August 19, 2003

Unbalanced Economic Growth

An amazing fact:

Selling Gadgets in a Wal-Mart World"Of the 20 million DVD players sold this year in the United States, over half will be sold at $50 or less..."

Posted by DeLong at August 19, 2003 09:07 AM | TrackBack

Comments

August 18, 2003

Nightly Business Report - PBS

JAMES BRADFORD DELONG, COMMENTARY: Everybody is happy that real economy seems to be accelerating. Real GDP grew at a 2.4 percent annual rate in the spring. But everybody is sad that unemployment news continues to be lousy. Hours worked fell at a 2.2 percent annual rate in the spring. How can production grow and employment fall? Productivity. In the spring, the productivity of the American economy shot ahead at a 5.7 per year rate. In the last two years, productivity growth has averaged 4.6 percent per year, a rate not seen since the 1960s. Rapid productivity growth tells us, first, that in all likelihood the economic news is going to keep being schizo-, production is likely to keep rising, the unemployment rate is unlikely to fall. For bosses, investors, and those secure in their jobs, it will probably feel like a healthy recovery. For those without jobs and who fear they might lose their jobs, it will probably feel like the recession never came to an end. Second, fast productivity growth tells us that the new economy is still burbling away underneath excess telecom capacity and terror jitters. The swift pace of improvement in an adoption of high technologies has not slowed. Since 1999 the share of American households online has nearly doubled, risen from 33 to 59 percent. And this year digital cameras will outsell film-based cameras for the first time. If only our policies gave us demand to match the growth of our productive potential, the economic news would be very, very bright indeed. I'm Brad DeLong.

Posted by: anne on August 19, 2003 09:54 AM

I remember when cell phones cost a thousand dollars.

I must be as old as the hills.

Posted by: Jim Glass on August 19, 2003 09:58 AM

I remember when everybody had hand-made, hand-wowen clothes. No I don't, but I'm pretty sure it was like that. If some things gets cheaper, other things get relatively more expensive. And nowadays, hand-made clothes from hand-wowen fabric is only for the very rich, or for those very interested in such things.

Raising kids is a task as resistive to productivity improvement as hand-made products. We have to worry about the social and demographic consequences of ever increasing productivity. Otherwise racists, anti-globalists and ecologists will - and they won't suggest any constructive solution.

Posted by: Mats on August 19, 2003 10:18 AM

Ecologists have all sorts of constructive suggestions to environmental problems, and lumping ecologists with racists is bizarre or ignorant. Good grief!

Posted by: lise on August 19, 2003 10:35 AM

Suppose productivity is not enough???

http://www.nytimes.com/2003/08/19/business/19AUTO.html

Ford Plant Finds Efficiency Is No Protector
By DANNY HAKIM with ANNE BERRYMAN

The Ford Motor Company's assembly plant near Atlanta is one of the most productive car factories on the continent, but a top union official there said today that its future was in doubt.

Ford told union workers at a meeting in June that no new product is scheduled for the plant in the Atlanta suburb of Hapeville, which employs 2,300 hourly workers and produces the aging Ford Taurus and Mercury Sable sedans, according to Mitchell Smith, the top United Automobile Workers official at the plant.

Workers were also told that plans to build a new factory in Georgia were also suspended, Mr. Smith said.

Coming during a summer of labor contract talks, these developments reinforce the challenge that unions face in stemming the flight of domestic manufacturing jobs and the struggles of domestic automakers to bring costs in line with foreign rivals....

Posted by: anne on August 19, 2003 10:39 AM

All of which means that China is going to be a big deal in the 2008 election. The only question is whether panicked Bushites will blame China in 2004.

Posted by: Maynard Handley on August 19, 2003 10:52 AM

If you think that's incredible, calculators are being offered for sale in Hong Kong for anywhere between 22 cents and 92 cents - see link. And some folks don't believe in deflation? Sheesh.

http://www.sourcehk.com/stock/index.htm

Posted by: Pooh on August 19, 2003 10:59 AM

Unless there is a surge in employment, trade issues will be most important in the coming election. Democrats has better take an aggressive stance on job creation and protection, very aggressive. Mary Landreau won in Louisiana when she told the national Democrats to get lost and got tough on trade issues of concern in Louisiana. Al Gore missed the importance of the steel trade issue in West Virginia.

I am not interested in some trade theory or other, I am interested in jobs and job protection, and beating Republicans.

Posted by: jd on August 19, 2003 11:04 AM

http://www.nytimes.com/2003/08/19/business/worldbusiness/19indi.html

Indian Companies Are Adding Western Flavor
By SARITHA RAI

HYDERABAD, India - Arun Kumar had never shaken hands with a foreigner nor needed to wear a necktie. He vaguely thought that raising a toast had something to do with eating bread. If it was dark outside, he greeted people with a "good night."

But Mr. Kumar, 27, and six other engineers graduating from the local university with master's degrees in computer applications, were recently recruited by the Hyderabad offices of Sierra Atlantic, a software company based in Fremont, Calif. And before they came face to face with one of Sierra's 200 or so American customers, the new employees went through a grueling four-week training session aimed at providing them with global-employee skills like learning how to speak on a conference call, how to address colleagues (as Mr. or Ms.) and how to sip wine properly....

As more and more service- and knowledge-intensive jobs migrate to India, such training programs, covering some substance as well as style, are increasingly common at companies with large numbers of Indian employees....

Posted by: anne on August 19, 2003 11:08 AM

"lumping ecologists with racists" - goofed on that one, sorry!

Posted by: Mats on August 19, 2003 11:09 AM

Thank Mats. Should have realized, but I had never seen your fine blog.

Posted by: lise on August 19, 2003 11:52 AM

Thanks, I'm keeping it updated :)

Posted by: Mats on August 19, 2003 01:14 PM

"I am not interested in some trade theory or other, I am interested in jobs and job protection, and beating Republicans."

So why should anyone NOT looking to feather his own snug little nest vote for your guys, then? The American consumer does NOT owe you a living, and politicians like Mary Landrieu should go get stuffed, as far as I am concerned. "Job Protection" my ass!

Posted by: Abiola Lapite on August 19, 2003 07:21 PM

Looks like comparative advantage at work.

Now that I can afford a CD player, I think I'll go shopping...

Posted by: Alan K. Henderson on August 19, 2003 09:41 PM
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