Will "The Productivity Miracle of the 1990s" Continue?

In this Economic Scene column, Austan Goolsbee discusses a paper by Nick Bloom, Raffaella Sadun and John Van Reenen and uses the results to argue against any move toward increased protectionist measures:

How the U.S. Has Kept the Productivity Playing Field Tilted to Its Advantage, by Austan Goolsbee, Economic Scene, NY Times: Americans’ anxiety level over competitiveness with other nations has grown in recent years. A large number of Americans appear to believe that the United States will not be able to succeed in an open world market, and they argue in favor of reducing our exposure to the outside. ...

For all the collective hand-wringing, the United States is still home to the most productive workers of all the major economies... Granted it started from the pole position, but the United States still kept the lead in what some economists have come to call the productivity miracle of the 1990s.

Normally, because it is easier to copy someone else’s innovation than to generate new ideas, as countries get richer and more productive, their growth rates slow. Other countries may have much faster growth than the United States, but once their income gets close to ours, their growth slows substantially. This is the law of convergence.

The data has mostly backed up the notion of convergence among rich countries for decades. The United States miracle of the 1990s was that our productivity began growing faster than that of other countries, even though we were the richest to start with.

The popular explanation, of course, pointed to information technology and, specifically, to the fact that the price of semiconductors began falling at an even more rapid rate ... starting in the 1990s. ... Low computer prices drove mass adoption of technology and, hence, the productivity miracle was born. Or so the story goes.

The only problem is, the explanation doesn’t work, according to John Van Reenen at the London School of Economics. ... He said that the prices of information technology fell in Europe, too. And Europeans bought information technology. But they had no productivity miracle.

To explain the experience in the United States, one would have to believe that Americans have some better way of translating the new technology into productivity than other countries. And that is precisely what Professor Van Reenen’s research suggests.

His paper “Americans Do I.T. Better: U.S. Multinationals and the Productivity Miracle,” (with Nick Bloom ... and Raffaella Sadun ...) looked at the experience of companies in Britain that were taken over by multinational companies with headquarters in other countries. ... [I]n the huge service sectors — financial services, retail trade, wholesale trade — they found compelling evidence ... that. ... [w]hen Americans take over a business in Britain, the business becomes significantly better at translating technology spending into productivity than a comparable business taken over by someone else. ...

The real question is whether this advantage will last. In an interview, Professor Van Reenen observed that there are two possible outcomes. One is that the last 10 years were an aberration...

But there is a chance that the 1990s represent a fundamental shift in the global economy. Perhaps the greater amount of uncertainty and churn in the world economy in the 1990s is the new norm. Perhaps the 21st century will continually favor those who adjust best to changes. As Professor Van Reenen put it, “If the world has become one in which everyone is trying to hit a moving target, it certainly helps to be the best at changing one’s aim.”

But that is, of course, the paradox of the American position. We hate experiencing major adjustments ... that force people to look for new jobs. That experience has made many skeptical about the future of the United States in the world economy. Yet the evidence seems to show that for all our dissatisfaction, we are the most flexible economy around and may be best poised to take advantage of the coming changes on a global scale precisely because we are so good at adjusting. ...

I agree that the disutility of "experiencing major adjustments" needs to be considered and minimized to avoid the rise of protectionist sentiment. But an issue that isn't mentioned, the distribution of the gains from trade and from technologically induced structural change, is also part of the political forces driving the opposition to trade liberalization. If faster response to change means that losers from the adjustment process are churned out more quickly, the politics will continue to build against globalization.

[Hal Varian also looks at work by Nick Bloom, Raffaella Sadun and John Van Reenen in an Economic Scene from January 2006, and he talks a little more about some of the reasons why U.S. companies might have an advantage in making using of information technology.]

Comments

[cm]

This presentation is not very coherent, just throwing out some ideas.

One part of the "productivity miracle" in IT and perhaps tech in general, not sure how significant, is that US businesses apparently placed more emphasis on, and perhaps even pioneered, the concept of "time to market" over detail engineering finesse. This policy worked -- claim market share THEN incrementally tune your product (to the extent necessary at all).

In most things software/computer related this is greatly accommodated by rather lax product liability mandates (except where the software/computer is part of equipment or applications that in turn are subject to "hard" liability).

There is the stereotypical adage, but with at least a grain of truth in it, of "Americans" capturing the market while the "Europeans" are still "gold-plating" their designs and manufacturing process. On the other extreme, some call it sloppy engineering vs. attention to detail. The truth, if there is any, is probably somewhere "in between", compare also Richard Gabriel's "Worse Is Better".

Massive cold-war (semi?) military funding of the computer industry in the US certainly helped as well, giving it a head start of a half or full decade. First-mover advantages are always significant.

From a "European" perspective, it also appeared that the US and US businesses had been dealing with less bureaucracy in a more laissez-faire (at least for business) environment for a long time. That seems to be largely over as bureaucracy has caught up. (Not just government-mandated red tape, but the general growth of hierarchies, consortia, boards, business "self regulation", standards, burgeoning butt-covering procedure, etc.)

[dale]

With decades of downsizing, stagnant wages in many sectors,growing inequality, etc., perhaps US strength in productivity is a reflection of greater exploitation.
I'm much more interested in who benefits from increased productivity.

[Kimmitt]

Re: protectionist sentiments.

Um, if benefits from free trade flow exclusively toward an elite ruling class, then protectionist sentiments aren't something to be "protected against," as though we were seeing to a child's welfare -- they are the entirely appropriate response for a polity which is supposed to serve all of its citizens.

[Adrasteia]

I'm just thinking out aloud here, but could the "productivity miracle" have anything to do with the massive amounts of deficit spending over the last two decades?

[Steve]

"First-mover advantages are always significant."

My comment piggybacks on Varian. Most of my friends in IT cut their teeth on home computers in the early '80s, back when the machines were not as user friendly and one had to "get under the hood" more to use them. When I started grad school in the mid-90s, even my British colleagues hadn't even had word processors as undergrads.

[Mark Thoma]

I just noticed email addresses aren't showing (though web pages show okay). I'll work on that when I get a chance.

[Lafayette]

Goolsbee : He said that the prices of information technology fell in Europe, too. And Europeans bought information technology. But they had no productivity miracle.

I spent a good part of the period (within which this observation was made) selling IT into European companies. I have no notion whatsoever that their exploitation of the technology was not “state-of-the-art”, that is fully effective.

Furthermore, I have had no feedback from customers that they are dissatisfied with the lack of productivity gains (a major selling point) - and I asked specifically numerous times.

In fact, the major business management system on the market was and still is German in origin. (SAP.) It is applied world-wide to run companies.

cm: is that US businesses apparently placed more emphasis on, and perhaps even pioneered, the concept of "time to market" over detail engineering finesse.

In the same vein, I recall using not only this argument, but the “Five Sigma Quality” as well as “24 hour global business operations” or "Networked Product Engineering" arguments as well. They all had their pertinence for different audiences.

My point: The justifications for using technology were similar in Europe and the US. Their implementations were if not identical, at least very similar. And, finally, I can enumerate many instances in which IT solutions were “proved” effective in Europe before adoption in the US.

So, I think that “something beyond technology” was occurring in order to produce better productivity statistics in the US.

I will make this guess: The homogeneity of the US (in terms of market structures, products, production systems, distribution systems) is far greater than that of Europe. Also, labor input was more flexible in the US and workplace regulatory constraints more rigid in Europe.

Let us not forget that, in Europe, if you lose your job in Barcelona, you don’t go looking and finding another in Berlin, or Bordeaux or Birmingham. Workforce flexibility is significantly less in Europe.

These factors may be the cause for lower levels of European productivity observed, quite by chance, in conjunction with enhanced IT management/production techniques.

It would make sense to me, given that the relative economies of scale (that provoke productivity increases) can be severely impacted by the factors mentioned.

[evagrius]

"I will make this guess: The homogeneity of the US (in terms of market structures, products, production systems, distribution systems) is far greater than that of Europe. Also, labor input was more flexible in the US and workplace regulatory constraints more rigid in Europe."

Perhaps one could break down the U.S. into regions of higher and lower productivity and compare that to Europe?

[spencer]

In the 1990s as we had a surge in capital spending that generated a sharp increase in the US capital stock per employee. This explains much of the 1990s productivity growth. But since 2000 the US capital stock per employee has stagnated and with a lag the US is experiencing a sharp slowing of productivity growth. Moreover, real growth is also slowing in the US while it is accelerating in Europe.

Looking at this data I suspect what we are seeing is the US productivity surge is ending but the Europeans are starting to catch up. I wonder if in 5 years we will be reading article talking about how US productivity growth is lagging behind European productivity growth.

But at a minimum the article is based on the premise that the US productivity surge of the 1990s is continuing and that clearly is not correct.

It looks like another example of the failure of supply-side economics.

[CALLAHAN]

Yeah, K street is very productive, however Congress is the adverse, or con-ductive.

[anne]

Spencer:

"Looking at this data I suspect what we are seeing is the US productivity surge is ending but the Europeans are starting to catch up."

I am concluding the same, though even more strongly, and think the catching up is going beyond western Europe from Canada to Australia to Japan. Also, Brad DeLong is leading me to believe that we may be failing to understand just how much Europeans are catching us even in raw per capita income.

http://delong.typepad.com/sdj/2007/06/international_i.html

[ken melvin]

Phantom GDP:

http://www.businessweek.com/magazine/content/07_25/b4039001.htm

[robertdfeinman]

I wonder how much of the increase in productivity has to do with the parallel de-industrialization of the US at the same time. The shift to financial services and other intellectual pursuits allows fewer people to generate larger earnings for their firms.

To see if IT was a major factor one would have to examine specific industries and see how they fared. For example the auto industry adopted computerization in many areas from design to assembly and yet has done poorly. On the other hand a few firms which have relatively few employees have done well; examples range from film studios to Google.

Another factor which should be considered is that American firms tend to work their employees harder and to provide less in the way of benefits. The US model is that maximizing returns for the firm is the principle goal, while in Europe this goal is balanced out by concerns about the workers and the impact of the firm on the overall society. In other words, the Europeans have deliberately chosen to limit the degree of profit in order to accomplish other goals.

[Lafayette]

evg: Perhaps one could break down the U.S. into regions of higher and lower productivity and compare that to Europe?

How would one do that and have two sets of data that are supposedly "significant representations" of both the US and the EU economies?

Anyway, what I tire of seeing, in this context, is the continued use of national reporting of economic figures comparing European countries with America.

Very few reports show an aggregation of European countries into an "EU data set" for purposes of comparison. And, yet, this would be the most significant and meaningful method of comparing.

The EU and US have strikingly similar macro-economies. Not identical but very similar. It is at the micro-economic level that the similarity dissolves.

One can, for instance, conceive of a product/service that would appeal to markets across the EU. But, the distribution systems are remarkably different one from the other. (A freight train leaving Dusseldorf needs to stop at the French border, change engines and conductors before carrying on to Paris, just another two hours away. And, this change can take a day to make.)

More so, a real difference is the ability of American companies to hire and fire with considerable ease. In Europe, reducing manpower would result in very punishing costs in contributions to the state as unemployment charges. (The stupidity of Europeans has been to propose such punishing separation fines as measure to "protect" workers in their jobs. The consequence has been just the opposite as companies dislocate manufacturing abroad.)

Let us not forget, that, on average, the EU works about 10% less a work-year than the US. This means, for instance, that France has the same unit productivity as the US per hour of work. But, in terms of total productivity annualized, it's productivity lags the US.

[me]

"the United States is still home to the most productive workers of all the major economies.."

And still our jobs are exported offshore. But, CapEx is finally up. I seee FedEx raised their spending, oops sorry, it is to build hubs in China.

[calmo]

Such a boon to have spencer's tuba on this piece. Ok, and others too (esp cm who needs to see what it looks like when I just ramble...gloriously.)
But I am missing Webb who's heart is very close to these productivity numbers and their recent disappointing "revisions".
Ok, this is my 2 cents:
what kind of masking tape do you need to keep that straight face on in this discussion to avoid bringing up the guesstimate of 12M "illegal aliens"?
I make it the heavy duty 3" wide duck tape that seals you off from the neck up, you?

[Bruce Wilder]

Adrasteia: "I'm just thinking out aloud here, but could the "productivity miracle" have anything to do with the massive amounts of deficit spending over the last two decades?"

Well, yes, the "productivity miracle" of the 1990's might have had something to do with the Clinton policy of ending those deficits. See Spencer's remarks on capital stock per worker, above. And, Bush's tax cuts and deficit spending may have squeezed all the life out of the miracle.

says...

Anne - you make it sound as Europe catching up is a bad thing - is that your intent?

[Bruce Webb]

BLS: Productivity by year
2001: 2.5%, 2002: 4.1%, 2003: 3.7%, 2004: 2.9%, 2005: 2.1%, 2006: 1.6%

Calmo speaks, his humble servant appears.

Productivity numbers fell off a cliff in 2003 but with honorable exceptions like Spencer and Anne no one seemed to notice. I don't know if it is the lag time for publication or simple unwillingness to actually examine the numbers first hand but I find it bemusing anytime people simply lead with the premise that productivity is simply continuing as it was in the 1997 to 2003 period. Officially at least it isn't, instead on an annual basis it has dropped by 61%, if we use official US government data the answer to this question "Will "The Productivity Miracle of the 1990s" Continue?" is 'No'.

Granted this dropoff was masked until the large retrospective downward revisions back to 2002 revealed in the press release of the Q2 2006 number, but that is a year back now.

Ironically I don't have particular faith in the series, a 61% drop should be showing up somewhere whether that is earnings, profit, employment or wages and it isn't or if it is I would appreciate a pointer. Then again I don't set the rules of the game here, the BEA and the BLS do. Officially Q1 2007 GDP and Productivity came in at .06% & 1.0%. Now I have every reason to believe those numbers will pick up, I am still bullish on productivity long-term, but somebody at least needs to address the number series as it exists today. Officially we are in a multi-year slump in productivity, this Emperor is in fact not wearing any clothes.

[cm]

robertdfeinman: "American firms tend to work their employees harder [...] while in Europe [maximizing returns] is balanced out by concerns about the workers"

My perspective on this is that most of the "balance" that "Europe" has in this regard is stronger legislation of work hours and in part labor standards, e.g. (in Germany) limiting hours to 10 on a daily basis, mandating breaks after any 6 hours of sustained work, and requiring employer permits for weekend work. With a still present collective bargaining framework, more employee categories are on hourly and overtime pay, at least in major employers bound by the respective agreements. (In the US many people sitting in front of a screen and keyboard are "exempt" from work hours and overtime.)

There may be more enforcement, but to some extent abuses are (used to be?) kept in check by livable unemployment and welfare benefits as well as firings being rather more costly. With recent "reforms" in these areas we can expect abuses to rise as workers are compelled to accept more crap.

As for working people "harder", it depends on what that means. What I have seen in a number of US office environments is yes, people are on the job longer, but the intensity of the work is lower too. Germany for example does not have the proverbial "water cooler" culture to this extent. (Well, they do have coffee makers, which are often private/pool operated.)

In "Europe", most firms certainly want to get "value" from their employees, which means in the case of the "highly skilled" pushing towards higher hours. After all, a college/uni graduate joining the labor market at let's say 25-30 will only last until perhaps 40-45 when it's time for the scrap heap (those current skills you know), and in the resulting "shortage" you cannot afford to keep them on a comfortable 35 hours while paying princely.

[calmo]

Good morning Mr Webb and lemme say I reject your overtures at becoming yet another of my damn servants (as I watch another troupe of ants haul off the findings on the kitchen floor...my help in the kitchen is spell-binding).
Too many qualifications (and not enough legs).
I would need acres to provide the room for talents such as yours...tie one hand behind your back and wear a blindfold maybe.
Twas Bob Newhart, (former accountant!) who coined the phrase (as The Psychiatrist): It's a croc. and well, it is a huge component to this construct (ok, that was one right there.), this compilation (I can be motivated to find the right word.), this performance (This B it!) which includes it's very adjudication...is principally, (I know it would B a fight to the death with spencer on this.) the adjudication.
Test (and case):
So how am I doing?
Well, you're still reading...but with difficulty...and some revisions will be necessary to accommodate unforeseen externalities...not the hordes of immigrants (self-made-men to some) marching in the streets yet... no, the growing lack of confidence you have in me as truthful correspondent from my part of the planet. But I can put on airs...those Emperor Clothes (I'm sure the ants recognize my leavings)...that dog.

See?

And more now than ever before with a wealth distribution that has never been this skewed with so much to lose for those few at the top.

[anne]

Increasing productivity from India to Germany can mean improving the ways in which we live, so I am certainly pleased with the productivity increases that are presently or hopefully soon broadly shared in any economy. I am impressed with much of the way in which Europeans live, as with ways in which others live, but I had no sense in mind that catching America was a problem. Several European countries already surpass un in productivity, and I would prefer faster growth here not competitively but for the potential life-style gains.

[Meh]

Jerome over at Eurotrib has long espoused a "lag theory" which seems pretty reasonable to me. US productivity didn't instantly increase with the IT boom, rather it took some years. The "IT boom" took off later in Europe, so we should be looking to see if they are catching up now (which they are) rather than simply doing year by year comparisons.

[anne]

Please, all that needs to be done is to travel through Europe to find how advanced they are and have long been in information technology applications. However, there is every reason to believe we are nowhere near exhausting the applicative gains that we can make let alone that Europe can make.

[calmo]

Meh, you figure this "lag theory" held sway for eons wrt gravity too? The larger stone fell faster than the smaller stone...eventually. The long and variable lags conceal the veritable truth, not to mention The Invisible Hands...working these compilations up for our edification.
Long and variable lag theory: what you don't want behind the aircraft you are presently flying.

[Meh]

calmo: There's a reasonable amount of evidence that large scale IT infrastructure investments started on average 5 years later in Europe compared to the US.

Thus, it seems reasonable to expect that you should look for the European "productivity bump" to occur later than that in the US.

The study above doesn't seem to take this into account very well. That's all I'm saying.

[anne]

http://www.epi.org/printer.cfm?id=2737&content_type=1&nice_name=webfeatures_snapshots_20070620

June 20, 2007.

Strong Unions, Strong Productivity
By Ross Eisenbrey

Unionization in the United States has declined since the late 1970s, when 27% of U.S. workers were covered by union contracts, to today, when only about 12% are covered. This has had substantial adverse effects on inequality, the wages of typical workers, and pension and health benefit coverage.

By contrast, most of the major continental European countries have maintained strong unions, and most of their employees are covered by collectively bargained contracts, ranging from 68% in Germany to over 90% in Belgium, France, and Sweden.

There is a common myth that unions hurt productivity, supposedly because they impose work rules that make their employers less efficient. The evidence from industrial relations studies does not support this myth. A broad study of the economics literature found "a positive association [of unions on productivity] is established for the United States in general and for U.S. manufacturing" in particular. * And international comparisons suggest that high productivity and very high union density are entirely compatible.

The dramatic drop in unionization in the United States from 1979 to 2005 did not lead to faster productivity growth than in the seven largest European countries with union density greater than 60%. In fact, those countries' average annual labor productivity growth of 1.7% equaled productivity growth in the United States. Output per hour worked is higher in the Netherlands, France, and Belgium, where more than 80% of employees have union contracts (compared to the United States' 12% unionization).

If Congress is concerned about protecting middle-class incomes, it should pass measures to facilitate union organizing and collective bargaining coverage, including the Employee Free Choice Act. There is no reason to fear that higher rates of unionization will impede efficiency or labor productivity.

* Doucouliagos, Christos, and Patrice Laroche. "What do unions do to productivity? A meta-analysis." Industrial Relations. Vol. 42, No. 4 (2003).

[robertdfeinman]

Anne:
You can make your citations clickable and not have to worry about them being cut off or wrapped inappropriately if you add a bit of HTML code to your postings. Here's how:

Title that will appear clickable

[You have to leave out the space after the < when you actually do this.]

The study you site is interesting, but I'm not sure I believe their figures for union density. When I did my research for my little essay I found numbers in the 40-50% range for France and Italy, for example.

I do think the underlying point is correct, however. Strong unions make life better for workers and their dependents and improve the lot of those who don't belong as firms must compete for labor.

An interesting chart would be to see the ratio of super wealthy as compared with union density.

[Lafayette]

There's too much finger pointing at "productivity" as the magic wand ... which seems to say, "Well, we'll have a bit more productivity, please, so could you all install 1 million more PCs ... somewhere ... anywhere?"

Productivity is a calculated number and the variables in that calculation, output per total hours worked, can result from many, many different factors/conditions - and not just "information workers" pecking away at a keyboard.

Some posters have given some very good evidence. Moving away from high-labor content but low-skill manufacturing of low-value produce towards high-return (financial) services with higher-skilled input could indeed be a factor provoking higher productivity (more output value for less total hours worked).

(What happens to the displaced workers? They find other jobs, either in industry or services, but they do not show up - for the moment- in increased unemployment. It is a fact that American unemployment is near its historical low.)

Using technology to offshore parts of product design to India is another. The same work input is provided for less cost and the skill employed is identical.

As for the difference between Europe and the US, I still think it is a matter of economies of scale. The US achieves these economies quicker than the EU because of its more in depth homogeneity in terms of consumer propensities, retail distribution systems and total market size (the whole - in the US - is greater than the sum of the parts in the EU).

Let's remember, the EU has a total population size greater than the US. That makes its potential aggregate GDP larger, but there is no guaranty of that potential actualizing itself. For the moment, its per capita GDP lags the US, and the EU must learn why.

Presently, the EU is focusing on making workers work longer hours annually. In Germany, retirement age has lengthened. In France, companies are threatening to move out if people do not move back to the (near) 40 hour week from 35-hours.

It's a good move, because regardless of the reason (and there is no one "smoking" productivity gun), working more in the face of rising demand certainly stimulates total GDP (and shows up in the productivity numbers), which inevitably provokes lower unemployment.

Lower unemployment translates into more disposable income and therefore more propensity to consume. The virtual circle is thus closed - leaving us to presume that it keeps on rolling.

[real person from the real world]

Layfette says, "Lower unemployment translates into more disposable income and therefore more propensity to consume. The virtual circle is thus closed - leaving us to presume that it keeps on rolling."

Low unemployment would seem to suggest labors get lower wages while employers cherry pick. You just need to look around to see that is true.

Displaced workers taking other jobs.... yup, and often at lower wages.

Offshoring and other forms of globalization may increase the productivity of some of us, but there are plenty of negatives discussed in these blogs. I won't rehash the arguments.

[real person from the real world]

above - Meh says, "calmo: There's a reasonable amount of evidence that large scale IT infrastructure investments started on average 5 years later in Europe compared to the US. Thus, it seems reasonable to expect that you should look for the European "productivity bump" to occur later than that in the US."

This is something we all should watch for. It will be quite telling with regards to the numbers.

[real person from the real world]

Working for a foreigner, I have some observations about productivity: The hassling, bargaining, back and forth, under the table negotiating, lying, and cost variations for every variation under the sun, and out and out hidden layers upon layers of middlemen for the foreign businesses, slows any real business producing wealth down. Americans are straight forwards.

[cm]

real person: Oh, please. "Americans" never lie, deceive, take advantage, and try to get into middleman (arbitraging), "administrative", or perception-managing positions?

[calmo]

That was a Beaut real p: Americans are straight forwards.Ok, new found respect for the Poet in you...I would say let Her take over while the goin is this good!...pay no attention to cm and others who might want to rein you in at the edges...let her rip.

[Lafayette]

rp: Displaced workers taking other jobs.... yup, and often at lower wages.

Yep, tough world, isn't it.

Moving right along ....

[Lafayette]

rip: Low unemployment would seem to suggest labors get lower wages while employers cherry pick. You just need to look around to see that is true.

Total wages remain constant or increase slightly, so what is happening is not consonant with your comments.

Constructive destruction, ala Shumpeter, has been around to explain the phenomenon for a while now. It is a short term anomaly, a process by which economies go up the skills ladder to higher wages and expanded total output. Post war Japan and Korea went through the same ineluctable cycle as well as Europe - the US is taking a bit longer to do precisely the same. Nothing lasts forever.

Your constant churning of "the sky is falling, the sky is falling on us poor workers!" is getting a bit boring.

[real person from the real world]

CM, I never said Americans were paragons of virtue, only that they are STRAIGHT forward. They don't haggle and dance around like the foreign entreprenuers who need to negotiation 10 different aspects of every deal with every vendor, and play games to hide what is going on under the table (the great network negotiations going on in 2nd language speaking despite US company portals and conference and other efforts to make dealing seem nuetral to all parties). American managers are not particularly byzantine, and often actually lack the creativity of some of these GC guys.

[Lafayette]

rp: They don't haggle and dance around like the foreign entreprenuers who need to negotiation 10 different aspects of every deal with every vendor

Balderdash.

You were evidently not around with American negotiators during the last GATT round, under instructions from Washington to give NO GROUND whatsoever in terms of farm subsidies (government welfare to agricultural conglomerates).

A more perverse argumentation was difficult to find and the talks had to be canceled - which was precisely what Bush wanted.

You say you are from the "real world"? Who are you trying to kid? Yourself? When it comes to its vested interests, America is no less perverse than any other country.

[real person from the real world]

Well, we've heard from the foreign interests. America is fair game, but don't say anything about the foreign countries....

[real person from the real world]

Look, I am not arguing hi level economics. I am in the real world, day after day, and see what goes down. When my guy wants the answers to too many questions too often, I have to soothe the offended HR on the other end of the phone, and when my guy is yakking away in his language with a manager who is at a company we are dealing with, I know it is not all chit chat about wives and home. The regular everyday American who answers the phone, takes care of the db, and makes the calls at the lower depts of BigBiz,Inc. I also see when it backfires, and we get into trouble because some vendor didn't trust the other, and is pulling his guy out, making my guy look bad in front of BigBiz, Inc.

[real person from the real world]

Isn't there some logical fallacy, where when you cannot attack someone's argument, so you (lafayette) do it by insinuation about his character?

[cm]

real person: It's called "ad hominem". OTOH challenging you about "whom you are kidding" is not strictly in that category. Regarding classification of your comments as "balderdash" and "boring", welcome to the club.

[Lafayette]

rp: I am in the real world, day after day, and see what goes down.

And, you are not the only one, around here.

You're working with some foreigner who blathers with an HR and you extrapolate the relationship to an international level of power-politics push / shove.

Your anecdotal evidence is not relevant. Try harder.

[Lafayette]

rp: where when you cannot attack someone's argument, so you (lafayette) do it by insinuation about his character?

For the moment, what you post is rubbish.

Apparently you are unaware that this forum is to discuss economics. Try posting in a manner that invites debate about economic matters (that may be relevant to you).

But, enough of the wailing and gnashing of teeth about how American employment is going to hell in a hand basket - because the facts show that such is clearly not the case.

America is transitioning from an industrial economy to an information economy, which provokes profound infrastructural change in patterns of employment. Many changes will be hard for many to assimilate. Also, these transformations hit hardest those least able to assume them. But, there is nothing in history to suggest that, when such evolutions have occurred, they did little or no similar damage.

You're whining.

[evagrius]

"America is transitioning from an industrial economy to an information economy, which provokes profound infrastructural change in patterns of employment. Many changes will be hard for many to assimilate. Also, these transformations hit hardest those least able to assume them. But, there is nothing in history to suggest that, when such evolutions have occurred, they did little or no similar damage."

The situation is similar to that of immigration. In both cases, the ones most deeply affected, ( or the ones who perceive themselves to be most deeply affected), are not the ones who benefit or who instigated the transformation.
Other countries may have undergone similar transformations but there was an implicit "social contract" that limited and shard the damage.

As pointed earlier, there are individuals in the U.S. who don't agree about social contracts.

Not all are little minnows in the pond of life. Some are very large predators with no compunction.

RP is merely stating what is going on from the vantage point of the minnow.

[Lafayette]

evg: In both cases, the ones (immigrants) most deeply affected, ( or the ones who perceive themselves to be most deeply affected), are not the ones who benefit or who instigated the transformation.

I doubt seriously that most immigrants who have made their way to America/Europe in the past fifty/hundred years and made a place for themselves would agree with the above.

I know that my father wouldn't.

In fact, most immigrants better themselves by seeking other horizons. The sad part is that, indeed, we are seeing (particularly in the western Mediterranean) into Europe a migration that is prompted by abject African poverty. These people are unskilled and cannot possibly find legal employment in Europe, as much as they might hope for such.

[Meh]

Gah, now I read the original paper in depth I see they don't provide enough information to actually analyse their results. Since they don't list the companies used for the "UK companies taken over by US firms" we have no way of looking at alternative explanations for the phenomena.

In particular, the biggest question is: "What is a takeover?" and in more detail "Does US ownership mean US IT practices are in fact implemented?"

They assume "yes" but not only provide no evidence for that, but don't even provide enough information to check up on the issue.

And they call this peer review...

[Lafayette]

There's an anti-dumping bill that is making the rounds of Congress and it will probably pass.

It's scapegoat are countries with serious exchange rate imbalance (with the US dollar). As if that was some sort of crime ...

Morgan Stanley has some thirteen different ways of calculating historical exchange rate imbalance and all come up with different answers. So, it is evident, in this bill, that the US looking for a way to unilaterally block Chinese manufactured goods according to American law.

I don't see how this is going to square with the fact that, by treaty, this is the sort of matter that should be decided before the WTO. But, there is such an hysteria developing in the US, that this sort of silliness was bound to happen.

Here are the usual suspects. Note China, on the left. Look at Japan, also there. Who's the real culprit?

Will Japan be lambasted for serious currency misalignment? Nahhhhh.

[real person from the real world]

Lafayette, while we deal with some HR people, when the CEO of our company calls a fellow who is a HIRING manager in a company we are doing business with, unofficially, and is calling to get information/assurances that other vendors do not get, it is what it is, and it is not straight dealing. This along with kickbacks paid to get into companies, and justified by the excuse that everyone else does it too. More often than not, these games have not really worked well for us, but there is a whole underground of business activity akin to what historically was referred to as the "old boys' club" of the robber barons era. I am not guessing, and I don't think this is good business practice.

[real person from the real world]

Layfette, do you think that outside agreements to get business advantages others do not get, is good business? or ethical?

[real person from the real world]

One more thing, how do you account for subtrefuge and corruption in the economic models?

[Lafayette]

rp: One more thing, how do you account for subtrefuge and corruption in the economic models?

We don't.

We work under the assumption that such perpetrators will be smitten by the wrath of God.

Or an ambitious DA.

[real person from the real world]

L: Great comeback!