In a research note in May, Mr. Hatzius and fellow Goldman economist Kris Dawsey argued productivity might not be so bad.**
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Maybe initially the cupcake ATM is jamming and smushing the cupcakes, but over time the kinks get worked out and every cupcake comes out flawlessly. There’s been some quality improvement, but it’s hard to capture.
Secondly, the statistics may fail to capture the value of new products. How do you measure the economic value of, say, Google? The company’s revenues come primarily from advertising. The vast majority of Google’s users never pay a dime but obviously derive value from the ability to trawl the Internet.
Goldman’s economists conclude: “We walk away persuaded by the notion
that productivity mismeasurement could be a significant issue.”**
........................................................................Mr. Feroli of J.P. Morgan and his fellow economist Jesse Edgerton disagree.**
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The timeline of new technologies, they argue, doesn’t align with the productivity slump.
“The beginnings of many of the most prominent more recent technologies stretch back well before the financial crisis. Cellphones, home computers, email, and the World Wide Web gained ground rapidly in the late 1990s and were already widespread in the early 2000s,” they write.**
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Perhaps Silicon Valley is changing the world in ways that can’t be measured. Or perhaps somebody in Silicon Valley is hyping new technology as transformational to try to sell you something. Maybe a cupcake.**
*http://blogs.wsj.com/economics/2016/02/12/why-does-u-s-productivity-look-so-abysmal-not-mismeasurement-paper-says/?mod=djemRTE_h
** http://blogs.wsj.com/economics/2015/06/16/goldman-sachs-and-j-p-morgan-cant-agree-why-the-economys-productivity-has-slumped/
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