tag:blogger.com,1999:blog-3240565408401956331.post8473612927470497798..comments2023-07-08T05:49:38.333-04:00Comments on Larry Davidson's Thoughts on Macro and Other Stuff: Lesson 3 Productivity: Not Such a Mystery Unknownnoreply@blogger.comBlogger25125tag:blogger.com,1999:blog-3240565408401956331.post-34622503036791909692015-05-28T19:03:26.136-04:002015-05-28T19:03:26.136-04:00Having crossed swords with a 40-year bureaucrat at...Having crossed swords with a 40-year bureaucrat at the 5-Sided Puzzle Palace, I can testify that longevity is not always beneficial to the government. "We've always done it that way" is one comment sure to get my hackles up...and you won't like me when my hackles get up.Fuzzyhttps://www.blogger.com/profile/11438679628562995612noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-90498045881141767942015-05-28T17:07:11.402-04:002015-05-28T17:07:11.402-04:00Some people don't fully understand the differe...Some people don't fully understand the difference. Especially since there are departments within government that sometimes get political as in the IRS, Energy department, etc. That behavior taints their reputations. The BEA and the Labor Departments as far as I know are mostly technicians who pump out numbers. They probably don't like any of the Presidents since the data guys are scientists and Presidents are well politicians. Many have served for decades and have seen Presidents come and go...Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-59172070090851118502015-05-28T16:38:21.121-04:002015-05-28T16:38:21.121-04:00Putting spin on the numbers by an administration h...Putting spin on the numbers by an administration has nothing to do with the bureaucrats who dredge up the numbers, but if I were one of the pros who put them out, I would be incensed by the way the administrations spin them...when did we change the word "lie" into "spin?" Notice, I pointed my finger at the administrations not at the people who put out the numbers. Lets sing from the same sheet of music...well, maybe not.Fuzzyhttps://www.blogger.com/profile/11438679628562995612noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-74587313556045382942015-05-28T15:24:48.241-04:002015-05-28T15:24:48.241-04:00My economist friends at the Department of Labor wo...My economist friends at the Department of Labor would not like your comments very well. It is one thing to say that politicians put spin on the numbers but another to suggest that the professionals who put out the numbers would participate in a fraud. I know them too well to believe the latter. Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-18994984288636458662015-05-28T14:09:44.554-04:002015-05-28T14:09:44.554-04:00Partially, yes. Every administration since Washing...Partially, yes. Every administration since Washington has played with the numbers to make itself look good in the shower.Fuzzyhttps://www.blogger.com/profile/11438679628562995612noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-83668412454777988472015-05-27T15:30:09.743-04:002015-05-27T15:30:09.743-04:00I was always taught that business people try to ma...I was always taught that business people try to maximize profits or something like that. Basing business decisions on silly politicians silly pronouncements is not a great way to maximize. Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-17782679995035095482015-05-27T15:23:27.073-04:002015-05-27T15:23:27.073-04:00I’m not concluding that; only offering a possible ...I’m not concluding that; only offering a possible solution to the mystery.Tunahttps://www.blogger.com/profile/10963127416474394394noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-60662194266779453902015-05-27T15:22:14.972-04:002015-05-27T15:22:14.972-04:00If the majority of voters (including multi-double-...If the majority of voters (including multi-double-dippers and the deceased) can re-elect an empty suit why is it questionable that bidinesses would not believe Joe the clown?Tunahttps://www.blogger.com/profile/10963127416474394394noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-9175776828682372152015-05-27T13:46:47.976-04:002015-05-27T13:46:47.976-04:00Productivity is output divided by employment. Empl...Productivity is output divided by employment. Employment includes contract and part-time workers. You are drawing a conclusion that these workers are less productive than the same hours by a full-time employee. Sounds intuitive but not so sure it is true. Are you really so sure that firm's would be motivated to hire people based on something said by Joe Biden? Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-37342107476804121882015-05-27T11:20:50.330-04:002015-05-27T11:20:50.330-04:00Dear LSD. Da govomit fak’n numbers? Ah-g-g-g-g-g-g...Dear LSD. Da govomit fak’n numbers? Ah-g-g-g-g-g-g, tell me it ain’t so, Joe! At a minimum da numbers are subject to revision—who knows, a revision might show an explosion of productivity. Regarding da mystery—insight might be gained if the dynamic of part-time/contract workers were considered. E.g. would/do part-time or contract workers have a mitigating effect on productivity—since Biden’s continuing rebound has resulted in extraordinary hiring of them.Tunahttps://www.blogger.com/profile/10963127416474394394noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-1290911399269562962015-05-27T11:14:10.407-04:002015-05-27T11:14:10.407-04:00Dear LSD. Ya mean YOU didn’t believe Joe the clown...Dear LSD. Ya mean YOU didn’t believe Joe the clown?Tunahttps://www.blogger.com/profile/10963127416474394394noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-10411230096900358852015-05-27T10:05:49.391-04:002015-05-27T10:05:49.391-04:00So the productivity puzzle is the result of the go...So the productivity puzzle is the result of the government faking the jobs numbers? Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-70480145248183829232015-05-27T09:51:26.740-04:002015-05-27T09:51:26.740-04:00Do ya think that they "really" haven'...Do ya think that they "really" haven't hired more workers? That those thousands of "new jobs" the administration takes credit for creating really aren't new jobs at all?Fuzzyhttps://www.blogger.com/profile/11438679628562995612noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-3903692840748456362015-05-27T09:43:30.447-04:002015-05-27T09:43:30.447-04:00Business believed Biden's rosy forecasts?Business believed Biden's rosy forecasts? Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-3844646576088833122015-05-27T09:42:13.605-04:002015-05-27T09:42:13.605-04:00The mystery is why firms would hire more workers a...The mystery is why firms would hire more workers and not get a proportionate increase in output. Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-10669314647263933572015-05-27T07:59:21.049-04:002015-05-27T07:59:21.049-04:00If we accept the government's data that says u...If we accept the government's data that says unemployment is somewhere south of 6%, we must also accept it's data that says that average annual household income is down by about $2700. We've hired more but have paid them less for their work. So, where's the productivity "mystery?" Blinder needs to take his off.Fuzzyhttps://www.blogger.com/profile/11438679628562995612noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-57324820726989878372015-05-26T20:56:47.504-04:002015-05-26T20:56:47.504-04:00Dear LSD. I don’t believe that labor and output mo...Dear LSD. I don’t believe that labor and output move proportionately . . . rather, the relationship is similar to investing in overhead/capital at intervals (assuming labor cost is fixed) . . . a bidiness doesn’t invest in OH/capital linearly. It increases investment incrementally when the ROI justifies the increment. GDP went up and down during ’09 and ’15 (adjusting of course for adjustments . . . ) so maybe bidinesses hired according to GDP rosy forecasts (e.g. Biden’s umpteenth forecast for the “summer of recovery”) therefore ‘splain’n the “proportional” increase in hiring relative to output.<br /><br />Labor hoarding? That seems counter intuitive given the increasing cost of employment due to Obummercare. <br />Tunahttps://www.blogger.com/profile/10963127416474394394noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-8432529620228277932015-05-26T17:46:09.642-04:002015-05-26T17:46:09.642-04:00I get your drift but your answer is lacking tempor...I get your drift but your answer is lacking temporal change. At some point we have a change in output. Call that from 2009 to 2015. Then you measure over the same time period the change in employment. Even if labor is cheap or free, you still need to explain why during that period they hired proportionately more labor. If you don't need proportionately more labor to produce proportionately more output, then why hire them at any price? Labor hoarding? Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-55951838089913356462015-05-26T17:07:28.955-04:002015-05-26T17:07:28.955-04:00Dear LSD. The answer is elementary. Budinesses don...Dear LSD. The answer is elementary. Budinesses don’t need to economize on labor because labor is cheap . . . the labor supply is greater than demand for it . . and part-time/contract labor is an alternative that further mitigates hiring costs. It’s like China twenty years ago . . . it’s labor supply was almost infinite . . no need to economize there . . . just throw a few more bodies in at almost no incremental cost per unit. Labor might not be free, but at the moment it’s relatively cheap.Tunahttps://www.blogger.com/profile/10963127416474394394noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-87521204142843175672015-05-26T16:09:52.399-04:002015-05-26T16:09:52.399-04:00Not bad Tuna but your story needs one more piece. ...Not bad Tuna but your story needs one more piece. The drop in productivity as you point out has output growing less than employment. Given that employees are not free why has business been more willing to hire than to produce? If I was worried about future sales I would want to economize on labor...Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-64136984644819896022015-05-26T14:30:41.729-04:002015-05-26T14:30:41.729-04:00Dear LSD, "Elementary, my dear Watson," ...Dear LSD, "Elementary, my dear Watson," was never written by Sir Arthur Conan Doyle. But, Blinder’s (your fav liberal piñata) ‘splanation of the problem/mystery is well, rather, elementary economic/liberal rationalization. As a doo-da who prefers simplicity, I see the problem/mystery of low productivity simply as a function of slack demand relative to employment. Employment is grudgingly coming back to 2007 levels but demand is not. So, the denominator is increasing slightly but the numerator is increasing at a slower rate because bidinessess are producing just enough inventory to meet lackluster demand. If the economy were chugging along at more than 2% we’d probably see a jump in productivity.<br /><br />I am partial to Mitchell’s ‘splanation that big govomit anchors down the economy by stifling bidnessess’ incentive to expand. But I wunner if without the heavy regs would bidinessess expand facing weak demand? Excess labor supply, low inflation, and low productivity have kept pressure on wage growth down. So, while there might be a mystery about how to account for social technology’s contribution to employment/growth/GDP/et al I think the more simple ‘splanation to the productivity conundrum is that the economy sucks, consumers’ wages can’t afford budinesses’ output, the Internet’s contribution to productivity has peaked, a unit of service adds less value than a unit of manufacturing, and the education system hasn’t produced grads that can convert ideas to sales other than to flip burgers and change diapers. There, that ought to do it: A simple but elegant ‘splanation Mr. Holmes would find alluringly elementary. Tunahttps://www.blogger.com/profile/10963127416474394394noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-14077835152483017762015-05-26T14:12:35.462-04:002015-05-26T14:12:35.462-04:00Well said Fuzz. Well said Fuzz. Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-9808879689948950322015-05-26T12:17:01.769-04:002015-05-26T12:17:01.769-04:00I agree.I agree.Fuzzyhttps://www.blogger.com/profile/11438679628562995612noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-18680754347200922942015-05-26T11:00:26.705-04:002015-05-26T11:00:26.705-04:00Productivity has generally been a positive forth f...Productivity has generally been a positive forth for employment. I am sure you don't want to go back to a world with typewriters and horse drawn plows. It may take a while before the quality of jobs catch up but history suggests it will. While offshoring is a factor, the US leads in so many categories that it is hard to imagine that we won;t see the positive impacts here. Of course if policymakers enact legislation that hurts US companies then they may make it harder for good jobs to grow here. In this world we need companies to be more competitive and policy should support that. Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-62790035729445317522015-05-26T10:37:35.580-04:002015-05-26T10:37:35.580-04:00The latter two men are more correct than the first...The latter two men are more correct than the first. My smart phone is equal to two administrative assistant. . When I get the call center in India for my smart phone made in China I see another labor replacement...or two. There is less participation in the workforce because there are less jobs ...That is pretty simple. Less people with the help of better technology produce what more people did without it. If citizens buy the same or less than they did 10 years ago in real dollars because their wages are flat because the demand has shifted for labor due to increased technology and off-shoring lower level jobs then that affects demand for production products. If the cost of products is higher than one can get for an import then then the consumer buys the import.Jameshttps://www.blogger.com/profile/16257806506590834840noreply@blogger.com