----- Original Message ----- From: "Erik Reuter" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" <[EMAIL PROTECTED]> Sent: Monday, September 27, 2004 6:54 PM Subject: Re: Productivity Re: Br!n: some thoughts and quotes.
> On Mon, Sep 27, 2004 at 04:08:30PM -0500, Dan Minette wrote: > > > I won't argue with you, but its interesting that it doesn't reflect > > itself in an accelerated growth in total capitol employed. > > Perhaps the measurement of the capital they are employing is not doing a > good job of representing the true productivity of the capital. It just hit me. With computers, depreciaton is accelerated compared to machinery, planes, factories, etc.. Thus, investment is higher, but it is not reflected in net capital employed because the yearly depreciation is much faster. I have no arguement, also, with the idea that improved technology is the foundation of productivity growth..more than an increase in the skills level of the average worker. For example, a master smith has more skills than a high school graduate that goes to work at the steel mill. Yet, the later's productivity is far higher. From personal experience, I know that the skill level needed to produce scientific graphs in 1977 was far higher than it was in 1981. One graduate student could process data in '81 with the same efficiency as a team of 5 did in '77. These numbers, as you may guess, are from personal experience. So, while the skill level of the workforce has increased, most of the increase in productivity seen during the last 250 years has been the greater leverage afforded by technology. The pattern that I have seen is that, from time to time, is a burst of technological innovation allows for the development of hardware that significantly improves productivity. Computers, and associated equipment, are the technological innovation that handled this in the '90s. The cheap horsepower that became available allows me to have significantly more FLOPS capacity for $500 than Western Atlas had for $1,000,000 in '85. Relating back to an older thread: Walmart used computers to get a handle on its inventory, one example of the new old ecconomy. The other listed in the Atlantic monthly was the advances in 4-D seismic and geosteering that greatly reduced the price of oil field production. These types of possibilities increased the return on investment....which had to happen because the depreciation on this type of investment was much faster than the depreciation of airplanes, for example. With Moore's law, computational power is close to becoming a commodity....PICs with more power than a 1960s mainframe computer are now available for a few bucks apiece. I think that's what happened in the '90s. I know that the Clinton ecconomic team went to Greenspan about the expected increase in productivity early in their term, arguing that this will allow for more non-inflationary growth, which was right. I'm glad I saw an explaination for data that seem to be contradictory. When different bits of data don't seem to fit, I always think we're missing something. If the faster depreciaton is as widespread as I think, it would explain the increase in the rise in investment not being matched by an increase in total capital. If anyone sees a mistake in my reasoning, please tell me. While I don't like being mistaken, its better to be corrected than to stay mistaken. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
