Four decades on, Superman continues to feature in films, but often not alone.
He now stars alongside Batman, Wonder Woman, The Flash, Aquaman and other superheroes. For the fans of DC Comics, it is a delightful coming together of childhood favourites.
But for economists, it symbolises a worrying decline in productivity.
Superman needs help
Where once a single superhero was able to save the world, now two or more are required to complete the same task.
As Oscar Wilde once said, life often imitates art.
But what is most striking about what has happened is when it has happened. The past 25 years have seen extraordinary advances in technology.
We ought to be much more productive
An extra 3.5 billion people have gained access to the internet, the processing power of computers has skyrocketed, and we now have smartphones, with almost everything on them, and factories and warehouses that are automated in ways that would have once only been dreamt of.
The sharing economy promises to unlock the full potential of our idle cars, our unused bicycles and empty rooms and houses. The accumulated history of human knowledge is at our fingertips.
So where’s the resulting increase in productivity?
Economists have since put forward a variety of explanations for this paradox, but with little agreement.
There’s little agreement about why we’re not
Others argue that the productivity improvements from technology have been crowded out by other factors, like the aftershocks of the global financial crisis, weak demand and investment, slowing trade, stalling growth in global value chains, ageing populations, reduced investment in education, the impacts of automation on demand and inequality, weakening competition and reduced business dynamism.
Productivity growth might be hidden
While some firms have been highly productive, their effects have been offset by laggard firms. The OECD found that “frontier firms” have consistently achieved productivity growth six times that of laggard firms which have dragged down the average.
It’s possible to see this at the industry level. John Fernald, from the Federal Reserve Bank of San Francisco, finds that productivity gains from information and communications technology have been concentrated in specific industries, the benefits from which have been netted-out by industries that have failed to adopt new technologies.
Or technology might be holding it back
He says, as much as we might like them, the technological advances in recent decades have been no match for the really big advances between 1870 and 1970, such as electricity and the automobile.
Harvard’s Jeff Frankel goes further.
With all this uncertainty, what’s the best approach for an incoming or reelected government?
So what should we do?
It sounds trite, but the best approach is “flexibility”.
More precisely it is well functioning mechanisms that allow us to adjust things such as exchange rates, interest rates, government spending and industry settings.
On the whole we have these mechanisms. We will also need strong laws that encourage competition; that will enable new or suddenly productive firms to displace old ones that have grown used to large market shares.
If we do turn out to be on the cusp of a new productivity surge, a flexible, competitive economy will enable us to spread the benefits quickly.
Allow good firms to grow, bad ones to die
If instead we turn out to be on track for a low productivity future, or if the productivity gains from new technology are crowded out by other effects, then flexibility can also help, redirecting resources away from inefficient firms to more efficient ones.
If it turns out the productivity paradox is no paradox at all but merely a measurement failure, then it is yet another reason to properly fund organisations such as the Australian Bureau of Statistics.
The new government will need to watch, and to some extent it will need to wait. But it will need to be ready.
As American economist Paul Krugman observed a generation ago when productivity growth was much higher than it is today, “productivity isn’t everything, but in the long run it is almost everything”.
- ^ the first Superman film (www.imdb.com)
- ^ average annual total factor productivity growth (www.imf.org)
- ^ three times higher (www.abs.gov.au)
- ^ Australia's productivity problem: why it matters (theconversation.com)
- ^ close to zero in the past two years (www.abs.gov.au)
- ^ close to zero productivity growth (www.pc.gov.au)
- ^ gained access to the internet (data.worldbank.org)
- ^ famously remarked (www.standupeconomist.com)
- ^ The internet has done a lot, but so far little for economic growth (theconversation.com)
- ^ point to (www.nber.org)
- ^ according to some estimates (ieeexplore.ieee.org)
- ^ argue the (www.nber.org)
- ^ Budget explainer: the problem with measuring productivity (theconversation.com)
- ^ global financial crisis (www.imf.org)
- ^ weak demand and investment (www.un.org)
- ^ slowing trade (www.un.org)
- ^ stalling growth in global value chains (www.ecb.europa.eu)
- ^ ageing populations (www.imf.org)
- ^ reduced investment in education (www.oecd.org)
- ^ impacts of automation (www.nber.org)
- ^ weakening competition (www.brookings.edu)
- ^ business dynamism (www.oecd.org)
- ^ suggests that (web.stanford.edu)
- ^ found that (www.oecd.org)
- ^ Some attribute this (www.oecd.org)
- ^ zombie firms (www.oecd.org)
- ^ finds that (www.nber.org)
- ^ sees no paradox at all (www.nber.org)
- ^ points to evidence (www.project-syndicate.org)
- ^ distracting us and reducing our attention spans (bankunderground.co.uk)
- ^ Why we should approach claims of a productivity crisis with caution (theconversation.com)
- ^ but still conclude (papers.ssrn.com)
- ^ Paul Krugman observed (www.oecd.org)
Authors: Adam Triggs, Research fellow, Australian National University