Gary, thanks for the excellent article. I appreciate you pointing out the highlights for us – it keeps me hoping. I hope you will appreciate my comments below and I hope they are not coming on too strong – but rather they should motivate people to see the issues and work towards finding some solutions.

The link did not work, try this one:
http://cep.lse.ac.uk/pubs/download/dp0788.pdf

Page 3 (4 of pdf)
Examples include McDonald’s and Starbucks, could also have Wal-Mart, all notorious for painfully low wages. Who wants to have they child grow up to be a Wal-Mart greeter making minimum wage? Raise your hands-anyone?

Page 5 (6 of pdf)
“IT enabled ability of regional managers to remotely monitor branches, this led to a huge reduction in branch-level management and much greater decentralized decision-making for the front-line staff“

IT changed banks to become more efficient. This means they no longer needed experienced (well paid) loan managers and could eliminate many of the tellers. As a result banks paid less for people and more for IT. Middle level jobs where eliminated – these were educated white collar jobs. Where did the extra money go? The IT workers are not getting it. Do you see the spread of top/bottom growing?

Page 31 (32 of pdf numbering)
“First, according to our model the US is not always superior. Rather, it is the flexibility of the US economy in adapting to major changes (such as the IT revolution) that gives it a temporary productivity advantage. This model predicts that Europe will start to realize enhanced IT-enabled productivity growth over the next few years and resume the catching up process with the US that was observed until the mid 1990s. There may be some evidence of this occurring as Europe’s productivity growth in 2006 picked up as America’s slowed slightly.”

It continues with our only hope this sentence:
“Of course, if the world economy has moved into a stage of development where technology-related turbulence is inherently greater, then the more flexible US will retain an edge over Europe for the foreseeable future.”

That means the 20 year old of today are going to be up against a formidable challenge. Will they wrestle with the international markets to continue the fight or will they relent and allow a more natural speed of development to take place. Hopefully we will all find a way to bring back the American middle class that has helped make this the great country it is today.

Graph on page 58 includes only 3 of the 5 first world countries, where are Ireland and Luxemburg. They must be too small for the graph to include them.

Graph on page 59 predicts that by 2020 the US will be behind European productivity.