Chad Hudson on US exploitation & info profits

[Rob Schaap <bantam@xxxxxxxxxxxxxxxx>]

G'day all,

Excerpted from:
http://www.prudentbear.com/economic.htm

                       This morning, productivity growth was revised down to
2.1% from 2.7%. We have long argued that the increase in productivity has been
due to cyclical forces and convenient accounting rather than a secular change
due to technology. A report out of the International Labor Organization, an
U.N. agency, found that U.S. workers have added 36 hours to their work year
since 1990. American workers now work on average 1,979 hours, most hours
worked in the world. Americans overtook Japanese workers during the 1990s and
have steadily pulled away since. If anyone is thinking of relocating these
statistics might help your decision. Americans work 137 hours more per year
than Japanese workers, 260 hours more than the British and 499 more hours than
German workers.

                       Could longer hours be one of the reasons for the higher
productivity? According to the Bureau of Labor, the average workweek has
remained relatively steady at 34.5 hours. As the U.S. economy has moved to a
service based economy with more workers getting paid a salary rather than by
the hour, Americans are working more without the incremental pay. Add in
employee stock option plans and the calculation gets even dirtier. As the
economy continues to slow and any eventual recovery will be much more
"traditional" than the previous couple of years, the "new era" of productivity
growth will disappear just has it has in the past. The ramifications of this
are huge. Productivity growth was heralded as the way the economy could grow
faster than 2% to 3% without inducing inflation. Politicians hope for faster
economic growth for either more spending or tax-cuts. Recent reports now
indicate that the budget surplus is in severe jeopardy, and we have not even
had one quarter of negative growth.

                       The Conference Board announced that July's Help-Wanted
Advertising Index was flat with June's reading of 58. Last July the reading
was 82. The weakness is widespread according to Ken Goldstein, economist with
the Confrence Board, "All major areas of the country, most of them with
distinctly different industrial demographics, appear to be reacting in
lock-step to changes in the macro-economy. This is not a typical recession
pattern and suggest the profit squeeze is hitting every sector in the
economy." Goldstein is not overly optimistic on the near-term, "it might not
get much better real soon, but it's probably not going to get much worse."

                       A paper written by former Treasury Secretary Lawrence
Summers and Bradford DeLong, an economist at the University of California at
Berkeley, questions the ability of technology to propel profits. While "the
future of the technology is bright; the future of the profit margins of
business - save for those few that truly are able to use economies of scale to
create mammoth cost advantages - is dim." The effect of stock prices will mean
"customers will gain, and shareholders will lose."

Cheers,
Rob.