going back to this chained-dollars adjustment to GDP. I got some figures. I get this from another bear, Michael Burke.
"Here is how it works: The US counts growth in "computing power" as sales growth, not in dollar sales. Of course, we have been in an era where computing power has grown exponentially while ASPs of the same computers have fallen like a rock."
"For example, last year, chained dollar computer sales growth added $158 billion to GDP, more than half of GDP growth. In real dollars, computer sales were up less than $8 billion. This discrepancy of 95% between actual numbers and govt. fantasy numbers is the ONLY component of our outsized GDP growth and productivity growth and low inflation numbers. Without chained dollar sales of computers, both GDP growth and productivity growth look very sickly."
I pored over the figures at the DOC web site. Under gross private investment, change from previous year, I get +$137 billion. I assume that the other $21 billion must come from household expenditures on durable goods (sounds reasonable). If his figure for computer sales (up only $8 billion) is correct, then the chained-dollars of computer sales do account for half of GDP growth. This would be an absolute scam. As a techie who has been involved in using, installing, and maintaining computers for my research group, I think that faster computation has added virtually nothing to the value of computers for at least 95% of users since about 1995-96, which is when affordable hardware (the PC) finally caught up with software and left it behind.
-- Enrique Diaz-Alvarez Office # (607) 255 5034 Electrical Engineering Home # (607) 272 4808 112 Phillips Hall Fax # (607) 255 4565 Cornell University mailto:enrique at ee.cornell.edu Ithaca, NY 14853 http://peta.ee.cornell.edu/~enrique