UPDATE: I've found a way to trick the old system into staying up longer, though not permanently. It'll be a while before we return to normal operation around here, as I have several projects on deadline this week. If you are reading this, I am still being tricky enough to keep the system up -- it seems to involve keeping Ethernet and at least one application active.

If you look at the chart the Post provides, you can see that there are two factors that account for the spurts of jobless growth in recent years -- every quarter in which a tax refund was delivered to Americans (Q4, 2001, Q3 2002 and last quarter, Q3 2003), they spent more; otherwise, if you look at the quarters after the invasion of Afghanistan and Iraq (Q1 2002 and Q2 2003, when we had to build and buy more bullets, uniforms, bombs and missiles), defense spending pumped things up. But the purpose of the tax cuts was to stimulate job growth, which still hasn't materialized and I'll take economy's slower growth without the expense of American lives any day.

But the really painful medicine in the "stellar" economy reports is that every time we've had a great quarter, the following unstimulated quarter--that is, when money wasn't being pumped directly into the economy in the forms of checks from Treasury or the DoD--growth has fallen back to a dismal 1.3 percent to 1.4 percent.

Secretary of Commerce Don Evans took the occasion of today's economic numbers to reiterate the promise that "We're growing the American economy and soon we'll be growing more jobs." We won't be seeing any new jobs if, as the market seems to think, stocks are currently priced for perfection and that the Fed will soon have to raise rates, which will choke off consumer spending built in recent years on the extraction of equity from homes. This is not an environment of renewed investment, but one of economic sleight of hand, trading current spending for massive federal deficits, not to mention ever-growing consumer debt. Much of the current job "growth"--which is still 250,000 jobs lower each month than promised by the Bush Administration--is in pre-holiday temporary hiring. It happens every year, so the gain of 57,000 jobs in September should be discounted more aggressively to account for seasonal jobs. The key sentence in that employment report was: "Since November 2001, the proportion of long-term unemployed has increased by about 9 percentage points."

The problem with tracking unemployment on the Department of Commerce site is that they replace the previous month's current unemployment with the previous month's report without changing the URL, making it hard to create comparisons between months. But, these charts clearly show the lack of progress in the economy:

One hopes that Republican voters hold the President and his administration to the promise they keep repeating but on which they never deliver.

Sony's president, Nobuyuki Idei says he wants to gain five percent of the Chinese consumer electronics market for Sony, which currently holds about a one percent market share. Those gains have to come while domestic Chinese companies and competitors from other countries, particularly Samsung and LG in Korea, compete for a share of the exploding Chinese market. So, Sony doesn't just have to increase its Chinese sales by 500%, it has to increase it by 5,000% over the next decade to achieve that market share target.

The layoffs, while not unprecedented in Japan, are massive. And the suggestion that the company will compete in China by outsourcing manufacturing to China is a clear sign of what happened to that headcount, half of which were "administrative" positions overseeing an already deeply automated production system. Sony will never be rehiring that 13 percent of its workforce --those jobs have gone permanently to the floating market for outsourced manufacturing and middle management associated with those product lines has been wiped out.

Rich Media's Share Of Online Ads Served

Share Of Ads Served*
Q1 2002 17.3%
Q2 2002 19.3%
Q3 2002 23.2%
Q4 2002 24.9%
Q1 2003 27.8%
Q2 2003 31.7%
Q3 2003 38.6%

Source: DoubleClick Q3 2003 Ad Serving Trends Report. *By DoubleClick. Q3 2003 Base = 172 billion impressions.

President Putin, who runs his country as a quasi-dictatorship at this point, has jailed one of "the oligarchs," the cadre of super-rich quasi-mobster businessmen who dictate most of the economic activity in Russia because he threatened to contest Putin's political power. In one of those trumped-up sounding charges of corruption, Putin has had Mikhail Khodorovsky imprisoned on corruption charges as Khodorovsky's company, Yukos, the world's fourth largest oil company, was in the midst of negotiations with foreign investors to sell part of the firm. The sale would have freed Yukos from the strict control exerted by Putin.

Russians, who have had to endure the concentration of wealth and power in the hands of a very few people in the wake of the collapse of the Soviet Union, another centralized regime, are going to pay for this kind of conceit on Putin's part with an even longer economic winter. It also suggests that, should the U.S. and Russia come to some geopolitical loggerhead, the only option will be a catastrophic showdown between Bush and Putin, neither of whom seem to understand anything other than blunt force.

Mr Jorgenson uses data for Europe and Japan which are adjusted to incorporate price deflators and measures of software expenditure similar to those used in America. Unfortunately, the detailed information needed to make these adjustments is available for most economies only up to 2000. Even so, the results are striking. For instance, they suggest that Japan's GDP grew by an annual average of 2.1% in the second half of the 1990s, compared with only 1.4% according to official statistics.

Employing these revised data, Mr Jorgenson finds that in all G7 economies, not just America, a boom in IT investment helped to boost growth in the second half of the 1990s. Indeed, the contribution to GDP growth from IT capital spending was almost as big in Japan as in America—although it was offset by a fall in investment of other sorts. All of the European economies also saw a marked increase in their IT capital stock, albeit smaller than in America. As in Japan, in many European countries this was partly countered by weaker non-IT investment.

I'd say that the different perceived value of the returns on IT investment are a combination of overstatement of the value to the U.S. economy and an understatement of the European and Japanese returns.

The article goes on to talk about "deficient demand" in Japan and Europe, "The snag is that elsewhere it has been partly disguised by the poor performance of investment in other things," which is a fancy way of saying -- in my opinion -- that the benefits of IT aren't being recognized. But I'd say that is actually a failure of IT marketing and product follow-through, not some kind of fault in the populations of other countries.

This same researcher said in 1991 that IT investment would "ease the economic slowdown," which was patently wrong. It seems he expects perfect responses by the market to imperfect technology or technology marketing.

I think we have a ways to go on the understanding the economic benefits of technology front.

Also, I received a comment about one of my postings recently on the same topic, which bears repeating here and a full response:

This sort of Time Shifting is already available for streamed Internet radio. Check out Replay Radio here:

www.replay-radio.com

Replay Radio lets you schedule shows to record, and then it saves them as MP3 files or burns them to an audio CD automatically. The software costs $29.95, and you can try a free demo from the site to see how it works before you buy it.

Posted by: Bill Dettering at October 26, 2003 09:25 PM

Actually, no, that's not what I am describing. I'd like something far more radical than the time-shifting feature. I want to shift attention away from the mass media to the many media. Audible has had time-shifting for years, now, but the whole industry needs to go further!

Replay Radio requires there be a stream from an existing radio programming source to record in the first place, which means it is only a half-step away from today's media -- it's predicated on today's media. It's, as the site says, a VCR for the radio -- what we need isn't just TiVo, but a completely new channel for content offered outside of the streaming environment, which is still incredibly inefficient. I want to be able to subscribe to a program and have it delivered on my schedule without having to have to set a system to record from a stream.

For instance, I was on WebTalk Guys this week and the show was pre-empted on the local radio station because of a football game. I'd have missed the show using Replay Radio to record that stream.

Now, as for finding individual shows, Replay Radio does let you do that, but it doesn't provide the kind of marketing channel I think is needed to promote a show, since it funnels the entire experience through a single interface. If Replay Radio decides to be a marketer of programming the cost of getting exposure in the application interface will probably rise; if not, Replay hasn't got the incentives/resources to stretch a wide net to find new content and categorize it -- unless it embraces RSS with enclosures.

Replay Radio's Quick Capture feature is pretty nifty and probably would get the company sued if users recorded secured music from the sound card after it was decrypted. Not that I object to that, but from a pragmatist's viewpoint, it is something to consider.

Finally, the big thing is that Replay Radio isn't providing an economic model for the programmer to invest in time-shifting, whether that programmer is a ClearChannel or a single producer of content. Simply capturing audio doesn't enable any new business model to support content creation.

Clearly, I am far more concerned about how the small content player can get off the the ground. The fact that Audible, with whom I've worked for years, is embedded in most MP3 players and has a working secure delivery regime that is rational and fair to the consumer, allowing multiple copies and flexible playback options, makes it my platform of choice for the self-publishing audio efforts. They just don't do it yet and if anyone wants to see them do it, let me know and I'll pass it along to Audible as feedback.

Why should code written randomly by some hacker in China and contributed to some open-source project, why is its pedigree by definition somehow better than the pedigree of something that is written in a controlled fashion?" he asked. "I don't buy that."

What Steve Ballmer doesn't realize is that his own company takes virtually the same approach, hiring some young coder from Kentucky or Bangalore to write a bit of code that gets appended to Word or Windows, but without the feedback of coders and users that are incorporated into the collective decision-making that produces open source software. The market decides in open source whether the code written by the hacker gets incorporated into the product or shaved off and discarded because there are better solutions available.

At the same time, Ballmer says Microsoft will pursue more consulting and services business, which is the core of the open source financial model -- but he is going to try to do it with a closed system that embeds people who don't know the source code of the tools they use as intimately as an open source service provider who might actually have written the code in question.

UPDATE: For the many of you who have asked, this is satire, not a record of actual statements.

One of the changes that I think is essential in the midst of the "you are with us or against" line drawn by the Bush Administration is the end of having to hate other Americans with whom you don't agree in order to be a Good American. That needs to start with people in the various candidates' camps, as well as the candidates themselves, recognizing that the worst thing to do is attack other candidates for the opportunity to challenge Bush in 2004. A substantive discussion of policy without the abrasiveness would be a big step in the right direction.

Then, we can deal in an organized way with the potential for an unprecedented theft of the election using electronic voting machines.

Here is what is significant: The Net auction will distribute the shares as widely as can be achieved in this world, rather than allowing large pools of shares to be held by major institutional investors. As an anonymous source told the FT: ""They could get a $100bn" stock market value, said one person involved. "However, all the shares would end up with Aunt Agatha in Des Moines and Uncle Milt in Pittsburgh and there would be no real public market at all."

This reduces the liquidity of the stock, which will keep the share prices higher in the short- to medium-term, because there will be a shortage of Google shares for people who want to buy large quantities. In the long term, it is a promise to shareholders that they will receive value directly from the company, which is already profitable -- that is, old fashioned dividends. This is a significant change in the value proposition in stock offerings. It suggests that the Bush suspension of the dividend tax could actually make IPOs by unprofitable companies less attractive, reducing the ability of younger companies to raise money.

It also raises significant issues relating to the sale of stock by insiders, who will obviously hold the vast majority of shares when the IPO is over. By tracking the sales of stock by insiders we should be able to get a very clear idea of how they are feeling about the company's performance -- and there may need to be a more explicit disclosure of reasons for sales of stock in advance. At least this is what my sojourn in investment banking tells me as I contemplate the Google IPO story.

UPDATE: Tristan Louis adds some interesting thoughts about what Google might do with the money it raises.

Tristan's point about "what would they buy?" is an interesting one. I think Google could come out of this with a $30 billion to $40 billion valuation and about $8.5 billion in cash. Of course, it is profitable, so it will keep tossing off cash to pay for more acquisitions or to pay off an acquisition of the size of Yahoo. But I think that Tristans latter thought is more likely where they will go -- the assemblage of a variety of network services that can be exposed by extending their APIs into new functionality anchored and tied together by comprehensive search functionality.

Contrast this language, offered by President Bush in April:

The misdeeds now being uncovered in some quarters of corporate America are threatening the financial well-being of many workers and many investors. At this moment, America's greatest economic need is higher ethical standards -- standards enforced by strict laws and upheld by responsible business leaders....

We've learned of some business leaders obstructing justice, and misleading clients, falsifying records, business executives breaching the trust and abusing power. We've learned of CEOs earning tens of millions of dollars in bonuses just before their companies go bankrupt, leaving employees and retirees and investors to suffer. The business pages of American newspapers should not read like a scandal sheet.....

With these campaign contributions, from a financial industry that is experiencing double- and triple-digit growth in compensation (which is scandalous, given the continuing layoffs across the economy, not to mention continued paring on Wall Street):

A study to be released today shows that the financial community has surpassed all other groups, including lawyers and lobbyists, as the top industry among Mr. Bush's elite fund-raisers. The list of those generating $100,000 and $200,000 now includes chief executives like Henry M. Paulson of Goldman Sachs, John J. Mack of Credit Suisse First Boston and Stanley O'Neal of Merrill Lynch , whose firm has already raised twice the amount for Mr. Bush's re-election that it did during the entire 2000 campaign cycle....

The 2004 election is still more than a year away, but employees of securities and investment firms and their political action committees have contributed $3.8 million to the Bush campaign through September, just $159,000 less than they gave during the entire campaign cycle in 2000, according to the Center for Responsive Politics, which tracks campaign finance.

The president has raised more from the industry than all nine candidates in the Democratic field combined. While Senator John Kerry of Massachusetts counts the industry as his second-largest contributor, at about $1 million through September, others have not done as well. Howard Dean, the top fund-raiser in the field, raised about $302,000, and Senator Joseph I. Lieberman of Connecticut raised about $639,00

While Wall Street executives say they are contributing because "President Bush is doing the right thing for the American people," the evidence of economic performance and increasing distrust and anger toward the United States internationally doesn't support the argument. The tangible results of the president's economic and foreign policy don't bear any improvements for Americans -- yes, we're more scared, but we are less prosperous and less secure than we might have been if President Bush had not lied repeatedly about the justifications for the war in Iraq.

All things being equal, the simplest explanation is that, having lined the pockets of Wall Streeters, President Bush is harvesting the resulting contributions.