GOP Presidential hopeful Jeb Bush was in New Hampshire the other day, and he had an interview with a local paper, the Union Leader. In the interview, he said:
“My aspirations for the country, and I believe we can achieve it, is for 4 percent growth as far as the eye can see, which means we have to be a lot more productive. Workforce participation has to rise from its all-time modern lows. It means that people need to work longer hours and through their productivity gain more income for their families. That’s the only way we are going to get out of this rut that we’re in.” – See more at: Union Leader
4% growth. That’d be quite the feat. Boom-times growth. To do this, he rightly reckons, workers would need to increase their productivity (after all, a worker is paid by his productivity). But he wants to go about it in a rather poor manner: increase hours worked. That would increase productivity to some extent (a man who works 8 hours is generally more productive than one who works 1 hour), but after a given time, there is decreasing marginal returns (for each unit inputted, the worker would become marginally less productive). So, increasing hours worked would only be helpful to a certain extent.
Where the focus should be is increased capitalization. Labor and capital are compliments, rather than competitors. A worker is more productive (and thus earns more income) with more capital, and capital is just lumps of junk without labor.
Economies that are labor-intensive (China, Southeast Asia, Africa) tend to be poorer, whereas countries that are capital-intensive (US, Europe), tend to be wealthier. If Jeb really wants to achieve 4% growth, he’d focus on sustainably increasing productivity.