LOL- I am not replying to you but in case anyone else sees this, let me quote Steven Roach from Morgan Stanley as someone who agrees with me that "productivity improvements" are actually reporting on offshoring trends. Of course Steven Roach, chief economist at Morgan Stanley, probably has nothing on your background Kenneth.
If that presumption is correct, then as much as a third of the so-called productivity bonanza of this recovery can be attributed to a shortfall in domestic hiring. Absent that windfall, productivity growth over the first six quarters of this expansion actually would have fallen well short of its typical recovery profile. Obviously, that has not been the case in this jobless recovery. But that doesn’t mean aggregate demand is necessarily being sourced by more efficient modes of global production that require reduced labor content. Instead, courtesy of a cross-border labor arbitrage, it may simply mean that there has been a substitution of foreign labor input for domestic labor input. For America, that has the effect of biasing domestic productivity growth to the upside. That’s because conventional measures undercount the total labor input -- foreign as well as domestic -- required to generate a given product flow. Conversely, for foreign outsourcers, productivity growth may well be biased to the downside, as low-wage employment encourages more labor-intensive production schemes.
morganstanley.com
Of course the Bush economic team, in their infinite wisdom thinks otherwise. And we all know how on the mark John Snow has been. What Roaches comments really say is that the higher productivity goes, the more labor we are losing in the US. Watch for GDP at 10% next year. |
