Last Week in Bad Problem Solving, 2016 POTUS Candidate Edition

productivity vs wagesWhen one spends as much time as I do thinking about the ins and outs of the problem solving process, it soon becomes painfully obvious that the U.S. political system demands very little from our elected leaders in that regard. Last week GOP Presidential hopeful Jeb Bush made comments containing some typical indicators bad problem solving. In an interview in the New Hampshire Union Leader, he said

“My aspiration for the country — and I believe we can achieve it — is 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’re going to get out of this rut that we’re in.”

To start, we have solution-jumping and committing to a single countermeasure, while it remains unclear what problem he is trying to solve. Presumably, it is one whose problem statement would be something like, “The growth rate of the United States should be X% but it is Y%, and the gap is 4%.” As a dry, business growth target, a percentage may be fine. But when discussing the prosperity and well-being of a nation for which he hopes to become President, we should demand leaders with more inspiring long-term aspirations that include raising the quality of life of all citizens, for which the 4% growth would be but a means. Hopefully this quote has been taken out of context, and Jeb Bush’s long-term aspiration for the U.S. is really not “4% growth as far as the eye can see”. However, these are not the most worrying flaws.

At best, Jeb Bush receives half marks for practical problem solving step 3, arguably the easiest of the 8 steps. The 4% target is large, vague, and not time-bound. While long-term thinking is good, “as far as the eye can see” only raises questions. The longer we look out in time, the more likely it is that 4% will be completely inappropriate, because if history has taught us anything it is that the fortunes of nations change, and change drastically and unpredictably. Empires rise and fall. Technologies upend economies. Populations migrate and demographics shift. A 4% goal for growth may be what Jeb Bush’s advisors say is a good, safe growth number for the U.S. economy to aim for, but the aggregate nature of such a large target contains many assumptions. How exactly does higher productivity and steady 4% growth bring about benefit to the people of United States?

Even his attempt at addressing this question seems to backfire. Jeb Bush scores problem solving points for framing the problem in terms of his customers (U.S. citizens), but immediately loses them by assigning blame. Critics last week were quick to jump on Jeb Bush’s comments, countering that working people put in long enough hours already, and calling on wage-earners to put in more hours and be more productive seemed out of touch with reality, at best. The countermeasure Jeb Bush offers is the equivalent of “try harder”. While he is mistaken, in problem solving terms, to assign blame on people and jump to solutions, his line of thinking is not all bad. Just as the 4% economic growth is an aggregate number, he seems to be talking about “people” in the aggregate. It is true that if people in the U.S. work longer hours and earn more, the economy will grow. This can be accomplished a number of ways. One way is to simply provide employment to the unemployed and underemployed, without increasing the hours of the fully employed. About 5.5% of the population are unemployed, working zero gainful hours, and about 18% work part time, less than 35 hours per week. Strictly speaking, when Jeb Bush says “people need to work longer hours” to meet his 4% goal he is not wrong if the countermeasure targeted these two demographics. He could earn problem solving points here if an examination of his A3 revealed some data stratification underpinning an understanding of the above.

There is a huge false assumption when Jeb Bush says people will, “through their productivity, gain more income for their families”. This sounds good but has not been a reality in the U.S. in the last forty years. It may remain true for artists, farmers, craftsmen and self-employed professionals who are paid based on output and not based on hours worked. More output in fewer hours increases income. In the aggregate, productivity brings prosperity. However, worker productivity between 1973 and 2013 grew by about 74% while wages grew at about 9%, based on Economic Policy Institute data (from which the image above). Data seems to indicate that over the past forty years, raising worker productivity, or output of goods and services per hour, has disproportionally benefited the employers and shareholders, not the wage earners. Setting aside all other flaws, the proposed countermeasure would fail the “therefore” test of logical chain of causation from productivity to increased wages to increased economic growth.

The role of the U.S. government as envisioned by the founders is simple: to protect life, liberty and the pursuit of happiness for its citizens. We can think of these as ideal conditions, with successive Presidencies striving towards short-term target conditions through American history. Today we still have many gaps in all three of these conditions of this ideal. All POTUS hopefuls would benefit from reflecting on their policy proposals and the problem statement underlying them in these terms, going into the population to see reality, and working to counter root causes of the loss of life, loss of liberty and inability to pursue happiness. A country’s long-term problems are not solved by governments spending money and implementing partisan policies. These are often exercises in solution-jumping driven by ideology rather than by a solid grasp of how things work in reality. A country’s practical problems are solved when its people agree on common goals and change behaviors to move in the direction of the goal, under the guidance of leaders courageous enough to face the facts, grasp cause-and-effect and conduct many small rapid experiments.

1 Comment

  1. Mike

    July 21, 2015 - 7:35 am

    Every politician should have to read this and be tested on it. Too many times they present nothing more than solutions looking for a problem all based on ideology with absolutely no tie to actual data.