We’re Not As Productive as We Think We Are
Posted on Nov 09, 2009
Economists Seek to Cure a Defect in National Data : Apparently GDP figures don't remove foreign-made goods. I can't believe this hasn't been addressed sooner.
Not only is the gross number inflated, but – as the following scenario demonstrates – laying workers off to use imported goods raises the nation's supposed productivity two different ways – less works making more dollars in goods.
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.