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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Oblomov who wrote (30521)	10/23/2000 4:25:48 PM
From: LLCF	Read Replies (3) \| Respond to of 436258

<For example, say a skier hurts his knee on the slopes. In the past he would have had painful, invasive surgery, been laid up for days or weeks and undergone months of physical therapy. Now doctors may be able to fix the skier's knee using lasers or other less-invasive methods. The athlete spends less time in a hospital bed, but the quality difference will likely not make its way into government data.> I don't get it... aren't the gains measured because the guy was right back at work instead of lying around? Isn't that measured? Also, you've got one guy with a 'scope' fixing the guys knee up with no OT needed... the gains are eliminating OT. It's huge, and already measured, what's the problem? DAK

To: Oblomov who wrote (30521)	10/23/2000 5:56:36 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 436258

Oblomov - ...productivity... The fundamental problem with productivity measurement is NOT the fact that any sort of accuracy is simply impossible, is NOT the fact that it is manipulated for political effect, but rather that the conclusions drawn from the productivity number and its rate of change are obvious, simplistic, and wrong. As an analogy, consider the following : Dow Jones News - The NYSE tire manufacturing sector rose 4% yesterday as the BTS reported that September tirednessivity came in at 4.69, up from 4.61 in August and up from 4.26 in September, 1999. This growth in tiredness of 10% year over year tends to support the recent strong performance in the tire sector. Tirednessivity is a monthly measurement series provided by the Bureau of Tired Statistics (BTS) representing the average number of tires per vehicle, a broad measure ranging from unicycles and bicycles to tandem trailers. In related news, unicycle and bicycle sales continued to plummet as the new federal mandatory airbag regulations came into effect. The point of the analogy is that the measurement of productivity is fundamentally no more than the result of dividing total output in dollars by total input of labor hours. In the tire analogy above, an increase in the average number of tires does NOT necessarily imply an increase of the number of tires, but may be the result of a loss of vehicles with a below average number of tires. In the case of productivity, a higher number is commonly assumed to mean that individual workers are producing more output per hour of work. While this CAN happen, it is highly likely that the productivity results are more the result of the elimination of lower productivity jobs, thus raising the average. This can result from government action, as things like an increasing minimum wage make relatively low productivity jobs illegal, but the largest driver is the level of competition in a free market economy. Every action taken by a company tends to increase output per unit of labor, so there is a normal upward bias to the productivity number, only decreasing in periods of economic contraction where labor is not shed as fast as output falls. The biggest increments of productivity increases come when the least competitive (and lowest productivity } companies are driven out of business and no longer drag down the average number. Not only do the low productivity companies disappear, but the remaining competitors improve their own productivity as they pick up the demand no longer supplied by the missing companies. Anything that increases the rate of extinction of weak competitors will show up as a faster rate of growth of average productivity. In particular, there two things that are the primary drivers of an increased rate of extinction. First, as a larger and larger proportion of economic output is produced by public companies, there is a much reduced tolerance for weak and non-competitive performance. Whereas a private company may struggle through years of incompetence, a public company is under ever increasing pressure to perform on at least a quarterly basis, and it must compete with all kinds of capital investment, not just with its direct competitors. Secondly, it is commonly thought that the primary effect of technology is to increase productivity by acting as a productivity multiplier for individual workers. While this effect is real, it is offset to a smaller or larger degree by competition as the prices for production output are driven lower to reflect the lower costs. It is far more likely that the effect on overall measured productivity is primarily due increased competitive stress as the introduction of new technology is often less a source of improvements for an individual company than a new cost of business survival. Only technology that can be combined with a competitive advantage and financial strength, and denied to competitors, can be an unalloyed blessing. In a technology driven environment, it is the suppliers of the new technology that are the primary beneficiaries, not the buyers. However, this benefit is limited in both time and extent by the ability of the buyers to both invest and survive. The technology suppliers are in a similar position to arms suppliers to a couple of neighboring countries at war. Their success often contains the seeds of their own destruction, if they are not able to find new markets. Regards, Don

To: Oblomov who wrote (30521)	10/24/2000 4:46:59 AM
From: Ken98	Read Replies (2) \| Respond to of 436258

Well, it's a heck of a way to run monetary policy is all I can say. At what point does it become too cute by two? And you are correct in pointing out the error (just one of many) in the BLS logic - most service industry and high-tech employees are salaried not hourly, and to equate them to supervisors is not appropriate. Why aren't more academics more critical of these fallacies? It seems that most academics have a blind spot in their analysis in that they assume (don't the academics teach the dangers of doing this) that the gov't reports are not subject to political manipulation. I have never heard an academic question the veracity of a gov't economic statistic. I do believe that the Fed gave the BLS the green light to goose the GDP number (and hence the productivity number) by changing the calculations regarding software accounting and banking profits. Easy Al gave a couple of speeches on the topic prior to the BLS adopting the changes if I recall. Thus, the most recent episodes of Clownspeak on this topic are likely a prelude to another productivity enhancing adjustment from the BLS.