The whole reason corporate America is seeing an increase in profits, is due to increases in productivity from the greater use of high technology.
Granted that's certainly an important factor, but it's hardly the only one. Here are two others:
1. a stable monetary environment with low inflation ( Greenspan deserves an A+, IMO) Firms operate more efficiently and more profitably, when prices are stable, or at least predictable.
2. greater attention to profit max. by large corporations. Most large U.S. corporations are management controlled, not stockholder controlled. Companies like Dell, MSFT, and Schwab, are stockholder controlled but they are the exceptions. Mgt controlled firms (characterized by highly fragmented stockholder ownership) historically were more interested in empire building and max. the returns to management, often at the expense of shareholders. today these same firms are more inclined to focus on improved efficiency and profits, maximizing returns to shareholders. What has changed? One explanation, widely accepted, is that greater use of stock options has redirected mgt incentives for the better, and made a difference.
Just my opinion.
Geoff
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