productivity question, page-24

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    Excellent thread, thanks CW.

    Productivity and GDP are whatever the govt want them to mean. On a large scale, such as countries or corporations with mixed products they are fairly meaningless numbers.

    Take China during the GFC. Exports dropped 7%, so they increased infrastructure spending by 5.5% to maintain GDP growth. Just like that! Was the infrastructure needed? There is certainly plenty of evidence of surplus residential and office accommodation in China. If the infrastructure was not needed, can it really be said to have been a component of GDP? If you build an office block, and knock it down and rebuild, you have twice the contribution to GDP but only one office block. One report I read said that China further skews GDP by including projects at full cost as soon as they are approved.

    You can similarly twist productivity figures. Outsourcing is an easy way to increase unit production per e/ee. Buy in pre-assembled sub-assemblies and get rid of a quarter of your staff - productivity shoots up! Profit might drop, unless you are getting them from China, in which case productivity is up whichever way you look at it. Except from the redundant workers points of view.
 
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