_The developed worlds economists have been racking their brains for explanations of the rich countries protracted period of weak improvement in the productivity of labour. Ive thought of one that hasnt had much attention.

_

Productivity isnt improving as fast it could be partly because of the increasing number of our brightest and best devoting their efforts to nothing more productive than helping their bosses or customers game the system.

That is, helping them find ways around our laws tax laws, labour laws, even officially supported accounting standards for how profits should be measured and reported.

What put this into my mind was all the kerfuffle a few months ago when Labor announced its plan to abolish refunds for unused dividend franking credits.

The ATO’s video about what to do if you have a computer, phone or other electronic device that you use for work purposes.

When Paul Keating introduced dividend imputation in 1988, unused credits werent refundable. Only in 2001 were they made so by John Howard. At first, the cost to the budget of this minor concession was tiny. Over the years since then, however, the cost has blown out extraordinarily.

Why? Because a small army of accountants, lawyers and investment advisers started advising their clients (many of whom cant use their franking credits because they pay no tax on their superannuation payouts) on how to rearrange their share portfolios to take advantage of the new refund.

Thus did they turn a small concession into a hugely expensive loophole. Scott Morrisons claim that Labor had overestimated the saving to be made by closing the loophole rested on his since-refuted assumption that it had failed to take account of the way the small army would respond by further rearranging their clients portfolios.

But thats just one example. The truth is that helping their customers steal a march on the government is one of the main services the entire investment advice industry uses to justify its fees and commissions.

A particular favourite is helping people with loads of super turn the cartwheels necessary to frustrate the mean-test rules and still get a part pension.

Some tax agents help their clients pad out their work-related tax deductions so the punters tax refunds are big enough to have the agents fee deducted without them feeling much pain.

For years, starry-eyed economists exulted in the phenomenal growth of the banking and financial services sector on the grounds of all the financial innovation going on.

Post the global financial crisis its clear much of the innovation was no more productive than finding new ways to minimise tax or get around financial regulations. And, of course, all the advances in risk management turned out to be more about slicing, shifting and hiding risk than reducing it.

Its an open secret that our compulsory super system leaves employees open to hugely excessive fee charging, as layer upon layer of advisers clip each others tickets and send the bill to the mug savers.

The banks volume of trading of currencies, securities and derivatives in financial markets exceeds by many multiples the amount required to service the needs of their real-economy customers or even to keep markets deep (able to process big transactions without shifting the price much).

The banks are just betting against each other - meaning much of the bloated financial sectors activity isnt genuinely productive.

And now theres the gig economy Uber, Airbnb, fast-food delivery services and all the rest.

They represent a strange amalgam of genuine innovation using the internet and smart phones to bring buyers and sellers together much more efficiently than ever before with a lot of terribly old-fashioned tricks to get away from the tax, labour and consumer protection laws faced by their conventional competitors.

“Oh no, the people who drive cars, ride bikes or do odd jobs at our behest arent our employees. Gosh no. So if they dont pay their tax, make super contributions or insure themselves, its nothing to do with us.”

Note that even if_all_the cost saving extracted from the hides of these poor sods was passed on to customers, it would still be less a genuine efficiency improvement than a mere income transfer from unempowered workers to consumers, most of whom are not in need of a free kick at other peoples expense.

Now, its true most of the practices Ive described are perfectly legal. And many people have convinced themselves that if its legal it must be moral. But they cant have it every way: it may be legal and even moral, but what its not is particularly productive.

For many years business people loved to lecture the rest of us about the need to grow a bigger pie, not squabble over how the pie was divided.

Turns out a surprising amount of business activity involves ensuring their slice is bigger than yours. If so, dont be surprised productivity improvement is slow.

Ross Gittins is economics editor of the SMH and an economic columnist for The Age. His books include_Gittins’ Guide to Economics, Gittinomics_and_The Happy Economist_.