My good friend Alex asked me to comment on the role of the Internet in producing greater efficiency. He points out that products we used to order took two weeks to be delivered, even across national boundaries; they now arrive in two or three days.
We don't have any adequate measures of productivity. The productivity measure you see in the newspapers is a residual of dividing revenue of industries by the number of workers in those industries. As these numbers diverge we have greater productivity reported to us.
You can see the problem with this. It is crude. It is gross and it is often years after the introduction of the productive elements in that industry. This measure makes it impossible to identify specific sources of increased productivity.
My experience of working inside individual businesses is that there were two extraordinary increases in productivity that occurred in the early 1980s. One was in telecom due to the fax machine and the telephone answering machine which allowed commerce to proceed on a global 24-hour schedule. The second was the introduction of delivery services that were truly rapid, such as FedEx, UPS and DHL.
I watched as people worked longer hours, worked much faster and much harder simply to keep up with the flow of material and paper that was moving faster around them.
It is from this experience that I conclude that anything that shortens delivery time between information from individual to individual and material passed from individual to individual or business to business is inevitably going to increase productivity.
The first people I saw buy portable phones, called car phones at the time, were the most productive people at high ranks in corporations and self-employed people who frequently worked in their cars.
From all of this. I conclude that increased speed in communications and materials results in increased productive output.
I know there are restrictions and limitations to this statement. People have a limited number of hours to work as opposed to sleep and people have a finite amount of energy. But I have certainly seen productivity gains in communication and supplies translated into exhaustion of available work hours and energy. I have also seen some nonproductive uses made of these new tools.
I think improvements in communication and supply are of great productive significance.