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Friday, December 20, 2002

Productivity Rules!-Interesting Economist article found by Georgetown econ student Simone Koo on company profits growing a projected 5% for 2002. The article has this bit of sour grapes-"However, much of the gain is likely to come from cost-cutting and restructuring, not from a robust recovery in profitability." Sir, profits are revenues minus expenses, last I checked. You can add to profitability by either increasing revenue and/or decreasing expenses. Cutting costs through productivity gains is a legit way to decrease expenses and increase profitability. Schumpeter would call it creative destruction.

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