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In response to
""Does the "New Economy" Measure Up to the Great Inventions of the Past?""
by
x
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excerpt: "The New Economy has created a dynamic explosion of productivity growth in the durable manufacturing sector...
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both in the manufacturing of computers and semiconductors and of other types of durables. This productivity explosion has boosted the economy�s rate of productivity growth and created enormous wealth in the stock market. Also, by helping to hold down inflationary pressures in the last few years,
the New Economy allowed the Federal Reserve to postpone the tightening of monetary policy for several years in the face of a steadily declining unemployment rate. However, the New Economy has meant little to the 88 percent of the economy
outside of durable manufacturing; in that part of the economy, trend growth in multifactor productivity has actually decelerated, despite a massive investment boom in computers and related equipment.
The fundamental limitation on the contribution to productivity of computers in general and the Internet in particular occurs because of the tension between rapid exponential growth in computer speed and memory on the one hand and the fixed endowment of human time. Most of the initial applications of mainframe and personal computers have encountered the rapid onset of diminishing returns.
Much of the use of the Internet represents a substitution from one type of entertainment or information-gathering for another.
In assessing the importance of the New Economy and the Internet as an invention, we have applied a tough test. To measure up, the New Economy had to
equal the great inventions that constitute what has been called the Second Industrial Revolution. Internet surfing may be fun and even informational, but it represents a far smaller increment in the standard of living than achieved by the
extension of day into night achieved by electric light, the revolution in factory efficiency achieved by the electric motor, the flexibility and freedom achieved by the automobile, the saving of time and shrinking of the globe achieved by the airplane, the new materials achieved by the chemical industry, the first sense of live two-way communication achieved by the telephone, the arrival of live news and
entertainment into the family parlor achieved by radio and then television, and the enormous improvements in life expectancy, health, and comfort achieved by urban sanitation and indoor plumbing."
don't, don't, don't. don't believe the hype.
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Responses:
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