As the statistical offices themselves of the government have admitted, for the service sector their numbers are cooked. Even if they could figure out what was meant when one spoke of the "output" of, say, a bank or a brokerage house, they'd still have no clue as to how to measure it. As things stand, the amount of labor in many cases is used as a proxy for output, thus output is a function of the measured labor time. But productivity is output per unit of labor time, thus the reported output figure is useless for calculating productivity changes.
The government is so unsure of the "labor productivity" in the service sector that it refuses to publish the numbers. Nevertheless, it does not hesitate to include the meaningless service sector productivity series together with manufacturing productivity to calculate productivity for the business sector of the economy as a whole.
As it stands, it is clear from those two published figures that the unpublished figure for the service sector must have been nearly zero or even negative since the 1970s. And, indeed, Alan Greenspan confirmed in one of his Congressional appearances that the actual figure for one subsector was of a decline of one percent a year over the past 20 or 25 years. Anyone who believes that could be true simply has been asleep since the Beatles broke up.
Anecdotal evidence of major increases, indeed, revolutions in efficiency and productivity thanks to the computerization of American businesses can be had from nearly anyone who has been working steadily in the same place for a decade or two, cracks like that people are playing minesweeper instead of working notwithstanding.
To believe the official statistics and the published studies about enterprises reaping no economic benefits from computerization is crazy. You'd have to posit that, for some strange, irrational reason, managers across the breadth of American business for close to two decades have been embarked on an exercise of flushing money down the toilet; that virtually no one at any of these companies has even noticed that without computers they were more profitable; and that the few that did notice, instead of using non-computerization for competitive advantage, consciously chose to sacrifice profitability and competitive advantage.
It comes down to this: who are you going to believe, the owners and managers of 10,000 enterprises and your own lying eyes, or a bushel full of (needless to say, computer-generated) figures.
Jose
-----Original Message-----
From: Jim heartfield <jim at heartfield.demon.co.uk>
To: lbo-talk at lists.panix.com <lbo-talk at lists.panix.com>
Date: Sunday, August 29, 1999 4:53 AM
Subject: Re: software as capital
In message <v02130502630bdb4042ef@[128.112.71.62]>, Rakesh Bhandari
<bhandari at phoenix.Princeton.EDU> writes
>What are to make of software/IT growth as a percentage of total business
>investment?
A while ago there was a lot of research on the impact of computers on
productivity which said that it was negligible.
Thomas Landauer of Bell laboratories said that companies expenditure on
new technology was essentially wasteful: 'computers have been consumer
products not capital good'. That means the computer on the desk is more
likely to be absorbing employees' time playing minesweeper or solitaire
than doing forward accounts.
Landauer is quoted in James Woudhuysen's excellent pamphlet on the
subject, Cult IT, published by the Institute of Contemporary Arts,
London. According to Woudhuysen contemporary management theory uses IT
to redefine business as play - not something that is likely have a
positive impact upon your bottom line.
--
Jim heartfield
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