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To: Alomex who wrote (129536)	8/2/2001 2:42:03 PM
From: Skeeter Bug	Read Replies (1) \| Respond to of 164684

>>Wrong. This assumes that none of the savings are passed on to consumers. If the number of hours worked goes down in half, and the price goes down in half (much as it happened to aluminum at the turn of the century) you "equation" wouldn't report an increase in productivity, even though clearly a major one had just taken place.<< reported productivity is an economic measure, not a piece meal measure. this is why folks get confused so easily, they can't keep this straight. what business is the aluminum company in? to make aluminum? not really. it is just a means to an end. the end is to make dollars. their real business is to make dollars. did they make dollars more efficiently? nope. ah ha! of course the figure isn't picked up in economic productivity! there was no increase in economic productivity... >>How else is productivity going be measured if not by getting more for the same<< you miss the real point - more of what? units or dollars? >>Did I miss something? Haven't we just witnessed ten years of economic boom that raised the standard of living to unprecedented levels?<< nope. unprecedented credit expansion based off false premises (ie, productivity miracle) and a bubble market financed the standard of living increases and the boom, not HUGE productivity increases. the boom is about to be taken away en masse and the bogus productivity numbers will not save us. the inevitable bust draws nearer every day. >>Actually yes. This is known as the principle of Creative Destruction first posited by Schumpeter and Drucker<< creative destruction is not the same as misallocating resources resulting in HUGE supply imbalances driving an entire industry toward bankruptcy. btw, such misallocation of resources reduces economic productivity even though unit productivity can surge. why? the misallocation of capital reduces dollar output. ask yourself this. assume you are a widget mfr. would you rather create 100% more widgets and no more revenue or would you rather create 100% more revenue and no more widgets, all else being equal? which would raise your standard of living more? you can keep the extra widgets -lol- granted, a true economic system has some holes. however, the web of ambiguous crap we've melded into "productivity" is an utter joke. you probably believe the absurd notion that productivity (unit or dollar, take your pick!) grew at nearly a 10% annual rate in q4 1999. do you?