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Productive?

Entry 249, on 2005-11-15 at 14:08:26 (Rating 3, News)

We were greeted this morning with the intriguing news that inhabitants of our largest city, Auckland, are more productive than the rest of us. This was the finding of a study conducted by New Zealand Treasury. Since most non-Aucklanders view our friends in Auckland with something less than total admiration, I was naturally interested in the methodology.

The person who conducted this "study" was interviewed and as it proceeded I gradually realised that this result might not stand up to any real scrutiny. The first problem would be the word "productive". How do we tell who is more and less productive? Apparently their methodology was to equate productivity with salary. OK, so let's make everyone more productive by increasing their salary. Sounds good to me! Interestingly, people in Wellington have similar salary levels, but for some reason they aren't seen as productive because there are many government employees there. OK, so some times salary isn't an indicator, apparently.

This seems to be fairly typical of the un-intellectual, non-rigorous approach our friends in the commercial world have towards research. Commerce has always seemed to be the lowest area of human endeavour, and this confirms it to me. There is no way anyone would get away with this sort of nonsense in science or even in most research in the humanities.

Its generally accepted that most of New Zealand's national income comes from agriculture and tourism. I don't think Auckland is a major source of either of those! (OK, there is some tourism there, but it wouldn't be at the same level as Queenstown or Rotorua, for example) The reason they have higher salaries there is because there are many company CEOs and other senior management in Auckland because it is the location of many companies' head offices. But are they productive? I don't think so.

To say the market determines that your salary is set relative to your productivity is just hopelessly naive. if this is the sort of thinking we have at Treasury I wouldn't have a lot of confidence in the future direction of our economy!

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