Do you REALLY want to open that can of worms? I'd strongly suggest that you check out a site: www.economagic.com. There you can find all sorts of the government's very own statistics. I'd encourage you to pull up a long term (that's a few decades, not the past few years) chart of productivity growth.
What you'll find may startle you. The 1990s, despite the huge changes in technology, were completely unexceptional in terms of productivity gains. Productivity growth exceeded that in the 1980s, but lagged the 60s. Surprisingly, the 1970s had excellent productivity growth, yet few people would declare that period an outstanding time for our economy.
Strong productivity growth in the 1970s did not correlate to strong profitability, economic, employment, or stock market growth. Weak productivity growth in the 1980s likewise did not hold back corporate profitability, economic growth, employment growth, or stock prices.
The things that DID strongly correlate were asset inflation (stock and real estate), commodity inflation, and weak economic & stock market performance.
We have entered a New Era alright - an era of inflation that hasn't been seen for a couple of decades. The markets are too caught up in their mania to realize this, but any cold, rational look at all the statistics in historical perspective makes it very plain.
New investment dollars have no interest whatsoever in buying capital equipment to expand commodity production - they're too busy chasing exciting ways to lose money in the New Era. However, the global growth demands increased commodity output. The capital cycle always lags the price cycle, so new equipment to meet the increased demand won't arrive for some time. Therefore, I don't expect the cyclical upswing in commodity inflation to end any time soon. And I'm very certain that all my greedy co-workers will see to it that wage inflation is here to stay until the bubble finally comes undone.
The 1970s (and the 1920s, and the 1980s in Japan) should have taught us a lesson, but evidently they haven't. Irresponsible monetary policy has extremely negative long term consequences. Asset inflation causes severe dislocations in capital flows that can tip even the most robust economic powers into recession, but your revered Greenspan is totally blind to this.
BC |
