Dear Mum

I’m sorry this letter is so long. I didn’t have time to write a short one.

This is the essential paradox of productivity, and why it is so hard to measure. It’s easy to count the output of widgets per man-hour, if widget-making is what you do. It’s less easy when your new, super-widget is dearer to make but lasts twice as long. When it comes to the productivity of, say, a sales assistant in John Lewis, it’s getting quite hard.

That assistant’s chairman, Charlie Mayfield, has launched a productivity crusade far beyond the widely-admired group of stores he heads. British workers are only four-fifths as productive as German ones, and Sir Charlie’s government-backed campaign calculates that better practice could add £130bn to the UK economy.

This is quite a prize, but to win it, we’re told, requires “better quality leadership”, a motherhood-and-apple-pie aspiration which takes us no nearer to the line. It’s another slippery concept, like productivity itself. More rules may comfort the regulators of life assurance companies, but the cost is borne by shareholders and savers. That sounds less productive.

Expanding banks’ compliance department may improve the quality of leadership, but they have been a drag on national competitiveness since the crisis. Fortunately, as Patrick Jenkins argued here, that may be starting to change.

On the other hand, where once it may have taken a day in a library to discover something useful, or a struggle round the shops to find an unusual product, now it just takes a couple of clicks. That certainly feels a lot more productive, whether or not it’s in the statistics.

If measuring productivity in services is tricky, measuring it in the public sector has hardly begun. Free services give no pricing signals, and while there is plenty of diagnosis of the problem, the few attempts to measure it suggest it is falling.

Convention dictates that improved productivity is the only way the population can become richer, as opposed to growing the economy by more people working. Employees are understandably nervous that improving productivity means they must work harder, or that a business reckons it can do without some of them. Britain’s impressively low level of unemployment looks uncomfortably like the other side of the productivity coin.

It’s not easy. Unlike the webloggers, newspaper writers are constrained by space. Does that make me more productive, or less?

Never learning

The survival of John Fallon as CEO of Pearson is one of the wonders of the City. His policy of throwing everything overboard to prevent the ship marked USS Education sinking gives a rather different meaning to the company’s slogan of “always learning.” The list of disposals is long (including the FT and another slice of Penguin) and, judging by the prices he gets, he’s a fine salesman.

Unfortunately, his focus on selling textbooks to American students looks ever more like a high-stakes gamble where the odds are stacked against him.  The pesky students have discovered the internet, and those who prefer hard copies are buying them second-hand off the web. Who’d have thought it?

The result is a share price at its worst since the financial crash, and a dividend that is unsustainable. A muddled presentation announcing the Penguin deal left analysts trying to work out how much might be sustainable, and coming up with around 16p, against last year’s 52p.

Surveying the dwindling stock of businesses left to sell, Salesman Fallon might conclude that trying to get a good price for the whole thing is his last option. Perhaps we will find out with the results next month.

Oiling the wheels with fudge

The Financial Conduct Authority is getting it in the neck over its decision to bend the listing rules to accommodate the world’s biggest-ever new issue, Saudi Aramco. Fortunately, it can point to its creation back in February of an “international” class of listing which the domestic tracker funds would not be obliged to buy. Honour is satisfied all round, and London retains its international relevance. Best not to call these listings the “fudge” class, though.

This is my FT column from last Saturday (with apologies to both readers for the delay in posting).