Technology according to Greenspan

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Friday's Wall Street Journal, page 1, leftmost column is an explaination of Alan Greenspan's technology viewpoint, productivity, and the resulting economic factors. Title: Great Expectations Did Greenspan Push High-Tech Optimism on Growth Too Far?

Back on The Cellar Mark 3(?), I had noted that economists were quite puzzled by our 1990s economy. The results of computers had appeared everywhere except on their economic reports. According to that economic data, the massive expenditure on information technology had resulted in no productivity increase. This article also notes that banks had no increase in productivity after a massive installation of ATM machines that permitted more transactions per customer. The Commerce Dept was pressured into massive changes in how they reported economic growth. Now the question is why did those reports show economic growth over the past two years that was not there. According to The Economist's recession index, we have been in recession - negative growth - for three quarters of a year. Why do government economic numbers not agree?

Greenspan recently gave a speech at Rice University.

He ignored the collapse of so many symbols of the 1990s boom, including Enron Corp., the sponsor of the "distinguished public service" award he received that evening.

How's that for ironic. Enron is the largest corporate bankruptcy in the history of capitalism. They gave an award to someone who has changed how we report economic data. According to Enron's economic data, they were making about $1billion more every year than in reality. They were reporting high profits while incurring high losses over the past 5 years. They sponsored Greenspan's award?

Most of page A12 is where the article gets interesting. Unfortunately, good posts and articles must be long (Economists have a bad habit of then assuming that long posts and articles must be good - which is why we have neo-classical economic theory).

How the many argued over the data. Interesting comments are made by people almost unknown to layman. Formally of U of Chicago and Cal Tech, and now from Stanford is a most important person in the world of economics - Paul Romer. His comments only rekindled the contraversy.

Since the WSJ is not published on the weekend, the issue should be available for the next two days. It requires a subscription on the web.