The ever-interesting Brad DeLong is on a real roll lately. Read his post on current economic trends. Here is my favorite part:
…more important than the short-run cycles are the long-run trends. Labor productivity growth in the United States rose from 1.2% per year from the mid-1970s to the mid-1990s to 2.3% per year in the late 1990s to 4.2% per year–so far–in the 2000s. How much of that second jump-up in productivity growth will be sustained? We do not know, but it is safe to bet that some of it will. (Me, I don’t believe those numbers: I prefer to look at the income rather than the product side of the National Income and Product Accounts, and say that the three economy-wide productivity numbers are 1.2%, 3.1%, and 3.2% respectively, with the difference between the income and product side blamed on an erratic “statistical discrepancy.”) When will the rapid productivity growth that we have seen in the United States and ascribed to information technology spread to the rest of the rich countries? We do not know, but we do know that one of these years it will make itself visible. How long will it take world trade in information-services like form-processing, accounting, and customer service to truly boom as a result of the internet and the fiber-optic cable in the same way that the iron-hulled ocean-going steamship and the submarine telegraph made world trade in staple goods–not just luxuries and preciosities–boom in the late nineteenth century? Once again we do not know, but once again we do know that one of these years it will make itself visible.
It is time for governments, firms, investors, workers, and parents worldwide to begin betting on the long-run trends that have become visible over the past decade. Such bets probably won’t pay off in the next year, or two, or three. But they surely will start to pay off sometime in the next ten.
I will direct your attention again to Brad’s recent post comparing Bob Rubin and Paul O’Neill. I think it is one of the finest things an economist has written on bureaucracy, ever.