Noodling Productivity

Don Boudreaux asks us to find the problem with this article. Here is his answer. I'll give you the summary. The article argues that increases in American productivity over the last several years are illusory. Productivity is measured by the amount of work or a unit of output. The article contends that work done overseas is not being considered, and is improperly hidden in productivity calculation. Someone is still doing the work, the article contends-- it's just not Americans. Thus American's really aren't that much more productive.

Don's answer is this:

If yesterday American workers required two hours to produce an electric drill, and today those same workers require only one hour to produce an identical drill, those workers’ productivity has risen.  Whether this higher productivity is the result of importing (rather than producing in the U.S.) more component parts of the drill, or instead the result, say, of a new machine that today produces some parts that yesterday were produced by hand, the result is the same: it requires fewer hours of work by Americans to produce a given amount of output.

I didn't understand this answer at first. I think I do now, and I agree with Boudreaux, but I think it's confusing. Here is why. The "hours" spent producing the drill don't just include the labor of the workers working in a factory on the actual drill. It also has to include the man hours spent creating and maintaining the "new machine." For example, if it takes one hours to make a drill with a machine, but a worker spends two hours to fix the machine for every drill, or if the machine takes so many man hours to create that the equivalent man hours can never be saved, then, the machine doesn't increase productivity. (Of course, no one will ever conscientiously use a machine that lowers productivity.)

Similarly, outsourced labor shouldn't be taken into account when considering American productivity. But those foreign laborers are providing the components for other goods or services. And those American hours spent producing the goods/service that are exchanged, should be considered, just like hours spent making/maintain the machine are considered.

At the end of the day whether it's a machine or trade, no one will voluntarily use either unless they increase productivity. I think Boudreaux doesn't go down this road, because he's trying to keep it short and simple. But I think he would agree that these other "hours" are incorporated into productivity calculations.

There's another similarity between trade and technology. Both "destroy" jobs. No one, however, argues we should get rid of copy machines, refrigerators or computers to bring back all the jobs they've eliminated.