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To: Southack
You will not find that recessions always follow productivity gains.

I nowhere said that recessions always follow productivity gains. I contend that the productivity gains we have recently experienced are a) occurring at the wrong time, when the last thing we need is greater production capacity, and b) being achieved largely by tactical means that don't actually result in strategically-significant improvements to the health of the economy (unlike the example you gave.)

Here's a counterexample: The 1920's saw very significant increases in productivity as the result of electrification, but the result was the Great Depression. I contend that the productivity increases due to computerization and the internet will have a similar result--in spite of the fact that we will be better off "in the long run" because of our investments in these productivity-enhancing technologies.

Finally, please consider the argument in The Collapse of Wall Street and the Lessons of History.

71 posted on 02/06/2003 3:27:19 PM PST by sourcery
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To: sourcery
"Here's a counterexample: The 1920's saw very significant increases in productivity as the result of electrification, but the result was the Great Depression."

The premise of your example is flawed.

Look, I walk outside early every morning, and every morning the sun rises. By your logic above (of first electrification and then Depression), my walking outside every day makes the Sun rise because one follows the other. Yet clearly that's not the case.

Productivity is always a plus for the macro, sometimes a short-term minus for the micro.

Adding electricity did not create poor farming techniques that contributed to the Dust Bowl weather catastrophies. Adding electricity did not cause the Fed to tighten credit or the Congress to raise taxes or the French to dump their Gold reserves, much less indebt Europe in post-war poverty and massive death as a result of a useless war that they hoisted upon the world.

73 posted on 02/06/2003 10:15:26 PM PST by Southack (Media bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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