Me at Nieman Watchdog I:
Nieman Watchdog > Ask This > Missing the Story of Structural Change:
Q. In what businesses are people working much harder than they did five years ago, and what’s making them work so much harder?
Q. In what businesses are people working much smarter than they did five years ago, and what’s letting them work so much smarter?
Q. In what businesses are productivity gains due primarily to people figuring out how to use all the computers they bought in the late 1990s, and how are people using computers and related gear to boost worker productivity?
Q. As the price of information technology capital continues to fall, are there any signs of another boom in information technology investments that will greatly boost the productivity of IT-using industries yet further?
Q. What new jobs or industries are being created because of the falling price of information technology?
The press needs to be asking questions about the underlying structural changes in the economy under George W. Bush. By structural, we mean the things that change over the long-term: labor, capital and technology. These are the things that ultimately determine America’s standard of living (as opposed to the ups-and-downs of the unemployment rate and other cyclical factors that look bigger in the short run but are smaller in the long run).
On the structural side, the American economy has been growing fast over the past four years. The productive potential of the American economy has grown at an extremely rapid pace. But the rapid growth has not been the result of high investment (more capital). In fact, the rate of investment has been markedly slower than in the late 1990s. It has also not been the result of any action taken by the Bush Administration. Instead, the rapid growth is the result of:
(a) learning to efficiently use the information-technology capital put in place in the late 1990s
(b) becoming smarter about organizing production processes, and
(c) speeding up the pace of work.
This story of positive structural changes in the American economy – the very rapid growth of potential output – is the big story about the economy during the past four years. It's important both at the macro level – why is output-per-man-hour 20 percent higher than it was five years ago? – and at the micro level – how are people today doing their jobs and being 30 percent more productive than their predecessors of a decade ago? The news media aren't covering this well. Yet it's the really big story about the economy in the Twenty-First century.
Posted by DeLong at June 3, 2004 09:09 AM | TrackBack | | Other weblogs commenting on this postHow com ITS Intelligent Transport Systems is not getting any attention here -- I mean in the context of a question like "What new jobs or industries are being created because of the falling price of information technology?"
ITS could become a showcase of US-EU competition in terms of "a claim to civilization".
ITS America:
http://www.itsa.org/
ITS Europe:
http://www.ertico.com/
The hardcore supply siders are too busy flooding the market to care about structure.
Posted by: Vlad The Inhaler on June 3, 2004 10:32 PMBrad -- my issue with arguments about technology and productivity is that studies done year after always seem to argue that the boost was not as large as people said it was. It feels like "productivity" is just another way to sop up the error term. Certainly, it isn't clear to me that I can see the kinds of productivity improvements that the numbers say we've experienced in the last 20 years. The only place I can see a clear argument is in communications technologies, but the big leaps forward were telegraph and telephone. After that, do emails reduce transactions costs so much more than faxes that we can justify the productivity numbers that people claim?
Posted by: Ennis on June 4, 2004 11:10 AM"...but the big leaps forward were telegraph and telephone..."
Excuse me, nobody ever called telegraph and telephone "IT". The entire process of globalization would not be possible without the marriage of computers and telecommunications. The globalization of the banking sector was just stage one. Without "IT", NASDAQ Vice-President could not possibly draw the analogies he drew along the lines that NYSE is like representative democracy while NASDAQ is like direct democracy.
In production sectors, I have not been closely following the manufacturing sector but I have a hunch that IT has had a tremendous impact on globalization of automotive sector and permitted leaps in productivity in there. If I am not mistaken, design-manufacturing cycle times have been cut in half in this sector. Etc... wait till they eliminate the supermarket jobs... and more is coming...
Posted by: Bulent on June 4, 2004 11:51 AMI would like to know how productivity is measured and if unpaid overtime is factored in. My own impression is that at least some of the alleged increase in productivity has occurred because some of the work formerly done by employees is now done by consumers. And that the rate of error (which has to be sorted out by the consumer) has increased significantly. And I have been much less then impressed by the way in which all the information collected and stored is: (1) inadequately protected; (2) erroneous.
Posted by: azurite on June 6, 2004 11:37 PMIn at least one case I know of, because it involves me, "the news media aren't covering this well" because their editors don't think it's interesting. Maybe if it involved more political conflict (or corporate scandal or heart-wrenching layoff stories) and less nitty-gritty operational improvement, the stories would be easier to sell.
Posted by: Virginia Postrel on June 15, 2004 11:18 AMSemper Gumby - Always flexible (United States Air Forces, Europe, Contracting squadron motto)
Praetio prudentia praestat - Prudence supplies a reward
Medio tutissimus ibis - You will go safest in the middle (Moderation in all things.)(Ovid)
Ex animo - From the heart (sincerely)