AboutWarren D. Miller, CFA, ASA, CMA, CPA Expertise My in-depth knowledge of economics is confined to three sub-disciplines: Austrian economics, industrial organization, and evolutionary economics. Other questions dealing with macroeconomics, the traditional neoclassical paradigm, labor economics, environmental economics, agricultural economics, health economics, and so on should go to those who have the appropriate expertise.
N.B.: I DO NOT ANSWER QUESTIONS MARKED 'PRIVATE' because I believe that knowledge should be shared, not hoarded. I also believe that such questions are likely to come those trying to cheat. Similarly, as one who was a full-time academic for half a decade, I can recognize test and homework questions several time zones away. Therefore, please do not demean yourself by submitting such questions to me. Those who do so are cheating, pure and simple, and I WILL call you out publicly if I believe you are doing so. I have a zero-tolerance policy where cheating and dishonesty are concerned.
In addition, please don't imitate the businessman who posted a request for help in August 2008. He expressly denied that he was seeking "investment advice" and said that his query was for, and I quote, "educational and informational purposes." Later, he allowed as how his questions related to the possible purchase of a $500K piece of equipment. I said I thought he had misrepresented himself. Bottom line: high-end business consulting is how I make my living. I am the sole support for my family. Please respect that fact and don't try to get for free what our clients pay for. If your company is big enough to have a sophisticated problem, it's big enough to pay for the kind of expert advice we provide. Beckmill Research, LLC, is a 95-octane firm. We're small, but we've been at this for nearly 18 years. We know what we're doing.
Finally, please DO NOT ask for investment advice. I am not licensed to provide such advice. If you want such advice, check with your financial planner or other financial adviser.
Experience I work with Austrian economics (which is different in major respects from the traditional neoclassical model), industrial organization (which is about industry structure, conduct, and performance), and evolutionary economics (almost, but not quite, the economic analog of its biological counterpart) everyday in my work. I appraise closely-held businesses, provide exit-planning services, and offer high-level strategic analysis, advice, and clients to CEOs and owners of mid-sized businesses. Understanding, applying, and writing about these disciplines is an essential part of how I have made my living since 1993.
Organizations CFA Institute, Strategic Management Society, American Society of Appraisers, Institute of Management Accountants, Academy of Management, Culver Legion
Publications CFA Magazine, Strategic Finance, Valuation Strategies, Value Examiner, Journal of Advanced Property Economics, Harvard Business Review, American Fly Fisher, CFA Digest, CPA Expert, and Business Valuation Review, among others
Education/Credentials MBA - Oklahoma State (1991)
BBA - U. of Oklahoma (1975)
Chartered Financial Analyst designation (2006)
Accredited Senior Appraiser (2006)
Certified Management Accountant (1992)
Certified Public Accountant (1992)
Question QUESTION: We constantly hear about worker productivity. If a company exports jobs overseas ( and as a result pays lower labor costs ) does this impact the productivity index. I do not seem to find any exact info on how the index is calculated.
Paul
ANSWER: Paul, I think I understand the questions you're asking. I think. Let me take a few swings here, and let's see if I make contact. Please give me some feedback.
1. Productivity is usually measured within a country's geographical borders. So jobs going overseas to or from America really have no bearing on what you call "the productivity index" in terms of how it is calculated.
2. Productivity is defined as output divided by input. Output is typically measured in dollars, and so is input. The common unit is time, which is usually measured per hour. Obviously the ratio needs to be > 1 for any worker to be a viable employee. The problem, of course, is that a company's competitors often take actions that improve their productivity. So, if one company's manufacturing employees have a ratio of 2.5--that is, $2.50 of output per hour for every $1 per hour of input--and the company you own has a ratio of 1.5, then your company has a problem, doesn't it? It can't compete.
I find your statement that you cannot "seem to find any exact info on how the index is calculated" remarkable. Did you try googling the word "productivity"? If you had, you would have seen this link on the first page of results: http://www.bls.gov/lpc/. Take a look. I'll be very surprised if what you're looking for isn't there. If you don't think it is, look again.
Take care, and let me know what else I can do to help you. Please fill out the rate-the-expert email you'll receive on the heels of my reply. Your ratings and, especially, your comments help me do a better job of assisting people like you who ask such interesting questions.
Warren
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QUESTION: Thank you for the BLS source. After much digging I got to the pdf "The effect of outsourcing and offshoring on BLS Productivity measures" This seems to say that if a domestic manufacturer switches to a foreign supplier of intermediate inputs and US jobs are lost labor productivity will rise. If the US manufacturer switches most of its production to off-shore facilities labor productivity might rise substantially.
To me this seems to be saying that yes, in manufacturing sending jobs overseas will increase measures of labor productivity. Am I reading this correctly or am I missing some nuances
Paul
ANSWER: I'm sorry, Paul, but I take strenuous exception to your characterization of putting jobs where the people are best able to do the work productively as 'sending jobs overseas.' That's political babble, and ignorant political babble, at that.
Now, if you want to have a conversation about economics, I'll be glad to do that. But if you're going to try to bog me down in the economic ignorance of politicians and of the yahoos in the media, I'm afraid you'll have to find someone else. I have too much paying work to do to warrant my taking time for which I am not paid to engage in politic exchanges with kool-aid quaffers.
Did you just go straight to the BLS, or did you touch base w/Ricardo and "comparative advantage" along the way? From here, it appears that you bypassed C.A. It's important that you read that stuff. You'll see what a mischaracterization of reality the phrase "sending jobs overseas" really is.
Take your pick, Paul. But "sending jobs overseas" is an ignorant characterization. I don't like having to use such strong language, but it is what it is.
Warren
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QUESTION: Don't get snippy just because you clearly got the first answer wrong according to the BLS. Jobs going overseas can clearly affect labor productivity measures according to the above mentioned pdf. "sending jobs overseas" may be a politically incorrect characterization according to your viewpoint and maybe "offshoring" is a better term but it is really just semantics.Sorry to have wasted your valuable time- have a good life.
Paul
Answer As long as I'm donating my time, when someone tries to waste it, I'll be as snippy as I choose to be, esp. when I'm dealing with some dolt who thinks he's so bloody smart that it never occurred to him either to look @ the BLS (which is first-grade stuff). OF COURSE, it's simple mathematics: if one has an average and removes the big (low) number, the average will go down(up). You know your point was about 'sending jobs overseas.' You know this was about politics and nothing else. Deal with it, dude.
