New Economy

WASHINGTON -- Despite a remarkable run of prosperity that he credited in large part to new technology, Federal Reserve Chairman Alan Greenspan delivered his bluntest warning in months yesterday that the economy could still be derailed by its old nemesis, inflation.Delivering a sweeping analysis of the forces reshaping the economy at home and abroad, Greenspan said the ability of businesses to use rapid advances in computers and communications to hold down costs and produce higher-quality goods and services had helped hold down price increases, bolster the stock market and allow the economy to grow robustly.

IT'S A PERPLEXING period for finance guru Burton G. Malkiel.A Princeton University professor, Malkiel is the author of "A Random Walk Down Wall Street," an investment classic now in its seventh edition.On one hand, as espoused in his book, Malkiel believes that securities markets are efficient, meaning stocks are very nearly always accurately priced. On the other hand, with the technology-focused Nasdaq composite index hitting record high after high, and with profitless high-tech firms valued at billions, Malkiel says he's certain as can be that the stock market is out-of-whack: We're in the midst of a stock-market bubble -- a speculative financial frenzy that's destined to burst because share prices are way too high.

NEW YORK -- In the early 1990s, I was let go by my employer, then promptly rehired to do the same work as an independent contractor. I was elated. Not only was I living the American dream of being my own boss, I had more cash in my pocket.I was getting paid more and paying Uncle Sam quarterly instead of every two weeks. I looked with considerable compassion at my co-workers stuck in the same old corporate rut.It was a mutually beneficial arrangement. At a typical company, overhead expenses per employee are at least equal to gross wages.

Dwindling Y2K fears and a widening belief that the technology-driven "New Economy" is more reality than media myth sent stocks soaring yesterday, with all three of the major U.S. indexes again closing at record highs on the final trading day before Christmas.The Dow Jones industrial average rose 202.16 points to close at 11,405.76, and the broader Standard & Poor's 500 index climbed 22.21 to finish at 1,458.34.The technology-heavy Nasdaq composite index punched through the 4,000 level for the first time in its 28-year history 36 trading days after it eclipsed the 3,000-point level.

WASHINGTON -- At the end of the 1980s, the book that dominated the best-seller list and scholarly discussion was Yale historian Paul Kennedy's pessimistic "The Rise and Fall of the Great Powers." As the 1990s end, what dominates are sunny titles such as "The Millionaire Next Door."The sea change in Americans' reading habits offers one way to gauge how unexpectedly well the U.S. economy performed during the decade -- and how poorly many of the country's most prominent politicians and policy thinkers did at predicting it."

THE "GOLDILOCKS Economy" enjoyed by U.S. consumers for much of this decade got its nickname for a reason: For the nation to enjoy prosperity of this duration, every factor influencing the economy had to be "just right."And, yet, it hasn't always seemed that way.Take the labor shortage, which -- even now, after three interest-rate increases by the Federal Reserve -- continues to afflict key growth industries nationwide and in Maryland. For the country, the unemployment rate for November stood at 4.1 percent, matching October for the lowest rate in 29 years.

This summer, more than 70,000 workers staged an unusual 36-hour strike against the regional telecommunications company Bell Atlantic.The usual strike issues - wages, pensions and health care ` had already been decided. What remained unresolved was what would happen to Bell Atlantic's current employees, mostly members of the Communications Workers of America (CWA), as traditional telephone-company jobs continue to be automated out of existence.Just a day-and-a-half after the strike began, the company and the union reached an innovative agreement.

WASHINGTON -- Consigned to extinction by the Republican Congress, the Congressional Office of Technology Assessment in 1995 sang a troublesome swan song. We'd soon be deserting cities, migrating to calm rural places, it predicted.And why? Computers and modems would free us from offices, let us work anywhere. So why not bow to the inevitable and just spread a thin, sprawling layer of homes and settlements across the countryside?But now comes the Silicon Valley consulting firm of Collaborative Economics, with a radically different tune for the times.

More than two decades ago, the emergence of the global economy nearly destroyed the big three auto companies. Now, it's dividing each of the two major political parties as well.For those who were unaware that globalization is generating new arguments, new alignments, and surprising outcomes, the defeat of Fast Track trade legislation last year was a rude wake-up call. Fortunately for those who want to understand the trade debate, there is a growing number of controversial and comprehensible books on the subject.

WASHINGTON -- It's nice to have Labor Day. But now, at the dawn of the New Economy, we also need a Business Day. With such a perspective, the summer of 1997 could have served as the first session of New Economics 101, a course we all need.The AFL-CIO did its part. When the Teamsters struck UPS, the national labor confederation pledged money and moved to the front lines of the public-relations war. The unionistas made a stark ideological case: The greed of the business class, coupled with the New Economy, was creating a ''part-time America'' where working men and women who played by the rules couldn't get a full-time job or earn a living wage.

The knowledge economy that Maryland is pushing as its future - a promised land filled with high-paying jobs in health care, defense, biotechnology and professional services - is shutting out tens of thousands of the region's residents. As lab coats replace work shirts, the underside of the new economy becomes clear: The more dominant it becomes, the harder it is for people without specialized training to participate. That disconnect could become even more pronounced in a state that has made the pursuit of biotechnology official policy.

A few months after General Motors made its last van at the 70-year-old Broening Highway plant, a seed for Maryland's new economy sprouted across town in West Baltimore. On a cold morning in October 2005, the governor and mayor heralded the opening of a biopark built by the University of Maryland, Baltimore - a place where researchers would pursue breakthroughs in treatments for diabetes, cancer and heart disease. One of the park's first tenants was a Japanese medical firm. Officials toasted the partnership with sake.

Twenty-five years ago, Greek kids were the largest group of non-native speakers in the Baltimore public schools, and most of them were at John Ruhrah Elementary. Baltimore was the only big city in America where Spanish wasn't the principal alternative language. That wasn't because there were so many Greeks here - it's because there were so few Hispanics. That era has long since passed. Immigrant children are fueling the increase in school enrollment across most of Maryland. In percentage terms, their numbers are growing faster than those of African-Americans.

Maryland is one of the best-positioned states for today's fast-changing and high-tech economy, according to a report released yesterday by two pro-innovation nonprofit groups. The state ranked third behind Massachusetts and New Jersey - beating out the tech states of Washington and California, which rounded out the top five. Maryland's large share of professional and technical jobs, fast-growing firms and scientists and engineers helped propel it near the top of the list. The study, released by the Information Technology and Innovation Foundation and the Ewing Marion Kauffman Foundation, looks at 26 indicators to judge how prepared states are for what it calls the "new economy" - in which knowledge and entrepreneurship are key, and the competition for business is global.

WASHINGTON -- The last time the Dow Jones industrial average closed at a record high, America was living in a giddy economic era when good times and budget surpluses seemed as if they might continue indefinitely. It was Jan. 14, 2000, the start of another year, another century and another millennium. The economy was roaring along. The unemployment rate was low at 4 percent. The "new economy" of young entrepreneurs energized markets with new tech companies that didn't turn profits. Nobody seemed to care, and excesses piled on top of excesses.

Conspiracy of Fools Kurt Eichenwald. Broadway. 742 pages. $26. Twenty-five years ago the chairman of a large Philadelphia bank volunteered some advice to a newspaper editor fretting about his ability to assess a complex business deal. "If you can't understand it, they are probably stealing," he suggested with a boyish grin. It turned out that they were. The spectacular rise and even more spectacular fall of Enron Corp. reminds me of the banker's advice. A half-dozen books have been published about Enron's collapse, but Conspiracy of Fools, Kurt Eichenwald's richly detailed narrative, is likely to be a landmark record -- not just of what went wrong at Enron, but of how American business went crazy during the 1990s, when it seemed that everyone had a shot at becoming a billionaire in the New Economy.

MILWAUKEE, Wis. - Douglas Konecny loved everything about manufacturing. He loved the roar of the machines and the hum of the factory walls. The vibrations. The smells. Even the feel of the fans blowing against his damp skin on midsummer days when it was 10 degrees hotter inside the seven-story building than outside. He could tell when things were going right and when they were going wrong. Even when he wasn't there. "You actually feel it like your own blood pumping," Konecny, 49, says of the work that gave him satisfaction and a comfortable, middle-class life for nearly 30 years.

AUSTIN, Texas -- There's some stiff competition in the Stupidest Thing Said Yet department about the swoon in the financial markets. But among the heavy contenders we must surely count those who are now saying they know who's responsible, and it is us. According to this theory, you, me and Joe Doaks made Ken Lay do it. Came as a surprise to me, too. Naturally, as a liberal, I just love guilt, so I was ready to sign right up for this one, but try as...

"One planet. One network. A million possibilities." That motto greets customers at Global Crossing Ltd.'s Web site, reflecting not just the company's vision, but an entire industry's conviction that it can transform the way people work and live, making life better and easier for everyone. Telecommunications companies made a spectacular entrance six years ago, raising billions of dollars in capital, expanding rapidly, hiring hundreds of thousands of workers and creating a worldwide network with thousands of miles of fiber-optic cable on land and across the ocean floor.

PITTSBURGH - Shannon Sharpe dissed this town royally, didn't he? The Baltimore Ravens had just destroyed the Miami Dolphins to set up tomorrow's Armageddon with the Pittsburgh Steelers, and Sharpe was discoursing on what a swell idea it was for the team to arrive in Miami early so the players could bask in the sun and cruise South Beach and lounge about their pricey resort hotel getting pedicures. (Pedicures! That sound you heard was Artie Donovan choking on a Natty Boh.) "We won't be going to Pittsburgh early, I can tell you that," said Sharpe, in summation.