Repeat after me: productivity growth.

The New York Times reports that the apparent strength of the current economic turnaround has caught most economists off-guard. But then, they were out to lunch on the way down as well. Why are the economists so clueless? According to the Times (also clueless?), they missed the impact of “productivity growth.” Huh? Even I can recall that in every speech made by Alan Greenspan in the past 18 months, he has said to not underestimate the impact of productivity growth on the economy.

Quote:

During the last 30 years, the average annual growth rate of productivity in all quarters was 1.7 percent. In quarters that included periods of recessions, as identified by the National Bureau of Economic Research, productivity shrank at an average annual rate of 0.35 percent. Yet in the three quarters since the most recent recession began in March 2001, productivity has clocked annual growth rates of 2.1 percent, 1.1 percent and 3.5 percent.

I will now make a bold prediction. In the not-to-distant future, the New York Times or Wall Street Journal will report that the economic downturn of 2000-01 would have been much more severe had it not been for, are you sitting down, the Internet. The pundits will observe that the “dot-com” stock-market bust masked the real story: that networked computers allow companies and consumers alike to be profoundly more productive.

Okay, perhaps my prediction is not so bold:

While some economists see the collapse of the dot-com economy as evidence productivity rates may be on a long-term dive, Federal Reserve Chairman Alan Greenspan argues that we have yet to fully exploit the potential of networked computers and other technology. (October, 2001)

The continuing saga of David A. Vise’s book purchasing oddities make for some interesting story-weaving, but an interesting sidebar is the light it casts on the always bizarre economics of the book publishing business. The Washington Post, the newspaper where Vise works and the paper for which he has won a Pulitzer Prize, is covering the story intensely, but gives Vise plenty of room to defend himself (or enough rope to hang himself).

On the surface, Vise appears to have placed a massive order from barnesandnoble.com for between 16,000-18,000 of his new book, The Bureau and the Mole: The Unmasking of Robert Philip Hanssen. Then he returned them. B&N went nuts and demanded the publisher pay for shipping. The book-industry media was informed and they naturally assumed Vise was attempting to cook the New York Times Best Seller list.

But Vise says he can explain what he was going to do with all those books. And most amazing to me, his uber-hip New York publisher Morgan Entrekin (a Nashville native and, in a note of full disclosure, the son of my wonderful next-door neighbor), has an explanation of why it cost the author less to purchase the book from bn.com than direct from the publisher.

My continuing question since first learning of this story seems to evade the reporters covering this story. Someone, please, ask Barnes & Noble how often they receive orders online for 18,000 books from the same person? From the same person who’s ordering it on their credit card?

18,000 books? How many trucks does it take to deliver 18,000 books?

Update: Seems like I can ask about this myself. I just found out that Vise is also a native Nashvillian and will be speaking at a luncheon I’m attending Monday.

Matt Drudge does a great job pointing to breaking and obscure news on the Web, but sometimes his big scoops make no sense to me. For example, his recurring “exclusive” that the movie A Beautiful Mind does not include some aspects of John Forbes Nash’s life contained in the book is, well, weird. The book is a bestseller and the movie is a blockbuster. What possibly can be “exclusive” about the contents of either? And really, when has a movie ever contained everything in a book? Okay, other than Harry Potter?

Drudge’s current big scoop is that some people are not voting for Russell Crowe and Ron Howard in the Oscars because in the book, Nash is an anti-Semite, and in the movie this fact is “covered-up.” I think a careful review of the book will also reveal that Nash was constantly communicating with aliens while in the movie this fact was mysteriously altered so that the aliens were cast as CIA agents and college roommates. A conspiracy? What about the fact that the book described Nash as severely mentally ill when he was espousing anti-Semitic views? That he was an insane schizophrenic.

And anyway, what do Russell Crowe’s acting skills have to do with Nash’s views while he was insane? Does this mean that to win an Oscar, leading actors must only play a character who desires to serve his fellow man?