OPPORTUNITIES BEFORE EFFICIENCIES

There is more to be gained by producing more…

…opportunities than by optimizing existing ones.

Optimization and efficiency die hard. In the past, better tools made our work more efficient. So economists reasonably expected that the coming information age would be awash in superior productivity. That’s what better tools gave us in the past. But, surprisingly, the technology of computers and networks have not yet led to measurable increases in productivity.

Increasing efficiency brought us our modern economy. By producing more output per labor input, we had more goods at cheaper prices. That raised living standards. The productivity factor is so fundamental to economic growth that it became the central economic measurement tracked and perfected by governments. As economist Paul Krugman once said, “Productivity isn’t everything, but in the long run it is almost everything.

 

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This is a blog version of a book of mine first published in 1998. I am re-issuing it (two posts per week) unaltered on its 10th anniversary. Comments welcomed. More details here.
-- KK