Ohio miners forced to attend Romney rally without pay...

[kandrathe]

This deserves its own explanation, although the BLS has a plenty good one themselves for anyone that cares to read it.

You say that, if a computer costs 20% more, but is 30% faster, that should be counted as an increase, not a decrease, because when "[you] need a new computer, [you] need a new computer." Because we need to compare "apples to apples."

So, let's do just that! Imagine apples* were like computers - every few years, they doubled in nutrition and tastiness.

Tastiness adds no utility, so I will ignore it (other than possibly fueling my apple addiction). If they double in nutrition, I can eat half as many apples. The other half may spoil, but let's say I can store it until tomorrow. I can't defer my cost by buying (storing) half a computer, or car, or wrist watch. I wish I could convince my boss that buying the Quad Dual Core, ultra machine would increase my productivity eight-fold -- but alas, he's not that stupid.

Now, tell me, should those apples be measured, "apples to apples," as the same item? No adjustment for quality increase? That is *precisely* what you are asking us to do. And it's crazy. And the longer we calculate in this bizarre way, the crazier it gets.

Now, if we don't fantasize about a Moore's law applying to apple nutrition, but deal in the *real* world of apples, or wrist watches. Then an 1990 1$ apple is about as nutritious and filling as a $9.93 2012 apple. And, it's an apple that suffers a 11% annual inflation rate. A wrist watch still just tells me the time.

The productivity of a person at a 1990 computer does not follow Moore's law. Crazy, I know. A person, using a shovel or a computer, still works at the same speed -- assuming they aren't sitting around idle half their time (i.e. no processing bottlenecks). My car still mostly transports me between work and home -- even though it may be safer or have more features, it still should be measured by it's utility.

The real productivity increase in computing in really not the computing power (although for some applications power must be sufficient to make the application possible). Having spent 30 years implementing process improvements via technology, I'd have to say that the productivity improvements are in the application of technology to systems that were otherwise un-automated. For example, a simple addition of a credit card processing step in an online application process obviates the need for people(employees) in managing that financial transaction, and in the process speeds up the delivery to the applicant during that same online session. It's faster, less cumbersome, less expensive, and produces a better customer experience. The only losers are the employees who are no longer needed in the process.

Ok, another example; Auto dealers buying used cars. The old way was to have a (employee) buyer fly from Las Vegas to St. Louis to a live auto auction, inspect, and buy a bunch of cars and have them shipped to your dealership. The seller had all the cars in California, so had to ship them all to St. Louis for the live auction, and along the way they get dinged and beat up a little. The Auction has an army of workers to clean, detail, and repair your slightly beat up vehicles. With the advent of the internet, you can now have a certified inspector in California take digital HD photos of the vehicle, and write up a detailed inspection report. Post the vehicles to an online auction, the dealer (buyer) logs in, reads the independent inspection report, and bids on the cars. If he wins them, he arranges for transport. The vehicle only moves once, instead of twice. Their is no need to fly someone around the US to buy the cars anymore. And, the entire live auction business is un-needed. The only new job is the one of independent vehicle inspection, many jobs, transport costs, and travel costs are eliminated. The price savings are now reflected in the lower cost for used vehicles (but still subject to laws of supply and demand though).

Here is another analytical wonk looking at food inflation (as it relates to energy too). --> http://gregor.us/poverty/the-inflations-in-the-poverty/