IT spending drove the acceleration.  Alignment (deep integration of business processes with IT) with Moore's law will provide the longer term benefits.  I think the latest blip in the productivity numbers without much IT spending shows that companies are aligning.  >>>Perhaps two-fifths of the acceleration in productivity growth between the first and second halves of the 1990s is explained by companies' increased spending on IT equipment rather than by higher total factor productivity (the efficiency with which both capital and labour are used). Spending on IT has since fallen sharply from a peak in 2000. If it fails to return to its earlier, clipping pace[~]because firms can see no pay-off[~]this could dampen future productivity growth.  The good news is that companies still have plenty of scope to boost productivity by reorganising their businesses to use information technology more efficiently, which could yet boost growth in total factor productivity. That theory might soon be put to the test. <<<

Competition.  Increased competition forces companies to keep prices low, which in effect passes gains on to consumers.  It also means that companies will be forced to continue to spend on information technology:  >>>Mr King argues that workers (who are, naturally, also consumers) were virtually the sole beneficiaries of the new economy, in the shape of faster real wage growth. This was partly thanks to a fall in the prices of IT goods that they bought. More important, the same IT that spurred productivity also increased competition more widely across industries, from airlines and banking to insurance and cars, squeezing prices and profits. Information technologyreduces barriers to entry, and makes it easier for consumers to compare prices.  What is more, globalisation, itself spurred by information technology, has further trimmed the pricing power of firms. HSBC finds that, in most economies, the correlation between domestic inflation and domestic unit-labour costs has declined over the past 40 years; the correlation between domestic inflation and average OECD inflation has risen. In most countries in the 1990s domestic inflation was more closely correlated with OECD inflation than it was with domestic costs. <<< [John Robb's Radio Weblog]
1:30:22 PM    comment   

Interesing...sounds like a less pleasant version of Galt's Gulch.
11:15:22 AM    comment   

As rapid progress in the miniaturization of semiconductor electronic devices leads toward chip features smaller than 100 nanometers in size, device engineers and physicists are inevitably faced with the looming presence of quantum mechanics--that counterintuitive and sometimes mysterious realm of physics wherein wavelike properties dominate the behavior of electrons. Pragmatists in the semiconductor device world are busy conjuring up ingenious ways to avoid the quantum world by redesigning the semiconductor chip within the context of "classical" electronics.
10:42:18 AM    comment   

>>>In one demonstration, the researchers taped a woman speaking into a camera, and then reprocessed the footage into a new video that showed her speaking entirely new sentences, and even mouthing words to a song in Japanese, a language she does not speak. The results were enough to fool viewers consistently, the researchers report.<<<

>>>''This is really groundbreaking work,'' said Demetri Terzopoulos, a leading specialist in facial animation who is a professor of computer science and mathematics at New York University. But ''we are on a collision course with ethics. If you can make people say things they didn't say, then potentially all hell breaks loose.''<<<

>>>MIT's Ezzat said that he would like to develop a more complex model that would teach the computer to simulate basic emotions.<<<

There is also a quicktime video of the technique in action. [John Robb's Radio Weblog]
10:39:38 AM    comment