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Productivity is also down 20 percent in mining. The reason for
this is also clear. People tend to forget that the largest mining
activity in the United States is drilling oil wells. Because we calculate
oil well drilling productivity by the number of barrels of oil brought
up from the ground, 80 percent of the decline in mining productivity
has been caused by geological depletion. The other 20 percent is
caused by federal regulations (environmental, safety, and so on). It
takes time and money
to
fill up an empty open pit mine, or to put
more timbers in an underground mine to keep people from getting
killed.
Productivity is also declining in "services." In common par–
lance, people talk about services as if they were everything except
construction, mining, agriculture, and manufacturing. The govern–
ment uses a narrow definition for services. But even a narrow
definition of services absorbs a tremendous fraction of the manpower
added to the private economy. Actually about a third of the man–
power in the 1970s went into services. The history of services is the
opposite of that of agriculture. In 1948, agricultural productivity was
40 percent of the national average. At that time service productivity
was 96 percent of the national average.
It
has been declining, so that
it is now down to 62 percent of the national average. When you move
a worker from industry to service, you place a 38 percent drag on
productivity, because you are lowering his productivity. That is
what we did in the 1970s.
Almost half of the workers who moved into the service sector
went into health care; and almost all of those health care workers
went into nursing homes. Productivity there is down because
bath~
ing, feeding, and putting grandmother to bed is a low productivity
operation. Now, you can regard taking care of grandmother as a
good thing, even if it is a negative blow to productivity. But of course
someone has to pay for taking care of her.
If
you do it in your own
home, it is not a net drag on your cash income. But if you do it in a
private nursing home, it is a drag on your net income. GNP is
basically just cash incomes, so when you move from a nonmonetized
activity (taking care of grandmother at home),
to
a monetized activity
(putting her in a nursing home), it may be a net improvement in
your welfare, but it's a net reduction in your income.
Another third of the people in services went into business
consulting: they became lawyers and accountants, and so on. Accord–
ing to the way the government keeps statistics, these people are in
low productivity employments. That makes some sense. An account-
