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Closing the Books on a Go-Go Decade


"Restating the '90s" (Cover Story, Apr. 1) suggests that "the productivity gains of the 1990s are real and sustainable." That's the most heartening economic news imaginable for our country, but it's something that's totally overlooked or ignored by most investors and economic analysts.

Investors focus too much on their capital losses generated from underwriting excesses in high tech. How many remember the Wang computer or the massive Cray central processor that once dominated the markets? How many shareholders of Wang and Cray still weep about their outcast state and begrudge the advances made by the low-cost replacement of their products?

We have become a nation of hand-wringing investors who fret over losses that are part of the process of technology's progress, a land of lucky laborers among a small band of spoiled investors.

Richard E. McConnell

Catharpin, Va.

Michael J. Mandel focuses on improved education as the cause for an improved labor force, whereas it is very likely that much of the improvement comes from the maturing, more experienced labor force. During the '90s, baby boomers were entering their most productive period. This pattern will continue for another 10 years. But by 2010, baby boomers will be leaving the labor force to be replaced by fewer, less experienced, youthful employees. While the labor-force quality helped drive productivity up in the '90s, and may help us out of the recession, it will drag productivity down in the 2010s.

Edward A. Bryant

New York

"Restating the '90s" contains "Enron accounting" in the numbers it purports to show. In general, it defines the 1980s as the nine-year period from the first quarter of 1982 to the first quarter of 1991. For the 1990s, it generously uses an 11-year interval from the first quarter of 1991 to the fourth quarter of 2001. As anyone awake at the time knows, 2001 was a year of dramatic, negative change. An entirely different picture emerges when the two actual decades of the '80s and '90s are compared.

Blair Vedder

Sheridan, Ill.

Editor's note: The goal was to assess the performance of the economy over the whole business cycle of the 1990s, from the trough in the first quarter of 1991 to the next trough in the fourth quarter of 2001. We followed the same procedure for the '80s cycle. Those periods give the most accurate picture, including both boom and recession years.

You point to wage increases in blue-collar jobs as evidence for the benefits of globalization, but there is another, more accurate explanation for these gains: As the manufacturing sector contracted, less-productive employees and many entry-level positions were trimmed. This left behind the more productive and experienced senior employees, who were typically paid more. This shift in compensation demographics is the most influential factor in the wage increase. Growth occurred in sectors (government, finance, transportation, and services) where globalization is not yet a factor.

Larry Brooks

Buffalo

The story of how the benefits of productivity gains are distributed is not over. With recent layoffs, wage pressure subsided. As companies begin rehiring, they are finding experienced, educated workers with renewed interest in factors overlooked during the '90s, such as sharing the company's vision and respecting the team. In two to three years, BusinessWeek will observe that the gains were shared in a more traditional manner between investors and employees. Besides, increasingly, employees are also the shareholder.

Lori Lehmann Hobson

Palo Alto, Calif.

"Restating the '90s" disturbs me. Shouldn't a business magazine get the story right the first time?

Jon Titus

Milford, Mass. Shareholders of the combined Hewlett-Packard Co./Compaq Computer Corp. should beware--not because the idea to combine was a bad one but because HP managers failed in their duty to show enthusiastic support for CEO Carleton S. Fiorina's strategy ("What price victory at Hewlett-Packard?" News: Analysis & Commentary, Apr. 1). Torpedoing Fiorina's earlier plan to streamline sales showed lack of leadership on managers' part, not hers.

Scott McNealy didn't go far enough when he said in his BusinessWeek interview that shareholders "who wanted to vote no should have gotten out of the stock." The rule also applies to managers who would undercut their CEO while happily accepting a salary.

Christopher J. Lahoda

Princeton, N.J. As a longtime admirer of Sun Microsystems Corp., I was disappointed with Scott McNealy's facile comments on Enron Corp. ("A talk with Scott McNealy," Information Technology, Apr. 1). The Enron failure had nothing to do with a Darwinian failure to compete. Its failure came from greed and dishonesty. Worse were McNealy's remarks about winners and losers in a free-market economy. Isn't McNealy himself seeking protection from what he perceives as predatory behavior, to avoid becoming one of those losers, rather than simply letting the free-market economy work?

Murray Duffin

Isle of Palms, S.C.

The day after the 2000 election, I attended the Sun Microsystems shareholder meeting. It proved to be a love fest for Scott McNealy--as the stock was near an all-time high of $64. Scott said: "The next two years are going to be exciting, spell that `volatile'but I'm holding on to my SUNW shares." He talked glowingly of expanded markets and increasing use of the network with Sun's growing role in it. He never alluded to the fact that, according to your article, he felt the stock was overpriced. "would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? What were you thinking?"

Well, as a shareholder since 1995, I was thinking of all the positive things I drove 200 miles to hear Scott talk about. Going to that meeting was a big mistake as I went for the head fake. Scott states in your interview: "I'm just going to keep my mouth shut." Is withholding information a good business practice that protects shareholders?

Keevan Abramson

Fort Bragg, Calif.

McNealy can complain about Microsoft, but Microsoft may now have the quality software that will commoditize major portions of the server market, just as [it did] the PC market. With Microsoft providing operating systems, Intel providing high-end processors and chip sets, and Compaq Computer, HP, Dell Computer, and others doing systems integration and support, the PC horizontal integration market will move to the server, and Sun's [vertical integration] business model is mostly toast.

Stephen Kay

Severna Park, Md.


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