Productivity and Economic Growth in the Old and New Economy

It is easy to look at the pending Snapchat IPO, and either feel very confident that capital is being rightly allocated to the “New Economy,” or lament a possible $22 billion IPO valuation for a company with no profits and 330 employees. For comparison, Ford, an “Old Economy” bellwether, has $50 billion in revenues, $6.8 billion in pre-tax profit, and employees 201,000 people that pay taxes and support their local economies. The truth about relative value lies between the Old and New Economy. Snapchat...

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