That looks more like fiscal efficiency than productivity. Once they threw in monetary value of the products earned, it was no longer productivity - it was fiscal efficiency. Or maybe I am wrong. But it seems to me (and Dictionary.com) that productivity is not about dollars. I like these two definitions of productivity:

(1) Economics. The rate at which goods or services are produced especially output per unit of labor.

(2) the ratio of the quantity and quality of units produced to the labor per unit of time.

By placing monetary value on widgets as a factor on productivity, suddenly a worker's productivity becomes devalued when they may actually be just as productive - and the value of the product has simply gone down.

What makes this worse is the fact that values of widgets may therefore decrease by *overproductivity* (Flooding the market). By producing less, such statistics can be skewed because the value of the product would go up! Supply and demand!

Of course, the U.S. also uses the number of people who are collecting unemployment funds as the unemployed statistic... never mind that when the time runs out for receiving such payment, the unemployed are still unemployed.

I'm just a layperson, though. I'm pretty sure that someone can give reasons as to why these statistics are calculated the way they are. I don't know that they will be good, but I'm open.

I think the key phrase is "output per unit of labor" - output has to be measured using some yardstick and money is the most commonly used one. After all, productivity must somewhere loop back to the idea of producing things that people want - so I think it'd be fair to say that a worker producing an over-supplied good is less productive than one producing an under-supplied one...

If we are indeed going to hear a lot about how ICTs are going to boost productivity, I do hope we hear first that the IT productivity paradox has been solved once and for all. Last I heard, it hadn't. Oh, efforts have been made to explain it away by all sorts of means. Especially popular has been the technique of redefining terms - kind of important ones like 'productivity' - but the fact remains that over the period when investment in ICTs has shot up (since say the 60s), productivity has refused to follow suit and insisted instead on stagnating.

This is quite interesting from Morgan Stanley's Chief Economist:

"In the end, America's productivity revival may be nothing more than a transition from one way of doing business to another — a change in operating systems, as it were. Aided by the stock market bubble and the Y2K frenzy, corporate America led the world in spending on new information technology and telecommunications in the latter half of the 1990's.

"This resulted in an increase of the portion of gross domestic product that went to capital spending. With the share of capital going up, it follows that the share of labor went down. Thus national output was produced with less labor in relative terms — resulting in a windfall of higher productivity. Once the migration from the old technology to the new starts to peak, this transitional productivity dividend can then be expected to wane."

But you're right Chris, everyone tends to assume that tech investment leads to greater productivity, often the basis of fairly weak evidence.

David,

I agree that there needs to be a way of measuring output, and I understand why you say that money is a good measure - but if you go and buy a pair of shoes today when you're a size 10 by a yardstick which will show that you are a size 8 tommorow, you'll see my point.

Price changes for a widget are indicative of a lot of different factors - and yet the widget is still produced.

I have no problem with measuring productivity in a fiscal manner, but I do have a problem with the misnomer of productivity with all the financial issues hidden, and no mention of the implications of economics on the productivity. It's misleading to the public.

There is a need for a basis for productivity on a more static yardstick. It can be done using historical data, and without finance involvement. If economists want to bastardize the data from there, they can have at it... but the point is that a spade is a spade, whether you call it a rake or a spade.

This becomes more important when you consider developing nations are going to be trying to 'reduce cycle times', 'increasing productivity', and measuring against a GNP. There are pros and cons to this, but the average person in the developing world does not know this.

A statement of "Productivity went up 10%, but GNP went down 5%" is more informative than "Productivity went down 5%" to the average person. And speaking to the average person should be the goal of any government interested in communication.

David,

I agree that there needs to be a way of measuring output, and I understand why you say that money is a good measure - but if you go and buy a pair of shoes today when you're a size 10 by a yardstick which will show that you are a size 8 tommorow, you'll see my point.

Price changes for a widget are indicative of a lot of different factors - and yet the widget is still produced.

I have no problem with measuring productivity in a fiscal manner, but I do have a problem with the misnomer of productivity with all the financial issues hidden, and no mention of the implications of economics on the productivity. It's misleading to the public.

There is a need for a basis for productivity on a more static yardstick. It can be done using historical data, and without finance involvement. If economists want to bastardize the data from there, they can have at it... but the point is that a spade is a spade, whether you call it a rake or a spade.

This becomes more important when you consider developing nations are going to be trying to 'reduce cycle times', 'increasing productivity', and measuring against a GNP. There are pros and cons to this, but the average person in the developing world does not know this.

A statement of "Productivity went up 10%, but GNP went down 5%" is more informative than "Productivity went down 5%" to the average person. And speaking to the average person should be the goal of any government interested in communication.