Small Differences that Matter

May 24, 2005

Economists need to put on different glasses, according to Brad DeLong in the Taipei Times.

The real sources of growth are not to be found in supply and demand and the allocation of scarce resources to alternative uses, but in technological and organizational change...How, exactly, did these accomplishments occur? What were the small differences that turned out to matter so much?

It's not "stuff," it's insight, a different perspective, how we do what we do, creative verve in analysis. It's the nature and paths of emergent systems, whatever that turns out to mean.

Via Econopundit

Update:
This seems to be the discussion du jour, based on Macroblog's chart from The Financial Times. The Eclectic Economist points out that labor productivity in the U.S. has grown considerably since 1987, and goes on to focus on supply chain improvements via Thomas Siems of the Federal Reserve Bank of Dallas:

In our increasingly interconnected and interdependent global economy, the processes involved in delivering supplies and finished goods—including information and other business services—from one place to another are mind-boggling. But through information engineering, supply chain improvements have resulted in a reduced bullwhip effect, lower inventory levels, reduced logistics costs and streamlined payments.

We notice also the information advantage to our understanding of finding a resource like QuickMBA.