>I have learned there is often but a meager relationship between purported facts and the actual truth. One may be correct with respect to fact but be totally wrong regarding truth. My evidence to support this contention is supplied by Mr. Douglas when he laments in his posting the use of those "awful numbers" which nevertheless you then touted to support your point of (non-deflationary) view.
Here is where the debate becomes baroque. Taken to the extreme, your argument can be construed as saying that you can argue without facts, that higher truths derive from compelling rhetoric rather than a careful review of data. I know you're not saying that, but I think we should always have a profound respect for data, however imperfect.
In my response to you, I put in something about how I agree with the honorable Douglas, but 1) they are the best data we have and 2) even though the methodology is suspect, it is the same methodology used over and over. Of course, a lot of people think the error keeps increasing over time, as the real economy diverges ever more from the statistician's model. Although I have sympathy for this claim, it is controversial. I unfortunately edited all this out, because it is a tad esoteric.
>I personally am willing to stipulate that most facts have counter-facts and the truth is somewhere in-between. For me, and I hope for others, these discussions are informative, even entertaining, and I could never scout up all the great articles posted by contributors.
This is where I have problems. I am not willing to stipulate the existence of credible counter-facts for deflation or 80% world hunger.
re: questions
I can't answer your questions because the scenarios you outlined are open-ended. Let me try to give you a theoretical framework instead, so you can pass judgment using whatever assumptions you want. Productivity is understood as output (measured in dollars) per worker. A productivity gain is the non-inflationary increase in output. So your scenarios would only result in a productivity gain if, at the end of the day, the dollar value of those sales have gone up, after subtracting away inflation.
Just for an example, say Gillette sells 100 Sensor razors for $10 (total sales $1000). If next year, they raise the price to $12, but still sell 100 (total sales $1200), that's 20% inflation, 0% productivity increase. In a competitive market in an era of price stability, this does not happen. What happens instead is that they only sell 50 at $12 (total sales $600) because the other, price-sensitive consumers, buy $10 Schick razors instead in disgust at Gillette's price gouging. So we get 20% inflation, -50% productivity. So what Gillette has to do instead is invent a new razor so that next year it can sell 90 Mach3 for $12 (total sales $1080). This is 0% inflation, 8% productivity increase, because consumers are still free to choose to buy the $10 Sensor, or the at the very least, the $10 Schick equivalent.
Here, you begin to see the outlines of the arguments against government statistics start to gather shape. If the methodology is sufficiently shoddy (what's the consumer price of a razor today and next year?), it may misinterpret consumer choice for high-performance razors as a price increase, and end up calling a 8% productivity gain as 8% inflation. Also, it is intuitively appealing that this consumer choice aspect is more pronounced now than in the past, whereby quantity may be more of a consideration than quality while the reverse is truer today. Thus, proponents argue that productivity is understated, inflation overstated.
I remain firm in my contention that the supermarket is a great place to study economics.
>One more question: Do the high percentage of people who admit to lying and cheating in college ever stop when they get into a profession, business, or academia? Or does the same behavior morph to a new form and get re-defined?
I dunno. Ask Ted Kennedy. |
