Re: Productivity: Economics Blogs
On Fri, Jul 16, 2004 at 05:20:40PM -0400, Paul wrote: Dmytri Kleiner wrote: As I'm sure most of you have noticed US labour productivity has been the talk of the economics blog world of late. .. I can't resist asking which ones you read or would reccomend. I am aware of DeLong and Sawicky - any others that focus seriously on economics or eco policy? Yes, those two, especialy the later, are the best, but there are also Albert King's EconLog and Marginal Revolution which are quite active. You will find many links there. Micheall Albert also has two, Though Dreams and Goodbye Maggie, both hosted on ZNet, where discusses 'Participatory Economics.' Regards, Dmytri.
Productivity: Economics Blogs
Dmytri Kleiner wrote: As I'm sure most of you have noticed US labour productivity has been the talk of the economics blog world of late. .. I can't resist asking which ones you read or would reccomend. I am aware of DeLong and Sawicky - any others that focus seriously on economics or eco policy?
Re: Productivity: Economics Blogs
Angry Bear The Big Picture Kautilyan ArgMax D-Squared Digest Nathan Newman Billmon (Whiskey Bar) You can get the links on my site (on the left) lots of right-wing ones too, some knowledgeable, some loony. max -Original Message- From: PEN-L list [mailto:[EMAIL PROTECTED] On Behalf Of Paul Sent: Friday, July 16, 2004 5:21 PM To: [EMAIL PROTECTED] Subject: Productivity: Economics Blogs Dmytri Kleiner wrote: As I'm sure most of you have noticed US labour productivity has been the talk of the economics blog world of late. .. I can't resist asking which ones you read or would reccomend. I am aware of DeLong and Sawicky - any others that focus seriously on economics or eco policy?
Productivity.
As I'm sure most of you have noticed US labour productivity has been the talk of the economics blog world of late. I have a few questions regarding this productivity boom that have not been answered sufficiently in what I have read so far. Productivity, as best as I can tell, is defined as follows: Productivity = (Gross Output - Foreign Inputs) / Domestic Labour So, foreign inputs are simply ignored by the formula, doesn't this mean that if cheaper foreign inputs displace domestic inputs that this calculation would show a rise in productivity? Also, since US dollars sent abroad to pay for these foreign inputs will eventually come home and make demands on US productivity, shouldn't this increasing dependence on foreign inputs eventually cause inflation? In fact, doesn't this rise in productivity happen to exist against the backdrop of massive hoarding of US currency in Asian Central Banks? Is this preventing the inflation? In this light, can it be said that the 'Productivity Boom' is really Asian productivity financing US consumption? What hapens when the Asians begin to spend some of that US currency?
Re: Productivity.
Dmytri asks: I have a few questions regarding this productivity boom that have not been answered sufficiently in what I have read so far. Productivity, as best as I can tell, is defined as follows: Productivity = (Gross Output - Foreign Inputs) / Domestic Labour So, foreign inputs are simply ignored by the formula, doesn't this mean that if cheaper foreign inputs displace domestic inputs that this calculation would show a rise in productivity? Dmytri, foreign inputs don't appear to be ignored in the formula you've given above, but I would definitely agree with you that as cheaper foreign labor inputs displace domestic labor inputs, productivity would rise. I would crudely measure labor productivity by dividing real GDP in a period by the number of labor input units employed during the same period. I would also add that ANY measure of productivity is sure to increase in value if firms are: 1. learning how to do more with fewer full-time labor inputs 2. learning how to replace full-time labor input with temporary labor input 3. learning how to replace labor-intensive processes with more capital-intensive ones 4. learning how to replace domestic labor input with foreign labor input (as you mention) ...which is what is happening in the US today, thus the so-called productivity boom. Also, since US dollars sent abroad to pay for these foreign inputs will eventually come home and make demands on US productivity, shouldn't this increasing dependence on foreign inputs eventually cause inflation? That's an interesting question. If US dollars are going abroad to purchase machinery and equipment (increasing imports in machinery/equipment as is happening in Canada today, see article below), there would be a downward pressure on prices on the demand side -- and future productivity increases on the supply side. Also, if US dollars are going abroad to purchase cheaper foreign labor inputs, productivity rises (as you mention), theoretically expanding aggregate supply and putting downward pressures on the average level of prices. But there are so many other factors and the part I wrote above about US dollars going abroad to purchase machinery/equipment is not happening. Thanks for the interesting thoughts. Diane Surge in imports spurs hopes for gains in productivity Machinery demand fuels record gains The Globe and Mail Wednesday, Jul 14, 2004 Exploding demand for machinery and equipment fuelled a record surge in Canadian imports in May, sparking hopes that the long-awaited improvement in productivity may be around the corner. The Canadian business sector has been lagging the United States in productivity improvement since 2001. The jump in imports -- attributed in part to a strong Canadian dollar -- cut sharply into Canada's trade surplus, which fell to $5.2-billion from $7-billion a month ago. Imports of machinery and equipment climbed 13.9 per cent during the month to $9.6-billion, the largest increase since September of 1981, offering some grounds for optimism that Canadian firms are investing in technology that will bolster their competitiveness and yield long-awaited economy-wide improvements in productivity. Gains were widespread, affecting telecommunications gear, office machinery, transportation equipment and laboratory supplies. The sharp increase suggests a meaningful capital spending cycle is developing, said Robert Spector, of Merrill Lynch Canada Inc. We've been anticipating this for some time as companies take advantage of the stronger Canadian dollar, the low cost of capital and lean balance sheets in an effort to boost sagging productivity. The rise implies spending in the economy is becoming more balanced between the consumer and business investment, he added. Overall imports climbed 7.8 per cent in May, the biggest gain since the beginning of 1997, reaching a record $31.6-billion. Exports showed a modest gain of 1.3 per cent to $36.8-billion. Businesses are more confident, and willing to shell out on machinery and equipment, said Warren Lovely, senior economist at CIBC World Markets Inc., with equipment imports now up 20 per cent from a year ago. Three solid months of labour-force growth show businesses are hiring and investing in capital goods as well, Mr. Lovely said. The upturn mirrored a Bank of Canada survey this week showing a growing optimism among Canadian firms about sales prospects, investment intentions and hiring. Last year's 20-per-cent rise in the value of the Canadian dollar means goods imported from the United States are cheaper, said Stephen Poloz, chief economist at Export Development Canada (EDC). It's like putting the equipment on sale, he said, and that's where our productivity catch-up will come from. More than 70 per cent of machinery and equipment imports come from the United States. Among those looking for productivity gains is Toronto-Dominion Bank, which signed a $420-million contract with Hewlett-Packard Canada to upgrade its network of banking machines and debit-card
Re: Productivity.
Diane Monaco wrote: Dmytri, foreign inputs don't appear to be ignored in the formula you've given above, but I would definitely agree with you that as cheaper foreign labor inputs displace domestic labor inputs, productivity would rise. A productivity guy at the BLS told me that foreign labor inputs would be counted as foreign production as well, with little impact on the productivity figures. Doug
Re: Productivity.
Doug wrote: Diane Monaco wrote: Dmytri, foreign inputs don't appear to be ignored in the formula you've given above, but I would definitely agree with you that as cheaper foreign labor inputs displace domestic labor inputs, productivity would rise. A productivity guy at the BLS told me that foreign labor inputs would be counted as foreign production as well, with little impact on the productivity figures. Would have little impact on which productivity figures, Doug? If foreign labor inputs are displacing domestic labor inputs, and domestic labor inputs are counted in domestic productivity figures, wouldn't there be an impact on domestic productivity figures? (domestic labor productivity)=(domestic output)/(domestic labor input) ...so if domestic labor input goes down and if domestic output stays the same or increases...then domestic labor productivity will go up. I'm thinking that the BLS productivity person you refer to was suggesting that foreign labor inputs don't directly enter domestic labor productivity formulas as Dmytri originally suggested in the previous post...and I would agree. Just a thought. Thanks, Diane
Re: Productivity.
Diane Monaco wrote: Would have little impact on which productivity figures, Doug? If foreign labor inputs are displacing domestic labor inputs, and domestic labor inputs are counted in domestic productivity figures, wouldn't there be an impact on domestic productivity figures? (domestic labor productivity)=(domestic output)/(domestic labor input) ...so if domestic labor input goes down and if domestic output stays the same or increases...then domestic labor productivity will go up. If the work is done abroad the value added is counted as part of foreign, not domestic, output. The foreign labor would be embodied in purchased components. Doug
Re: Productivity.
strictly speaking, labor productivity isn't (domestic output)/(domestic labor input). Rather, it's (domestic value added)/(domestic labor input), where value added = domestic output minus intermediate goods input. BTW, it sure looks like the concept of value added is very similar to Marx's S+V. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine -Original Message- From: PEN-L list [mailto:[EMAIL PROTECTED] Behalf Of Diane Monaco Sent: Wednesday, July 14, 2004 10:57 AM To: [EMAIL PROTECTED] Subject: Re: [PEN-L] Productivity. Doug wrote: Diane Monaco wrote: Dmytri, foreign inputs don't appear to be ignored in the formula you've given above, but I would definitely agree with you that as cheaper foreign labor inputs displace domestic labor inputs, productivity would rise. A productivity guy at the BLS told me that foreign labor inputs would be counted as foreign production as well, with little impact on the productivity figures. Would have little impact on which productivity figures, Doug? If foreign labor inputs are displacing domestic labor inputs, and domestic labor inputs are counted in domestic productivity figures, wouldn't there be an impact on domestic productivity figures? (domestic labor productivity)=(domestic output)/(domestic labor input) ...so if domestic labor input goes down and if domestic output stays the same or increases...then domestic labor productivity will go up. I'm thinking that the BLS productivity person you refer to was suggesting that foreign labor inputs don't directly enter domestic labor productivity formulas as Dmytri originally suggested in the previous post...and I would agree. Just a thought. Thanks, Diane
Re: Productivity.
Suppose a Chinese girl makes a pair of Nikes for $2. Someone in the US puts them in a box and sells them for $150. The boxer is paid $2, but his productivity statistics will look fairly impressive, even considering the marketing management overhead. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu
Re: Productivity.
Doug wrote: Diane Monaco wrote: Would have little impact on which productivity figures, Doug? If foreign labor inputs are displacing domestic labor inputs, and domestic labor inputs are counted in domestic productivity figures, wouldn't there be an impact on domestic productivity figures? (domestic labor productivity)=(domestic output)/(domestic labor input) ...so if domestic labor input goes down and if domestic output stays the same or increases...then domestic labor productivity will go up. If the work is done abroad the value added is counted as part of foreign, not domestic, output. The foreign labor would be embodied in purchased components. True, in a perfect world. But the foreign labor inputs used, should technically be subtracted from domestic value added as imported intermediate goods inputs, as Jim D. more accurately detailed above, although it is always understated, thus overstating domestic output (domestic value added). So when domestic value added, if you will, is overstated and domestic labor input falls, domestic labor productivity rises. Imported intermediate goods inputs are understated because the work that is outsourced to contractors, is typically further outsourced to subcontractors and other unidentifiable brokers, jobbers, etc. along the way -- and the actual value is lost and hidden. Diane
productivity
In a recent SF Chron article on productivity, the author wrote: Such fast-growing productivity is a tremendous boon for society, economists stress. While jobs might disappear in the short run, higher output per worker spurs growth that in the long run creates more opportunity. Higher productivity generates profit that is often reinvested in new job- creating activities, they note. Full article at http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/12/28/BUGE03U34Q1.DTL I think that the statement that profit is often reinvested in new job-creating activities deserves closer scrutiny. First, it says nothing about where these jobs are going to be. Second, I actually don't think that's the trend. I read recently, I think it was in Barrons, that the profits are not being reinvested but used largely for speculation. Does anyone have data on this? Joanna
Re: productivity
There is plenty of data on this and except for that data collected by Dr. Pangloss and his assistants at the Milton Friedman-Ayn Rand School of the Dismal Science(Team Fight Song-- First I Look At the Purse), the last 30 years have proved just the opposite-- greater profits have been accompanied by reductions in living standards, declining real wages, reduced manufacturing employment, etc. etc. Reduced profits trigger even greater reductions in living standards, wages, employment etc. Rates of growth, globally, have declined from the 1948-1973 period in output, trade, and profits while the mass of profit has expanded. Not too long ago, the chief economist for Alliance Capital, measured a worldwide decline in manufacturing employment, including China, despite the increased direct investment. Overall, the trends are for reduced manufacturing employment levels, at both absolute and relatively diminished wage levels, with growing service sectors where wages are lower than in manufacturing and for work force increases basically derived from the employment of women at lower rates than those paid to men. But it's the best of all possible worlds, and when it gets worse, that will be the best of all possible worlds, too. dms
Re: productivity
--- joanna bujes [EMAIL PROTECTED] wrote: In a recent SF Chron article on productivity, the author wrote: Such fast-growing productivity is a tremendous boon for society, economists stress. While jobs might disappear in the short run, higher output per worker spurs growth that in the long run creates more opportunity. Higher productivity generates profit that is often reinvested in new job- creating activities, they note. ** Was the author's name Supply Side Jesus? Mike B) = Talent develops in tranquility, character in the full current of human life. Johann Wolfgang von Goethe (1749-1832) http://profiles.yahoo.com/swillsqueal __ Do you Yahoo!? Find out what made the Top Yahoo! Searches of 2003 http://search.yahoo.com/top2003
Inflation and productivity questions
I wanted to ask for help on two questions, one on inflation and the other on productivity. As to the inflation question, a while back business week had a special article on fees. The article argued that many businesses unable to raise prices are adding fees, like banks for example. My question: do these fees enter into the CPI, or are we understating inflation? As to productivity, a while ago there were articles showing that a lot of the productivity increase came from the sector that produced computers. And that the increase in productivity in that sector was the result of statistical work designed to take into account quality increases. As a result, the national income accounts showed a higher value of output than actually produced or sold. Those articles also made the point that the higher productivity figures resulting from that calculation were not comparable with productivity figures from other countries, because most did not do that adjustment. My question: are recent productivity gains a product of the same statistical adjustments? Thanks, Marty Hart-Landsberg
Re: Inflation and productivity questions
With regard to productivity, Robert Gordon was the most prominent sceptic. He has back off from his scepticism somewhat. I don't think fees are part of the CPI. Nor are sales taxes although corporate taxes are, at least that is my understanding. On Fri, Dec 05, 2003 at 01:08:18PM -0800, Martin Hart-Landsberg wrote: I wanted to ask for help on two questions, one on inflation and the other on productivity. As to the inflation question, a while back business week had a special article on fees. The article argued that many businesses unable to raise prices are adding fees, like banks for example. My question: do these fees enter into the CPI, or are we understating inflation? As to productivity, a while ago there were articles showing that a lot of the productivity increase came from the sector that produced computers. And that the increase in productivity in that sector was the result of statistical work designed to take into account quality increases. As a result, the national income accounts showed a higher value of output than actually produced or sold. Those articles also made the point that the higher productivity figures resulting from that calculation were not comparable with productivity figures from other countries, because most did not do that adjustment. My question: are recent productivity gains a product of the same statistical adjustments? Thanks, Marty Hart-Landsberg -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: productivity growth as a mixed bag
Do the dollars really go back to the US and buy US products or do they stay outside in waiting? Do you Yahoo!? The New Yahoo! Shopping - with improved product search
productivity growth as a mixed bag
[I wonder how Varian would explain this point in terms of his micro textbook.] October 23, 2003/New York TIMES/ECONOMIC SCENE The Mixed Bag of Productivity By HAL R. VARIAN RECENTLY productivity has been growing at a rate of about 4 percent a year. For the country as a whole, this means that each year we can work as much as we did last year and consume 4 percent more; or we can consume as much as we did last year and work 4 percent less. That's got to be a good thing, right? Well, it depends on whom you ask. In truth, those productivity gains have resulted in some people's working 100 percent less, with the rest of us consuming 4.01 percent more. If you are one of the unemployed, chances are you are less enthusiastic about the productivity gains than are those who have enjoyed the increased consumption. Strangely, productivity growth is not getting much blame for the jobless recovery. Criticizing technological progress is downright un-American. On the other hand, criticizing foreign trade is a traditional pastime here, as in every other country. To economists, trade and productivity growth have a lot in common: each allows you to produce more with less. James Ingram's economics text tells the story of how an entrepreneur built a factory that was significantly more productive than his competitors' plants, and was hailed far and wide for his brilliance. But then his dirty little secret was revealed: all he was doing was importing goods from abroad through the back door. In terms of impact on employment, trade is usually better than productivity growth; those dollars sent abroad eventually come back to purchase American products, and employ more workers. By contrast, jobs lost to productivity increases stay lost; try to find someone today who can make buggy whips. Gains from trade or technology initially tend to accrue to owners of capital. When a company fires a computer programmer and shifts the job to India, the company captures the difference in wages. It wouldn't have to work that way. Suppose the programmer found his doppelganger in India, and started exporting tasks on his own. Dear Sanjay, please write a subroutine to sort these accounts and send it back to me by 5 p.m. (California time). Each week the programmer could cash his $1,000 paycheck and send $100 to Sanjay. This is only a thought experiment, not a policy proposal. But it illustrates the point that the controversy over trade and technology is not about whether or not they are good things - of course they are - but about who will capture their benefits and who will bear their costs. There is little doubt who wins in the long run: consumers. Virtually all the gains in the standard of living in the last two centuries have come from technology. Trade has had a smaller but still significant effect on growth in per capita consumption. Achieving the gains from technological advances can be tortuous. Back in 1886, when America's railroads standardized on one gauge, it became substantially cheaper to transport goods. A great boon for everyone, right? Well, tell that to the workers who unloaded and loaded freight at the cities where different-gauge railroads met. They rioted over the change, and understandably so - the benefits from technological progress came at the expense of their jobs. Eighty years later, the longshoremen's union was more farsighted. It saw new technology coming for unloading ships and negotiated lifetime employment at high wages. The result was that by 2002 a full-time longshoreman earned $80,000 to $107,000, depending on whether you ask the union or management. The crucial issue in last year's West Coast port strike was not whether technology for managing shipyards would be introduced - both sides were in favor - but whether the new information-processing jobs went to union workers. The longshoremen's union has tried to ensure that a significant part of the gains from productivity increases accrued to its members. But even the longshoremen recognize, though they might be loath to admit it, that there has to be something for both sides in the negotiation; if all the gains go to labor, there will be no incentive for capitalists to adopt more productive technology. Capitalists have to get their piece, so they will have an incentive to pony up the money. How much labor ends up with depends on its bargaining power. If workers do not have much bargaining power, they get the short end of the deal. In the long run, as the new technology becomes widely adopted, competition pushes prices down. The gains that originally accrued to the owners of capital are competed away, and consumers - meaning workers for the most part - end up with the benefits. Look at travel agents. The Internet opened up a new channel for airlines to communicate directly to travelers. Intense competition for passengers meant that most of the gains from the new technology were passed along to consumers, with travel agents squeezed out
productivity growth failing US
http://www.latimes.com/business/la-fi-dispatch11jul11,1,5661366.story?c oll=la-headlines-business WASHINGTON DISPATCH Cause for U.S. Recovery Lacking Effect By Peter G. Gosselin Los Angeles Times Staff Writer July 11, 2003 WASHINGTON - Here's an economic kick in the pants for you: Mainstream economists say that the nation is finally on the road to recovery. And not just any recovery, but a splendid one fueled by technology-driven productivity gains. But the revival has yet to produce any of what matters most to people - namely, jobs. The chief reason there has been no pickup in employment: the very productivity gains that are supposed to ensure a grand comeback. High productivity means that companies can meet the current level of demand without going to the trouble of hiring new people, said Princeton economist and former Federal Reserve Vice Chairman Alan Blinder. It makes the task of providing enough demand to soak up all that productive capacity a much harder one. The lack of new jobs is just one instance of what could prove to be a new phenomenon: the evidence-free recovery. Economic turning points usually produce a welter of conflicting signals, some suggesting full revival and others further trouble. But thus far, this one has been remarkably free of the former. Although forecasters busily explain why the economy should come roaring back - near-record low interest rates, still more tax cuts and a sliding dollar to help exports - they have yet to be able to cite a solid piece of evidence that it actually is on the way back. There's not much out there to convince you we're headed into a period of strong growth, said Gregory D. Hess, a former Fed staffer who is an economist at Claremont McKenna College. What's happening to jobs and wages offers a vivid example of what's half-empty about the economy and what could put a cork in a full-fledged recovery. American employers have created no new jobs on a net basis since the presumed end of the recent recession in January 2002. Worse yet, according to Labor Department statistics, they actually have been cutting jobs, especially over the last five months, when payrolls fell by nearly half a million. The latest result came Thursday, when the department announced that the number of people collecting unemployment benefits hit a 20-year high of 3.82 million in June. Some economists maintain that recent job trends pose no threat to the recovery. They say employment and unemployment are lagging indicators that improve only after a turnaround is well underway. But at 18 months and counting, the lag is getting mighty long. Other analysts comfort themselves with the thought that the tens of millions of Americans who are still employed have continued to borrow and buy at a remarkable pace, keeping the economy afloat and primed for recovery. Even so, however, the trends are not altogether happy. Wages, which play a big role in what most of us decide we can and cannot afford, and which moved in lock step with rising productivity during the late 1990s, have broken loose in the last couple of years. Although they still are rising, they are doing so at a slower - and slowing - pace. The nation's nonfinancial corporations boosted their labor productivity - the amount of goods and services they can produce per hour of labor - by a record 5.5% last year, according to government statistics. But the working Americans who provided that labor saw their wages rise by less than one-third of that amount, and at less than half the pace of the hottest moments of the late '90s. [the print copy has a graph showing the growth of real wages growing more or less in step with labor productivity from 1999 to 2001 and then falling behind. The latter implies a rise in the rate of exploitation, associated with the rise in the size of the reserve army of unemployed labor.] Analysts say that, although painful for workers, the divergence of productivity and wages could turn out to be a good thing for the economy as a whole. That's because if people aren't reaping the benefits, then companies must be seeing them in the form of bigger profits. And bigger profits might motivate firms to begin investing, expanding and hiring again, setting off an upward spiral of growth. [that fits with Marx's theory of accumulation, but not the standard neoclassical view.] The problem is that corporate America has shown almost no interest in doing any of these things, all of which leave the economy in a nasty bind. [as I've said before, adding to Marx, unused capacity, corporate debt, and pessimistic expectations can block accumulation.] It's unlikely that consumers will be able to continue to shrug off mounting job losses, rising unemployment and diminishing wage increases for much longer, said Mark Zandi, chief economist of West Chester, Pa.-based Economy.com. In fact, other than home buying, he said, consumers appear to be growing increasingly cautious. Car sales, for example, have slipped
productivity for information technology
Fortune magazine suggests that the productivity paradox is finished. Information technology is now lifting productivity by facilitating outsourcing jobs abroad. http://www.fortune.com/fortune/fastforward/0,15704,401035,00.html -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
mommy, what's the marginal productivity of a ceo?
http://www.wsws.org General Electric's Jack Welch and the corporate plundering of America By Jeremy Johnson 17 September 2002 Divorce papers filed in court earlier this month against retired General Electric Corporation Chairman and CEO John F. Welch Jr. provided a glimpse into the lifestyle of America's corporate elite. In her suit to dissolve their 13-year marriage, Jane Beasley Welch complains that the $35,000 per month offered by her husband is nowhere near enough to maintain the extraordinary standard of living that they enjoyed together. Her papers quantify $126,820 in monthly expenses incurred by the couple, not counting sizable additional amounts paid by General Electric as perks to its former chief executive. Among the most significant items, GE provides a company-owned luxury apartment at the Trump International Hotel and Towers on Central Park West in New York City. Besides allowing Welch to live there rent-free, GE picks up the tab for such additional necessities as fresh flowers, wine, laundry and dry cleaning services, a cook and wait staff, a housekeeper, and every other detail down to toiletries, newspaper and magazine subscriptions, even postage. GE also pays a portion of Welch's dining bills at the exclusive restaurant Jean Georges, which is located in the building. Additionally, Welch receives a free grand tier box at the Metropolitan Opera, memberships at four country clubs, including Georgia's prestigious Augusta National, court-side tickets to New York Knicks basketball games, box seats behind the dugout at Yankee Stadium plus a skybox for the Boston Red Sox, prime tickets to the French Open, Wimbledon and US Open tennis tournaments, VIP tickets to all Olympic events, and unlimited use of a corporate Boeing 737 jet. The cost of this last item alone is estimated at $291,869 a month. The list goes on. GE pays for Welch's limousine and driver in New York, bodyguards when he travels abroad, satellite TV installations in his New York apartment and his three other homes in Massachusetts, Connecticut and Florida. And, Mrs. Welch reports, GE contributed $7.5 million over the course of their marriage to help furnish the four homes with appliances, security systems and sophisticated computer and telecommunications equipment, with GE employees assisting with the installation. All of these fringe benefits supplement a retirement agreement that includes a pension of over $9 million a year and a health insurance and life insurance package that Welch negotiated with the GE board of directors in 1996 when he agreed to extend his tenure as chief executive until age 65. The contract specified that upon retirement, Welch would retain lifetime access to company facilities and services comparable to those made available to him as CEO. Welch formally retired on September 1 of last year, but, in addition to everything else, he receives a consulting fee of $86,535 for his first 30 days of work each year, plus $17,307 for each additional day. Yet another company-paid perk is the cost of financial planning services to help Welch manage his fortune, estimated at $900 million. In statements released on September 6, neither Welch nor General Electric disputed the extent of the perks, most details of which had never been revealed to shareholders. GE spokesperson Gary Sheffer insisted that the company had complied with all legal disclosure requirements, while Welch asserted that the arrangement had worked to the benefit of all constituencies. Welch has been lionized as the model corporate executive for producing higher profits year after year. He is credited by his corporate admirers with almost single-handedly turning GE from a company valued at $15 billion when he took over to one valued at over $400 billion when he retired a year ago. Since then, the company stock has declined some 25 percent, in spite of reporting a 15 percent increase in six-month profits this year to $7.94 billion. His ruthless methods earned Welch the nickname Neutron Jack among GE workers, due to the layoffs he carried out soon after taking over. In the course of the 1980s Welch cut some 100,000 jobs. He established the principle of selling off any subsidiaries that failed to maintain a number one or number two market share in their respective industries, while meeting profit expectations. General Electric owns businesses that range from its traditional lighting and appliance production to aircraft engine manufacturing, electric generating systems, financial services and insurance, and the major broadcast network NBC. This latter enterprise provided Welch with exceptional political clout. Analysts point to the kid glove media treatment of George W. Bush during the 2000 presidential election campaign, after his top advisor Karl Rove promised Welch and other media moguls that, if elected, Bush would carry out a major deregulation of the broadcast industry. Welch reportedly took a keen personal interest in the NBC News
marginal productivity of a ceo
http://www.businessweek.com/ AUGUST 21, 2002 NEWS ANALYSIS CEO Pay Tomorrow: Same as Today Despite the uproar over gargantuan compensation packages, here's why the level of reform is likely to be modest at best During the boom years of the late 1990s, the fact that CEOs made out like bandits may have prompted disgust, but it sparked little outrage. After all, lots of other people were getting wealthy off the bull market, too. Now that actual banditry is being blamed for the collapse of major companies -- and for billions of dollars in shareholder losses -- CEO compensation is being scrutinized as never before. It seems like every company that had accounting problems also had troublesome compensation practices, says Brandon Rees, a research analyst with the AFL-CIO's office of investment in Washington, D.C. He believes that executive compensation abuses can be symptomatic of broader corporate governance problems. The two seem to have occurred simultaneously at Enron, WorldCom, Adelphia, and Global Crossing. And this year's scandals have revealed disturbing exec pay quirks even at companies that haven't imploded. Tyco, for instance, showered deposed CEO Dennis Kozlowski with the type of largesse usually reserved for royalty only to see him charged with trying to evade a measly -- compared with his pay -- $1 million or so in sales taxes on high-priced art. LOWER PAY? NO WAY. And you don't even have to be a CEO to come under fire for an outsize compensation package. Who can explain the reported $30 million that superstar telecom analyst Jack Grubman got when he recently resigned from Citigroup's Salomon Smith Barney -- even as he's under investigation for misleading investors in telecommunications stocks? With over-the-top pay and executive misbehavior so closely aligned, it might seem that exec compensation would be facing an overhaul. But the experts see little ahead that will reset the priorities of CEOs -- and certainly nothing that will ratchet down the average $11 million that top executives were paid in 2001. We aren't going to see CEOs being paid less, says David Aboody, an associate professor of accounting at UCLA's Anderson graduate school of business and an expert in executive compensation. A survey of experts in the field finds a consensus that the reforms from this year's debacles will be exceedingly modest, at best. In fact, they believe that substantive compensation changes will most likely be left to individual companies eager to set themselves apart from the pack. WINDOW DRESSING. CEOs will suffer some, of course. For a while, they'll all be tarred with the same brush as their disgraced peers, some of whom may end up in jail (see BW Online, 8/21/02, One CEO's Take on CEO-itis). There's also the indignity of having to vouch in writing for the financial results of their companies because no one wants to rely on their word anymore. But for the most part, the changes being contemplated for stock-option plans and corporate compensation committees have the look of window dressing. Most companies are likely to stick with the status quo, in part because they do business on the up and up. Moreover, it's now obvious that an exec who really wants to cheat can probably find a way to -- at least for a while. It's tough to legislate integrity, says Steve Hall, a managing director at compensation consultants Pearl Meyer Partners in New York. Many observers think the only changes likely to be widely adopted are the two the New York Stock Exchange and the Nasdaq may require of companies traded on those exchanges. (Experts say both could be adopted by yearend if approved by the Securities Exchange Commission.) One would stipulate that corporate compensation committees, which decide how much a CEO is paid, be composed only of independent directors. Today, some 39% of these committees at the country's top 5,000 public companies include either company insiders or outsiders with direct connections to the corporation, according to the National Association of Corporate Directors. Still, independent compensation committees may not do much to improve the moral fiber of execs, because such committees are often populated with CEOs -- active or retired -- who are from the same old-boys club, notes Rees. And there's nothing in the Nasdaq/New York exchange proposals that would keep boards from loading up compensation committees with the CEO's golfing buddies. THOSE CEO LOANS. The other reform the exchanges have proposed would require shareholder approval of executive equity awards including stock options. (Currently, shareholder approval isn't necessary if the options plan is broadly based or results in at least a portion of the shares being distributed to employees.) But greater shareholder oversight of compensation practices may not eliminate executive shenanigans until there's more disclosure of the private dealings between corporation and CEO, says Judith
Good Health=Higher Productivity
ORIGINAL NOTE: The support for national health care: Good health = higher productivity = higher profits. .. Eugene Coyle wrote: Jenkins did say that placebos work as well. .I missed how the column could be read to support national health care? RESPONSE: The equation above, is of course nothing new. It was instrumental lay behind many of the progressive social policies introduced by many capitalist governments. One case in point was the NHS of the UK introduced by Bevan. Even before that was school meals in the UK; the Boer War recruits being so weak stunted prompted much consternation in the ruling class. Hari Kumar
RE: Re: Prozac Productivity
Title: RE: [PEN-L:27264] Re: Prozac Productivity A WSJ columnist, Holman Jenkins, today praised Prozac et al for raising worker productivity. -Original Message- From: Tom Walker This is what I was trying to tell Jim Devine about speed up -- post hoc ergo prozac. COMMENT: I don't know where Tom got the false impression that I was praising speed up. I also don't praise productivity. Jim
Prozac Productivity
Prozac Productivity by Carrol Cox 27 June 2002 04:02 UTC There was a fine science column in last Friday's WSJ -- on the way environment turns genes off and on. For example, if you've been without sex for awhile and are expecting to get some tomorrow your beard may grow faster: sexual activity triggers a flow of testosterone, but apparently even thinking about it can do the same thing. And rats that are licked a lot by their mother when pups are more curious and less subject to panic than other rats -- because the licking turns on some genes. -clip- This all comes from a new technology of microarray analysis, in which 'gene chips' reveal which DNA in a sample of tissue is expressed and which is quiescent. In other words technology is beginning to show that macro features of the environment are _part_ of genetic causation; a huge new pile of data to support the argument in Levins Lewontin's _Not in Our Genes_ -- it's in the environment which turns on some genes and turns off others. ^ CB: I agree with your general approach of relating genes and environment as a dialectical whole, but specifically, when testosterine flow is begot, it is not through genes being turned on is it ? It would be glands, not genes. Genes function to shape more fundamental developments mostly in the womb and infancy, no ? For example, the development of glands is related to genes ( and proteins have a bigger role at this level the genome project results suggest). But a once a gland is developed in an adult, its function is not related to current genetic activity in the gland.
Re: Prozac Productivity
Charles Brown wrote: CB: I agree with your general approach of relating genes and environment as a dialectical whole, but specifically, when testosterine flow is begot, it is not through genes being turned on is it ? It would be glands, not genes. Genes function to shape more fundamental developments mostly in the womb and infancy, no ? For example, the development of glands is related to genes ( and proteins have a bigger role at this level the genome project results suggest). But a once a gland is developed in an adult, its function is not related to current genetic activity in the gland. I was just paraphrasing/quoting/condensing the column. I don't have an opinion of my own. Carrol
Re: Prozac Productivity
I don't know where Jim got the false impression that I thought he was praising speed up. For the record, I'll say it one more time: my point is simply that there might not be the causal relationship between speed up and productivity growth that most people assume there is. It has nothing to do with whether either speed up or productivity are good or bad in themselves. Jim Devine wrote, COMMENT: I don't know where Tom got the false impression that I was praising speed up. I also don't praise productivity. Tom Walker 604 255 4812
Prozac Productivity
A WSJ columnist, Holman Jenkins, today praised Prozac et al for raising worker productivity. The suggestion is that the jump in prescriptions over the past years have resulted in a jump in productivity. And as the economy moves more toward service work, involving meeting customers, future gains will result if we get more of the work force on Effexor and Prozac. Holman quotes $ gains provided by others. The column was not titled Brave New World. Gene Coyle
Re: Prozac Productivity
But he says that placebos work as well. You could read the article to support national health care. On Wed, Jun 26, 2002 at 10:53:47AM -0700, Eugene Coyle wrote: A WSJ columnist, Holman Jenkins, today praised Prozac et al for raising worker productivity. The suggestion is that the jump in prescriptions over the past years have resulted in a jump in productivity. And as the economy moves more toward service work, involving meeting customers, future gains will result if we get more of the work force on Effexor and Prozac. Holman quotes $ gains provided by others. The column was not titled Brave New World. Gene Coyle -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: Prozac Productivity
Jenkins did say that placebos work as well. But he used that as an attack on the FDA. He wants the FDA to approve drugs even if they can't be shown to work better than placebos -- because that would permit more placebos in the market. I missed how the column could be read to support national health care? If I wanted to cause Jenkins a bad night I would tell him your interpretation -- he's pretty much a Libertarian. Gene Michael Perelman wrote: But he says that placebos work as well. You could read the article to support national health care. On Wed, Jun 26, 2002 at 10:53:47AM -0700, Eugene Coyle wrote: A WSJ columnist, Holman Jenkins, today praised Prozac et al for raising worker productivity. The suggestion is that the jump in prescriptions over the past years have resulted in a jump in productivity. And as the economy moves more toward service work, involving meeting customers, future gains will result if we get more of the work force on Effexor and Prozac. Holman quotes $ gains provided by others. The column was not titled Brave New World. Gene Coyle -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: Re: Prozac Productivity
The support for national health care: Good health = higher productivity = higher profits. I hope that he has a bad night. On Wed, Jun 26, 2002 at 05:59:25PM -0700, Eugene Coyle wrote: Jenkins did say that placebos work as well. But he used that as an attack on the FDA. He wants the FDA to approve drugs even if they can't be shown to work better than placebos -- because that would permit more placebos in the market. I missed how the column could be read to support national health care? If I wanted to cause Jenkins a bad night I would tell him your interpretation -- he's pretty much a Libertarian. Gene Michael Perelman wrote: But he says that placebos work as well. You could read the article to support national health care. On Wed, Jun 26, 2002 at 10:53:47AM -0700, Eugene Coyle wrote: A WSJ columnist, Holman Jenkins, today praised Prozac et al for raising worker productivity. The suggestion is that the jump in prescriptions over the past years have resulted in a jump in productivity. And as the economy moves more toward service work, involving meeting customers, future gains will result if we get more of the work force on Effexor and Prozac. Holman quotes $ gains provided by others. The column was not titled Brave New World. Gene Coyle -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED] -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Prozac Productivity
This is what I was trying to tell Jim Devine about speed up -- post hoc ergo prozac. A WSJ columnist, Holman Jenkins, today praised Prozac et al for raising worker productivity. Tom Walker 604 255 4812
Re: Re: Prozac Productivity
There was a fine science column in last Friday's WSJ -- on the way environment turns genes off and on. For example, if you've been without sex for awhile and are expecting to get some tomorrow your beard may grow faster: sexual activity triggers a flow of testosterone, but apparently even thinking about it can do the same thing. And rats that are licked a lot by their mother when pups are more curious and less subject to panic than other rats -- because the licking turns on some genes. Prozac is one of the SSRIs -- Selective Serotonin Reuptake Inhibitors. But there has always been a puzzle. It begins to inhibit the uptake of serotonin in about 24 hours -- but it doesn't began to affect mood for three weeks or more. (There is some recent research to the effect that for some patients it only begins to work after about six months -- I don't remember this exactly but it was in Medscape some months ago.) So its direct effect on serotonin is probably not the reason it works. A tentative hypothesis is that it works by altering gene expression causing sprouting of new neurons or remodeling synapses. This all comes from a new technology of microarray analysis, in which 'gene chips' reveal which DNA in a sample of tissue is expressed and which is quiescent. In other words technology is beginning to show that macro features of the environment are _part_ of genetic causation; a huge new pile of data to support the argument in Levins Lewontin's _Not in Our Genes_ -- it's in the environment which turns on some genes and turns off others. Carrol Michael Perelman wrote: But he says that placebos work as well. You could read the article to support national health care. On Wed, Jun 26, 2002 at 10:53:47AM -0700, Eugene Coyle wrote: A WSJ columnist, Holman Jenkins, today praised Prozac et al for raising worker productivity.
The ECONOMIST on U.S. productivity growth.
[Interestingly, the ECONOMIST doesn't mention the role of the over 4% average annual increase in the nominal major-currencies trade-weighted value of the dollar -- or over 5% in real terms -- during the period 1996 to 2001. This is a key factor that would hurt profits despite rising productivity.] May 11, 2002 FINANCE ECONOMICS To these, the spoils NOT only has America's productivity wonder survived its first recession; it has positively thrived. Output per man-hour in the non-farm business sector rose at an annual rate of 8.6% in the first quarter of this year, its fastest growth in 19 years. Quarterly figures are volatile, yet the year-on-year growth in productivity was also impressive, at 4.2%. This bodes well for America's future economic growth--but not necessarily for company profits, or for share prices. Commentators cheered the latest evidence of rapid productivity gains, hoping that it might promise fatter profits ahead. That America's productivity continued to rise last year, in contrast to previous recessions, seems to confirm that an increase has taken place in trend productivity growth. Still, the latest numbers overstate the underlying trend. First, the growth in output, and hence productivity, was inflated in the first quarter by a big swing in inventories. Productivity often surges in the first year of a recovery after recession, as firms produce more without needing to hire extra workers. Productivity rose by 4-5% in the first year following both the 1981-82 and the 1990-91 recessions. Firms have actually continued to cut jobs this year, lifting the unemployment rate in April to an eight-year high of 6%. Today's best guess is that trend productivity growth is around 2-2.5%. That is less than the 3-4% claimed at the height of the new-economy bubble; but still well above the 1.4% average over the two decades to 1995. A second, more fundamental quibble is that, although profits will certainly rebound this year, as firms continue to trim their costs and revenues rise, in the longer term faster productivity growth does not automatically mean faster profits growth. A new study by Stephen King, chief economist at the HSBC bank, concludes that workers and consumers have received the lion's share of the productivity gains of therevolution in information technology (IT). Companies have received relatively little reward for their risk-taking. In the late 1990s it was widely assumed that faster productivity growth would mean higher profits (so justifying higher share prices). Over the previous half-century a strong positive relationship had indeed held between productivity and profits. In the 1990s that relationship broke down. Despite a surge in productivity, national-accounts profits (as opposed to profits reported by companies, a less accurate measure) fell between 1997 and 2000, even before the economy dipped into recession (see chart). At the end of 2000 the profits of America's non-financial firms were no higher in real terms than in 1994, implying a big fall in their share of GDP. Mr King argues that workers (who are, naturally, also consumers) were virtually the sole beneficiaries of the new economy, in the shape of faster real wage growth. This was partly thanks to a fall in the prices of IT goods that they bought. More important, the same IT that spurred productivity also increased competition more widely across industries, from airlines and banking to insurance and cars, squeezing prices and profits. Information technologyreduces barriers to entry, and makes it easier for consumers to compare prices. What is more, globalisation, itself spurred by information technology, has further trimmed the pricing power of firms. HSBC finds that, in most economies, the correlation between domestic inflation and domestic unit-labour costs has declined over the past 40 years; the correlation between domestic inflation and average OECD inflation has risen. In most countries in the 1990s domestic inflation was more closely correlated with OECD inflation than it was with domestic costs. The dismal performance of profits should not surprise. As the IMF's World Economic Outlook last October pointed out, productivity gains from previous technological revolutions, from railways and textiles to electricity and the car, have gone largely to consumers. Each time, a decline in the prices of goods and services has given a big boost to real incomes. Consumers gained from cheaper travel or clothes, but profits disappointed. The difference this time is that new technology has increased competition and squeezed profit margins across the whole economy. None of this lessens the overall benefit of faster productivity growth. But it does lead to some interesting conclusions: * The profit expectations built into share prices are unrealistic. Even if productivity growth remains robust, long-term profits growth is likely to be weaker than expected, making shares overvalued. * A lower return on equities means
Re: The ECONOMIST on U.S. productivity growth.
On 2002.05.11 02:08 AM, "Devine, James" [EMAIL PROTECTED] wrote: [Interestingly, the ECONOMIST doesn't mention the role of the over 4% average annual increase in the nominal major-currencies trade-weighted value of the dollar -- or over 5% in real terms -- during the period 1996 to 2001. This is a key factor that would hurt profits despite rising productivity.] May 11, 2002 FINANCE ECONOMICS To these, the spoils NOT only has America's productivity wonder survived its first recession; it has positively thrived. Output per man-hour in the non-farm business sector rose at an annual rate of 8.6% in the first quarter of this year, its fastest growth in 19 years. Quarterly figures are volatile, yet the year-on-year growth in productivity was also impressive, at 4.2%. This bodes well for America's future economic growth--but not necessarily for company profits, or for share prices. Commentators cheered the latest evidence of rapid productivity gains, hoping that it might promise fatter profits ahead. That America's productivity continued to rise last year, in contrast to previous recessions, seems to confirm that an increase has taken place in trend productivity growth. Still, the latest numbers overstate the underlying trend. First, the growth in output, and hence productivity, was inflated in the first quarter by a big swing in inventories. Productivity often surges in the first year of a recovery after recession, as firms produce more without needing to hire extra workers. Productivity rose by 4-5% in the first year following both the 1981-82 and the 1990-91 recessions. Firms have actually continued to cut jobs this year, lifting the unemployment rate in April to an eight-year high of 6%. Today's best guess is that trend productivity growth is around 2-2.5%. That is less than the 3-4% claimed at the height of the new-economy bubble; but still well above the 1.4% average over the two decades to 1995. A second, more fundamental quibble is that, although profits will certainly rebound this year, as firms continue to trim their costs and revenues rise, in the longer term faster productivity growth does not automatically mean faster profits growth. A new study by Stephen King, chief economist at the HSBC bank, concludes that workers and consumers have received the lion's share of the productivity gains of therevolution in information technology (IT). Companies have received relatively little reward for their risk-taking. In the late 1990s it was widely assumed that faster productivity growth would mean higher profits (so justifying higher share prices). Over the previous half-century a strong positive relationship had indeed held between productivity and profits. In the 1990s that relationship broke down. Despite a surge in productivity, national-accounts profits (as opposed to profits reported by companies, a less accurate measure) fell between 1997 and 2000, even before the economy dipped into recession (see chart). At the end of 2000 the profits of America's non-financial firms were no higher in real terms than in 1994, implying a big fall in their share of GDP. Mr King argues that workers (who are, naturally, also consumers) were virtually the sole beneficiaries of the new economy, in the shape of faster real wage growth. This was partly thanks to a fall in the prices of IT goods that they bought. More important, the same IT that spurred productivity also increased competition more widely across industries, from airlines and banking to insurance and cars, squeezing prices and profits. Information technologyreduces barriers to entry, and makes it easier for consumers to compare prices. What is more, globalisation, itself spurred by information technology, has further trimmed the pricing power of firms. HSBC finds that, in most economies, the correlation between domestic inflation and domestic unit-labour costs has declined over the past 40 years; the correlation between domestic inflation and average OECD inflation has risen. In most countries in the 1990s domestic inflation was more closely correlated with OECD inflation than it was with domestic costs. The dismal performance of profits should not surprise. As the IMF's World Economic Outlook last October pointed out, productivity gains from previous technological revolutions, from railways and textiles to electricity and the car, have gone largely to consumers. Each time, a decline in the prices of goods and services has given a big boost to real incomes. Consumers gained from cheaper travel or clothes, but profits disappointed. The difference this time is that new technology has increased competition and squeezed profit margins across the whole economy. None of this lessens the overall benefit of faster productivity growth. But it does lead to some interesting conclusions: * The profit expectations built into share prices are unrealistic. Even if pr
productivity jumps
Worker productivity shoots up 8.6 percent, best performance in nearly 19 years By Jeannine Aversa, Associated Press, 5/7/2002 10:54 WASHINGTON (AP) Worker productivity, a key ingredient to the economy's long-term vitality, shot up at an annual rate of 8.6 percent in the first quarter, the best performance in nearly 19 years. The jump in productivity the amount of output per hour of work followed a strong 5.5 percent rate of increase in the final three months of 2001, the Labor Department reported Tuesday. Productivity performance in the January-March quarter was better than many analysts expected. They were forecasting a 7 percent growth rate. But the improvement came at a price. Businesses, responding to the lingering effects of last year's recession, cut back on their payrolls. That caused the total number of hours worked to fall at a rate of 1.9 percent. Output, however, rose at a solid 6.5 percent rate. On Wall Street, stocks were mixed. The Dow Jones industrial average was up 32 points, while the Nasdaq index was down 15 points in morning trading. The first-quarter productivity gain marked the best showing since a 9.9 percent growth rate registered in the second quarter of 1983. The rise in productivity in the first quarter helped to push down unit labor costs, a gauge of inflation. Unit labor costs declined at an annual rate of 5.4 percent, the biggest drop since the second quarter of 1983. In the fourth quarter, unit labor costs fell at a rate of 3.1 percent. The performance of unit labor costs in the first quarter also was better than analysts' expectations of a 3.5 percent rate of decline and suggests that inflation is a no-show even as the budding economic recovery unfolds. In general, productivity tends to rise strongly when the economy is booming. Gains in productivity can become weak or productivity can fall when the economy slows or contracts. In the long run, productivity gains are good for workers, for the economy and for companies, whose profits took a hit during the slump. Gains in productivity allow companies to pay workers more without raising prices, which would eat up those wage gains, and permit the economy to grow faster without triggering inflation. If productivity falters, however, pressure for higher wages could force companies to raise prices, thus worsening inflation. For the year ending March, productivity rose 4.3 percent, the biggest gain since the second quarter of 2000. Unit labor costs dipped by 0.9 percent. Federal Reserve Chairman Alan Greenspan and his colleagues remain bullish about the long-term prospects of productivity growth, even though businesess sharply cut investment in productivity-enhancing computers and other high-tech equipment during the recession. That was a key source of the economy's weakness. ''With the growth of productivity well maintained and inflation pressures largely absent, the foundation for economic expansion has been laid,'' Greenspan told Congress last month. Last year's recession, which ended a 10-year economic expansion, the longest such period in U.S. history, has been determined to have begun in March 2001. The National Bureau of Economic research has yet to rule when the recession ended but many economists say the committee probably will eventually select January or February.
RE: productivity jumps
Worker productivity shoots up 8.6 percent, best performance in nearly 19 years By Jeannine Aversa, Associated Press, 5/7/2002 10:54 WASHINGTON (AP) Worker productivity, a key ingredient to the economy's long-term vitality, shot up at an annual rate of 8.6 percent in the first quarter, the best performance in nearly 19 years... Labor productivity is key to long-term vitality (as some old German guy said), but a single quarter's statistic means little or nothing about the trend in this variable, since quarterly statistics jump around the trend. (This is especially true since the numbers being reported are preliminary estimates.) In addition to statistical noise, it likely shot up due to: 1. the big increase in demand -- due to monetary and fiscal stimulus -- that allowed employers to use long-term or overhead employees' time more completely, or to distribute their salary costs over more units of output. (These folks make little or no direct contribution to production in the short run.) 2. decreases in the amount of overhead labor held, as part of the continued response to the 2001 recession. 3. speed-up of production workers (and/or increases in hours of unpaid work), as a part of the continued response to the 2001 recession and the increase in demand. The above fits with: ... But the improvement came at a price. Businesses, responding to the lingering effects of last year's recession, cut back on their payrolls. That caused the total number of hours worked to fall at a rate of 1.9 percent. Output, however, rose at a solid 6.5 percent rate. ... The rise in productivity in the first quarter helped to push down unit labor costs, a gauge of inflation. Unit labor costs declined at an annual rate of 5.4 percent, the biggest drop since the second quarter of 1983. In the fourth quarter, unit labor costs fell at a rate of 3.1 percent. Unit labor costs only drop due to increases in labor productivity when workers don't share in the benefits of increased productivity. That is, wages are not rising with producitivity. In the short run, in other words, the rate of surplus-value is increasing for this sector of the economy. ... In general, productivity tends to rise strongly when the economy is booming. Gains in productivity can become weak or productivity can fall when the economy slows or contracts. this is due to effect #1 above. In the long run, productivity gains are good for workers, for the economy and for companies, whose profits took a hit during the slump. productivity gains are often _not_ shared with workers, as during most of the quarter-century after 1975. Also, labor productivity gains often imply the shedding of labor (or slow growth of employment), as in manufacturing during recent decades, because demand may not rise in step with labor productivity. (Of course, labor productivity refers to only production sold through the market, ignoring external costs benefits.) Gains in productivity allow companies to pay workers more without raising prices, which would eat up those wage gains, and permit the economy to grow faster without triggering inflation. If productivity falters, however, pressure for higher wages could force companies to raise prices, thus worsening inflation. most students of this phenomenon would say that increases or decreases in labor productivity that are due to demand changes -- and effect #1 above -- do not help to avoid or help to stimulate inflation. It's the _trend_ rate of growth of labor productivity that is relevant here. Again, one quarter's labor productivity growth is not a good way to judge the trend. Jim Devine
machines and labor productivity at Amazon.com
[NYTimes] January 21, 2002 Amazon Ships to Sorting Machine Beat By SAUL HANSELL FERNLEY, Nev., Jan. 18 - Ever since it built five vast warehouses in 1999, Amazon (news/quote) .com has boasted of the wonders of the machinery inside them - 10 miles of conveyer belts and myriad other gadgets. What Amazon was not so vocal about was how many people it took to operate those machines, especially during the holiday rush. In 2000, for example, Amazon had to hire 7,200 temporary workers to supplement the 4,400 people working in its warehouses in the United States. Now, Amazon.com, once the champion the strategy of get big fast, has learned how to become small. On Dec. 11, its busiest day last year, Amazon's warehouses employed only 4,000 temps and 3,700 full-time employees. With one-third fewer people than the year before, the warehouses processed what analysts estimate were 10 to 15 percent more items. Amazon, which plans to release its fourth- quarter results on Tuesday morning, needs every dollar it can save. A year ago, the company - which has lost $2.8 billion since its founding in 1995 - promised investors it would turn an operating profit in the fourth quarter of 2001 (at least by its own pro forma calculation). That goal was made harder because Amazon's sales grew at only half the rate it predicted at the beginning of the year, dragged down by the recession, the aftermath of Sept. 11 and some of the company's own missteps. If, as analysts expect, Amazon nonetheless hits its fourth-quarter profit target, a key reason will be the savings from its yearlong campaign to reorganize the people and the machines in its warehouses. They are focused on productivity in a very structured way, and it appears they have made good progress, said Anthony Noto, an analyst for Goldman, Sachs. Mr. Noto estimates that order-fulfillment costs absorbed 11 percent of Amazon's sales in the fourth quarter, down from 13.5 percent a year earlier. Still, he said, those costs need to fall below 9 percent for the company to thrive. Walking amid a forest of bookshelves and climbing metal bridges over the rivers of conveyer belts in the warehouse here 40 miles east of Reno, Jeff Wilke, Amazon's senior vice president for operations, pointed to dozens of improvements big and small. One big goal had been to reduce errors in keeping track of the several million items continually being placed onto and pulled off of hundreds of thousands of bins on metal shelves. In theory, Amazon's computers know exactly where each item is at any moment. But in 2000, the computers were wrong more than 10 percent of the time, causing delays as workers searched for missing items and restocked spares. We had a whole secret plant, not our main focus, putting stuff back, Mr. Wilke said. To reduce errors, Amazon wrote new software to take better advantage of the gizmo that each warehouse worker was already carrying - a shoehorn-size device that combines a bar code scanner, a display screen and a two-way data transmitter. The new software beams far more explicit instructions to workers about where they should go and what they should do. And it checks their work by forcing them to scan each item every time they put it on or take it off a shelf. Errors have fallen to below 5 percent, from 10 percent, Mr. Wilke said. This new system also helps with another of Mr. Wilke's main goals - improving the productivity of seasonal temporary workers - by giving them more direction. It also monitors their performance, so those who cannot get up to speed in a week or so are given help - then fired, if necessary. Amazon also instituted a formal training program for temps. As a result, the average productivity of each temporary worker has doubled. Many of Mr. Wilke's efforts reflect the highly quantitative bent expected of an M.I.T.-trained engineer who ran chemical plants for Allied Signal before joining Amazon in 1999. But when he talks about the biggest change here in Fernley, he uses the language of music, not manufacturing. We needed to build cadence, Mr. Wilke said, to operate to the drumbeat of the constraint. The drumbeating constraint is the $25 million Crisplant sorting machine at the center of Amazon's automated approach. Working with batches of 500 to 2,000 orders, the employees with the hand-held terminals feed items onto a network of conveyor belts into the sorting machine. The machine reads the bar code on each item and routes it into one of 2,100 chutes, each chute representing an order for a single customer. When all the items in an order are in the chute, a light flashes, and a worker rushes to put them in a box. They are then sent on other conveyers to machines that print packing slips, seal the boxes and send them off to shippers' trucks. Adopting such an expensive and complex machine was controversial for Amazon. Mr. Wilke acknowledges that he was skeptical of the Crisplant machines when he joined Amazon
Will Hutton on Enron productivity
[snip] ...Enron could not have made the progress it did without the intellectual backdrop that all regulation and taxation is bad - and that the more the US deregulated, the better its economy performed. This was, and is, balderdash. Recent work by economists, notably at investment bank Credit Suisse First Boston, shows that after making the necessary accounting adjustments and including downward revisions, productivity growth in the US has done no more than match that in Europe. Indeed, countries like France and Germany have higher absolute productivity and faster rates of growth than the Americans, despite their approach to regulation and taxation. [snip] http://www.observer.co.uk/comment/story/0,6903,632020,0 0.html
productivity happy labor day!
from the L.A. TIMES [9/3//01] -- Productivity Said Key to Rebound Symposium: Top policymakers and others say a sustained pickup in worker output is needed for economy's recovery. (from Reuters) JACKSON HOLE, Wyo. -- The information technology boom of the 1990s stoked a new economy characterized by surging output per worker but with hard-to-measure and possibly vulnerable underpinnings, participants at a blue-ribbon crowd of policymakers, economists and academics heard over the weekend. Most felt a slowdown in the U.S. economy, which has developed over the last year, will ease later this year or in 2002. However, its timing and vigor depend on a pickup in productivity, or output per worker, being sustained even in the face of a rapid falloff in business capital spending on computers and other goods. The information economy was the theme of this year's exclusive gathering, the 25th such symposium at a remote Rocky Mountain resort. Organized by the Kansas City Federal Reserve Bank, it brought Fed Chairman Alan Greenspan and about 100 people together to mull the issue in the meetings and to swap observations on the state of the economy in the corridors. All agreed that a remarkable speedup in productivity from about the mid-1990s until 2000--when the pace of U.S. economic growth began to slow--was a key not only to past but future performance. In the process, it changed the way in which Americans work and spend and add to their incomes. The high-pressure economy, tight labor market and gratifyingly low unemployment rate of the last half-decade is hard to envision without the productivity speedup, which is largely driven by the technological revolutions in data processing and data communications, said Lawrence Summers, president of Harvard University and former Treasury secretary. Greenspan did not directly address the symposium's theme, snip A strong flavor of uncertainty hung over the proceedings, with several participants noting the U.S. economy can successfully skirt recession if productivity holds up, but it could quickly be in trouble if output per worker falls to lower rates found in the 1970s and 1980s. If the productivity trend collapses, the favorable performance of the '90s could unravel, with higher inflation, higher unemployment, slower growth, stock market weakness and a dollar that could drop sharply, cautioned Martin Baily, a senior fellow at the Institute for International Economics and a former chairman of the White House Council of Economic Advisers in the Clinton administration. With the U.S. economy by far the largest in the world, Europe growing slowly and Japan in a funk, the prospect that a U.S. bounceback is so dependent upon productivity clearly made some participants nervous. Michael Mussa, former chief economist and now special advisor to the International Monetary Fund, said he worried about unreasonably optimistic hopes for productivity gains, especially at a time when the U.S. economy already is burdened by a huge trade imbalance and when the U.S. dollar is at strong levels relative to other currencies. If expectations disappoint, a lot of those imbalances could come back to haunt the United States and the global economy going forward, Mussa warned. [COMMENT: I've decided that in common parlance, even among economists (who should know better), productivity is usually mixed up with profitability. So when the economists say they want increased productivity, they mean they want businesses' bottom lines to be doing better. This confusion arises in two main ways (besides the muddle-headedness of orthodox economics). First, rising labor productivity growth rates do NOT prevent inflation if workers get nominal wage gains in step with labor productivity. Economists assume -- and hope -- that wages won't do so, i.e., that profitability will rise. Also, note that increases in productivity growth can hurt recovery: if wages fall behind productivity, that hurts consumer spending (all else equal) relative to output. If fixed investment is stalled (along with other sources of aggregate demand), that hurts aggregate demand. If profitability rises, it's possible that fixed investment could get out of its stall. [Second, economists talk about the disgustingly crude concept of total factor productivity (output divided by the weighted sum of capital services and labor services). Not only are the components of the denominator almost impossible to measure, but they are weighted according to what they are paid in the national income product accounts (assuming that capital and labor are paid according to their contribution!) What's left -- the residual -- is mostly profits. So when total factor productivity goes up, so does the profit rate.] [andÂ… happy labor day!] Workers See Power Shifting to Employers Labor: The economic slowdown has given companies the edge in the job market. By LISA GIRION, TIMES STAFF WRITER
Re: productivity happy labor day!
Or, maybe what economists really mean (although they don't know it) is literally an increase in the rate of surplus value. See Marc Linder's From Surplus Value to Unit Labor Costs: The Bourgeoisification of a Communist Conspiracy in his _Labor Statistics and Class Struggle_. Linder tells the tale of the peregrination of an American Federation of Labor resolution to link wage increases to productivity gains to a Marxist statistical analysis (by Juergen Kuczynski in the 1920s) in support of that resolution to a business argument that wages must not exceed productivity gains to a status quo policy regime that productivity gains must precede and exceed even nominal wage increases. Jim Devine wrote, [COMMENT: I've decided that in common parlance, even among economists (who should know better), productivity is usually mixed up with profitability. So when the economists say they want increased productivity, they mean they want businesses' bottom lines to be doing better. This confusion arises in two main ways (besides the muddle-headedness of orthodox economics). First, rising labor productivity growth rates do NOT prevent inflation if workers get nominal wage gains in step with labor productivity. Economists assume -- and hope -- that wages won't do so, i.e., that profitability will rise. Also, note that increases in productivity growth can hurt recovery: if wages fall behind productivity, that hurts consumer spending (all else equal) relative to output. If fixed investment is stalled (along with other sources of aggregate demand), that hurts aggregate demand. If profitability rises, it's possible that fixed investment could get out of its stall. [Second, economists talk about the disgustingly crude concept of total factor productivity (output divided by the weighted sum of capital services and labor services). Not only are the components of the denominator almost impossible to measure, but they are weighted according to what they are paid in the national income product accounts (assuming that capital and labor are paid according to their contribution!) What's left -- the residual -- is mostly profits. So when total factor productivity goes up, so does the profit rate.] Tom Walker Bowen Island, BC 604 947 2213
Re: Re: productivity happy labor day!
At 08:58 AM 09/03/2001 -0700, you wrote: Or, maybe what economists really mean (although they don't know it) is literally an increase in the rate of surplus value. exactly. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~JDevine
35-hour French surpass overworked US in productivity
The NYT article below buries its lead in paragraph 13: But partly because of the comparatively high number of hours that Americans work, the report found that France and Belgium edged out the United States in productivity per hour. In France, which ranked first, workers produced $33.71 of value added per hour on average, compared with $32.98 in Belgium and $32.84 in the United States. http://www.nytimes.com/2001/09/01/national/01HOUR.html?todaysheadlines New York Times: September 1, 2001 Report Shows Americans Have More 'Labor Days' By STEVEN GREENHOUSE United Nations agency provided some discouraging news yesterday to Americans who believe they are overworked, finding that American workers have increased their substantial lead over Japan and all other industrial nations in the number of hours worked each year. The report, issued by the International Labor Organization, found that Americans added nearly a full week to their work year during the 1990's, climbing to 1,979 hours on average last year, up 36 hours from 1990. That means Americans who are employed are putting in nearly 49 1/2 weeks a year on the job. . . . Tom Walker Bowen Island, BC 604 947 2213
Marginal productivity is for the other guy
Spearheading the latest ineffectual populist campaign the whole family can join, the Guardian helpfully signals the difficult issues involved: Anger at boom in executive pay (snip) But Sir Ken Jackson, Blairite leader of the AEEU engineering union and a supporter of public service reforms, sounded a different note. Where performance merits competitive levels of pay, then we support companies rewarding their workers at all levels, including the boardroom. == Prompting one to ask about remuneration for AEEU full time officials... Any trade union leader who sports a sir or any badge of toadying (OBE, MBE, CBE) -- and there's a lot -- sold the jerseys years ago. Particularly if he is not yet retired. In the early 1980s film-maker Ken Loach was commissioned by newly begun and independent Channel 4 to film a series of documentaries on the leadership of the British trade unions, Questions of Leadership. These were completed, but never shown, and, apparently, are still banned. This is John Pilger's take on the subject, since he seems to have been one of the few lucky enough to have seen them: The big unions, like the TGWU, are still absurdly portrayed by the Tories and much of the media as a potentially dangerous fifth column in the body politic. Yet without the timidity and inaction of some of the famous union 'barons', the legislative attack on trade union rights in the Eighties probably would have failed, along with the devastation of the steel and mining industries, and the privatising of the docks. This perspective on the unions has always been something of a taboo. It was considered so threatening during the early part of Thatcher's reign that a 1982 television series by Ken Loach, Questions Of Leadership, for the fledgling Channel 4, was withdrawn and then drastically cut. Consider the opening sequence of the Loach films. Over archive film of a mass meeting of trade unionists during the Thirties Depression, the sound-track begins to play the chorus from Gilbert and Sullivan's Iolanthe: Bow low ye lower middle classes; Bow, bow ye tradesmen; Bow ye masses . . . As the mockery continues, the pictures dissolve to a parade of earnest young men, standing on platforms, exhorting the masses. Then they grow older, florid, comfortable, and become portraits of self-satisfaction, dressed in the ermine of the House of Lords. They are Joe Gormley, Vic Feather, Richard Marsh, all former trade union leaders (soon to be joined by Lord Len Murray). The commentary says, 'There are some trades union leaders who have in their own person achieved the harmony of the classes.' Rank and file trade unionists speak about the meaning of 'democracy' within the big unions, referring to 'small bureaucratic, centralised groups of people . . . that prevent individual members from playing a role within the union and the general direction the union is going'. Were these not the familiar media words of right-wingers complaining about the 'militants' infiltrating their 'democratic' institutions? Yes, but in the Loach film the voices came from ordinary trade unionists analysing the hold of the trade union establishment on the organisations and fortunes of millions of ordinary people. From They Never Walk Alone (Part 1) http://pilger.carlton.com/print/48727 As Joe Gormley once said when discovered in a posh restaurant: nothing's too good for the working class. Michael K.
Marginal productivity is for the other guy
Anger at boom in executive pay Call for government action as unions and investors condemn effects of top bosses achieving 28% rises Jill Treanor and David Gow Thursday August 30, 2001 The Guardian Unions, powerful City investors, and company directors united yesterday to round on the boards of FTSE 100 companies after the Guardian-Inbucon survey revealed Britain's top bosses enjoyed 28% pay rises last year. Union leaders urged the government to appoint at least two employee representatives to the secretive committees determining company directors' pay, while Ruth Lea, head of the policy unit of the Institute of Directors, warned these same committees against remuneration ratcheting by rubber stamping wage rises. The powerful body which represents all the major pen sion funds, the National Association of Pension Funds, said the 28% jump - some six times higher than the average pay increase - appeared to flout City rules set to standards for corporate behaviour. The rules call for these remuneration committees to be sensitive to the wider scene...including pay and employment conditions when determining annual salary increases. Chris Baldry, manager of the NAPF's voting issues service, said: There will be general concern about the numbers the Guardian has unearthed. The figure seems very high and doesn't seem to comply with the combined code (which sets City rules). Several unions are also dismayed by what they see as the failure of the government to crack down on so-called boardroom excesses, despite a raft of promises to force companies to link pay to performance. Ministers talked tough and the reality is that nothing has happened, a senior trade union official said. The government has said it would require companies to allow shareholders to vote each year on the pay policy. Yesterday, sources at the Department of Trade and Industry would only say the situation was being reviewed. John Monks, TUC general secretary, who is struggling to devise a common TUC front on the issue of public services between outright opponents of privatisation and the modernisers, believes the growing gap between boardroom salary packages, irrespective of merit, and the rest of the workforce is seriously damaging companies' morale and will spill over into debates at next month's TUC congress. Public service unions, already planning an assault at the congress on plans for partial privatisation of key services such as education and health, were outraged. Dave Prentis, leader of Unison, the biggest public service union, said: How much longer can fat cat bosses justify these huge pay and perks while millions of workers are denied a decent living wage? Calling for remuneration committees to have employee representation to compel companies to justify pay packages to annual general meetings, Mr Monks said: Fat cat pay shows no signs of letting up. Ms Lea contrasted the rise in the boardoom with the IoD's surveys, which showed the majority of all company directors - not just those in the FTSE 100 - saw pay rises of just 4%. She said: I think remuneration committees do have a tendency to look at the median earnings and say 'Our chaps are better than the average and need higher than the median'. Some questioned whether the threat of a downturn would stem boardroom pay. Michelle Edkins, corporate governance director at Hermes, which manages BT's pension fund, said: It will be interesting to see whether recession drives pay down. But in recessions, you will still need strong executives. But Sir Ken Jackson, Blairite leader of the AEEU engineering union and a supporter of public service reforms, sounded a different note. Where performance merits competitive levels of pay, then we support companies rewarding their workers at all levels, including the boardroom.
Productivity Byte, 8/7/01 by Dean Baker: Productivity Revisions Tarnish New Economy
August 7, 2001 Productivity Revisions Tarnish New Economy By Dean Baker __ ___ The lower productivity numbers should raise serious questions about stock prices. __ ___ The second quarter productivity release included large downward revisions to previously released productivity numbers. These revisions raise serious questions about the extent to which the United States really has a new economy with a qualitatively different productivity growth path. The reported annual rate of productivity growth in the non- farm business sector from the fourth quarter of 1997 to the fourth quarter of 2000 (the period for which data was revised), was lowered from 3.24 percent to 2.69 percent. This is still a significant upturn from the 1.35 percent annual rate of growth from 1973 to 1995, but much less impressive than the numbers originally reported. The data for the second quarter of 2001 showed a strong rebound from the first quarter, with productivity rising at a 2.5 percent annual rate in the second quarter compared with an increase of just 0.1 percent in the first quarter. However, this turnaround was entirely attributable to a sharp drop in the number of working hours reported in the second quarter. According to Labor Department's data, hours worked fell at a 2.4 percent annual rate in the quarter. The numbers reported for hours worked in this data is poorly measured. It is more likely that the falloff in hours reported in the second quarter, and therefore the rise in productivity growth, was attributable to errors in measurement. Productivity has probably been advancing at an annual rate close to the average reported for the first two quarters, or 1.3 percent, so far this year. The main reason for the downward revisions in the productivity data was a downward revision in the rate of output growth reported for 1999 and 2000. The increase in output in the non- farm business sector had originally been reported as 5.7 and 3.6 percent, respectively. In the new report the growth rate of output for 1999 was revised down to 4.9 percent, and to 2.8 percent for 2000. The downward revision to output was in turn primarily attributable to a significant reduction in the output of software reported by the Commerce Department in its GDP revisions last month. With this report, the new economy years from 1996 to 2000 look somewhat less impressive. The average rate of productivity growth over this period was 2.5 percent, compared to the 2.9 percent previously reported. It is also worth noting that this 2.5 percent figure somewhat overstates the increase per hour in usable output. Productivity is a measure of gross output per hour. The output that is actually usable, by consumers or firms, is determined by the growth in net output. The difference in the measures is the amount of output that is used to replace warn out or obsolete equipment. Wages and profits must be generated out of net output, no one can eat worn out equipment. Typically, the increase in gross and net output is virtually the same. In fact, in the sixties and seventies net output actually increased slightly faster than gross output. However, in the last five years, there has been a large gap between the growth of gross and net output, with gross output rising at a rate that is approximately 0.35 percentage points faster than net output, on average. This difference is due to the increasing use of computers, which have very short lives. This means that a productivity measure that examined the growth in net output over the period from 1996 to 2000 would show an annual rate of growth of less than 2.2 percent. This is still an upturn from the productivity growth rates of the mid seventies and eighties, but its far below the 3.0 percent productivity growth rates of the sixties. The productivity revisions in this report should raise questions among new economy optimists. It is unlikely that we will see the sort of rapid GDP and profit growth that many had anticipated. This should raise some questions on Wall Street, where stocks are still priced as though the economy will maintain high rates of growth for the indefinite future. The downward revisions may also affect budget projections. The Congressional Budget Office assumed that productivity growth will average 2.7 percent over the next decade. With the revised data, the rate assumed by CBO is now higher than the growth rate achieved even at the peak of the boom. Based on this new data, CBO is likely to revise down its growth projections, and its surplus projections as well.
Productivity miracle or mirage?
Penners Here's an interesting interview with someone who sounds interesting on the topic of the IT investment boom and the great US productivity miracle. In the same edition of the FT, Harvard professor Martin Feldstein pens an opinion piece warning that thanks to this apparent miracle the US is well-placed to rebound from its current economic difficulties, while Europe is doomed to play catch-up, and always from far behind, thanks to its attachment to old ways. Feldstein concludes: In Europe, fundamental changes in employment practices, labour markets and management incentives are necessary to encourage rapid adoption of new technology that can raise productivity while increasing employment. Without such changes, the gap between US and European incomes will continue to widen. In what direction??? See http://globalarchive.ft.com/globalarchive/articles.html?print=trueid=010628 001693 To me, at least, Strassmann reads a lot more convincingly. = Guru of profitless computing Financial Times, Jun 28, 2001 BY ALAN CANE Paul Strassmann is playing his favourite role once more: the computer expert who claims companies are wasting money on computers. The information technology industry's leading iconoclast has been rehearsing the part during more than 40 years of rigorous research into companies and their use of IT. However, as the latest of his more than 200 reports, books and articles on the subject nears publication, his message has been refined into its ultimate, devastating form. Mr Strassmann's central thesis is that no relationship can be demonstrated between the amount a company spends on computer systems and its profitability. And, he believes, none ever will be. He quotes for emphasis Robert Solow, the Nobel Prize-winning economist, who taught him statistics at Massachusetts Institute of Technology: You can see computers everywhere - except in economic statistics. A second argument is no less contentious: that the IT industry, customers and vendors alike, is on the cusp of an important - and final - disjunction: Every seven years, we have torn up what has gone before and started again, he says. There have been eight cycles of 'build and scrap' since 1946. The first cost $100m, equal to 7 per cent of business investment at the time. The last cost $2,000bn, or 47 per cent. The next would have cost $5,000bn but we have run out of money: we have come to the end of history as we know it. These conclusions have a significance beyond the computer industry. The US, which spends more on IT than any other nation, is on the brink of its first recession in a decade, dragging with it much of the developed world. It has sustained growth during the past 10 years, many think, by investing in information systems. The pundits argue that this has delivered competitive gains, accelerated transactions and increased customer satisfaction. Many other nations, envious of the performance of the US economy in the past decade, have set out to achieve the same miracle. But is this belief in IT as the powerhouse of improved productivity misplaced? Has the US's share of that $2,000bn been squandered on a false promise? Few are better placed to answer these questions than Mr Strassmann, now 72 and as active in retirement as when he was chief information officer for the US Department of Defence. His career has seen him managing the information interests of large companies, including Kraft and Xerox. It culminated in his appointment to a newly created post of director of defence information at the Department of Defence, where he was responsible for a $35bn cost-reduction programme. He oversaw the DoD IT strategy at the time of the Gulf war and was rewarded with the Defence Medal for Distinguished Public Service, its highest civilian award. It is, however, the quality and quantity of the data underpinning his chief contentions that set Mr Strassmann apart. He has been collecting financial statistics on the world's principal companies with all the enthusiasm of a trainspotter since 1954, soon after leaving Cooper Union college in New York City with an engineering degree. Today, the numbers - revenue, profits, assets, productivity, head count and so on - fill appendix after appendix in his published works. He is contemptuous of the profusion of studies from consultancies and the computer industry proving the value of investment in computer systems: I give little credence to the gloss. I say: 'Show me the numbers,' he declares with a grin. Not for Mr Strassmann the superficial 150 leading companies that contribute to most surveys. His latest work, on European competitiveness, analyses in depth more than 3,000 companies. The question of how investment in computers may be linked to profitability is as intriguing as it is difficult to answer, in spite of intensive efforts during the past half-century. Mr Strassmann believes his numbers indicate unequivocally that there is no connection between investment in computers
Re: Productivity miracle or mirage?
Strassmann's book, The Squandered Computer, is interesting. His work is often contrasted with Eric Brynjolfsson of MIT, who seems to make the strongest case for the New Economy of all the economists. He tries to measure the actual productivity of computers and high tech gear. Needless to say, his work is not universally accepted. Keaney Michael wrote: Penners Here's an interesting interview with someone who sounds interesting on the topic of the IT investment boom and the great US productivity miracle. In the same edition of the FT, Harvard professor Martin Feldstein pens an opinion piece warning that thanks to this apparent miracle the US is well-placed to rebound from its current economic difficulties, while Europe is doomed to play catch-up, and always from far behind, thanks to its attachment to old ways. Feldstein concludes: In Europe, fundamental changes in employment practices, labour markets and management incentives are necessary to encourage rapid adoption of new technology that can raise productivity while increasing employment. Without such changes, the gap between US and European incomes will continue to widen. In what direction??? See http://globalarchive.ft.com/globalarchive/articles.html?print=trueid=010628 001693 To me, at least, Strassmann reads a lot more convincingly. = Guru of profitless computing Financial Times, Jun 28, 2001 BY ALAN CANE Paul Strassmann is playing his favourite role once more: the computer expert who claims companies are wasting money on computers. The information technology industry's leading iconoclast has been rehearsing the part during more than 40 years of rigorous research into companies and their use of IT. However, as the latest of his more than 200 reports, books and articles on the subject nears publication, his message has been refined into its ultimate, devastating form. Mr Strassmann's central thesis is that no relationship can be demonstrated between the amount a company spends on computer systems and its profitability. And, he believes, none ever will be. He quotes for emphasis Robert Solow, the Nobel Prize-winning economist, who taught him statistics at Massachusetts Institute of Technology: You can see computers everywhere - except in economic statistics. A second argument is no less contentious: that the IT industry, customers and vendors alike, is on the cusp of an important - and final - disjunction: Every seven years, we have torn up what has gone before and started again, he says. There have been eight cycles of 'build and scrap' since 1946. The first cost $100m, equal to 7 per cent of business investment at the time. The last cost $2,000bn, or 47 per cent. The next would have cost $5,000bn but we have run out of money: we have come to the end of history as we know it. These conclusions have a significance beyond the computer industry. The US, which spends more on IT than any other nation, is on the brink of its first recession in a decade, dragging with it much of the developed world. It has sustained growth during the past 10 years, many think, by investing in information systems. The pundits argue that this has delivered competitive gains, accelerated transactions and increased customer satisfaction. Many other nations, envious of the performance of the US economy in the past decade, have set out to achieve the same miracle. But is this belief in IT as the powerhouse of improved productivity misplaced? Has the US's share of that $2,000bn been squandered on a false promise? Few are better placed to answer these questions than Mr Strassmann, now 72 and as active in retirement as when he was chief information officer for the US Department of Defence. His career has seen him managing the information interests of large companies, including Kraft and Xerox. It culminated in his appointment to a newly created post of director of defence information at the Department of Defence, where he was responsible for a $35bn cost-reduction programme. He oversaw the DoD IT strategy at the time of the Gulf war and was rewarded with the Defence Medal for Distinguished Public Service, its highest civilian award. It is, however, the quality and quantity of the data underpinning his chief contentions that set Mr Strassmann apart. He has been collecting financial statistics on the world's principal companies with all the enthusiasm of a trainspotter since 1954, soon after leaving Cooper Union college in New York City with an engineering degree. Today, the numbers - revenue, profits, assets, productivity, head count and so on - fill appendix after appendix in his published works. He is contemptuous of the profusion of studies from consultancies and the computer industry proving the value of investment in computer systems: I give little credence to the gloss. I say: 'Show me the numbers,' he declares with a grin. Not for Mr Strassmann the superficial 150 leading companies
US productivity shows steepest fall since 1993
www.ft.com US productivity shows steepest fall since 1993 By Peronet Despeignes in Washington Published: June 5 2001 13:06 US workforce productivity fell more than expected in the first quarter amid a slowdown in demand for goods and services that was more abrupt than previously thought. The labour department said on Tuesday that output per person-hour outside the agricultural sector dipped at an annual rate of 1.2 per cent in the first quarter, marking the first time US productivity has faltered since 1995 and its biggest decline since 1993. The report revised sharply downward the initial estimate of a 0.1 per cent dip. The sharp first-quarter drop followed the previous quarter's 2 per cent gain. Lower productivity and continued gains in worker pay mean higher labour costs per unit of output - a key inflation gauge. Labour costs jumped at the fastest pace in a decade - at a 6.3 per cent annual rate instead of the 5.2 per cent in the first quarter initially estimated. It is the first time US labour productivity has sunk since economists began asking five years ago whether the US economy had entered a new era of perpetually fast growth, low inflation, fatter profits and rising living standards due to the adoption of new technologies and better economic policies. Higher productivity was a distinguishing feature of US economic performance in the 1990's. Other industrialised nations failed to match its twin achievements of strong job creation and accelerating productivity growth from 1995 to 2000, according to a recent survey of international trends by the Conference Board, a New York-based research group. The Board's report found that outside of the US virtually every country showed decelerations in productivity growth in the latter half of the decade. Japan managed to maintain persistently high productivity growth at the expense of employment growth. The revival of job creation in Europe over the past five years came amid slowing productivity growth. The report, by authors Robert H McGuckin and Bart van Ark, concluded that greater economic reforms allowed the US to make better use of its resources, including labour and capital. New-era enthusiasts, including Alan Greenspan, Federal Reserve chairman, and Roger Ferguson, Fed vice chairman, have repeatedly expressed faith in the possibility that productivity would hold up through any downturn. After its last interest-rate cut in mid-May, the Fed's policy-making open market committee, said in a public statement that although measured productivity growth stalled in the first quarter, the impressive underlying rate of increase that developed in recent years appears to be largely intact, supporting longer-term prospects. This assumption is critical because the pickup in productivity growth over the past few years helped suppress US inflation. If the nation's money supply were rising much faster than its output of goods and services, inflation might become a bigger problem for the Fed, which is currently fighting off recession risks with interest rate cuts - a point reaffirmed recently by Robert McTeer, president of the Dallas Federal Reserve. In comments at a Puerto Rico banking conference this week, Mr McTeer said he was uncertain about the assumption that inflation would slow along with the economy: I believe that in part inflation went down in the late 1990s not despite rapid growth but because of rapid growth [in output of goods and services]. If too much money is chasing too few goods, causing inflation, more goods are just as helpful as less money. Sceptics of the new economy view, including Robert Gordon, Northwestern University economics professor, and recently Stephen Cecchetti, former research director of the New York Federal Reserve, have expressed growing doubt that the productivity surge was real or enduring. One top Fed official told the Financial Times recently that the central bank needed to better justify its faith. Another senior official, Fed board member Laurence, plans to give a speech on the topic tomorrow. What the latest figures actually say about the strength of the US economy's productivity miracle is unclear. One quarter's data is not a trend, and both cyclical and structural factors influence productivity. The current downturn may say more about the abrupt slowdown in demand for goods and services than the private sector's ability to improve efficiency. But the sharp, ongoing plunge in business spending on equipment and software that is supposedly productivity-enhancing and renewed uncertainty among investors about the course of US economic policymaking amid political changes in Washington have cast doubt on that as well. Louis Proyect Marxism mailing list: http://www.marxmail.org
Re: US productivity shows steepest fall since 1993
Of course, none of this matters a jot to the markets. They're efficiently signalling nothing but blue sky today - the Hand as unseeing as it is invisible. Funny; if technology really is responsible for rising productivity, it makes sense to drop rates again, so that capital investment might be resuscitated, and productivity thus rejuvenated. But the monetarist's way to combat high wages in times of decreasing productivity and upcoming tax cuts should be to hike interest rates, no? Wouldn't be Greenspan for quids ... Cheers, Rob.
Re: Re: US productivity shows steepest fall since 1993
- Original Message - From: Rob Schaap [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Tuesday, June 05, 2001 6:26 PM Subject: [PEN-L:12775] Re: US productivity shows steepest fall since 1993 Of course, none of this matters a jot to the markets. They're efficiently signalling nothing but blue sky today - the Hand as unseeing as it is invisible. Funny; if technology really is responsible for rising productivity, it makes sense to drop rates again, so that capital investment might be resuscitated, and productivity thus rejuvenated. But the monetarist's way to combat high wages in times of decreasing productivity and upcoming tax cuts should be to hike interest rates, no? Wouldn't be Greenspan for quids ... Cheers, Rob. = I'm always fascinated by the absence of naming slow sales as the culprit for lagging productivity. If no one's biting on the product, workers can't help but slow down on the jobs/sales that are still in the pipeline. Sales teams get boom tired too. Ian
Re: US productivity shows steepest fall since 1993
the FINANCIAL TIMES wrote: US productivity shows steepest fall since 1993 ...The labour department said on Tuesday that output per person-hour outside the agricultural sector dipped at an annual rate of 1.2 per cent in the first quarter, marking the first time US productivity has faltered since 1995 and its biggest decline since 1993. The report revised sharply downward the initial estimate of a 0.1 per cent dip. The sharp first-quarter drop followed the previous quarter's 2 per cent gain. Lower productivity and continued gains in worker pay mean higher labour costs per unit of output - a key inflation gauge. Labour costs jumped at the fastest pace in a decade - at a 6.3 per cent annual rate instead of the 5.2 per cent in the first quarter initially estimated. Of course, as the article notes toward the end, labor productivity falls every time there's a recession or a sharp slow-down of the economy (since the workers not laid off -- the overhead managers, staff, supervisors -- aren't productive, at least in the short run). This causes unit labor costs to rise, as does the fact that the less-well-paid workers tend to be laid off first. But this is not a sign of inflation to come, since it reflects a fall in demand. (Wachtel and Adelsheim once argued that recessions promote inflation as monopoly corporations try to restore profitability (hurt by falling utilization of capacity) by raising profit margins and thus prices. But this story seems remarkably quaint in the current competitive era. Monopoly pricing is relevant -- look what it's done to California energy -- but it's not a response to falling demand.) It is the first time US labour productivity has sunk since economists began asking five years ago whether the US economy had entered a new era of perpetually fast growth, low inflation, fatter profits and rising living standards due to the adoption of new technologies and better economic policies. Higher productivity was a distinguishing feature of US economic performance in the 1990's. Other industrialised nations failed to match its twin achievements of strong job creation and accelerating productivity growth from 1995 to 2000, according to a recent survey of international trends by the Conference Board, a New York-based research group. It's a mistake, however, to assume that just because there's a cyclical decrease in labor productivity there's also an end to the alleged trend in productivity growth. In fact, the latter is very hard if not impossible to measure and it's unclear whether or not there was a new economy spurt in labor productivity growth or not (as Gordon and Ceccetti are cited as saying, later in the article). ... the pickup in productivity growth over the past few years helped suppress US inflation. If the nation's money supply were rising much faster than its output of goods and services, inflation might become a bigger problem for the Fed, these days, the Fed doesn't care about the money supply. Old-style monetarism is dead, at least in the U.S., because the demand for money is so unstable. It's amazing that the high dollar exchange rate isn't cited as a major reason for the suppression of inflation. ... the sharp, ongoing plunge in business spending on equipment and software that is supposedly productivity-enhancing and renewed uncertainty among investors about the course of US economic policymaking amid political changes in Washington have cast doubt on that as well. a fall in real investment doesn't affect productivity growth right away. It takes several years of sustained depression of investment to have this effect, and it may be counteracted by other things, such as the shake-out effect, in which the scrapping of the least productive operations raises the average. The long depression of investment during the 1930s doesn't seem to have ended the period of relatively fast growth of U.S. labor productivity which reached from 1919 or so until 1970 or so. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Re: Re: US productivity shows steepest fall since 1993
At 08:48 AM 6/5/01 -0700, you wrote: I'm always fascinated by the absence of naming slow sales as the culprit for lagging productivity. If no one's biting on the product, workers can't help but slow down on the jobs/sales that are still in the pipeline. Sales teams get boom tired too. I agree that slow sales are the culprit here, but I don't think it's the workers who are making the decision here. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Re: US productivity shows steepest fall since1993
That was a common observation during the Great Stagflation. Also, the recessions promote consolidations, which promote inflation in the long run. Jim Devine wrote: (Wachtel and Adelsheim once argued that recessions promote inflation as monopoly corporations try to restore profitability (hurt by falling utilization of capacity) by raising profit margins and thus prices. But this story seems remarkably quaint in the current competitive era. Monopoly pricing is relevant -- look what it's done to California energy -- but it's not a response to falling demand.) -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Floyd Norris: An Exaggerated Productivity Boom May Soon Be a Bust
Or, productivity is cracked up to be something that it isn't. And therein lies the one great enduring fallacy of bourgeois economics, which is concerned above all to demonstrate the contribution to production of a non-tangible essence, i.e. a contribution of capital that cannot be attributed to previous accumulation of surplus value. [P]roductivity is not what it was cracked up to be. And therein lies one of the great fallacies of the recent boom and bubble. Tom Walker Bowen Island, BC 604 947 2213
Re: Floyd Norris: An Exaggerated Productivity Boom May Soon Be a Bust
Floyd Norris: An Exaggerated Productivity Boom May Soon Be a Bust By FLOYD NORRIS [P]roductivity is not what it was cracked up to be. And therein lies one of the great fallacies of the recent boom and bubble. Productivity — at least as measured by the government — zoomed in recent years, rising at a faster rate than at any time since the 1960's. That increase helped to persuade many economists that it was a new era, one in which old economic verities might not apply. Rising productivity meant that the economy could grow rapidly without fear of inflation while the information technology revolution, in the year-old words of John T. Chambers, the chief executive of Cisco Systems, enabled companies to reduce costs, generate revenue in new ways, empower employees and citizens and provide the agility needed for the Internet economy's rapid pace. Now productivity is falling, and Mr. Chambers is coping with a collapse in demand that he did not see coming and still cannot quite believe. This week he was still talking of Cisco returning to a 30 percent to 50 percent annual growth rate when the economy recovers. Ellipsis Productivity booms are not permanent things. I wish people wouldn't do this. We _don't know_ whether or not the productivity boom of the late 1990s was real or not. We may not know for decades. (The productivity boom of the 1920s turned out to be permanent and real, but we couldn't be sure until the 1950s or 1960s, when it became clear that labor productivity growth had a long-lasting acceleration in about 1919.) We _do_ know that when the economy slows or recesses, realized labor productivity always falls. The latter is what Norris is referring to, but he can't generalize from that to statements about the trend of productivity growth. Nor can I. There's a kind of Say's Law mystification of productivity growth. It's assumed that when productivity trends upward (or does so at a faster rate) that's automatically a good thing. Even ignoring external costs, etc., a rise in productivity may be a disaster if demand doesn't rise in step. All else constant, rising productivity means that demand _has to rise_ in order to keep unemployment from rising (one formulation of Okun's Law). But demand doesn't always rise, especially with the way that capitalists are always striving to push wages (and thus ultimately, consumer demand) down and the way in which capitalist investment can stop on a dime causing the economy to stall. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~JDevine Segui il tuo corso, e lascia dir le genti. (Go your own way and let people talk.) -- K. Marx, paraphrasing Dante A.
Land Productivity
Wittgenstein once commented that the most important truths are usually right in front of you. The land productivity differential between Europe and China was basically a function of their environmental resource endowments. Explaining this will demonstrate it was China which enjoyed the greatest ecological windfall. P's entire thesis hinges on the claim that Europe would have followed a normal Malthusian path were it not for the massive ecological relief it inherited through its *internal* coal supplies and its *external* colonial products. The industrial pattern of growth it enjoyed in the 19th century was an aberration. Lucky Europe, Normal China, says Perdue. But China was not one bit normal. On a wide range of environmental factors, it was exceptional, far luckier than Europe. The word around is that Pomeranz has changed dramatically the way we think about the origins of the modern world by refocusing the analysis away from technological innovations or cultural factors to geographical contingencies. Sifting through his book carefully rather than just advertising its contents demonstrates just how tendentious his geographical/ecological investigation really is. There is simply nothing on China's ecology. Europe and only Europe was the beneficiary of internal and external endowments. First, internally, if China achieved the highest yields in the world, it was on the strength of its land-saving technologies and not any natural endowment. If England achieved a breakthrough in the use of coal, it was fundamentally a function of geographic good luck. If China had less slack resources, it was because of its efficient use. If Europe has more slack, it was because of inefficient use. If China kept soil fertility high despite intensive use of the land, it was due to better land management and effective use of fertilizers. If Europe still had large amounts of grasslands and pasture that were sufficiently well watered to be converted to arable, it was because it had a relative abundance of water as **a matter of original endowment** Did Europe really have an advantage in original endowments?
Re: Land Productivity
Ricardo, I know of nothing to say that China had an ecological advantage. Almost all of its good land is on a narrow strip along the coast. Most of its land had to be manufactured into rice paddies. The interior is mostly desert or mountain. On Fri, May 11, 2001 at 11:10:12AM -0300, Ricardo Duchesne wrote: Wittgenstein once commented that the most important truths are usually right in front of you. The land productivity differential between Europe and China was basically a function of their environmental resource endowments. Explaining this will demonstrate it was China which enjoyed the greatest ecological windfall. P's entire thesis hinges on the claim that Europe would have followed a normal Malthusian path were it not for the massive ecological relief it inherited through its *internal* coal supplies and its *external* colonial products. The industrial pattern of growth it enjoyed in the 19th century was an aberration. Lucky Europe, Normal China, says Perdue. But China was not one bit normal. On a wide range of environmental factors, it was exceptional, far luckier than Europe. The word around is that Pomeranz has changed dramatically the way we think about the origins of the modern world by refocusing the analysis away from technological innovations or cultural factors to geographical contingencies. Sifting through his book carefully rather than just advertising its contents demonstrates just how tendentious his geographical/ecological investigation really is. There is simply nothing on China's ecology. Europe and only Europe was the beneficiary of internal and external endowments. First, internally, if China achieved the highest yields in the world, it was on the strength of its land-saving technologies and not any natural endowment. If England achieved a breakthrough in the use of coal, it was fundamentally a function of geographic good luck. If China had less slack resources, it was because of its efficient use. If Europe has more slack, it was because of inefficient use. If China kept soil fertility high despite intensive use of the land, it was due to better land management and effective use of fertilizers. If Europe still had large amounts of grasslands and pasture that were sufficiently well watered to be converted to arable, it was because it had a relative abundance of water as **a matter of original endowment** Did Europe really have an advantage in original endowments? -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Land Productivity
Michael Perelman: Ricardo, I know of nothing to say that China had an ecological advantage. Almost all of its good land is on a narrow strip along the coast. Most of its land had to be manufactured into rice paddies. The interior is mostly desert or mountain. - You're right and that's why it is so fascinating to find out how the remaining good land (only 10 to 11 per cent of the land is arable, as compared to 25% in the US) was able to feed so many people per square mile.
Floyd Norris: An Exaggerated Productivity Boom May Soon Be a Bust
NYT May 11, 2001 Floyd Norris: An Exaggerated Productivity Boom May Soon Be a Bust By FLOYD NORRIS [P]roductivity is not what it was cracked up to be. And therein lies one of the great fallacies of the recent boom and bubble. Productivity — at least as measured by the government — zoomed in recent years, rising at a faster rate than at any time since the 1960's. That increase helped to persuade many economists that it was a new era, one in which old economic verities might not apply. Rising productivity meant that the economy could grow rapidly without fear of inflation while the information technology revolution, in the year-old words of John T. Chambers, the chief executive of Cisco Systems, enabled companies to reduce costs, generate revenue in new ways, empower employees and citizens and provide the agility needed for the Internet economy's rapid pace. Now productivity is falling, and Mr. Chambers is coping with a collapse in demand that he did not see coming and still cannot quite believe. This week he was still talking of Cisco returning to a 30 percent to 50 percent annual growth rate when the economy recovers. The reality of the productivity explosion was that it was concentrated in the information technology industry. Some of that rise was not real anyway, since the government's statistical adjustments probably exaggerated the improvements in computers. But the failure of the productivity measures to show big gains in other areas should have been telling. If it was a real productivity miracle, how come we didn't see it in other places? asked Greg Jensen, an analyst at Bridgewater Associates. Nonetheless, it was believed to be real by the people that counted. It was that belief, says Robert Barbera, the chief economist of Hoenig Company, that led the Federal Reserve to back away from a pre-emptive tightening framework, in which rates were raised when the economy began to grow too fast. There is no way to know just how much a tighter Fed would have been able to slow the expansion of the bubble, but it would have had some effect. Less money would have been wasted on unproductive investments, of which Cisco's $2.2 billion inventory write-down is but a small part. Think of the money invested in absurd dot-coms, as well as fiber optic lines that are installed but may never be used. Now we see a contraction of the ability of good companies to get money, because of all the money the bad companies sucked in, Mr. Jensen said. Instead, we must deal with the effects of a bust in capital investment, one that is likely to continue for some time. We will learn that productivity was probably really growing at a slower rate than we thought, and will continue to do so. That implies slower economic growth and lower multiples for earnings in the stock market. There are historical precedents. In the 1920's and again in the 1950's and 1960's, productivity surged along with the stock market. Productivity growth does not necessarily presage heaven on earth, James Grant, the editor of Grant's Interest Rate Observer, said. The last productivity boom came to an abrupt halt with the horrors of the 1970's, when high oil prices helped to choke off economic growth and slow investment. In the five years that ended with 1972, productivity rose 2.9 percent, very close to the level of the last five years. But by 1980, the five-year average was below 1 percent and the Dow Jones industrial average was below where it had been in 1966. Productivity booms are not permanent things.
(Fwd) land productivity
I would like to see the post you are responding to? And Deirdre is not by any chance Deirdre McCloskey is she? If so she is very brilliant but quite vicious. Deleted it. You probably could find it in the EH archives (March 2001). It is McCloskey. She never responded to this post. It came out of a short exchange with Greg Clark who was really having an exchange with Michael Perelman. As a woman she's not as vicious. Everyone is Dears now. From what Pugliese sent, Deirdre now notices that academic men are a lot more hierarchical, obsessed about their accomplishments. She's happier. It is tough being a man in this world.
Land Productivity
While P questions the western model of developmet, he still seeks to convince us that the Chinese model achieved the highest agricultural yields in the world due to their efficient land-saving practices. That they were as efficient, as rational, as developed, as powerful as the westerners. This is called polycentrism in world history. Never mind the poly, if you can show that either China, Japan, or India were as advanced as Europe, then you're ready to join the multicultural crowd and sing We are the World. What about the Africans? Well..Nubia, yes, that's right, it has a nice ring to it. But that's way back, isn't that Black Athena? That too should be included, and later there's the Songhay empire of West Africa, the largest state of modern Africa, including the Oyo Empire in Nigeria, Nupe, Igala, and Benin in the lower Niger valley, or the Hausa states of Northern Nigeria, and Kongo in central Africa. Other ethnic groups? Oh yes, there others like the Jahaanke of the Gambia-River Niger region; the Juula of northern Ghana, Cote d'Ivoire, and Upper Niger River; the Wolof of Senegal; and the Awka and Aro of Iboland in Nigeria - they were also powerful and wealthy; they were the ethnic groups that facilitated and controlled the slave trade. We are all equal. A challenge to the western model this is not.
Re: Land Productivity
Ricardo: history. Never mind the poly, if you can show that either China, Japan, or India were as advanced as Europe, then you're ready to join the multicultural crowd and sing We are the World. What about the Africans? Well..Nubia, yes, that's right, it has a nice ring to it. But that's way back, isn't that Black Athena? That too should be included, and later there's the Songhay empire of West Africa, the largest state of modern Africa, including the Oyo Empire in Nigeria, Nupe, Igala, and Benin in the lower Niger valley, or the Hausa states of Northern Nigeria, and Kongo in central Africa. Other ethnic groups? Oh yes, there others like the Jahaanke of the Gambia-River Niger region; the Juula of northern Ghana, Cote d'Ivoire, and Upper Niger River; the Wolof of Senegal; and the Awka and Aro of Iboland in Nigeria - they were also powerful and wealthy; they were the ethnic groups that facilitated and controlled the slave trade. We are all equal. Is this diatribe going into your article? Is this meant for Science and Society? If so, expect angry letters from black readers. Actually, no problem since I doubt any African-American reads the journal--let alone writes for it--even though there are articles commenting on them from time to time. Louis Proyect Marxism mailing list: http://www.marxmail.org
Land Productivity
Louis: Is this diatribe going into your article? Is this meant for Science and Society? If so, expect angry letters from black readers. Actually, no problem since I doubt any African-American reads the journal--let alone writes for it--even though there are articles commenting on them from time to time. I have an agreement to send it to another journal. I have to choose journals that allow discussion of big questions which most don't. Unfortunately Universities/Journals are still dominated by specialists. A lasting merit of classical thinkers is they encourage real literacy and education. John Kenneth Galbraith said he can't understand why academic specialists are taken so seriously or held up as examplars of knowledge.
Re: Land Productivity
I think the Lou's question had to do with the way you presented your thought. Bringing up the Black Athena is an emotional subject. I'm far from an expert in the field -- not even a novice, but I suspect that most professional journals would be reluctant to give a fair hearing to the Afrocentric perspective. I also suspect that some Afrocentric writers overstate their position, offering easy targets to those who oppose Afrocentrism. We had been discussing how easy it is to make gross errors regarding other societies in something as simple as an evaluation of how development either improves or harms the life of the poor. The further away you look either in time or in culture, the more difficult such evaluations are. On Thu, May 10, 2001 at 12:34:14PM -0300, Ricardo Duchesne wrote: Louis: Is this diatribe going into your article? Is this meant for Science and Society? If so, expect angry letters from black readers. Actually, no problem since I doubt any African-American reads the journal--let alone writes for it--even though there are articles commenting on them from time to time. I have an agreement to send it to another journal. I have to choose journals that allow discussion of big questions which most don't. Unfortunately Universities/Journals are still dominated by specialists. A lasting merit of classical thinkers is they encourage real literacy and education. John Kenneth Galbraith said he can't understand why academic specialists are taken so seriously or held up as examplars of knowledge. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Land Productivity
http://www.cup.org/ Mao's War Against Nature Politics and the Environment in Revolutionary China Shapiro, Judith In clear and compelling prose, Judith Shapiro relates the great, untold story of the devastating impact of Chinese politics on China's environment during the Mao years. Maoist China provides an example of extreme human interference in the natural world in an era in which human relationships were also unusually distorted. Under Mao, the traditional Chinese ideal of harmony between heaven and humans was abrogated in favor of Mao's insistence that Man Must Conquer Nature. Mao and the Chinese Communist Party's war to bend the physical world to human will often had disastrous consequences both for human beings and the natural environment. Mao's War Against Nature argues that the abuse of people and the abuse of nature are often linked. Shapiro's account, told in part through the voices of average Chinese citizens and officials who lived through and participated in some of the destructive campaigns, is both eye-opening and heartbreaking. Judith Shapiro teaches environmental politics at American University in Washington, DC. She is co-author, with Liang Heng, of several well known books on China, including Son of the Revolution (Random House, 1984) and After the Nightmare (Knopf, 1986). She was one of the first Americans to work in China after the normalization of U.S.-China relations in 1979. SERIES NAME: Studies in Environment and History - Original Message - From: Ricardo Duchesne [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Thursday, May 10, 2001 7:58 AM Subject: [PEN-L:11338] Land Productivity While P questions the western model of developmet, he still seeks to convince us that the Chinese model achieved the highest agricultural yields in the world due to their efficient land-saving practices. That they were as efficient, as rational, as developed, as powerful as the westerners. This is called polycentrism in world history. Never mind the poly, if you can show that either China, Japan, or India were as advanced as Europe, then you're ready to join the multicultural crowd and sing We are the World. What about the Africans? Well..Nubia, yes, that's right, it has a nice ring to it. But that's way back, isn't that Black Athena? That too should be included, and later there's the Songhay empire of West Africa, the largest state of modern Africa, including the Oyo Empire in Nigeria, Nupe, Igala, and Benin in the lower Niger valley, or the Hausa states of Northern Nigeria, and Kongo in central Africa. Other ethnic groups? Oh yes, there others like the Jahaanke of the Gambia-River Niger region; the Juula of northern Ghana, Cote d'Ivoire, and Upper Niger River; the Wolof of Senegal; and the Awka and Aro of Iboland in Nigeria - they were also powerful and wealthy; they were the ethnic groups that facilitated and controlled the slave trade. We are all equal. A challenge to the western model this is not.
Re: Re: Land Productivity
http://www.cup.org/ Mao's War Against Nature Politics and the Environment in Revolutionary China While P questions the western model of developmet, he still seeks to convince us that the Chinese model achieved the highest agricultural yields in the world due to their efficient land-saving practices. The Chinese model that Ricardo has been discussing for the past several weeks has been that of the 17th and 18th century. I do not believe that Mao was in power back then. Louis Proyect Marxism mailing list: http://www.marxmail.org
Re: Re: Land Productivity
Michael, I don't know what your point is. I hope that you are not starting a good Mao/bad Mao debate. I recall that when mainstream Western agricultural types first visited China after the Nixon visit, they were astounded by the way the Chinese were able to feed so many people on such poor land. On the other hand, China, like the U.S., displayed little awareness of some environmental problems. They used too many pesticides and dammed too many rivers. They also cut down too much wood. On Thu, May 10, 2001 at 10:33:34AM -0700, Michael Pugliese wrote: http://www.cup.org/ Mao's War Against Nature Politics and the Environment in Revolutionary China Shapiro, Judith In clear and compelling prose, Judith Shapiro relates the great, untold story of the devastating impact of Chinese politics on China's environment during the Mao years. Maoist China provides an example of extreme human interference in the natural world in an era in which human relationships were also unusually distorted. Under Mao, the traditional Chinese ideal of harmony between heaven and humans was abrogated in favor of Mao's insistence that Man Must Conquer Nature. Mao and the Chinese Communist Party's war to bend the physical world to human will often had disastrous consequences both for human beings and the natural environment. Mao's War Against Nature argues that the abuse of people and the abuse of nature are often linked. Shapiro's account, told in part through the voices of average Chinese citizens and officials who lived through and participated in some of the destructive campaigns, is both eye-opening and heartbreaking. Judith Shapiro teaches environmental politics at American University in Washington, DC. She is co-author, with Liang Heng, of several well known books on China, including Son of the Revolution (Random House, 1984) and After the Nightmare (Knopf, 1986). She was one of the first Americans to work in China after the normalization of U.S.-China relations in 1979. SERIES NAME: Studies in Environment and History - Original Message - From: Ricardo Duchesne [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Thursday, May 10, 2001 7:58 AM Subject: [PEN-L:11338] Land Productivity While P questions the western model of developmet, he still seeks to convince us that the Chinese model achieved the highest agricultural yields in the world due to their efficient land-saving practices. That they were as efficient, as rational, as developed, as powerful as the westerners. This is called polycentrism in world history. Never mind the poly, if you can show that either China, Japan, or India were as advanced as Europe, then you're ready to join the multicultural crowd and sing We are the World. What about the Africans? Well..Nubia, yes, that's right, it has a nice ring to it. But that's way back, isn't that Black Athena? That too should be included, and later there's the Songhay empire of West Africa, the largest state of modern Africa, including the Oyo Empire in Nigeria, Nupe, Igala, and Benin in the lower Niger valley, or the Hausa states of Northern Nigeria, and Kongo in central Africa. Other ethnic groups? Oh yes, there others like the Jahaanke of the Gambia-River Niger region; the Juula of northern Ghana, Cote d'Ivoire, and Upper Niger River; the Wolof of Senegal; and the Awka and Aro of Iboland in Nigeria - they were also powerful and wealthy; they were the ethnic groups that facilitated and controlled the slave trade. We are all equal. A challenge to the western model this is not. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: Re: Land Productivity
I had not been following this lengthy thread on Pomeranz. Michael Pugliese, Better Mao Than Never... - Original Message - From: Michael Perelman [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Thursday, May 10, 2001 11:40 AM Subject: [PEN-L:11356] Re: Re: Land Productivity Michael, I don't know what your point is. I hope that you are not starting a good Mao/bad Mao debate. I recall that when mainstream Western agricultural types first visited China after the Nixon visit, they were astounded by the way the Chinese were able to feed so many people on such poor land. On the other hand, China, like the U.S., displayed little awareness of some environmental problems. They used too many pesticides and dammed too many rivers. They also cut down too much wood. On Thu, May 10, 2001 at 10:33:34AM -0700, Michael Pugliese wrote: http://www.cup.org/ Mao's War Against Nature Politics and the Environment in Revolutionary China Shapiro, Judith In clear and compelling prose, Judith Shapiro relates the great, untold story of the devastating impact of Chinese politics on China's environment during the Mao years. Maoist China provides an example of extreme human interference in the natural world in an era in which human relationships were also unusually distorted. Under Mao, the traditional Chinese ideal of harmony between heaven and humans was abrogated in favor of Mao's insistence that Man Must Conquer Nature. Mao and the Chinese Communist Party's war to bend the physical world to human will often had disastrous consequences both for human beings and the natural environment. Mao's War Against Nature argues that the abuse of people and the abuse of nature are often linked. Shapiro's account, told in part through the voices of average Chinese citizens and officials who lived through and participated in some of the destructive campaigns, is both eye-opening and heartbreaking. Judith Shapiro teaches environmental politics at American University in Washington, DC. She is co-author, with Liang Heng, of several well known books on China, including Son of the Revolution (Random House, 1984) and After the Nightmare (Knopf, 1986). She was one of the first Americans to work in China after the normalization of U.S.-China relations in 1979. SERIES NAME: Studies in Environment and History - Original Message - From: Ricardo Duchesne [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Thursday, May 10, 2001 7:58 AM Subject: [PEN-L:11338] Land Productivity While P questions the western model of developmet, he still seeks to convince us that the Chinese model achieved the highest agricultural yields in the world due to their efficient land-saving practices. That they were as efficient, as rational, as developed, as powerful as the westerners. This is called polycentrism in world history. Never mind the poly, if you can show that either China, Japan, or India were as advanced as Europe, then you're ready to join the multicultural crowd and sing We are the World. What about the Africans? Well..Nubia, yes, that's right, it has a nice ring to it. But that's way back, isn't that Black Athena? That too should be included, and later there's the Songhay empire of West Africa, the largest state of modern Africa, including the Oyo Empire in Nigeria, Nupe, Igala, and Benin in the lower Niger valley, or the Hausa states of Northern Nigeria, and Kongo in central Africa. Other ethnic groups? Oh yes, there others like the Jahaanke of the Gambia-River Niger region; the Juula of northern Ghana, Cote d'Ivoire, and Upper Niger River; the Wolof of Senegal; and the Awka and Aro of Iboland in Nigeria - they were also powerful and wealthy; they were the ethnic groups that facilitated and controlled the slave trade. We are all equal. A challenge to the western model this is not. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Land Productivity
If P asks us to drop our Western biases and look at Chinese economic performance in terms of its specificities most fundamentally at its superior agrarian sector and its land-saving innovations, he says next to nothing about Chinese agricultural productivity. We are definitely told indirectly it was highly successful in the way it was able to sustain relatively high living standards right through the 1800s. Even as China apporached the soon-to-come Malthusian limitations of the 19th century, its population doubled between 1750 and 1850 without any generalized fall in per capita income (p125). Why? Because despite the worsening person/land ratios so visible in regions like the Lower Yangzi, the Chinese were able to attain large gains in per-acre yields through such land-saving innovations as greater use of fertilizers, more multicropping and extremely careful weeding (p141). But P will hardly go further than this. He no doubt offers substantial numbers showing how much they consumed and produced crops like sugar, tabacco, tea and rice. But there is really no analysis of the agrarian system as such or the land saving technologies. There is an Appendix (B) comparing 'estimates of manure applied to North China and Europeans farms in the late 18th century, and of resulting nitrogen fluxes'. However, I would say that the Appendix, like the rest of the book, equivocates on the most crucial questions determining land productivity.
Re: Land Productivity
Philip T. Hoffman. Growth in a Traditional Society: The French Countryside, 1450-1820. Princeton: Princeton University Press, 1996. xvi + 361 pp. Appendices, notes, sources, bibliography, index. $39.50 (cloth), ISBN 0-691-02983-0. Reviewed by Jonathan J. Liebowitz, Department of History, University of Massachusetts Lowell. Published by H-France (May, 1997) In a recent on-line review of an economic history text edited by T. G. Rawski, historian Michael Dintenfass of the University of Wisconsin remarks that the book invites historians to discuss matters that no longer interest them deeply. [1] In his volume on pre-Revolutionary French agriculture, Philip Hoffman also seeks to write an economic history which will make concepts and findings influenced by the cliometric revolution accessible to historians.[2] I fear that despite his meticulous and imaginative research, Hoffman will meet the same fate as the authors of Rawski's volume and find that he is talking past his audience. Yet historians of early modern and revolutionary France, even those of a postmodern bent, will have to take into consideration his conclusions about the agricultural economy if they want to understand the behavior of most French men and women of the pre-industrial era. Hoffman's goal is to teach historians of early modern France that cliometrics has something to offer them and that they can understand its lessons even if not conversant with economic theory and econometric methods. Specifically he wants to revise the consensus view that the French agricultural economy was stagnant for more than 350 years before the Revolution because small farms were inefficient and the village community was hostile to innovation. After outlining this position in the first chapter, the rest of the book argues that the consensus is wrong on all particulars: early modern agriculture was not stagnant, at least not in all times and places; small farms were no less efficient than large ones; members of the village community were not bound by unyielding tradition but sought their individual interests, which sometimes might be served by traditional arrangements, sometimes by innovation. Chapter Two (Common Rights and the Village Community) begins with a dispute, revealed in legal documents, from a village near Nantes on the Loire in which the local farmers seem to be defending their traditional rights to pasture on the common against a local lord who wants to enclose it. But Hoffman springs a surprise on us: the poor farmers insisting on their common rights were pasturing, not their family cows, but sheep, which they leased from merchants in return for a share of the profits. In this way the poor used traditional rights to break into nascent rural capitalism (p. 23). The story is complicated, but by no means is it one in which the poor cooperated to uphold tradition in face of a modernizing capitalist elite. Instead, strife was more common among the villagers than cooperation, and they were equally likely as the rich to be involved in the market. In Chapter Three (Labor Markets, Rental Markets, and Credit in the Local Economy), Hoffman disputes the claim that markets were risky, maintaining that they reduced rather than increased the variation of peasants' income. Most peasants were involved in one market or another, whether labor, rental, or credit. Here he finds another assumption to disprove: that higher rent on smaller parcels of land resulted from either the power of large tenants or the land hunger of the poor. Rather he finds that the difference resulted from the landlords' collection of a risk premium from the poorer tenants of smaller parcels because they would be more likely to default on their payments. With Chapters Four (Agricultural Productivity in France, 1450-1789) and Five (Explaining Productivity in a Traditional Economy) Hoffman comes to the center of his concerns. What was the output of farms and how did it change? What were the reasons for the changes which occurred? At first glance, it would seem that answering these questions would have to begin with measurements of the total output of French agriculture at several points in time. But that is probably impossible since no one was collecting national data until the eighteenth century, and, even if contemporaries had collected such data, the researcher would face problems such as changes in national borders. So Hoffman adopts another strategy: comparison of Total Factor Productivity (TFP) at different times and places. TFP measures how efficiently producers turn their inputs--in agriculture typically land, labor, and capital--into output--wheat, wool, and so on. When TFP rises it means that the same inputs yield a greater output. The advantage of using this measure is that TFPs can be compared even if areas are very different because what is being measured is the output per unit of input. Nevertheless, direct measurement of the factors runs into almost as many problems
Re: Re: Land Productivity
At 02:23 PM 5/9/01 -0400, you wrote: Philip T. Hoffman. Growth in a Traditional Society: The French Countryside, 1450-1820. Princeton: Princeton University Press, 1996. xvi + 361 pp. Appendices, notes, sources, bibliography, index. $39.50 (cloth), ISBN 0-691-02983-0. ... Chapter Two (Common Rights and the Village Community) begins with a dispute, revealed in legal documents, from a village near Nantes on the Loire in which the local farmers seem to be defending their traditional rights to pasture on the common against a local lord who wants to enclose it. But Hoffman springs a surprise on us: the poor farmers insisting on their common rights were pasturing, not their family cows, but sheep, which they leased from merchants in return for a share of the profits. In this way the poor used traditional rights to break into nascent rural capitalism (p. 23). The story is complicated, but by no means is it one in which the poor cooperated to uphold tradition in face of a modernizing capitalist elite. Instead, strife was more common among the villagers than cooperation, and they were equally likely as the rich to be involved in the market. Hoffman seems to be using a definition of capitalism that includes simple commodity production (market-oriented production without proletarianization) under its umbrella. I would guess that the strife within the community resulted from the fact that some peasants wanted to be (true) capitalists, with others as proletarians. ... With Chapters Four (Agricultural Productivity in France, 1450-1789) and Five (Explaining Productivity in a Traditional Economy) Hoffman comes to the center of his concerns. What was the output of farms and how did it change? What were the reasons for the changes which occurred? At first glance, it would seem that answering these questions would have to begin with measurements of the total output of French agriculture at several points in time. But that is probably impossible since no one was collecting national data until the eighteenth century, and, even if contemporaries had collected such data, the researcher would face problems such as changes in national borders. So Hoffman adopts another strategy: comparison of Total Factor Productivity (TFP) at different times and places. TFP measures how efficiently producers turn their inputs--in agriculture typically land, labor, and capital--into output--wheat, wool, and so on. When TFP rises it means that the same inputs yield a greater output. The advantage of using this measure is that TFPs can be compared even if areas are very different because what is being measured is the output per unit of input. I don't understand why people (including my friend Bob Brenner) like TFP. It's bogus. The calculation adds up apples oranges (labor, capital goods, land, etc.) to create the denominator. In order to do this addition, it assumes that each input's payment on the market = its contribution to the total production process. This is totally wrong, due to the existence of monopoly, monopsony, and externalities. Marx, for example, wouldn't equate the return on capital (profits, interest, rent) to capital's contribution to total production. The new growth theory of neoclassical economics also rejects this assumption. Nevertheless, direct measurement of the factors runs into almost as many problems as does measurement of total output, so Hoffman adopts a technique used by Robert Allen (The Efficiency and Distributional Consequences, Economic Journal, vol. 92, 1982) to circumvent these problems. Instead of trying to measure how much wheat was produced or how many hours of labor were needed in its production, he measures prices, wages, and especially rents. Given certain assumptions about the agricultural economy, mostly that it participated in a competitive market, Hoffman can derive its TFP. I would accept Hoffman's assumptions, which recent studies of Italian, English, French and United States farming tend to reinforce. a competitive economy?! is there any validity to that assumption? ... What caused stagnation in some times and places and growth in others? Peasant mentalities and communities were not responsible for stagnation. Nor were obstacles to combining small farms into larger ones (e.g., by enclosure), since small size was not in itself a cause of inefficiency and small plots could be combined to produce larger ones if farmers wanted. Recurrent wars and taxes, which caused uncertainty, were more to blame. So conversely, peace encouraged growth, as did demand from large cities and reduction of transport costs. Only Paris was really large enough to have a stimulating effect, and productivity in the Parisian Basin rose steadily at levels comparable with those of England. Louis, this book seems to be written from a _laissez-faire_ perspective. Is that one you trust? Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Land Productivity
The Chinese developed a magnificent system of working the land with high sustained yields. There were problems. High levels of intenstinal worms and parasites because of the unsanitary ways of handling wastes. Even so, multi-cropping achieved yields the west could never achieve, except in specialty agriculture, such as the Paris market gardens. England, like the U.S. in modern times, excelled in cutting costs rather than increasing yields. In fact, US yields are still relatively low. The key to England's success was in increasing net yeilds, what was left over after the farm workers took their share. In France, the Physiocrats pushed the idea that net, rather than gross yields were the goal. Ricardo Duchesne wrote: If P asks us to drop our Western biases and look at Chinese economic performance in terms of its specificities most fundamentally at its superior agrarian sector and its land-saving innovations, he says next to nothing about Chinese agricultural productivity. We are definitely told indirectly it was highly successful in the way it was able to sustain relatively high living standards right through the 1800s. Even as China apporached the soon-to-come Malthusian limitations of the 19th century, its population doubled between 1750 and 1850 without any generalized fall in per capita income (p125). Why? Because despite the worsening person/land ratios so visible in regions like the Lower Yangzi, the Chinese were able to attain large gains in per-acre yields through such land-saving innovations as greater use of fertilizers, more multicropping and extremely careful weeding (p141). But P will hardly go further than this. He no doubt offers substantial numbers showing how much they consumed and produced crops like sugar, tabacco, tea and rice. But there is really no analysis of the agrarian system as such or the land saving technologies. There is an Appendix (B) comparing 'estimates of manure applied to North China and Europeans farms in the late 18th century, and of resulting nitrogen fluxes'. However, I would say that the Appendix, like the rest of the book, equivocates on the most crucial questions determining land productivity. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
(Fwd) land productivity
The following forwarded message is from a short exchange I had in EH.R last March which briefly shows that I don't view productivity increases, including per capita income increases, as progress. Having said this, I still think we should acknowldge that productivity increases through labor-saving innovations bring power. The Soviets knew this as they went on to exterminate small-scale peasant agriculture during the collectivization program of the 1930s. Millions died, lost their land, became destitute; and, in fact, total agricultural production declined, yet the Soviets obtained their *surplus* which they used to finance the First Five Year Plan which eventually transformed the Soviet Union into a world power. --- Forwarded message follows --- From: Ricardo Duchesne [EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject:EH.R: Clark on Perelman, _The Invention of Capitalism:..._ Date sent: Mon, 19 Mar 2001 17:06:25 EST Send reply to: [EMAIL PROTECTED] - EH.RES POSTING - Commenting on Deirdre: That a cheery (though I would prefer promising) view of peasant life has characterized various Marxist interpretations is true enough (not enough, of course, to warrant Greg's misreading of Chapter 27). But we need a proper context. It appears cheery only if we restrict ourselves to changes in productivity and per capita income a la Maddison. But perhaps less so if we care as well about economic concentration and self-control. We have enough evidence suggesting that small scale farmers in England were under serious threat particularly after 1600: First, an additional 24% of the land was enclosed during the 17th century; second, in the early 17th century small farmers occupied 1/3 of the cultivated area, yet by 1800 they occupied only 8%. Moreover, whereas farms of 100 acres and more had constituted only 14% in the 1600s, by the 1800s they represented 52% (O'Brien, 1996). Given these facts, is it cheery to argue that small scale peasants were better off in 1600 than in 1800, even if agricultural productivity increased? Is it not silly to insist, or view this whole process of concentration as one in which small farmers were too poor to be worth ripping off ? Finally, why don't we find the respective sources from below so we can hear the voices of the peasants themselves instead of just relying on abstract productivity numbers generated by we comfortable academics? --- End of forwarded message ---
Re: (Fwd) land productivity
Ricardo Duchesne wrote: [clip] --- Forwarded message follows --- From: Ricardo Duchesne [EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject:EH.R: Clark on Perelman, _The Invention of Capitalism:..._ Date sent: Mon, 19 Mar 2001 17:06:25 EST Send reply to: [EMAIL PROTECTED] - EH.RES POSTING - Commenting on Deirdre: That a cheery (though I would prefer promising) view of peasant life has characterized various Marxist interpretations is true enough (not enough, of course, to warrant Greg's misreading of Chapter 27). I would like to see the post you are responding to? And Deirdre is not by any chance Deirdre McCloskey is she? If so she is very brilliant but quite vicious. Carrol
Re: Re: (Fwd) land productivity
http://www.linguafranca.com/br/9911/shalit.html - Original Message - From: Carrol Cox [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Wednesday, May 09, 2001 4:37 PM Subject: [PEN-L:11329] Re: (Fwd) land productivity Ricardo Duchesne wrote: [clip] --- Forwarded message follows --- From: Ricardo Duchesne [EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject:EH.R: Clark on Perelman, _The Invention of Capitalism:..._ Date sent: Mon, 19 Mar 2001 17:06:25 EST Send reply to: [EMAIL PROTECTED] - EH.RES POSTING - Commenting on Deirdre: That a cheery (though I would prefer promising) view of peasant life has characterized various Marxist interpretations is true enough (not enough, of course, to warrant Greg's misreading of Chapter 27). I would like to see the post you are responding to? And Deirdre is not by any chance Deirdre McCloskey is she? If so she is very brilliant but quite vicious. Carrol
US productivity falls
Instead of the expected increase at a 1 percent annual rate, US productivity declined in the first quarter of this year. The preliminarly BLS results, seasonally adjusted, annual rates, were -0.4 percent in the business sector and -0.1 percent in the nonfarm business sector. This might be explained by the 5.2 percent annual rate increase in unit labor costs over the same time period. Could it reflect a surge in one-time downsizing charges taken by employers? If not, it may be a sign that a purely monetarist response may be unable to to get the US economy moving again. Since the economic crisis has entered the perception of the public earlier this year, the FOMC has reduced both the discount rate and the feds fund rate by 2 percent. Nevertheless, Fed watchers are anticipating another rate cut at the Committee's May 15 meeting. It could be that the current crop of investors have become so risk adverse that they will not invest substantially even with reduced interest rates. To speak anecdotally, I'm not personally aware of any great new business plans or market opportunities. Particularly in the tech sector, there is no new killer app or new device that people simply must have. As a result, they continue to use the hardware and software they already have. This could change. It may be, however, that a Keyenesian government spending program could be required to spark the economy again. A Keyensian tax cut will probably not work if investors are so risk averse that they will not invest the money given to them by the government. They'll just pocket it. In short, the wheels are stuck in the mud, and no one is getting out to p http://stats.bls.gov/news.release/prod2.nr0.htm http://dailynews.yahoo.com/h/nm/20010508/bs/economy_productivity_dc_2.ht ml Andrew Hagen [EMAIL PROTECTED]
Re: US productivity falls
At 11:33 AM 5/8/01 -0400, you wrote: Instead of the expected increase at a 1 percent annual rate, US productivity declined in the first quarter of this year. The preliminarly BLS results, seasonally adjusted, annual rates, were -0.4 percent in the business sector and -0.1 percent in the nonfarm business sector. This might be explained by the 5.2 percent annual rate increase in unit labor costs over the same time period. no it can't be explained that way, since unit labor costs (ULC) reflect labor productivity rather than vice-versa: ULC = (total employment costs)/(output) = (employment costs per worker)/(output per worker), where output per worker = labor productivity. Could it reflect a surge in one-time downsizing charges taken by employers? More likely, it's because output fell drastically (or output growth slowed down drastically) but instead of laying off workers in proportion to output, employers held onto overhead workers in management (line and staff employees). The overhead workers are supposed to contribute to output in the long run, but in the short run holding onto them means falling output per worker. This is a normal cyclical phenomenon (though the triumphalism of as little as a year ago would have denied the possibility of a normal cyclical phenomenon). If not, it may be a sign that a purely monetarist response may be unable to to get the US economy moving again. Since the economic crisis has entered the perception of the public earlier this year, the FOMC has reduced both the discount rate and the feds fund rate by 2 percent. Nevertheless, Fed watchers are anticipating another rate cut at the Committee's May 15 meeting. I'd say instead that the unused industrial capacity, the extremes of consumer and corporate debt (relative to assets, which have fallen in value), and the shift to pessimism are blocking monetary policy. So far, however, lower interest rates might spur growth in the housing sector. If that begins to fail, then monetary policy is pretty useless. It's true that lower interest rates can stimulate US net exports (by pushing the dollar exchange rate down), but that simply stimulates the US economy at the expense of other countries. This doesn't work if other countries' interest rates also fall -- or if there's an effort to stabilize the dollar. Worse, the policy could work _too well_: if the dollar falls drastically, that causes an inflationary shock to the US economy (rising import costs, including most raw materials), which encourages the Fed to start raising rates again. (Monetarism refers to an old-fashioned Friedmaniac philosophy of monetary policy, one that's been rejected by the vast majority of economists. (Monetarism involved the idea of controlling the money supply, not interest rates, and keeping the MS growing at a constant rate each year, no matter what happens.) However, as pen-l's Brad deLong makes clear, there's a heck of a lot of that old philosophy in what's now called Keynesianism.) It could be that the current crop of investors have become so risk adverse that they will not invest substantially even with reduced interest rates. To speak anecdotally, I'm not personally aware of any great new business plans or market opportunities. Particularly in the tech sector, there is no new killer app or new device that people simply must have. As a result, they continue to use the hardware and software they already have. This could change. The household market for PCs is pretty dead, since people don't need to replace old ones. The same applies to businesses, to a large extent, especially as the market for used PCs is swamped. In addition, it's smart to wait for PCs or MACs that have the promised new operating systems already built in, because the new OSs are very different from the old ones. It may be, however, that a Keyenesian government spending program could be required to spark the economy again. That's Dumbya's plan. Of course, he has to compensate for the regressivity of the tax cut (how it mostly helps the high end of the income distribution) by making it long-term (permanent) so that the well-to-do people who can plan ahead can rely on future tax cuts in planning consumption. The latter makes the tax cut more effective than if it were a one-shot deal. A Keyensian tax cut will probably not work if investors are so risk averse that they will not invest the money given to them by the government. They'll just pocket it. In short, the wheels are stuck in the mud, and no one is getting out to p Keynesian tax cuts -- including Dumbya's -- affect consumer spending much more than (real) investment. That in turn could create the markets that businesses require if they want to invest in new plant and equipment. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: US productivity falls
Also, it suggests that, contrary to the wishes of the new economy types, that Robert Gordon was correct in insisting that much of the recent productivity growth was cyclical. Andrew Hagen wrote: Instead of the expected increase at a 1 percent annual rate, US productivity declined in the first quarter of this year. The preliminarly BLS results, seasonally adjusted, annual rates, were -0.4 percent in the business sector and -0.1 percent in the nonfarm business sector. This might be explained by the 5.2 percent annual rate increase in unit labor costs over the same time period. Could it reflect a surge in one-time downsizing charges taken by employers? If not, it may be a sign that a purely monetarist response may be unable to to get the US economy moving again. Since the economic crisis has entered the perception of the public earlier this year, the FOMC has reduced both the discount rate and the feds fund rate by 2 percent. Nevertheless, Fed watchers are anticipating another rate cut at the Committee's May 15 meeting. It could be that the current crop of investors have become so risk adverse that they will not invest substantially even with reduced interest rates. To speak anecdotally, I'm not personally aware of any great new business plans or market opportunities. Particularly in the tech sector, there is no new killer app or new device that people simply must have. As a result, they continue to use the hardware and software they already have. This could change. It may be, however, that a Keyenesian government spending program could be required to spark the economy again. A Keyensian tax cut will probably not work if investors are so risk averse that they will not invest the money given to them by the government. They'll just pocket it. In short, the wheels are stuck in the mud, and no one is getting out to p http://stats.bls.gov/news.release/prod2.nr0.htm http://dailynews.yahoo.com/h/nm/20010508/bs/economy_productivity_dc_2.ht ml Andrew Hagen [EMAIL PROTECTED] -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
Re: Re: US productivity falls
At 09:06 AM 5/8/01 -0700, you wrote: Also, it [the decline in labor productivity] suggests that, contrary to the wishes of the new economy types, that Robert Gordon was correct in insisting that much of the recent productivity growth was cyclical. yes, but it's hard to tell from one quarter's stats. We could have had a new economy spurt of productivity growth during the period 1996 to 2000. It's also possible that notional (constant unemployment rate) labor productivity is continuing to spurt, but that the slowdown/possible recession means that the spurt isn't being realized in terms of actual productivity. There was a spurt of labor productivity growth during the 1920s that wasn't realized during the 1930s but turned out to be the beginning of a new trend (compared to the period before 1919 or so) once high aggregate demand returned with WW2 and the 1950s warfare/welfare state. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Re: Re: US productivity falls
Jim, I agree with you. I only said suggests. Maybe I am too suggestable. On Tue, May 08, 2001 at 09:47:53AM -0700, Jim Devine wrote: At 09:06 AM 5/8/01 -0700, you wrote: Also, it [the decline in labor productivity] suggests that, contrary to the wishes of the new economy types, that Robert Gordon was correct in insisting that much of the recent productivity growth was cyclical. yes, but it's hard to tell from one quarter's stats. We could have had a new economy spurt of productivity growth during the period 1996 to 2000. It's also possible that notional (constant unemployment rate) labor productivity is continuing to spurt, but that the slowdown/possible recession means that the spurt isn't being realized in terms of actual productivity. There was a spurt of labor productivity growth during the 1920s that wasn't realized during the 1930s but turned out to be the beginning of a new trend (compared to the period before 1919 or so) once high aggregate demand returned with WW2 and the 1950s warfare/welfare state. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: US productivity falls
Jim Devine wrote: Keynesian tax cuts -- including Dumbya's -- affect consumer spending much more than (real) investment. That in turn could create the markets that businesses require if they want to invest in new plant and equipment. What's the theory behind this--ie tax cuts affect demand more than investment? In light of the Fed study that Michael just posted an article about, would not this have to do with the target of the cuts? Christian
Re: Re: Re: US productivity falls
I wrote: Keynesian tax cuts -- including Dumbya's -- affect consumer spending much more than (real) investment. That in turn could create the markets that businesses require if they want to invest in new plant and equipment. Christian writes: What's the theory behind this--ie tax cuts affect demand more than investment? In light of the Fed study that Michael just posted an article about, would not this have to do with the target of the cuts? it's absolutely true that tax cuts that are targeted to spur business fixed investment will do so (though Bush's proposal doesn't include this). However, these types of tax cuts are notoriously weak, delivering little or no bang for the buck. The problem is that businesses typically treat corporate tax cuts and investment tax credits as rewards for something they'd do anyway. Other concerns like cash flow and expectations play a bigger role. This is more of an empirical generalization than a theory, but it seems to be true. Maybe others on pen-l could help... Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~JDevine
Re: Re: Low productivity in the Global South
Michael Perelman wrote: I suspect that most of us who teach economics would find brats text one of the best available. Michael, there seem to be some bugs in your voice recognition software. Either that, or it can read your unconscious. Doug
Re: Low productivity in the Global South
oops! (now writing via keyboard). On Wed, May 02, 2001 at 09:13:54AM -0400, Doug Henwood wrote: Michael Perelman wrote: I suspect that most of us who teach economics would find brats text one of the best available. Michael, there seem to be some bugs in your voice recognition software. Either that, or it can read your unconscious. Doug -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Low productivity in the Global South
Re: Low productivity in the Global South Brad DeLong referred to the United Nations Development Program. He said, You can take a look at trends in the HDI since the 1970s at http://www.undp.org/hdro/BackMatter1.pdf. The claim that people in developing countries today are worse off than their counterparts a generation or two ago is, as best as we can tell from the life expectancy data (which is solid), the education data (which is subject to some manipulation, but is by and large consistent with what surveys report), and the real GDP data (much more shaky), completely false. Well, not exactly. I looked at the UN reports (one with the highly ambiguous title, Globalization with a human face). Life expectancy: Yes, the UN found increases since 1970 in life expectancy at birth. The shocking thing is that a dozen countries suffered outright decline in expectancy: Life expectancy at birth Country 19701997 - Belarus 71.068.0 Lithuania 71.469.9 Russian Fed 68.766.6 Latvia 70.368.4 Armenia 71.970.5 Ukraine 70.668.8 Botwana 51.647.4 Zimbabwe50.344.1 Zambia 46.340.1 Uganda 46.339.6 Rwanda 44.440.5 Burundi 43.742.4 (from the 1999 report) Education and GDP: I didn't find statistics on change since 1970 in years of education. Does Mr. DeLong have a better URL? Let's stipulate broad increases in education and GDP. The point is that it does not make much sense to talk about these increases without comparing them in some way with the increase in people's economic needs. Nearly every country produces a surplus of output over that which would just maintain the existing way of life without change. The working people perform the surplus labor that produces the surplus output, which in so-called developing countries goes partly to developing the powers of production and partly to supporting the unproductive comfort of a small percentage of the population. With the development of the powers of production, educational and material needs increase. An industrial worker needs more education than a subsistence farmer. A city resident needs more transportation services than a villager. If we compare production with needs, we see that inequality is not an abstract moral issue but a more pressing one: how much of the population lives below the level of need corresponding to the level of output? Does the economic order develop the powers of production as much as it can in consideration of people's labor, and does it equip people to participate fully and equally in the most advanced labor as well as its fruits? Relevant statistics would display inequalities within the population now and also measure how increases in education and GDP since 1970 compare with the increase in needs since then. In the absence of UN data, various contributors to this topic have argued from other information that inequality has increased since 1970 between the developed and developing countries and within the latter, that world capitalism has wasted vast amounts of people's labor, and that people's needs at today's levels of education and market GDP are more acute than they were in 1970. (As a minor addendum, the UN reports show the following for external debt as a percent of GDP: For the bottom-level low human development countries, 19851997 69% 93% For the medium developmentcountries, 19851997 35% 33% which averages increases in some countries with decreases in others.) Charles Andrews Web site for my book is at http://www.LaborRepublic.org and my essay on globalization is posted at http://www.LaborRepublic.org/Essay44.htm
Re: Re: Re: Low productivity in the Global South
G'day Brad, I think all this ribbing about your textbook is a bit off colour (I'd buy it if I weren't stuck with Australian kopeks), but I reserve the right to disagree with you. Everyone--at least everyone who was honest--agreed that improvements in working-class standards of living during the 1790-1850 period in Britain were small or nonexistent if there were any improvements at all. Everyone agreed that improvements in working-class standards of living after 1850 were large--on the order of 1% per year or more average growth in real incomes. Estimates of the average trend in British working-class standards of living between 1790 and 1850 ranged from a lower bound of about -0.3 percent per year to an upper bound of +0.4 percent per year. Any honest assessment of the debate is very, very far indeed from: Just tell me the answer you want, and we can find the appropriate authorities to support it. I agree with all this - as far as the United Kingdom of the time, the imperialist hegemon du jour, is concerned. How much that tells us about other places and other times is what I'm worried about, though. The more interesting question--and the question about which there is more disagreement--is not what happened to working-class standards of living in Britain during the industrial revolution?--but what would have happened to working-class standards of living in the absence of the industrial revolution? A more interesting question is, can the lessons of UK 1790-1914 be uncritically imported into debates about Ghana 1957-2001, or anywhere else, or at any other time. Cuba features well on international comparisons of these social indicators, after all. And rather than imperialist hegemon, it is a blockaded pariah. One possibility (advocated by Ken Pomeranz and others) is that Britain would have undergone a full-blown Malthusian crisis with *massive* declines in living standards on the part of the poor until increases in death rates stopped population growth--and that only the coming of the industrial revolution allowed British working-class standards of living to remain roughly constant in the first half of the nineteenth century. Another possibility is that Britain without the social upheaval of the industrial revolution would have had lower rates of population growth, a higher land/labor ratio, and possibly higher real wages. These issues are still wide open. Still don't think this is central stuff, I'm afraid. Britain and the US developed under relatively statist political conditions, whereby the international dimension entered the picture primarily as value extraction from periphery to core. That ain't the relation Ghana faces. But this kind of nihilistic denial that we know anything about the past--that authorities are driven by ideology and nothing else--is simply false. Well, one way of spotting ideology is to examine how stats are interpreted (given that we've discussed that others are how they're produced, who produces 'em and why they're produced). An improved life expectancy might correlate with the permeation of commodified life, for instance, but cause-effect relations are hard to establish. The introduction of antibiotics, anti-malaria and anti-diarrhoea medicines can make a huge difference in tropical third-world societies in the short to medium term, for instance. That happened in many places (including your example of Bangladesh) precisely in the period from which you choose your life expectancy stats. Now, those medicines might have entered the society through 'free market' processes (I think that's moot, though), but neither the development (much of which occurred through state-subsidised and coordinated research) nor the diffusion (much of which occurred through government and NGO activity) of these drugs was decisively dependent on 'free markets'. They might have depended on economic linkages between nations, but that, too, does not necessarily demand capitalist relations (the Cuban example again). Add to that the point that the huge dislocations immanent in 'industrial revolutions' are always traumatic, but more often exacerbated by economic dependency (you don't have to reject the idea of a WB - but you should inquire as to the politics of policy within the WB, for instance) than ameliorated by the imperialist advantage enjoyed by the UK and US during their wonderful advances, and you have plenty of reason to question the universalist neoliberal prescriptions. As for literacy, that too would be expected to increase radically while the base is low. There's nothing in IMF restructuring requirements to indicate that health and literacy should be expected to increase across the population after these initial improvements. I think they'll decline or, at least, take a more stratified form. But we won't have the stats to prove that for a generation or two. And then we'll still be arguing about whether technological advances like
Re: Low productivity in the Global South
On Wed, May 02, 2001 at 10:28:21AM +, Rob Schaap wrote: I think all this ribbing about your textbook is a bit off colour (I'd buy it if I weren't stuck with Australian kopeks), but I reserve the right to disagree with you. I suspect that most of us who teach economics would find brats text one of the best available. The fact that he says that he minimizes the Aggregate Supply-Aggregate Demand material puts him at the head of the list. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: Re: Low productivity in the Global South
Brad Delong wrote: Good God! Do you think that the *entire* World Bank _Human Development Report_ is a lie? No, it is not a lie. But it is far too narrow a perspective. This is like examining the development statistics of Chile after 5 years or so of Pinochet and crowing about how rapid the rise has been. Of course, this only makes sense if you bracket out the Allende years, prior to the full onslaught of the CIA, when the statistics far exceeded those of Pinochet. So context is everything. To properly gauge the success or lack of success of capitalism in the third world, it is necessary to factor in lots of things that would get ignored in a World Bank Report. For example, capitalism was responsible for the slaughter of 90 percent of the indigenous population during the early colonial years when capitalism was sinking roots. So if the wages from 1600 to 2000 are based on demographics that sweeps all the corpses under the rug, things will look a lot better. It is like stating that the average four-member family in some country owns a 3 bedroom house. But if that family axe murdered another family who was living in the house beforehand, then you can say that the system was not only stagnant but evil. Basically I find DeLong's arguments a sophisticated defense of stagnation and murder. Tens of millions of corpses never enter the picture. Who cares if all the native inhabitants of New England were exterminated, if you have shopping malls in Marblehead today. That's some god-damned argument. Jonathan Swift, where are you when we need you. Louis Proyect Marxism mailing list: http://www.marxmail.org
Re: Re: Re: Re: Low productivity in the GlobalSouth
Michael Perelman wrote: Brad, there was a long debate about the standard of living during the Industrial Revolution. You probably know the literature as well as anyone. The issue is complex, but Lou's monetization point cannot be dismissed. No it can't, but 1) we're a long way past the Industrial Revolution, and 2) does anyone know how many people it applies to today? We seem to have two extremes here, with LNP saying it applies broadly, and BDL saying it hardly applies at all. Does anyone really know? Doug
Re: Re: Re: Re: Re: Low productivity in the Global South
No it can't, but 1) we're a long way past the Industrial Revolution, and 2) does anyone know how many people it applies to today? We seem to have two extremes here, with LNP saying it applies broadly, and BDL saying it hardly applies at all. Does anyone really know? Doug It is useful to hone in on specific countries rather than to talk about the third world in broad generalizations. Of the countries I have made close studies of, including Nicaragua and Colombia, I can say that my analysis is rigorous and can be easily documented. In both countries the majority of its citizens were peasants living by subsistence farming who traded surplus for manufactured goods in cities like Esteli, Cordoba, etc. The entire 20th century has been about removal of peasants from their land, to support cattle-ranching in one case, or coffee growing in the other. Based on the concrete historical experience of such nations, it is fairly easy to extrapolate from this and judge Peru, Ghana, etc. on similar terms. They share common characteristics: 1. reliance on export agriculture 2. failure to develop native industries 3. domination by foreign financial and industrial corporations 4. forced emigration in search of jobs (NYC's supermarket delivery boys all come from Africa) 5. explosion of the informal economy The economics has been documented extensively: Baran, Sweezy, Magdoff, Petras, Wallerstein, Amin, Frank, Vilas, et al. If you take the economic analysis and apply it to individual countries like Colombia or Nicaragua, there is one and only one conclusion you can draw. Capitalism does not work. Louis Proyect Marxism mailing list: http://www.marxmail.org
Re: Re: Re: Re: Re: Re: Low productivity in the Global South
Doug wrote:we're a long way past the Industrial Revolution, that's true for the U.S. and the rest of the rich capitalist countries, but it's not true of most of the poor countries. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Low productivity in the Global South
The debate about the standard of living him in the Industrial Revolution involved some of the best in economic historians. It was quite similar in some ways to the exchanges between Lou and Brad. You asked for conclusive answers. That's easy. Just tell me the answer you want, and we can find the appropriate authorities to support it. One side said that the workers could now drink tea. The other side said that the team was a poor substitute for milk. In a way, it is like the Boskin commission writ large. Economic measurement was very subjective. On Mon, Apr 30, 2001 at 12:11:31PM -0400, Doug Henwood wrote: Michael Perelman wrote: Brad, there was a long debate about the standard of living during the Industrial Revolution. You probably know the literature as well as anyone. The issue is complex, but Lou's monetization point cannot be dismissed. No it can't, but 1) we're a long way past the Industrial Revolution, and 2) does anyone know how many people it applies to today? We seem to have two extremes here, with LNP saying it applies broadly, and BDL saying it hardly applies at all. Does anyone really know? Doug -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: Re: Re: Low productivity in the GlobalSouth
Brad, there was a long debate about the standard of living during the Industrial Revolution. You probably know the literature as well as anyone. The issue is complex, but Lou's monetization point cannot be dismissed. Yes it can be dismissed. It's not important or powerful enough to alter trends. There was a long debate about the standard of living during the Industrial Revolution *in* *Britain*. There is no debate about the standard of living during the Industrial Revolution in France, or Germany, or Spain, or Sweden, or Italy because no one maintains that urbanization and industrialization lowered the standard of living of the rural poor, or of those who migrated to the cities and so changed from being rural poor to being urban poor. The United Nations Development Program works hard at compiling a human development index--a weighted combination of life expectancy, educational attainment, and real material standards of living across the world. You can take a look at trends in the HDI since the 1970s at http://www.undp.org/hdro/BackMatter1.pdf. The claim that people in developing countries today are worse off than their counterparts a generation or two ago is, as best as we can tell from the life expectancy data (which is solid), the education data (which is subject to some manipulation, but is by and large consistent with what surveys report), and the real GDP data (much more shaky), completely false. Now you can look at the world as it is--and see global progress (although much less than I would wish to see). Or you can emulate the Bourbons. Brad DeLong
Re: Re: Re: Re: Re: Low productivity in the Global South
Michael Perelman wrote: Brad, there was a long debate about the standard of living during the Industrial Revolution. You probably know the literature as well as anyone. The issue is complex, but Lou's monetization point cannot be dismissed. No it can't, but 1) we're a long way past the Industrial Revolution, and 2) does anyone know how many people it applies to today? We seem to have two extremes here, with LNP saying it applies broadly, and BDL saying it hardly applies at all. Does anyone really know? Doug Well, the Human Development Index suggests substantial progress over the past generation. But that would involve actually looking at the world, which is not encouraged in this venue. A cite to Marx's belief that the urban poor of Manchester in 1848 were poorer than their grandparents had been in the British countryside in 1798 is preferable to observing that even in resource-poor Bangladesh today, with U.S. consumers protected against the danger of buying Bangladeshi textiles made with child labor, 80% of newborns are expected to survive to age 40, and that was definitely not the case two generations ago... Brad DeLong
Re: Re: Low productivity in the Global South
The debate about the standard of living him in the Industrial Revolution involved some of the best in economic historians. It was quite similar in some ways to the exchanges between Lou and Brad. You asked for conclusive answers. That's easy. Just tell me the answer you want, and we can find the appropriate authorities to support it. One side said that the workers could now drink tea. The other side said that the team was a poor substitute for milk. Bullshit. Everyone--at least everyone who was honest--agreed that improvements in working-class standards of living during the 1790-1850 period in Britain were small or nonexistent if there were any improvements at all. Everyone agreed that improvements in working-class standards of living after 1850 were large--on the order of 1% per year or more average growth in real incomes. Estimates of the average trend in British working-class standards of living between 1790 and 1850 ranged from a lower bound of about -0.3 percent per year to an upper bound of +0.4 percent per year. Any honest assessment of the debate is very, very far indeed from: Just tell me the answer you want, and we can find the appropriate authorities to support it. The more interesting question--and the question about which there is more disagreement--is not what happened to working-class standards of living in Britain during the industrial revolution?--but what would have happened to working-class standards of living in the absence of the industrial revolution? One possibility (advocated by Ken Pomeranz and others) is that Britain would have undergone a full-blown Malthusian crisis with *massive* declines in living standards on the part of the poor until increases in death rates stopped population growth--and that only the coming of the industrial revolution allowed British working-class standards of living to remain roughly constant in the first half of the nineteenth century. Another possibility is that Britain without the social upheaval of the industrial revolution would have had lower rates of population growth, a higher land/labor ratio, and possibly higher real wages. These issues are still wide open. But this kind of nihilistic denial that we know anything about the past--that authorities are driven by ideology and nothing else--is simply false. Brad DeLong
Re: Re: Low productivity in the Global South
But that would involve actually looking at the world, which is not encouraged in this venue. A cite to Marx's belief that the urban poor of Manchester in 1848 were poorer than their grandparents had been in the British countryside in 1798 is preferable to observing that even in resource-poor Bangladesh today, with U.S. consumers protected against the danger of buying Bangladeshi textiles made with child labor, 80% of newborns are expected to survive to age 40, and that was definitely not the case two generations ago... Brad DeLong This is a whitewash of Bangladesh capitalism. Of the five countries in the world suffering from landlessness, Bangladesh rates the highest at 54%. The reason you can get children to work for pennies in sweatshops that catch fire every 6 months or so is because of unequal land ownership. As I stated, this is the main problem in the third world. If peasants could grow their own food in fertile Bangladesh, they wouldn't be so dependent on the kindness of strangers shopping in Kmart. Louis Proyect Marxism mailing list: http://www.marxmail.org
Re: Re: Re: Low productivity in the Global South
Rarely do I encounter someone so self confident. Brad DeLong wrote: Bullshit. Everyone agreed that improvements in working-class standards of living after 1850 were large--on the order of 1% per year or more average growth in real incomes. Oh, yeah, you mean the period when the poor got some trickle down from imperialism. Estimates of the average trend in British working-class standards of living between 1790 and 1850 ranged from a lower bound of about -0.3 percent per year to an upper bound of +0.4 percent per year. Any honest assessment of the debate is very, very far indeed from: Just tell me the answer you want, and we can find the appropriate authorities to support it. The more interesting question--and the question about which there is more disagreement--is not what happened to working-class standards of living in Britain during the industrial revolution?--but what would have happened to working-class standards of living in the absence of the industrial revolution? Do you mean by this counterfactual, what if workers people were herded into the cities without the jobs? One possibility (advocated by Ken Pomeranz and others) is that Britain would have undergone a full-blown Malthusian crisis British did not practice very intensive agriculture. They could have easily produced much more food. Disease in the cities was much more of a threat than lack of food. with *massive* declines in living standards on the part of the poor until increases in death rates stopped population growth--and that only the coming of the industrial revolution allowed British working-class standards of living to remain roughly constant in the first half of the nineteenth century. Another possibility is that Britain without the social upheaval of the industrial revolution would have had lower rates of population growth, a higher land/labor ratio, and possibly higher real wages. These issues are still wide open. But this kind of nihilistic denial that we know anything about the past--that authorities are driven by ideology and nothing else--is simply false. Brad DeLong -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: Re: Low productivity in the Global South
Brad wrote: in resource-poor Bangladesh today, with U.S. consumers protected against the danger of buying Bangladeshi textiles made with child labor, 80% of newborns are expected to survive to age 40, and that was definitely not the case two generations ago... Brad DeLong The sarcastic reference to US consumers protected from Bangladeshi child labor seems a bit off the mark given this letter to the NYT from an AFL-CIO Dept. rep... [T] o the Editor: Re Hearts and Heads, by Paul Krugman (column, April 22): It is true that in 1993 the threat of United States legislation led irresponsible garment factory owners in Banladesh to dismiss child workers, who had no immediate prospects for schooling. But a five-year memorandum of understanding, signed in 1995 by Unicef and the International Labor Organization with the Bangladesh Garment Manufacturers and Exporters Association, has provided schooling and income support for more than 27,000 former child laborers. Since then, the number of exporting factories using children has dropped from 43 to 5 percent, allowing more Bangladeshi adults to move into jobs previously held by children. Meanwhile, the Bangladesh garment export industry grew almost 500 percent from 1990 to 2000. BARBARA SHAILOR
Re: Re: Low productivity in the Global South
Well, yes, but isn't it obvious to PK that the latter (competition among workers for jobs) far outweighs the former (competition among capitalists for workers) when 50% or more of the labor force are unemployed sweatshop wages are better than wages of many other kinds of work in the area??? Since he himself argues that sweatshop work is in fact greatly desired by workers who have few other options??? Yoshie No. Wage levels in open developing countries have been increasing rapidly over the past two generations, and so (with the exception of the United States and New Zealand) have wage levels in industrial countries... Brad DeLong
