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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (87263)	12/20/2000 12:33:35 AM
From: Skeeter Bug	Read Replies (2) \| Respond to of 132070

>>So we're generating a $230 Billion budget surplus on 2-3% GDP growth eh?<< ron, its a fact. once you subtract out the noneconomic, voodoo dollars that nobody has seen (rumored to sit next to elvis ;-), that is what we are left with. i'm not saying i know it is right. i am saying that if it is wrong then we need to find out what the fundamental problem is. hedonic voodoo is not the problem if it is wrong. btw, i haven't seen the latest numbers, but i'm quite skeptical of a $230 billion surplus - methinks you aren't paying close enough attention to the shells in the shell game. i'm not sure what link you are referring to. i can't argue for the author. to my understanding, profits are not factored into gdp and productivity growth directly. revenues are. >>But if revenues are increasing, which they clearly have in most cases, then this is setting the stage for future earnings growth as efficiencies bear fruit.<< yes, just barely above historical avgs... 2-3%. not my numbers. >>So I take it that you are answering in the affirmative with regard to major US corporations spending billions on economic pipedreams that add nothing to their ability to increase financial results for the corporation.<< wrong assumption. they may very well increase profits. think this through, though. micron technology spent billions from 1995 to 1998 in new technology. their efficiencies increased dramatically. at exactly the same time that their revenues dropped through the floor. was micron more productive when they made 4 mb drams and made billions (on paper, anyway) or when they made 64 mb dram for less than the cost of the 4 mb drams and they were losing billions? hmmmmmm.... no doubt their efficiency improvements were MARVELOUS! they were making 400% more mb output in 3-4 years for less expense! their economic productivity stunk as revenues collapsed (down by 50% or more, i believe) as did earnings billions in profits to billions in losses. this is where i believe many have tripped up. they focus on internal productivity improvement (micron had HASSIVE improvements that put the avg company to shame!) and hold all else equal. simple. neat. straight forward. and often times wrong. the world is dynamic. as these technologies and efficiencies are implemented, supply is created. depending on the dynamics, this can be good or bad for the company in its industry. micron would have loved to still be inefficiently making 4 mb drams and making billions rather than efficiently making 64 mb drams and losing billions. to say that MASSIVE efficiency increase lead to increased economic productivity is false. micron is a prime example. >>Well, I guess that bodes well for companies like Manugistics, doesn't it?<< i don't know what manugistics produces. i can say that the #1 problem most companies face is they don't know how to use what they already have. it isn't getting more stuff they won't use effectively. i read that "95% of managers know what to say. 5% know what to do" in a management book. maybe it was an apics book. my anecdotal experience indicates this is true. now, i'm not saying the technology available isn't good. some of it is very neat. i'm saying a company needs a foundation. they need to use what they have effectively and be able to learn to use what they will purchase effectively. wrt the link, i still don't what is under discussion. i think what you are saying is that software used to be expensed and it is now depreciated. assets, after all, do cost money, too. ;-) ron, i can only argue my points (and that ain't always easy! ;-), not those of an author who may or may not follow my line of thought. >>Sounds to me like they go hand in hand.<< ron, i do agree that increased revenues typically result in more profit the vast majority of the time - though there are exceptions. even so, revenues are used in figuring gdp, not earnings - to my understanding. earning typically follow, but this need not always be the case. >>The only downside to this<< ahhh, but that can be a big down side. another option is to sell below cost b/c decisions are made on the margin and sunk costs, no matter how large, are factored out of the decision making process. again, mu is a prime example. ron, re it talent. one could argue that a credit bubble created companies that should have never existed. these companies, in turn, created demand for it talent that should have never existed. i think that unemployment begins to go up from here and we will find out just how much things have remained the same - phony statistics or not.