Isn't this Mr Wray the same fellow who's always bellayching in the Financial Times about how the run up of the current account deficit will lead to panic flight from the dollar? Now the US has to intervene to check the dollar's rise? When will this guy face facts?
As for productivity, like most economists, Wray misses the prodigious real growth of the 1980s and 1990s.
Like his fellow economists he is probably mired in the murky data on service sector productivity which is stultified by measuring most outputs by the cost of inputs. For example, from 73 to 87 while employment only doubled in the brokerage business, the number of shares trades grew from about 6 million to more than 60 million. By 1999, the three leading exchanges were trading 1.6 billion shares daily, up almost 3000x fold since 1973 with scant impact on official productivity data. While banks have invested heavily in computers and ATM machines, banking productivity also has been flat in the data. That's because ATM increase for economists the measured inputs of banks while reducing the output in terms of the numbers of checks processed.
JC
>From: "Forstater, Mathew" <ForstaterM at umkc.edu>
>Reply-To: lbo-talk at lists.panix.com
>To: lbo-talk at lists.panix.com
>Subject: RE: New Economy rant
>LRW: For the most part, the increased productivity simply results from
>operating the economy nearer to full capacity-it is just a residual that
>falls out of the equation that relates GDP per capita to the employment
>rate multiplied by output per employee. When GDP grows robustly, that
>is, faster than employment, measured productivity rises. Most of this
>talk about a "new economy" is just nonsense. Neither GDP growth nor
>productivity growth has been unusually high in this expansion, rather,
>they have simply returned toward long-run US averages. Thus, while they
>are unusual compared with the poor performance of our economy after
>1973, they are not unusual if one takes a longer period for comparison.
>Certainly, things don't look unusual when compared with the so-called
>"Keynesian" era-the three decades after WWII. In an important article,
>economist Robert Gordon has shown that the increased productivity can be
>entirely attributed to a short-term cyclical effect plus increased
>productivity in the computer manufacturing sector. Surprisingly, there
>has been no "spill-over" of "new economy" productivity to other sectors.
>What this means is that any "new economy" effects on productivity have
>been limited only to the production of computers, with no benefit
>accruing to the sectors that actually use computers. That is a very
>strange result. However, what this tells me is that the current
>expansion is not at all unusual, that it has nothing to do with the "new
>economy", and, hence, that the "new economy" is not going to save us
>from a hard landing.
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