Friday Nov 03, 2006

Productivity Growth Slows

A recent Wall Street Joural article reports a decrease in productivity growth rate in the U.S. from an average of 2.8% in the last decade to 1.3%. While we commonly hear that productivity can grow by the rise in population and by the application of technology, we should also remind ourselves that organizational and process innovation as well as a healthy social infrastructure can also have a tremendous impact on economic growth. Productivity growth represents "a crucial factor in controlling inflation, boosting profits and improving living standards."

Productivity also matters to policy makers at the Federal Reserve. If it slows, the economy's growth potential -- the "speed limit" at which it can grow without stoking inflation -- also declines. Recently, Fed staffers have been nudging down their estimate of the economy's future growth potential, a move that reflects lower estimates of productivity growth. In the current environment, that means the Fed might have to keep interest rates higher for longer to keep inflation under control.

Scaffolded Urban Intelligence

Technology, when weaved through the fabric of our daily lives, can produce the effect that some have called scaffolded intelligence--intelligence that naturally has merged into our environment.

Great examples of this involve the use of seamless technology (i.e. technology that does not get in our way) to allow us to navigate around. While I have some questions about the natural-life integration of GPS navigation tools within cars, a more interesting integration involves seamless information gathering and distribution for more effective use of transportation artries within a city.

This type of integration has been available in Europe for some time. Users can get accurate information regarding bus, metro and train arrivals at particular stations and they can plan whole trips using their mobile devices, while en route, in several European countries.

Now, a similar system has been implemented for one of the best transportation systems in the U.S.:  Washington Metropolitan Area Transit Authority.

For details, see this Washington Post article: Lena H. Sun, "Web Lets Riders See Train Times From Afar," WP, Nov. 3, 2006, page B03.

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