PCs & the Productivity Paradox

December 1998
by Reid Goldsborough

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Despite the riotous instability of stock prices lately, some prognosticators are advising us not to worry. Sure, the stock market has experienced unprecedented growth without a significant downslide for seven straight years. And sure, the market has always been cyclical in the past.

But we’re in the midst of a revolution, say the pundits, an information revolution. Spurred by personal computers and the Internet, the economy has morphed in a fundamental way. Information technology has ushered in a paradigm-smashing leap in productivity that may have made recession pass‚.

Not so fast, say those who’ve studied these issues. It’s not even clear that personal computers have affected productivity appreciably, let alone leading to the kind of improvements that would allow us to sail off with our mutual fund investments into a tranquil prosperity.

What’s the Truth
about Computers & Productivity?

Well, the numbers are telling. Bureau of Labor Statistics figures show that, despite the personal computer “revolution” and the billions invested in the technology, productivity gains measured in output per hour have remained at a feeble annual rate of around 1% for the past 30 years, which pales in comparison to the brawny productivity growth of 3% annually experienced during the 1950s and ’60s.

Common sense tells you that personal computers should increase productivity. They let you plan and budget far more effectively than a calculator or table. They make it possible to k…IBPA Members – Click here to view the full article (login required).

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