Productivity is, as Reserve Bank Governor put it earlier this year, “the only real basis for optimism about future income”. Or, as Paul Krugman famously put it, before he himself became as well-known as his columns in the New York Times and his Nobel Prize have since made him, productivity ‘isn’t everything, but in the long run it’s nearly everything. Alan Blinder and William Baumol explain why: because ‘nothing contributes more to reduction of poverty, to increases in leisure, and to the country’s ability to finance education, public health, environment and the arts.