The Myth of American Productivity

Discussion in 'Economy' started by hvactec, Mar 11, 2012.

  1. hvactec
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    hvactec VIP Member

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    Politicians say we have the most productive workers in the world. They don't know what they're talking about.

    By Michael Mandel

    Alternatively, companies can cut costs by seeking out cheaper suppliers around the world—to use the business school term, they can engage in global supply chain management. A U.S.-based computer company can lower its costs by moving its customer call center from South Dakota to India, Walmart can shift its clothing purchases from a Chinese shirt manufacturer to a cheaper supplier in Vietnam. Apple can find a cheaper offshore supplier for its iPhone display screen.

    But here’s the rub: both of these corporate strategies— domestic productivity improvements and global supply chain management—show up as productivity gains in U.S. economic records. When federal statisticians calculate the nation’s economic output, what they are actually measuring is domestic “value added”—the dollar value of all sales minus the dollar value of all imports. “Productivity” is then calculated by dividing the quantity of value added by the number of American workers. American workers, however, often have little to do with the gains in productivity attributed to them. For instance, if Company A saves $250,000 simply by switching from a Japanese sprocket supplier to a much cheaper Chinese sprocket supplier, that change shows up as an increase in American productivity—just as if the company had saved $250,000 by making its warehouse operation in Chicago more efficient.

    Read more The Washington Monthly - The Magazine - The Myth of American Productivity
     
  2. uscitizen
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    uscitizen Senior Member

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    Productivity is not just how hard workers work, it is also the cost of ingredients and labor, etc.

    cut wages and you increase productivity.
    Lay off workers and then import products and you increase productivity.
    several more ways productivity is impacted.
     
  3. whitehall
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    whitehall Gold Member

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    Cheap energy lowers overhead and increases productivity. Which political party wants to keep energy prices high?
     

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