Greenspan and the Productivity Slowdown

''Still pumped up'' (News: Analysis & Commentary, Nov. 13) gives Alan Greenspan a big pat on the back for forecasting the post-1994 productivity boom. Yet Greenspan is portrayed as a passive observer of the current situation, when his six consecutive increases in the Fed funds rate have exacerbated the risk of a productivity bust.

The investment boom of the past five years that you cite as the engine of productivity is in danger of being choked off by higher interest rates. The article cites companies cutting back on capital spending because higher interest rates and lower stock prices are boosting the cost of capital. But these higher rates were engineered by Greenspan, in part in an effort to cool off stock prices. That Greenspan should be able to take a pass on the negative economic consequences of his massive interest rate increases is beyond the pale.

Bernie Schaeffer
Cincinnati


To Greenspan's delight, stock prices are reflecting a slowing economy. We should put into perspective the possible impact on corporate performance.

The U.S. economy has been expanding for almost two decades. Since the 1981-82 recession, we have performed with exceptional vigor most of the time. In fact, there were only four quarters in which gross domestic product did not increase in absolute terms--two in 1990, one in 1991, and another in 1994. Therefore, growth has occurred in 68 out of 72 quarters. The ''recession'' of 1990-91 was merely a speed bump on the road to prosperity. We submit that any slowdown in the next year or two is likely going to be another speed bump.

The $9 trillion U.S. economy is a diversified and growing engine that has brought benefits to most U.S. citizens. Its global corporate structure is now embracing and benefiting from a true revolution of efficiency brought on by the integration of Internet technology into almost every aspect of economic activity. Cost-containment strategies are being implemented across the board. If we do enter a period of recession, it will likely be short and mild. Instead of getting excited about the short term, decision makers and investors should continue to plan for long-term expansion.

Raymond Lopez
James Gould
Pace University
White Plains, N.Y.

Don't Blame R&D for Xerox' Shortcomings

Singling out Xerox Corp.'s Palo Alto Research Center as an example, author Peter Coy says that its inventions did little or nothing for Xerox' shareholders and that any co-owners will demand that PARC researchers work on ''more practical, short-term business problems'' (''Research labs get real. It's about time,'' News: Analysis & Commentary, Nov. 6). He later says corporate research and development labs once resembled ''ivory towers,'' but that ''PhDs are now getting their hands dirty on real-world customer problems.'' The thinly veiled implication: We've got to rein in those pointy-headed intellectuals in what he calls a ''dream factory.''

Coy misrepresents reality. PARC researchers did their job, but Xerox' business leaders failed to grasp the value of the R&D. What would companies give today to own rights to Ethernet networking, the graphical-user interface, or even just the lowly mouse itself?

Apple Computer Inc. was largely based on PARC research, and Apple's profits would have accrued to Xerox had Xerox' leaders been on the ball. Xerox' accountants, lawyers, and marketers failed to deliver on the El Dorado turned up by Xerox' engineers. The problem Coy has unwittingly put his finger on is the tendency to use R&D as a whipping boy for failures by technically benighted management.

Stephen R. Cooper
St. Louis

CEOs Let Their Wallets Do the Voting

''Do CEOs vote? Not always--and not often'' (Government, Nov. 6) told only half the story. While it gave a rundown on whether CEOs head to the polls on Election Day, it missed the opportunity to note that many CEOs who do not vote choose to influence the election through their contributions.

Although Lawrence J. Ellison of Oracle Corp. hasn't voted since 1992, he has made political donations since 1996 of $124,000, while Oracle's contributions amount to almost $800,000. And Oracle's lobbying expenses for 1999 alone topped $2 million. While C. Michael Armstrong of AT&T, John F. Welch of General Electric Co., and Steve Case of America Online Inc. find it difficult to get to the voting booth, their companies have found it easy to give soft money in the amounts of $3 million, $848,000, and $250,000 for this election cycle. And Steven F. Goldstone, chairman of Nabisco Group Holdings Corp., said that ''he does not vote in protest of the system.'' Yet, according to lobby filings in 1999, he authorized $650,000 to be used to lobby officials.

The arrogance of these CEOs, who choose to speak through their wallets or through their lobbyists rather than the ballot box, helps drive the fight for campaign finance reform. Democracy, after all, is supposed to be based on the concept of ''one man, one vote.'' Given the current system, who can blame these CEOs for not voting?

Amy Kauffman
Hudson Institute
Washington


Voting is a responsibility of every citizen. Possibly many of these executives see themselves more as global citizens and feel no particular allegiance to this country. In that case, I say take them off of corporate welfare just as I think most able-bodied welfare recipients should have a full-time job.

Some might say they are too busy, but that is only an excuse. I have been an active person most of my life. In 1953, I voted absentee as a soldier in Korea. I have voted in every election since I became eligible 49 years ago.

Bob Headland
San Diego

How Can Economists Put a Price Tag on the Environment?

Gore's ''reckless and offensive passion for the environment'' (Economic Viewpoint, Nov. 6) exemplifies the flaws characterizing narrow economic analysis. Current economic modeling has a woeful poverty of tools for factoring in true costs associated with environmental degradation. It does not take an Exxon Valdez for degradation to occur, but it is often more insidiously produced through lost habitat and other factors. It is an established fact that nearly 10,000 species of plants and animals are on the verge of extinction. Countless others have become extinct in recent decades at a rate unseen in history.

Similarly, the scientific community is in overwhelming consensus about the reality of global warming. Where in your models do you factor in the lost riches and the dislocations we are likely to experience because of weather change? The models do not account for long-term costs, complex wide-ranging relationships, or damage to large numbers of people. To ignore such realities and criticize Al Gore for being courageous enough to take a stand is truly reckless and offensive.

Rafael K. Reyes
Foster City, Calif.


Robert J. Barro's article shocks and dismays me. I expect such articles from people running for office, not from Harvard professors. Barro, like many other Americans, falls into the trap of thinking revenue and cost are adequate reasons to do just about anything. Who is he to judge what portion of nature is attractive? What relevance does our ever seeing it have to the well-being of the planet? By the way, Professor Barro, what is the ''cost'' of losing a species forever? I'd love to see the math on that one.

Barro also fails to address a basic fact known to rest of the world except us: Americans waste huge amounts of energy. If Americans chose to cut back consumption even in the slightest, we could solve our energy problem overnight. But since sport-utility vehicles, 24-hour air conditioning, and inefficient home construction are popular among Americans, they choose to ignore the impact--until it hits their wallets. I laugh in the face of SUV owners who cry at the pump. I say ''for shame'' to those who know they are wasting energy unnecessarily and do it anyway, simply because they can afford it.

No wonder the rest of the world is disgusted with us. We won't slow down our consumption long enough to even evaluate the situation properly. We just continue to chase ''revenue'' and limit our personal ''cost.''

James F. Kennedy
Madison, N.J.

Pilots' Pay Hikes Pale Beside Execs' ''Parachutes''

''Will United's woes spread?'' (Management, Nov. 13) was well done, but as a United Airlines pilot, I think a few points were missed. The pilots' pension plan increased from 9% to 11% with this contract, the same level that existed prior to 1981. The pilots' new wages come to annual compounded increases of 3% to 3.5% over seven years--not so generous. For comparison, consider the executive compensation raises and their ''parachute'' prices.

We have paid an inflated price for our own stock for six years and were not enamored of it. Why would we want United to purchase overpriced US Airways Group Inc. stock when no one else does, even at normal prices? Have you noticed any new employee stock ownership plans of late?

R.C. McCormick
Crystal Lake, Ill.

Don't Exclude the Baltics from a ''New Europe''

As a former vice-minister of defense of Lithuania, I feel obliged to express my concerns about ''Is NATO about to make a bad move in the Baltics?'' (International Outlook, Nov. 13). The authors' reference to the three Baltic nations as ''former Soviet republics'' shows their lack of understanding of history.

The Baltic nations were occupied and forcibly incorporated into the Soviet Union following the 1939 signing of the Molotov-Ribbentrop Pact, which established spheres of interest between Berlin and Moscow. After the Soviet occupation of the Baltic countries in 1940, their governments were overthrown and Stalinist puppet regimes installed. In the years that followed, one-third of the population of these nations was murdered or exiled to Siberia.

Lithuania, Latvia, and Estonia are three small, peaceful nations seeking membership in NATO to ensure that their freedom and independence are protected. They cannot forget the two centuries during which Russia subjugated and terrorized them, especially during the Soviet occupation. They want guarantees that this will never happen again. All the Baltic people want is to secure their liberties and do their part to contribute to overall security in Europe. They are doing this by forming their own armed forces which are being trained to defend themselves and to contribute to European security through NATO and U.N. peacekeeping operations.

When diplomats speak of a new Europe that is whole and free, they cannot ignore the people of Lithuania, Latvia, and Estonia as was done at Yalta.

Rom Kilikauskas
Fairfax, Va.

''What if it breaks?'' (Technology Buying Guide, Nov. 13, 2000)

''What if it breaks?'' (Technology Buying Guide, Nov. 13, in the print version of the magazine) said the price of Apple Computer Inc.'s AppleCare extended warranty was $249 for three years. That figure applies to the company's PowerMac line of computers. The price of its iMac series warranty is $149.