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    trade and income distribution..., 2004-03-13 16:57:58 | Main | Remote control puppets! How c..., 2004-03-15 11:59:13

    the "productivity miracle" is also partly a statistical quirk. A significant portion of what we "import" from foreign countries actually represents intermediate goods produced by foreign subsidiaries of U.S. companies, or companies formed by direct U.S. investment into those countries. Think about this for a second. We import the same intermediate goods we would have manufactured at home, but at cheaper prices (meaning that the deduction to GDP on account of imports will generally be proportionately smaller than the corresponding loss in U.S. employment). Yet when we turn around to calculate productivity, we don't count the foreign jobs used to produce that output. ... foreign outsourcing has the effect of artificially raising productivity figures because subtracting imports from GDP does not adequately correct for their impact on final output, yet foreign labor is not counted, so measured output per worker increases. ... The net effect of all this is that the U.S. "productivity miracle" is almost entirely dependent on growth in U.S. imports and foreign labor outsourcing.

    I'm not sure if that makes sense, at least the "almost entirely" bit for a glitch in accounting. Tack it onto the argument that domestic payroll cuts and increased work loads off hours are inflating productivity ratings. If productivity/efficiency gains are the primary measurable benefit of liberalized trade then we seem to need better ways of measuring it, but who am I to judge.

    Update 3/16: And then there's this one, citing the weak dollar and corporate tax cuts. I should go to the library and figure out if this was typical behavior back in 1992. Do we always get a chorus of analysts calling productivity figures imaginary? None of them provide data demonstrating that it's necessarily anything more than a minor adjustment to the existing figures.

    Update 3/18: And yet another, add understating inflation overstates growth.


:: posted by buermann @ 2004-03-14 19:17:11 CST | link





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