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Productivity and the Bonus Culture$
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Andrew Smithers

Print publication date: 2019

Print ISBN-13: 9780198836117

Published to Oxford Scholarship Online: May 2019

DOI: 10.1093/oso/9780198836117.001.0001

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Distractions from Serious Debate

Distractions from Serious Debate

(p.94) 18 Distractions from Serious Debate
Productivity and the Bonus Culture

Andrew Smithers

Oxford University Press

Low corporate investment is not caused by a lack of profitable opportunities but by the bonus culture. It can therefore be cured if its perverse incentives are reversed. Official estimates for trend growth rates are very optimistic. The risk of falling living standards should be a matter of major public concern but is not. This is damaging as problems are unlikely to be solved unless widely debated. One persistent problem is that growth is largely discussed in terms of technology rather than investment. The threat that we will soon be replaced by machines attracts much more attention than the problem that this is not happening fast enough to boost productivity. It is also nonsense to claim that companies are not investing in order to reduce debt, or that demand is inadequate. The post hoc fallacy remains a barrier to sensible debate.

Keywords:   investment, incentives, capital stock, debate, technology, NAIRU, post hoc fallacy, fiscal stimulus, balance sheet recession, buy-backs

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