Technology + Infrastructure + Education Investments Drove ~90% of Labor Productivity Growth for Past ~30 Years Sources of USA Average Labor Productivity Growth, 1977-2000 2.21% Annual Productivity Growth ? ~ a a aaa ; | = Technology Ss vA \ Investment 2 1M «moa we semen eee co en me om agen em meme on ane roan | = 1.13% 1.28% 1 Infrastructure & Bs Other Investment FS : 1 Education (Labor < 7 7 io Quality) a D> 05% ee alate come es | g g g a Other (Total Factor < Productivity) 0.0% ARUSIYG 3 oe nme 2 cm — om cen ee mS Sn 8 as = a fo = 1977-1990 1990-1995 1995-2000 Note: Total Factor Productivity is the portion of output not explained by the amount of inputs used in production. Source: Dale W. Jorgenson, Mun S. Ho, Kevin J. Stiroh, “Growth of U.S. Industries and Investments in Information Technology and Higher Education” <http://;www.nber.org/chapters/c10627> (@)) www.kpcb.com USA Inc. | What Might a Turnaround Expert Consider? 367 However, USA Inc. Has Increasingly Allocated Resources Away from Productive Technology + Infrastructure + Education Investment / Spending Toward Less-Productive Entitlement Program Spending USA Real Federal Productive vs. Less-Productive Spending*, 1970-2009 100% D 80% £ G < 2 ” SB 60% =] 2 g 2 40% x g 5 xe 20% 0% 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 Note: *Total spending exciudes one-time items (such as TARP / GSE / ARRA) for F2008 / F2009 data. Data source: White House Office of Management & Budget (1970-2009). (@)E) www.kpcb.com USA Inc. | What Might a Turnaround Expert Consider? 368 HOUSE_OVERSIGHT_021025