Nipawin - December 31, 2000 - by: Mario deSantis | |
confused |
Economic productivity as per capita GDP seems to be a bit misunderstood by our economists. |
Alan Greenspan, Chairman of the Federal Reserve Board and the most powerful man in the | |
business, finance and stock market, is confused about our economic productivity. And if he is | |
confused, then all of his followers-bankers, stock speculators, and the corporate world-are all | |
confused as well. | |
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Almighty |
Yes, we live in a state of confusion and we don't know whom to believe anymore, and the |
resulting conclusion is the omnipresent vision to believe in the Almighty Dollar(1)! The | |
Almighty Dollar is replacing our thinking and our hearts, and we are all brainwashed to look | |
for money, everywhere and at any price. I have been very conscious of this destructive | |
philosophy that "Money Talks" and when my son James decided to go back to school in | |
1995 and take business courses through Athabasca University, I mentioned to him how | |
confusing life can be. And, after reading the preface of his accounting textbook, I showed | |
him an excerpt from this book which stated that ethics is just like navigating an ocean, you | |
choose your own course, that is as to say that ethics is a personal affair, be good, be bad, or | |
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be ugly. |
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follow the money |
Now, I ask myself how we can have a vision of where we are going if we follow the money |
vision within any ethics, be good, be bad or be ugly. It is absurd to have such a vision, to | |
believe to any professor you listen or to believe to any textbook you read. Therefore, I gave | |
James the book "The Fifth Discipline(2)" and I told him that this was going to be his business | |
Bible. James read this book, and we have been happy ever since! | |
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information technology |
As I was saying, even Alan Greespan is confused about the notion of economic productivity, |
and last July, while speaking at the national meeting of American Governors, he stated that | |
"the major contribution of advances in information technology and their |
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incorporation into the capital stock has been to reduce the number of worker |
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hours required to produce the nation's output, our proxy for productivity |
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growth(3)" |
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declined |
This statement doesn't reflect the experience of the American economy. American Paul |
Strassmann, a consultant to some of the largest corporations on the planet(4), has pointed | |
out the following: | |
"Contrary to expectations of the productivity proponents, the revenue per staff |
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dollar has not increased. It has declined for a period of steady productivity |
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decline from 1989 through 1996. The recent reversals in this productivity trends |
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reflect mergers and consolidations, a strengthening of the dollar currency, and |
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the highest real interest income due to lower inflationary expectations. That has |
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little to do with computerization and much with reorganization and a cyclically |
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favorable state of the economy. The fact is that in 1989 one dollars' worth of |
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staff expense supported $7.50 dollars worth of revenue, whereas seven years |
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later - after a period of sustained computerization - the same dollar supports |
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only about $5.30 of revenue(5)" |
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relevant indicator |
Whom to believe? Greenspan or Strassmann? As I am concerned, I believe in my own and |
shared common sense, and that in our knowledge economy, no matter how sophisticated this | |
economy may be, there will always be low skilled jobs such as cashiers, janitors, retail | |
salespersons, waiters, and waitresses(6). Therefore, productivity, as per capita GDP, is not a | |
relevant indicator for our social and economic growth anymore and this observation is | |
confirmation that we must develop new indicators to measure the performance of our | |
knowledge economy. | |
-----------------Notes/References: | |
Quote by Donella Meadows "challenging a paradigm is not a part-time job. It is not sufficient to make your point once and then blame the world for not getting it. The world has a vested interest in, a commitment to, not getting it. The point has to be made patiently and repeatedly, day after day after day" ftp://sysdyn.mit.edu/ftp/sdep/Roadmaps/RM1/D-4143-1.pdf The Global Citizen, http://www.tidepool.org/gc/ | |
List of relevant social articles http://www.ftlcomm.com/ensign | |
Money Talks, Mandatory Voting and our Democracy, by Mario deSantis, December 23, 2000 | |
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The Fifth Discipline: The Art & Practice of The Learning Organization, by Peter M. Senge, Currency Doubleday. Books by Peter M. Senge: | |
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Remarks by Chairman Alan Greenspan, Structural Change In The New Economy, before the National Governors' Association, 92nd Annual Meeting, State College, Pennsylvania, July 11, 2000 | |
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US consultant recommends measurement of 'knowledge capital' before outsourcing, by Nick Gentle, 10 November, 1999 | |
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Facts and Fantasies about Productivity. Excerpted from Information Productivity, by Paul A. Strassmann | |
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Productivity is the wrong thing to measure, by Mario deSantis, December 25, 2000 | |
You can read about the background of Alan Greenspan at the web site for the Federal Reserve. | |
A simple and straightforward discussion of the issue of knowledge management in the form of an interview with Paul Strassmann | |
Paul Strassmann's home page. |