John Pierce: In your book, 'Gittinomics', you write about, I suppose many of my favourite topics, at least topics I've had to wrestle
with: the ageing of the population, taxation, the income/leisure trade-offs. And as you point out in various parts of the
book, at least part of the answer to a lot of economic problems is to grow the economy faster, particularly through higher
productivity growth. Where does that higher productivity growth come from and how do we get more of it?
Ross Gittins: Well, one of the ways we get higher productivity growth is by using more machines and by better machines but really a lot
of it comes from technological advance. We just get better at doing things. Now some of that technological advance is really
big, you know, the discovery of electricity, the discovery of the motor vehicle, the production line. More recently we've
had the development of computers, we've had the Internet. All of those things, those big technological advances can move,
can increase our productivity, our ability to produce more goods and services with the same quantity of inputs: labour and
capital.
John: We normally talk about higher productivity being accompanied by a shift of resources, labour and capital as you said, from
one sector of the economy to another. But perhaps sometimes that term 'resources' can hide the fact that it's really people
we're talking about shifting, people shifting from not just one firm to another but from one sector of the economy to another
and indeed even from one location within a country to another geographic location. What are some of the issues involved in
trying to get higher productivity through shifting people around?
Ross: Well, there are, it does involve shifting people around and economists can forget that. The people never forget it and I
have to say the politicians don't forget it either, because if the people dislike it too much they might vote against the
politicians. They often like the results but don't always like the things that have had to happen to get those results, to
make the economy to grow faster and to make us better off. I think we need to be more conscious that moving people around,
often that can involve that if you move them around the same town, same big city, that doesn't matter so much. But if you
separate them from their family and their friends, if you separate them from their parents, if you find that, in climbing
the tree of some organisation you've ended up living in a town way away from where your parents are who are starting to get
old and need their children to keep an eye on them, that can be a real problem. If you're raising kids but your parents aren't
there to help with the babysitting and so on, that can be a problem. I think economists tend to forget that and I think the
people who run business and departments can forget it, but people don't forget it and it's more important than we often give,
the attention that we often devote to it.