To start with, this was a corporate earnings season to die for. With the economy in boom mode there's little for a decent bear to hang his hat on, except for the old bear standard of fretting over low equity-risk premiums . Today, the real story is productivity. He was commenting on the slow productivity growth experienced in the US economy through the 1970-80's. The dawn of the digital age was slow going for productivity gains hampered by steep learning curves and expensive equipment, most of which is landfill by now.
Low productivity equals high inflation.
Increasing productivity means that the cost of goods and services go down and inflation is contained. Of course, measuring productivity isn't as simple in today's information based economy as it was in the industrial age. Back then all you had to do was weigh the ratio of what came in the back door of the factory to the amount of finished product rolling out the front door. Fortunately, as the economy has heated up in the last few years, so has productivity, with a little help from its cousin, innovation. The blossoming of the Internet and the maturing technologies of computers and software have combined into a synergistic force to propel productivity to new highs.