Wray himself notes that the high tech boom doesn't show up in MEAUSURED productivity. GDP doesn't measure quality of life either; it is also utterly misleading whether one is a Hayekian or a Marxist. Isn't that the point?
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
>Date: Tue, 26 Sep 2000 14:28:05 -0500
>
>I passed your message on to Randy Wray and this is what he replied:
>
>a) no, wray has never bellyached in the times about possibility of a run
>out of
>dollar. perhaps this person is confusing me with godley, and is confused on
>what
>godley said.
>b) nor am i now suggesting that the usa ought to check dollar's rise.
>perhaps
>this person can try to read more carefully?
>c) nor does this person seem to understand what productivity measures.
>whether
>one broker handles a thousand shares or a thousand million, that adds
>nothing to
>measured gdp thus adds nothing to measured productivity.
>randy
>
>-----Original Message-----
>From: jan carowan [mailto:jancarowan at hotmail.com]
>Sent: Tuesday, September 26, 2000 11:46 AM
>To: lbo-talk at lists.panix.com
>Subject: RE: New Economy rant
>
>
>Mr Forstater,
>
>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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