The New Economy: What It Is, How It Happened, and Why It Is Likely to Last

Rating:
Summary: Excellent analysis of the New Economy
Review: Roger Alcaly, an economist, makes a strong case that information technology, like electricity before it, will support economic growth for decades. Making a parallel with electricity, he notes that for decades, industrialists would electrify only parts of their plants, but only to supplement the older steam engines. It wasn't until the 1920s (40 years after the discovery of electricity), when new immigration laws slowed the arrival of cheap labor, that U.S. industry plugged fully into the new electric technology and reaped the resulting prodcutivity gains.

Alcaly suggests that a similar lag is holding up the computer revolution. He argues that the full impact of the New Economy won't be felt until vast sectors upgrade their basic processes, transmitting data over the Internet between suppliers and customers.

In his broad survey of an economy in transition, Alcaly ranges from the equity markets to manufacturing and the Federal Reserve. He makes a solid case that a New Economy is upon us, even if its power is hard to measure and predict.