The purpose of this paper is to provide an engineering perspective on the modern productivity paradox. Specifically, to shed new light on the failure of information and…
Abstract
Purpose
The purpose of this paper is to provide an engineering perspective on the modern productivity paradox. Specifically, to shed new light on the failure of information and communication technology (ICT) to increase overall factor productivity.
Design/methodology/approach
To this end, alternative approaches to modeling material processes are presented and discussed. Empirical evidence is brought to bear on the question of ICT productivity. Finally, the implication of the findings for production and management technology are presented and discussed.
Findings
The principal finding is theoretical in nature, namely that, according to classical mechanics and applied physics, ICT is not physically productive. Rather, information is an organizational input.
Practical implications
By identifying the role of ICT in material processes, the paper provides a framework to better understand and evaluate ICT investment, both at the firm and industry level. While ICT does not contribute to increasing physical output, it does nonetheless increase profitability. On a broader level, the paper provides a framework to evaluate ICT‐related public policy measures.
Originality/value
Among the contributions of the paper are the use of basic engineering principles to shed light on the modern productivity paradox; and the conclusion that information, unlike energy, is not physically productive and as such cannot be counted upon to increase output.
Details
Keywords
It is generally believed that the Smoot–Hawley Tariff Act (SHTA) of 1930 was an electoral response on the part of the Republican Party to Midwestern farmers’ concerns in the 1928…
Abstract
It is generally believed that the Smoot–Hawley Tariff Act (SHTA) of 1930 was an electoral response on the part of the Republican Party to Midwestern farmers’ concerns in the 1928 general election which via the legislative process (pork-barreling and log-rolling) was transformed into a generalized upwards tariff revision. There are, however, problems with this view, not the least of which is the fact that the farmers themselves were well aware of the fact that higher tariffs would not improve their lot, and hence favored the price support/equalization measures found in the Haugen–McNary Farm Relief Bill. This paper presents an alternative explanation. Specifically, it is argued that the SHTA had its origins in manufacturing states where the demand for a comprehensive upward revision of tariffs was transformed via the electoral process – and not the legislative process – into an omnibus upward tariff revision that included agriculture. The omnibus nature of the bill, it is argued, was intended as both (i) an electoral strategy and (ii) a hedge against near-certain revolt in rural America over anticipated higher prices for manufactures. We show that while successful electorally (i.e., in the 1928 presidential election), the Smoot–Hawley Tariff Bill fell apart in the legislature in the summer of 1929 when 13 Insurgent Republicans broke with the party to vote with the Democrats to lower tariffs on manufactures.