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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: Ilaine who wrote (88374)	4/1/2001 12:51:50 AM
From: Skeeter Bug	Read Replies (1) of 436258

>>GDP isn't a good measure of productivity because 20 shirts at $5 is measured the same as 5 shirts at $20.<< exactly correct. why? b/c $0.25 shirts are worth less than the $4.00 shirts. if a factory making $4.00 switched their production to making $0.25 shirts then the value of factory output has significantly dropped. the problem here is that you assume a shirt is a shirt is a shirt. this is not true. would you say a car is a car is a car? making a yugo is just as productive as making a lexus? i don't think you would. imagine 2 countries. one country makes 1 million $4 dollar shirts (lexi ;-) per year. the next country makes 1 million $0.25 shirts (yugos) per year. does a third country view each country as being equally "productive?" if so, are they willing to sell $4 million per year worth of their goods to the 2nd country? i think not ;-) if they are equally productive and their output is the same, then why won't the third country do $4 million in business with country 2, but will with country 1? the fact is their output is different - and very measurably different. if output is different then productivity is different.

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