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List of contents
- 1: The legacy of the financial crisis
- 2: What I seek to show
- 3: Poor productivity and damaging demography
- 4: The cause of poor productivity
- 5: Ageing populations
- 6: Other influences on growth
- 7: The problem of income inequality
- 8: Two models of growth
- 9: Investment and the stock of capital
- 10: Description of my model
- 11: The results of my model
- 12: Testing the proposed model
- 13: Investment, the capital stock, and economic policy
- 14: The bonus culture has raised the hurdle gate
- 15: The added impact of misinformation
- 16: Implications for growth
- 17: Management and shareholder interests
- 18: Distractions from serious debate
- 19: Deflation
- 20: The UK is similar to the US
- 21: Reversing perverse incentives
- 22: Changing the economic impact of current incentives
- 23: Misinformation adds to risks for the economy
- 24: The economic consequences of higher investment
- 25: Summary and conclusions
- APPENDICES
- A.1: The impact of real and nominal interest rates
- A.2: Measurement of the net capital stock and depriciation in the UK and the US
- A.3: The Gini Coefficient
- A.4: The formulae for NTV
- A.5: US profits as published are habitually overstated
- A.6: The Balassa-Samuelson effect
- A.7: Abolishing ACT caused a large rise in the effective rate of corporation tax
- A.8: Why profit margins in mature economies are expected to revert to their mean
About the author
Andrew Smithers is the founder of economic consultancy Smithers & Co. He is the author of Valuing Wall Street: Protecting Wealth in Turbulent Markets, The Road to Recovery: How Economic Policy Must Change, and Wall Street Revalued: Imperfect Markets and Inept Central Bankers. He is a former columnist for the London Evening Standard, and has also written columns and blogs for The Times and the Financial Times.
Summary
Growth in the US and UK is declining due to poor productivity. This book sets out a revised model which demonstrates that weakness in productivity is the result of the bonus culture, and suggests ways to change this flawed system so that investment is encouraged and growth returns.
Additional text
Smither's conclusions are made more credible by his effective refutation of alternative theories of declining productivity growth and by his unparalleled understanding of underlying data sources. His is a passionate voice pointing out why this this overlooked problem needs to be urgently addressed. But it is also a professional voice, based on insights from a long professional career, which suggests some eminently practical solutions to that problem. Read it and be convinced by both voices.
