To calculate change in productivity, compare the modern chimpanzees workload with the comparable figure for a chimpanzee from a thousand or a million years ago. Of course, we do not have any historical data on chimpanzees, but the answer is clear. The productivity growth rate for chimpanzees (and all other animals) is zero. Animals, even those with culture, show no progress across generations.

The economic opportunities of the grandchildren of modern chimpanzees will be no higher than todays chimpanzees (and probably far worse because of environmental destruction). Perhaps it is obvious that animals have zero productivity growth. Less obvious is the fact that the human rate of productivity growth throughout much of history has also been almost exactly zero! Through most eras, humans have done no better than chimpanzees or even bacteria for that matter. Keynes makes this point in his grandchildren essay noting, the absence of modern technical inventions between the prehistoric age and comparatively modern times is truly remarkable.

The archeological record reveals that Keyness observation applies to most periods. For most of human existence, the rate of technological change was essentially zero. Our modern ability to create more material goods per unit of effort is nothing short of amazing.

Lets return to our grandchildren. The answers are 20.2 hours per week for the lower-growth case and just 9.6 hours per week for the high-growth case. If the next 40 years look like the period 1970 to 1999, our grandchildren will have to work half as hard as we for the same material outcome. Alternatively, if productivity grows at the rate of the last few years, our grandchildren will only have to work one-quarter as hard as we do. If the high productivity path happens, our grandchildren could work Keyness 15 hour weeks and be considerably richer than we. Note that productivity growth doesnt just mean more TVs, it also allows for better medical care and education.

In terms of economic wealth, small improvements in productivity translate into big improvements to our lives and those of our children and

grandchildren. When it comes to economic wealth, productivity is the only thing. Thus, our economic wealth depends almost entirely on the rate of productivity growth.

There are, of course, a number of important caveats to this productivity argument that go beyond the scope of this book. First, average economic wealth may mean very little if it comes in a world that is environmentally damaged. Second, the distribution of wealth may be more important than its total. Third, and most fundamentally, there is scant evidence that increases in wealth make people any happier. In fact, studies from around the world suggest that while most of us believe money will make us happier, wealth does not cause happiness.10 All of these are important topics, but not for this book, which is dedicated to the mission of helping investors make money.

Conclusion: If the last few years of extremely high productivity are a sign of good times to come, we will be much richer, and our large debts will not be a problem.

America: The Talented Beggar

We started this chapter by asking what path the United States will take. Will it be Keyness vision of examined leisure created by information technology, or will we stumble down a painful path similar to that taken by post-bubble Japan?

Those who believe that these are the worst of times are right to recognize the U.S. financial hangover from the bubble years. The aftereffects of the 1990s are clearly visible in shaky consumer finances, idle factories, and large government deficits. However, those who believe these are the best of times are right to recognize the central importance of extremely high productivity growth.

Thus, productivity is the key. If there is to be a happy financial ending

for the United States, it must come through information technology and productivity growth. For investors, this converts to simple advice. Watch the productivity figures. If productivity can stay above 3% for the coming years, then like my talented running teammate, the United States should be able to work through its hangover. If productivity drops substantially, however, the pain of recovering from the excesses of the 1990s will be much greater.