30 June 2000

I began my weekend an hour early today.  For some reason, the IT department at work decided to start switching out network routers and other equipment without telling anyone.  This disrupted my work for about an hour early in the afternoon, leaving me without printer, shared file, company email, and internet access.  The problem was corrected -- for about 30 minutes -- only to go down again about 3 p.m.  So with an hour left in my workday and no ability to do any work, I said to hell with it and began my weekend!

I did read an interesting article at work in an industry trade publication.  The article argued that oil still drives the American and world economy, and that high oil prices are going to have a significant impact soon.  Actualy, the truth is exactly the opposite!  We've seen oil prices in the $30/bbl range now for how many months, with no appreciable impact on a booming U.S. economy?  The reason for this is simple:   virtually all of the growth in today's economy is service and information oriented.   The tech revolution has tied economic growth to man's mind and the minuscule amounts of power required to drive electrons through silicon chips in a highly organized manner.  It is an industry that is not bothered in the least when oil is $30/bbl.  

Interestingly, the greatest threat today to a booming economy is not oil, but rather   the celebrated Alan Greenspan.  Once a Rand devotee (and a proponent of currency based upon gold), Greenspan has become so drunk with power over the years that apparently it's turned him into a Keynesian.  The economy is booming?  It must be slowed down, Greenspan intimates! [Off the record, of course.  Why must it be slowed?]  Because otherwise the economy will overheat!  [Overheat according to whom?  Why is rapid growth bad?  When did Greenspan decide it was his job to determine this, rather than the job of the millions of individuals who compose and economic system?].  And if the economy overheats, inflation will result!  [Does Greenspan not recall writing articles in his Randian days on inflation as a completely monetary phenomena, back when he also argued a gold standard was the cure for inflation -- in other words, back when he made sense?].  And so forth. 

In response, Mr. Greenspan seems determined to continue to hike interest rates, which will indeed raise the cost of capital and slow down growth (though perhaps not to the extent he thinks, since information is less capital intensive than industrial production).   The high price of oil will eventually be blamed -- quite incorrectly.  And only a few astute observers will note the contradiction of the early Greenspan -- who advocated markets, limited government, and sound currency -- and the current Greenspan, who utilizes monetary policy in a manner that effectively renders him a hideous creature:   Economic Czar of the United States. 

It would be interesting to watch if it weren't so offensive.