The need of new indicators to measure the performance of our Knowledge Economy

Nipawin - December 31, 2000 - by: Mario deSantis

confused
Economic productivity as per capita GDP seems to be a bit misunderstood by our economists.

Alan Greenspan, Chairman of the Federal Reserve Board and the most powerful man in the

business, finance and stock market, is confused about our economic productivity. And if he is

confused, then all of his followers-bankers, stock speculators, and the corporate world-are all

confused as well.

Almighty
Dollar
Yes, we live in a state of confusion and we don't know whom to believe anymore, and the

resulting conclusion is the omnipresent vision to believe in the Almighty Dollar⁽¹⁾! The

Almighty Dollar is replacing our thinking and our hearts, and we are all brainwashed to look

for money, everywhere and at any price. I have been very conscious of this destructive

philosophy that "Money Talks" and when my son James decided to go back to school in

1995 and take business courses through Athabasca University, I mentioned to him how

confusing life can be. And, after reading the preface of his accounting textbook, I showed

him an excerpt from this book which stated that ethics is just like navigating an ocean, you

choose your own course, that is as to say that ethics is a personal affair, be good, be bad, or

be ugly.

follow the money
Now, I ask myself how we can have a vision of where we are going if we follow the money

vision within any ethics, be good, be bad or be ugly. It is absurd to have such a vision, to

believe to any professor you listen or to believe to any textbook you read. Therefore, I gave

James the book "The Fifth Discipline⁽²⁾" and I told him that this was going to be his business

Bible. James read this book, and we have been happy ever since!

information technology
As I was saying, even Alan Greespan is confused about the notion of economic productivity,

and last July, while speaking at the national meeting of American Governors, he stated that

"the major contribution of advances in information technology and their

incorporation into the capital stock has been to reduce the number of worker

hours required to produce the nation's output, our proxy for productivity

growth⁽³⁾"

declined
This statement doesn't reflect the experience of the American economy. American Paul

Strassmann, a consultant to some of the largest corporations on the planet⁽⁴⁾, has pointed

out the following:

"Contrary to expectations of the productivity proponents, the revenue per staff

dollar has not increased. It has declined for a period of steady productivity

decline from 1989 through 1996. The recent reversals in this productivity trends

reflect mergers and consolidations, a strengthening of the dollar currency, and

the highest real interest income due to lower inflationary expectations. That has

little to do with computerization and much with reorganization and a cyclically

favorable state of the economy. The fact is that in 1989 one dollars' worth of

staff expense supported $7.50 dollars worth of revenue, whereas seven years

later - after a period of sustained computerization - the same dollar supports

only about $5.30 of revenue⁽⁵⁾"

relevant indicator
Whom to believe? Greenspan or Strassmann? As I am concerned, I believe in my own and

shared common sense, and that in our knowledge economy, no matter how sophisticated this

economy may be, there will always be low skilled jobs such as cashiers, janitors, retail

salespersons, waiters, and waitresses⁽⁶⁾. Therefore, productivity, as per capita GDP, is not a

relevant indicator for our social and economic growth anymore and this observation is

confirmation that we must develop new indicators to measure the performance of our

knowledge economy.

-----------------Notes/References:

Quote by Donella Meadows "challenging a paradigm is not a part-time job. It is not sufficient to make your point once and then blame the world for not getting it. The world has a vested interest in, a commitment to, not getting it. The point has to be made patiently and repeatedly, day after day after day" ftp://sysdyn.mit.edu/ftp/sdep/Roadmaps/RM1/D-4143-1.pdf The Global Citizen, http://www.tidepool.org/gc/

List of relevant social articles http://www.ftlcomm.com/ensign

1.
Money Talks, Mandatory Voting and our Democracy, by Mario deSantis, December 23, 2000

2.
-
The Fifth Discipline: The Art & Practice of The Learning Organization, by Peter M. Senge, Currency Doubleday. Books by Peter M. Senge:

3.
-
-
Remarks by Chairman Alan Greenspan, Structural Change In The New Economy, before the National Governors' Association, 92nd Annual Meeting, State College, Pennsylvania, July 11, 2000

4.
-
US consultant recommends measurement of 'knowledge capital' before outsourcing, by Nick Gentle, 10 November, 1999

5.
-
Facts and Fantasies about Productivity. Excerpted from Information Productivity, by Paul A. Strassmann

6.
Productivity is the wrong thing to measure, by Mario deSantis, December 25, 2000

You can read about the background of Alan Greenspan at the web site for the Federal Reserve.

A simple and straightforward discussion of the issue of knowledge management in the form of an interview with Paul Strassmann

Paul Strassmann's home page.


Nipawin - December 31, 2000 - by: Mario deSantis

confused	Economic productivity as per capita GDP seems to be a bit misunderstood by our economists.
	Alan Greenspan, Chairman of the Federal Reserve Board and the most powerful man in the
	business, finance and stock market, is confused about our economic productivity. And if he is
	confused, then all of his followers-bankers, stock speculators, and the corporate world-are all
	confused as well.

Almighty Dollar	Yes, we live in a state of confusion and we don't know whom to believe anymore, and the
	resulting conclusion is the omnipresent vision to believe in the Almighty Dollar⁽¹⁾! The
	Almighty Dollar is replacing our thinking and our hearts, and we are all brainwashed to look
	for money, everywhere and at any price. I have been very conscious of this destructive
	philosophy that "Money Talks" and when my son James decided to go back to school in
	1995 and take business courses through Athabasca University, I mentioned to him how
	confusing life can be. And, after reading the preface of his accounting textbook, I showed
	him an excerpt from this book which stated that ethics is just like navigating an ocean, you
	choose your own course, that is as to say that ethics is a personal affair, be good, be bad, or
	be ugly.

follow the money	Now, I ask myself how we can have a vision of where we are going if we follow the money
	vision within any ethics, be good, be bad or be ugly. It is absurd to have such a vision, to
	believe to any professor you listen or to believe to any textbook you read. Therefore, I gave
	James the book "The Fifth Discipline⁽²⁾" and I told him that this was going to be his business
	Bible. James read this book, and we have been happy ever since!

information technology	As I was saying, even Alan Greespan is confused about the notion of economic productivity,
	and last July, while speaking at the national meeting of American Governors, he stated that
	"the major contribution of advances in information technology and their
	incorporation into the capital stock has been to reduce the number of worker
	hours required to produce the nation's output, our proxy for productivity
	growth⁽³⁾"

declined	This statement doesn't reflect the experience of the American economy. American Paul
	Strassmann, a consultant to some of the largest corporations on the planet⁽⁴⁾, has pointed
	out the following:
	"Contrary to expectations of the productivity proponents, the revenue per staff
	dollar has not increased. It has declined for a period of steady productivity
	decline from 1989 through 1996. The recent reversals in this productivity trends
	reflect mergers and consolidations, a strengthening of the dollar currency, and
	the highest real interest income due to lower inflationary expectations. That has
	little to do with computerization and much with reorganization and a cyclically
	favorable state of the economy. The fact is that in 1989 one dollars' worth of
	staff expense supported $7.50 dollars worth of revenue, whereas seven years
	later - after a period of sustained computerization - the same dollar supports
	only about $5.30 of revenue⁽⁵⁾"

relevant indicator	Whom to believe? Greenspan or Strassmann? As I am concerned, I believe in my own and
	shared common sense, and that in our knowledge economy, no matter how sophisticated this
	economy may be, there will always be low skilled jobs such as cashiers, janitors, retail
	salespersons, waiters, and waitresses⁽⁶⁾. Therefore, productivity, as per capita GDP, is not a
	relevant indicator for our social and economic growth anymore and this observation is
	confirmation that we must develop new indicators to measure the performance of our
	knowledge economy.

-----------------Notes/References:

	Quote by Donella Meadows "challenging a paradigm is not a part-time job. It is not sufficient to make your point once and then blame the world for not getting it. The world has a vested interest in, a commitment to, not getting it. The point has to be made patiently and repeatedly, day after day after day" ftp://sysdyn.mit.edu/ftp/sdep/Roadmaps/RM1/D-4143-1.pdf The Global Citizen, http://www.tidepool.org/gc/

	List of relevant social articles http://www.ftlcomm.com/ensign

1.	Money Talks, Mandatory Voting and our Democracy, by Mario deSantis, December 23, 2000

2. -	The Fifth Discipline: The Art & Practice of The Learning Organization, by Peter M. Senge, Currency Doubleday. Books by Peter M. Senge:

3. - -	Remarks by Chairman Alan Greenspan, Structural Change In The New Economy, before the National Governors' Association, 92nd Annual Meeting, State College, Pennsylvania, July 11, 2000

4. -	US consultant recommends measurement of 'knowledge capital' before outsourcing, by Nick Gentle, 10 November, 1999

5. -	Facts and Fantasies about Productivity. Excerpted from Information Productivity, by Paul A. Strassmann

6.	Productivity is the wrong thing to measure, by Mario deSantis, December 25, 2000

	You can read about the background of Alan Greenspan at the web site for the Federal Reserve.

	A simple and straightforward discussion of the issue of knowledge management in the form of an interview with Paul Strassmann

	Paul Strassmann's home page.