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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (77665)	3/12/2000 10:23:00 AM
From: Don Lloyd	Respond to of 132070

Zeev - [[I think that productivity numbers are also skewed by the fact that the denominator (the number of hours worked) is grossly underestimated. not only are more people putting in much more than the normal 8 hours day (with all the telecommuting we now have), but I believe that there is a growing unreported underground economy, contributing to visible GDP without actually showing a good portion of "labor" input.]] Both good points. My point of view is not that productivity growth does not exist, but rather that neither productivity nor GDP nor CPI can be adequately or usefully defined in dollar terms, let alone measured, even in theory. Human ingenuity and effort are continually being employed in an attempt to satisfy the subjective valuations of consumers as demonstrated by their actual purchasing choices. These attempts aim for new and/or better products at lower cost to better serve consumers. Trying to express the results of all this in dollars is a futile enterprise since the value of a dollar is a purely subjective quantity, not the same for any two individuals, nor for a given individual at two different times. This would be equally true for gold or for any other form of money. But even if the productivity numbers actually had some validity, it is not possible to conclude that this has a presumption for stock price advances. Any increase in productivity does produce economic benefits. However, the benefits must be distributed between lower prices for consumers, higher wages for workers, and higher profits for companies. The actual distribution that results depends on the level of competition in the labor, capital and final product consumer markets. It is not hard to imagine that even substantial productivity increases may result in no profit growth, or even no profits at all. In fact, rapid productivity increases often destroy existing capital faster, as existing plant and equipment become obsolete. As this process proceeds, even the most efficient producers may fail to profit as long as the obsolete factories of the walking dead are able to dump product inventories on the market. gold-eagle.com Regards, Don