One of the basic claims is that the rise in IT fueled the huge increase in productivity in the US over the past two decades. This is certainly an important factor for things like back office record keeping, transaction process and supply chain management. When I first started investing I had to call the broker to put in an order. He then had to call his floor person who had to walk over to the trading desk place a hand written order with the specialist and then repeat the whole thing in reverse when the order was executed. Now I just click the mouse a few times and computers do the rest. The cost of trades has gone down to 1/5 of what it used to be without adjusting for inflation.

But the aspect of the economy which has been ignored in the calculation is the shift from making physical "stuff" to dealing in information. A factory worker running a machine in an auto plant can just do so much per hour. Even when replaced by robots there are still limitations. So his productivity has a limit. When his job is outsourced to China and the new working class moves into, say, derivatives instead the picture changes.

Now a person can control millions in economic activity per day, and there is no physical limit to how big a transaction can be processed. Selling one share and one million shares requires about the same physical effort. This person may earn his firm millions per year in fees and commissions. His productivity is, thus huge by the usual measure, but in reality he has produced nothing. Entirely too much economic activity these days is of this type. It can't continue. Bubbles based upon financial speculation always pop whether they are in tulip bulbs, South Sea investments or exotic financial instruments.

My variation on the old joke: how many financial traders does it take to change a lightbulb? An infinite amount they never learned any real-world skills.

I'd like to see some discussions of "productivity" which factor in the changing nature of work.

Policies not Politics
---- Daily Landscape