Quiz time. Read this op-ed, by Alan Tonelson and Kevin Kearns, that appears in today’s New York Times and explain how the authors’ understanding of productivity is confused – and fatally so for their case for higher tariffs. (I’ve already sent my answer to the NYT in the form of a letter-to-the-editor.)
Is the Productivity of American Workers Overstated?
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“But there’s a problem: labor productivity figures, which are calculated by the Labor Department, count only worker hours in America, even though American-owned factories and labs have been steadily transplanted overseas, and foreign workers have contributed significantly to the final products counted in productivity measures.”
WOW! That explains a lot. That’s the question I wanted answered because I had a suspicion the numbers were fishy.
Where do we find your reply? I don’t believe there is a legitimate one.
As for what’s wrong with the op-ed, raja pretty much nails it. It doesn’t matter if the explanation for my reduced hours worked is a new machine made in China or that some of my tasks were outsourced to a worker in China.
Also, Tonelson keeps talking about stagnating wages, when the better metric is compensation which takes into account benefits.
What measure of wages is stagnant?
real compensation per worker increased about 1.6% per year during the Great Moderation (1984 to 2008.)
Real average hourly wages increased about about .7% per year during the Great Moderation. (This measure dropped a bit between 1984 and 1992, and so maybe that is what people remember.)
Gary Johnson for America 2012
http://www.johnsonforamerica.com/
“It’s not cheaper for you if your wages are stagnant or if you do not have a job.”
So, if I lose my job, then all of a sudden there is no difference in price between a $20 stereo from China and a $500 stereo made in America? The imports from China aren’t really cheaper, so, if I lose my job then the financially prudent thing to do would be to buy the $500 stereo because that will save me money? What does stagnant wages or not having a job have to do with the real price of goods? If I lose my job, isn’t it a GOOD thing that I can buy cheaper goods no matter where they were made?