May 18, 2007
JUST ANOTHER ACTUAL DAVID AND GOLIATH STORY:
Use IT or lose it: New calculations shed more light on Europe's productivity malaise (The Economist, 5/17/07)
It is now generally accepted that in around 1995, after 20 sluggish years, American productivity growth began a remarkable surge that only now seems to be subsiding. Yet the advances in information technology (IT) and the dramatic cheapening of computing power that lay behind that surge have had much less effect on Europe's productivity. In 2006, admittedly, Europe's output per hour grew faster than America's. But the cheer over that number merely points up the disappointment over the many years that came before.The recent appearance of a new database, the fruit of a project called EU-KLEMS, that accounts for the sources of European growth and productivity does not alter this broad impression. [...]
[E]urope was not only worse than America at making IT, but also much worse at using it. That is borne out by the EU-KLEMS economists' attribution of output growth to the various inputs. In this exercise, because of the limitations of the data, they used figures for only ten countries and compared 1995-2004 with the previous 15 years rather than 25. Most European countries used more IT, relative to other forms of capital, after 1995. But America underwent a much bigger shift into new technologies.
Y2K was the greatest broken baker's window in history. Posted by Orrin Judd at May 18, 2007 11:34 AM
The US tends to adopt new info tech a bit later and in a more ad hoc manner than Asia or the US.
Though you see a lot of headlines about how we are 'behind' on 'broadband', '3G wireless', 'computers in classrooms', etc., but, because we wait and let the market dictate we wind up investing capital in a more efficient, 'success based' manner in a lot of cases.
My favorite example is in wireless where the Euro carriers spend about 100BB dollars on 3G licenses that have not panned out while the US is only now auctioning new spectrum. However, the FCC allowed existing spectrum to be largely 'technology neutral' so US subscribers are still getting 3G services from Sprint, Verizon, Alltel, Cingular, etc. on existing spectrum and in some cases are surpassing what Europe has. The end state of the datacom network in the US will probably be just fine but we are taking a different path to get there.
Posted by: JAB at May 18, 2007 12:20 PMEverything has an up-side. Even a scam like Y2K.
Posted by: ghostcat at May 18, 2007 1:15 PMNo sense investing in IT if you can't then fire people.
Posted by: Ibid at May 18, 2007 2:04 PMIndeed, it was all upside.
Posted by: oj at May 18, 2007 3:15 PMTell that to the fools who lost their arses when the tech bubble imploded.
Posted by: ghostcat at May 18, 2007 3:28 PMThat's upside. Idiots being parted from their money makes markets work.
Posted by: oj at May 18, 2007 6:27 PMSounds darwinian.
Posted by: ghostcat at May 18, 2007 6:35 PMYes, Darwinism is just capitalism.
Posted by: oj at May 18, 2007 8:37 PM