In testimony to US lawmakers, US Federal Reserve Board Chairman Alan Greenspan has reiterated his contention that IT investment is a key underpinning of the economy's robust nine-year expansion, but cautioned that the rate of business productivity growth from IT spending may be at or near its peak.
"The rate of growth of productivity cannot increase indefinitely," Greenspan told the Joint Economic Committee. "While there appears to be considerable expectation in the business community, and possibly Wall Street, that the productivity acceleration has not yet peaked, experience advises caution."
Until his cautionary note, Greenspan's comments echoed his recent contention that high levels of IT investment by U.S. businesses have been a significant contributor to increased labor productivity that has helped keep the US economy growing without overheating.
Greenspan, headlining for a group of IT industry executives addressing the opening session of the committee's National Summit on High Technology, also warned against the potential inaccuracy of projecting technological change into the future.
"As I have noted in previous testimony, history is strewn with projections of technology that have fallen wide of the mark," Greenspan cautioned. "With the innumerable potential permutations and combinations of various synergies, forecasting technology has been a daunting experience.
"There is little reason to believe that we are going to be any better at this in the future than in the past," he added. "Hence, despite the remarkable progress witnessed to date, we have to be quite modest about our ability to project the future of technology and its implications for productivity growth and for the broader economy."
Setting the stage for the IT industry executives who followed him, including IBM Chairman and Chief Executive Officer Lou Gerstner, Greenspan seemed to call on Congress to maintain a hands-off approach to the technology marketplace and to minimise regulation that could stifle U.S. innovation.
"As we contemplate the appropriate public policies for an economy experiencing rapid technology advancement, we should strive to maintain the flexibility of our labor and capital markets that has spurred the continuous replacement of capital facilities embodying older technologies with facilities reflecting the newest innovations," he said. "Further reducing regulatory impediments to competition, will, of course, add to this process.
"The new technologies have widened the potential for economic well-being. Governments should seek to foster that potential."