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OECD Productivity Study Proves
Economist Lyndon LaRouche’s Long-Term Thesis

June 2016

Photo credit: Thomas Hundt (Own work) [CC BY 2.5], via Wikimedia Commons
E-trade Financial Center on Market Street in San Francisco, California, 2002.

June 1, 2016 (EIRNS)—One was strongly led to believe, by both financial and popular media, that labor productivity in the United States and the other "Trilateral" economies has risen strongly in the "era of IT and automation." Presidential candidates and labor unions often demand that it’s time "wages catch up with productivity" in this regard. But the U.S. Labor Department’s own reports have shown for years that as low-wage employment has proliferated, gross labor productivity in America has been at zero growth. The more serious gauge of total-factor productivity has been declining.

Now a global study by the OECD, of labor productivity and capital investment over the past two decades in all of its member nations, has hit (its authors) with a real surprise. In the era of globalization, when a general leveling down of wages and introduction of IT and communications innovations have been presumed to be increasing growth in both labor productivity and capital investment, in reality both have been falling; and falling furthest in sectors—like IT and communications — where they were presumed to be rising fastest.

The May 26 report, "New OECD Indicators Trace Productivity Growth Slowdown Pre- and Post-Crisis," came out just as the IMF produced a report acknowledging that its 60-year-old "neo-liberalism" economic dogma has been wrong, and that capital controls may increase nations’ economic growth prospects!

One can contrast the productivity growth found here in the OECD nations (except for South Korea), of 0.3-0.8%/year and falling from 2004-14—less than half the growth of 1995-2004—with that of productivity growth in China according to a recent Harvard Business School Study (3.6% annually 2002-2013); and that of land-of-heavy-engineering Korea, the one exception in the OECD study (3.5%/year 2004-14; 5%/year 1995-2004).

The difference: large-scale building of projects of new economic infrastructure: China’s great high-speed rail corridors and hydropower projects, Korea’s nuclear power and port engineering industries, for examples. In trans-Atlantic OECD nations, such infrastructure missions are a distant memory.

EIR Founding Editor and American System economist Lyndon LaRouche began 15 years ago agitating for "retooling" the U.S. auto/machine-tool industry to build just such modern infrastructure platforms. LaRouche attacked globalization as he already had in published works since 1967: Take modern industrial employment away from its enabling infrastructure; move it to lower-wage regions which lack such infrastructure; allow the source-region’s infrastructure to decay; and you will lower the productivity of the entire world economy, however "modern" your relocated plant. Conversely, build new infrastructure platforms where they don’t exist or where new "missions" or great projects are needed, and the world economy’s productivity is raised.

LaRouche remarked today of the OECD study, "They proved my thesis; and proved the contrary case as well."