For example, Marco Annunziata, the chief economist of General Electric, argues that many of the technological innovations now coming to market, like 3D printing and the use of augmented reality glasses in industrial settings, really are generating huge productivity gains where they are deployed.
But capital spending has been weak over all, and particularly weak for those more transformative innovations.
“The investment that should be most powerful in driving productivity for companies has been the weakest,” Mr. Annunziata said. “It means that all these innovations aren’t scaling. They’re only being implemented on an episodic basis, on a small scale.”
Companies, in his telling, are spending their capital budgets not on things that might cause a leap in their workers’ productivity, but on smaller projects to replace old machinery and software and make marginal efficiency gains.
What would change that? That’s what brings us back to Mr. Mason’s arguments about the interplay between demand and productivity growth.
Just maybe, if the labor market tightens and good workers are harder to find — and wages rise — that will be the impetus to get companies to consider more of those big-ticket innovations that generate productivity growth.
