[Marxism] Economists Seek to Fix a Defect in Data That Overstates the Nation’s Vigor (NYT)

Matthew Russo russo.matthew9 at gmail.com
Mon Nov 9 20:45:34 MST 2009


Pertains to an earlier discussion of post 2000 productivity growth in the US
- Matt:

http://www.nytimes.com/2009/11/09/business/economy/09econ.html?ref=business

 A widening gap between data and reality is distorting the government’s
picture of the country’s economic health, overstating growth and
productivity in ways that could affect the political debate on issues like
trade, wages and job creation.

....

The fundamental shortcoming is in the way imports are accounted for. A
carburetor bought for $50 in China as a component of an American-made car,
for example, more often than not shows up in the statistics as if it were
the American-made version valued at, say, $100. The failure to distinguish
adequately between what is made in America and what is made abroad falsely
inflates the gross domestic
product<http://topics.nytimes.com/top/reference/timestopics/subjects/u/united_states_economy/gross_domestic_product/index.html?inline=nyt-classifier>,
which sums up all value added within the country.
American workers lose their jobs when carburetors they once made are
imported instead. The federal data notices the decline in employment but
fails to revalue the carburetors or even pinpoint that they are
foreign-made. Because it seems as if $100 carburetors are being produced but
fewer workers are needed to do so, productivity falsely rises — in the
national statistics.

That may help to explain why the recovery from the 2001
recession<http://topics.nytimes.com/top/reference/timestopics/subjects/r/recession_and_depression/index.html?inline=nyt-classifier>was
a jobless one for many months and why the recovery from this recession
is likely to generate few jobs for many months.

On another front, many argue that labor productivity is rising faster than
the pay of workers who made the greater productivity possible. That argument
would be watered down if more accurate data showed that productivity had
been overstated.

“What we are measuring as productivity gains may in fact be changes in
trade,” said William Alterman, assistant commissioner for international
prices at the Bureau of Labor
Statistics<http://topics.nytimes.com/top/reference/timestopics/organizations/b/bureau_of_labor_statistics/index.html?inline=nyt-org>.

....

The problem is particularly acute in manufacturing. Imported components
constitute an ever greater share of the computers, autos, appliances and
other finished merchandise that roll off assembly lines in the United States
— and an ever greater share of all of the nation’s imports.



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