It's all about productivity

One of the points that needs to be continually reinforced about economic growth, is that it's not about how long (or "hard") you work, but how smart you work (generally measure in terms of productivity). As a story in today's New York Times ("Gap in Competitiveness Weighs on Europe, Analysts Say") notes:

Greeks with full-time employment worked an average of 42 hours a week last year, according to Eurostat, the European Union's statistics agency, while the average in Portugal was 38 hours. In Germany, it was just over 35 hours.
But the effect on competitiveness was starkly different. A Eurostat index of labor productivity gave Germany a mark of 105 in 2010, the latest year for which figures were available. But productivity was only 94.8 in Greece and 76.4 in Portugal.

(Note: the OECD labor productivity data - GDP per hours worked - for 2010 has the U.S. at 100, Germany at 90.9, Greece at 57 and Portugal at 54.3. France is at 97.9, Ireland at 107.9, Sweden at 84.6 and the UK at 78.3. The average weekly hours of all employees in the U.S. in December was 34.4 hours.)

But increasing productivity means making investments in tangible and intangible assets. And under many austerity programs, those types of investments get cut. Thus a vicious cycle begins: cuts reduce the ability of the country to grow, leading to further declines in revenues, leading to calls for further cuts.

To avoid this trap, our economic investment policy -- as well as our workforce -- needs to be smart.