Productivity

The U.S. Bureau of Labor Statistics has reported the increase in productivity for 2004 at 4.1%; the peak was 9% in the third quarter of ’03. Productivity has been slowing since. The past three years taken together have seen the most rapid growth in productivity in fifty years. Productivity is everything to the street economist. The last quarter fell to a gain of just .8%.

The stock market, not surprisingly, shows some related weakness. Productivity figures are most relevant to our own standard of living. Why the slow down? Could the Internet be the problem, the dysfunctional service of the phone companies and the reconsolidating pricing power they are once again amassing? Loss of high tech jobs overseas may also play a role in reduced domestic productivity: i.e. the productive work is done elsewhere. The low productivity work gets left to us.

If the Information revolution does not knock off the incumbent powers of the Industrial (Stone) Age, we may once again revert to an agrarian society. I can think of nothing driving productivity more effectively than computers, free information and robotics. We already see a counter cultural resentment to the later, not to mention a concerted effort to lock up the former. Wake up folks. Without steel mills, we had better be smart--- cheap bandwidth, free flow of information and our culture, titanium, hydrogen, pellet reactors, fuel cells and a lot more education. ---Gage me!