Originally published in The Australian Financial Review on April 8, 2014

Productivity is easy to define, hard to measure and impossible to predict.

But there is a big difference between how much we talk about something and how much we understand about it.

For economists, productivity refers to the amount of output that can be produced per unit of input. Profit, on the other hand, fluctuates with the prices paid for inputs and the prices received for outputs.

Profit and productivity growth sometimes go hand in hand, but they need not. As the mining boom showed, the profits of that industry soared as productivity plummeted.

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