancing.  (If other Western leaders could dance like that, would it somehow influence their minds to adopt more rational energy policies?)

Elsewhere in Europe, skyrocketing energy prices are causing a lot of hardship–and will surely create serious economic pressures as much manufacturing in the affected countries becomes cost-prohibitive)

The Euro is not doing very well versus the dollar.  More here.

Paul Graham:

f you think people have scar tissue, you should see organizations. Each time there’s a disaster, they create a process to prevent future disasters of that type. Eventually they accrete a thick layer of these processes that prevents them from moving. Then they die.


Emmett Shear, at Twitter (@eshear) suggests that Burnout, which he defines as “a particularly modern affliction, feeling simultaneously overwhelmed and paralyzed” is best thought of as a symptom with many different causes–the most important of which are permanent on-call, broken steering, and mission doubt.  ‘Permanent on-call’ is self-explanatory, ‘broken steering’ is the sense that your actions have no impact, ‘mission doubt’ arises when you question whether this work is really worth doing at all…ie, even if the steering was functioning properly, maybe this trip isn’t worthwhile.

It’s a useful formulation.  I’d note that some jobs have always had a permanent on-call aspect; railway workers, for example…see Linda Niemann’s memoir of her experiences on the old Southern Pacific Railroad–no cell phones or even pagers in those days, but there were ‘callers’ who would come to your residence and wake you up when you were needed.  Also sailors.  But on-call jobs are a lot more common today than they were 20 or 30 years ago.

I think the feeling of ‘broken steering’ has also long been present, in the case of large-bureaucracy employees and some manufacturing workers.  An assembly-line worker knows that his task does contribute to the final product..but the connection probably seems pretty remote and abstract when your actual job is to tighten three bolts.

‘Mission’ can be understood in two ways: the purpose of the job in terms of what it produces, and the purpose of the job in terms of income to support yourself and your family.  As the second factor becomes taken for granted, the first surely becomes more important.  (See Maslow)

Very relevant to this topic is Zeynep Ton’s recent book The Good Jobs Strategy.  She discusses the unpredictably-fluctuating employee schedules which are so common in retail..maybe not pure on-call, but close to it…and the disruptive effect these schedules have on an employee’s personal life.  She also talks about time pressures that lead to jobs inevitably being done poorly.  A former Target cashier, for example, said she was under so much pressure to ring up sales as quickly as possible that if a customer bought 10 bottles of Gatorade–in two flavors–she would scan the first one and then hit the quantity key for ten.  The inventory system thought the store had sold 10 lime-flavored Gatorades and no cherry-flavored Gatorades, rather than the mix that had actually just been sold.  She also cites a study of a $10 billion company which found that the system had the right information for only 35% of the products…for the other 65%, the discrepancies between the system inventory balances and the actual quantities available averaged 5 units…a third of the target stocking levels.  In one case, a certain item was continually out of stock, to the frustration of a regular customer.  It turned out that the inventory system thought there were 42 of these on hand, whereas there were actually none.  AND, since this particular store hadn’t sold any units in several weeks (because they didn’t have any to sell), the system automatically reduced the target stocking level for that item!  Situations like this are surely destructive both of sense of mission and of a functioning steering system.

Your thoughts?

Command Failure in the Ardennes, December 1944

This past December 16th 2022 marked the 78th anniversary of the German Unternehmen Wacht am Rhein (“Operation Watch on the Rhine“) offensive in the Ardennes area of Europe, otherwise known popularly as “The Battle of the Bulge.”  The “official narrative” for this battle is that it was an “intelligence surprise” where “Ultra’ code breaking signals intelligence missed because Hitler kept all of the important communications on untappable telephone/telegraph land lines or special couriers. The sole exception being General Patton’s 3rd Army G-2 intelligence officer Colonel (later Brigadier General) Oscar Koch who didn’t rely upon ULTRA and put together the complete picture through a process now known as “All Source Analysis“. Which built an intelligence picture for every intelligence discipline. signals, human, photographic, geographic, combat reports plus dogged order of battle cross filing that sorted every bit of information to plot existence, location and status of enemy ground and air units. A week before the German attack, December 9th 1944, Colonel Koch briefed General Patton’s full 3rd Army staff as to German capabilities and most dangerous probable intentions of those capabilities. Based upon this briefing, Patton ordered his 3rd Army staff to put together a series of counter attack options that were immortalized in a scene from the 1970 movie PATTON.


Figure above from 1997 masters paper “Signal Security In The Ardennes Offensive 1944-1945 Laurie G. Moe Buckhout, Maj. USA

Like a lot of narratives of World War 2, it uses a couple of nuggets of truth with the German ULTRA security black out and Colonel Koch’s brief to Patton to hide and conceal more than inform. It turns out that a lot more people on the allied side than Colonel Koch foresaw the impending German offensive. And that the failure to act on these multiple sources of accurate intelligence was a Command Failure by the “Ultra Cliques” of allied officers at Supreme Headquarters Allied Expeditionary Forces  (SHAEF), United States Strategic Air Force (USSTAF), the American 12th Army Group, and American 1st Army.

This command failure came less from a German security induced blindness of ULTRA than from a months long manipulation of Ultra intelligence data stream by senior officials in the British government — located in the Ministry of Economic Warfare, the “Oil Lobby” through out the Air Ministry and Whitehall ‘Committee Bureaucracy’ as well as the Directorate of Bombing Operations in the Air Ministry — intent on making German oil supplies the top strategic target set over German transportation targets in the Combined Bomber Offensive.  Their motives here were not only to collapse the German economy as a “War Termination Strategy,” but more importantly, make sure Air Power was seen as responsible for the German collapse after the Russian capture of the Romanian Ploesti oil fields in August 1944.  (If you are seeing some post-war institutional motivations here…you are correct.)


These manipulations were discovered in February 1945 by SHAEF when the after action forensic analysis by Royal Air Force Deputy Chief of Air Staff (DCAS) Air Marshall Bottomley found the Combined Strategic Targets Committee (CSTC) was systematically removing messages relating to the distress of the German Railroad, and collapse of the German economy resulting from the railway problems, starting in the fall of 1944.

Read more