Certainly I have made Microsoft Corporation’s output look better, but it has cost me a great deal of precious time to do it. I was able to write “Trading Optures and Futions” in just nine months, but it took me 1-1/2 years to produce it. Why? Because I had to simultaneously learn a new word processor and operating system to produce that manual. Both the operating system and the word processor are now considered obsolete. Is the struggle and fight to learn the quirks in software productive? My assistant and I have spent (wasted) numerous hours trying to get Microsoft Word to produce in a format we can live with. How do you measure all the lost time and money from the many conversions that have to be made because of the use of computers? In fact, many have questioned why all the billions of dollars invested in computers have failed to boost productivity and growth in the way they were supposed to. Does anyone really know the answer?

Cyberspace

Next may be the most difficult output of all when it comes to measurement. How in the world do you measure productivity in cyberspace? Countless hours are now spent by workers

What’s wrong with traditional statistics? They fail to measure what is really going on in the economy because the measurements that are being taken today are completely out of synchronization with reality. In fact, it has become virtually impossible to measure some things, which if not measured, render a variety of economic conclusions virtually worthless. Let’s see what these “immeasurables” are.

Service Orientation

As some economies become service rather than production oriented, it becomes increasingly difficult to measure output. When a nation is primarily a producer of goods, it is relatively easy to measure work output in terms of tons of steel produced, number of automobiles manufactured, miles of road paved, board feet of lumber shipped, etc. But how do you measure the amount of information services provided? How do you measure the output of a think-tank? How do you measure the output of an accounting firm, a legal service, a bank, a financial adviser, or even a trader of futures, options, or shares? Does a trader have an output? Would you measure a trader’s output by the number of round turns he makes? What about the ones where he loses?

Technological Advances

New technology – leading to improvement in quality, quantity, or both, render it extremely difficult to measure productive output. Let me give you an example of what I mean. Forty years ago, Ford Motor Company employed 600 men at their plant just outside of Kansas City, Missouri. Today that plant is operated by just 6 men. What happened to 594 jobs? They have been taken over by robots. The use of robots has created a shorter but improved product cycle. A friend of mine, who is one of the 6 men who work in that plant, sits around doing nothing. He is bored stiff. He takes a notebook computer to work and plays games. But he has to be there in case one of the robots breaks down. The question is, how do you measure his productivity?

At the time I was born, it was common for women giving birth to stay in the hospital for ten days. Today they send women home after a day or two. I would consider that to be an advance in technology, and knowledge, wouldn’t you? Yet when a statistician looks at figures for hospital bed occupancy, he would see a decline.

I have another friend who operates a package delivery service. By careful use of a computer to monitor the amount of traffic on delivery routes at various times of day, his company has been able to increase the number of deliveries made while at the same time decrease the number of delivery vehicles and drivers needed to make those deliveries. Now I happen to think that’s a great improvement. Certainly it is making my friend a more wealthy and successful businessman. But his company’s productivity, as measured by delivery miles driven, would show a drop, and since he used fewer vehicles, that fact would show up as fewer vehicles sold, and less steel produced. Do you see where this is going? We are looking at a problem to which there is no solution. Our concept of a unit of output is all wrong, and there is no way to make it right. Technological advances, especially when they result in rapid quality improvements, are increasingly difficult to measure. Because of our inability to measure real output, our statistics will fail to reflect what is really happening in the economy.

Yet another problem created by technological advances is seen in the flood of new products and services being produced. Many jobs did not exist a few years ago. Neither did the products or services that produced those jobs.

If you are a trader, you probably have had first-hand experience with technological obsolescence. The computer you purchase for your trading is obsolete almost the day you purchase it. Within a year, the trading software you use has also become obsolete. Did you know that the average life of a computer model is now less than 12 months? And this is true for most consumer electronics. Thirty percent of sales are for products that did not exist a year earlier.

Years ago I gave up on the idea of buying a camera. No sooner did I obtain one than it became obsolete. The manufacturer came out with a new model that had more capabilities than the one I just purchased. It was maddening. It caused me great frustration. Worse than that, it irritated my lust gland (the lust gland shares a common duct with the greed gland). I wanted to buy a new camera at least once a year. The only cure was to not own a camera at all. I wonder what that does to the Gross Domestic Production figures. It is the same way today with software. I have had to learn two new operating systems in the past four years. I had to learn to use three different word processors in that same period of time. Is this progress?

Certainly I have made Microsoft Corporation’s output look better, but it has cost me a great deal of precious time to do it. I was able to write “Trading Optures and Futions” in just nine months, but it took me 1-1/2 years to produce it. Why? Because I had to simultaneously learn a new word processor and operating system to produce that manual. Both the operating system and the word processor are now considered obsolete. Is the struggle and fight to learn the quirks in software productive? My assistant and I have spent (wasted) numerous hours trying to get Microsoft Word to produce in a format we can live with. How do you measure all the lost time and money from the many conversions that have to be made because of the use of computers? In fact, many have questioned why all the billions of dollars invested in computers have failed to boost productivity and growth in the way they were supposed to. Does anyone really know the answer?

Cyberspace

Next may be the most difficult output of all when it comes to measurement. How in the world do you measure productivity in cyberspace? Countless hours are now spent by workers w

Technological Advances

New technology – leading to improvement in quality, quantity, or both, render it extremely difficult to measure productive output. Let me give you an example of what I mean. Forty years ago, Ford Motor Company employed 600 men at their plant just outside of Kansas City, Missouri. Today that plant is operated by just 6 men. What happened to 594 jobs? They have been taken over by robots. The use of robots has created a shorter but improved product cycle. A friend of mine, who is one of the 6 men who work in that plant, sits around doing nothing. He is bored stiff. He takes a notebook computer to work and plays games. But he has to be there in case one of the robots breaks down. The question is, how do you measure his productivity?

At the time I was born, it was common for women giving birth to stay in the hospital for ten days. Today they send women home after a day or two. I would consider that to be an advance in technology, and knowledge, wouldn’t you? Yet when a statistician looks at figures for hospital bed occupancy, he would see a decline.

I have another friend who operates a package delivery service. By careful use of a computer to monitor the amount of traffic on delivery routes at various times of day, his company has been able to increase the number of deliveries made while at the same time decrease the number of delivery vehicles and drivers needed to make those deliveries. Now I happen to think that’s a great improvement. Certainly it is making my friend a more wealthy and successful businessman. But his company’s productivity, as measured by delivery miles driven, would show a drop, and since he used fewer vehicles, that fact would show up as fewer vehicles sold, and less steel produced. Do you see where this is going? We are looking at a problem to which there is no solution. Our concept of a unit of output is all wrong, and there is no way to make it right. Technological advances, especially when they result in rapid quality improvements, are increasingly difficult to measure. Because of our inability to measure real output, our statistics will fail to reflect what is really happening in the economy.

Yet another problem created by technological advances is seen in the flood of new products and services being produced. Many jobs did not exist a few years ago. Neither did the products or services that produced those jobs.

If you are a trader, you probably have had first-hand experience with technological obsolescence. The computer you purchase for your trading is obsolete almost the day you purchase it. Within a year, the trading software you use has also become obsolete. Did you know that the average life of a computer model is now less than 12 months? And this is true for most consumer electronics. Thirty percent of sales are for products that did not exist a year earlier.

Years ago I gave up on the idea of buying a camera. No sooner did I obtain one than it became obsolete. The manufacturer came out with a new model that had more capabilities than the one I just purchased. It was maddening. It caused me great frustration. Worse than that, it irritated my lust gland (the lust gland shares a common duct with the greed gland). I wanted to buy a new camera at least once a year. The only cure was to not own a camera at all. I wonder what that does to the Gross Domestic Production figures. It is the same way today with software. I have had to learn two new operating systems in the past four years. I had to learn to use three different word processors in that same period of time. Is this progress?

Certainly I have made Microsoft Corporation’s output look better, but it has cost me a great deal of precious time to do it. I was able to write “Trading Optures and Futions” in just nine months, but it took me 1-1/2 years to produce it. Why? Because I had to simultaneously learn a new word processor and operating system to produce that manual. Both the operating system and the word processor are now considered obsolete. Is the struggle and fight to learn the quirks in software productive? My assistant and I have spent (wasted) numerous hours trying to get Microsoft Word to produce in a format we can live with. How do you measure all the lost time and money from the many conversions that have to be made because of the use of computers? In fact, many have questioned why all the billions of dollars invested in computers have failed to boost productivity and growth in the way they were supposed to. Does anyone really know the answer?

Cyberspace

Next may be the most difficult output of all when it comes to measurement. How in the world do you measure productivity in cyberspace? Countless hours are now spent by workers

I have another friend who operates a package delivery service. By careful use of a computer to monitor the amount of traffic on delivery routes at various times of day, his company has been able to increase the number of deliveries made while at the same time decrease the number of delivery vehicles and drivers needed to make those deliveries. Now I happen to think that’s a great improvement. Certainly it is making my friend a more wealthy and successful businessman. But his company’s productivity, as measured by delivery miles driven, would show a drop, and since he used fewer vehicles, that fact would show up as fewer vehicles sold, and less steel produced. Do you see where this is going? We are looking at a problem to which there is no solution. Our concept of a unit of output is all wrong, and there is no way to make it right. Technological advances, especially when they result in rapid quality improvements, are increasingly difficult to measure. Because of our inability to measure real output, our statistics will fail to reflect what is really happening in the economy.

Yet another problem created by technological advances is seen in the flood of new products and services being produced. Many jobs did not exist a few years ago. Neither did the products or services that produced those jobs.

If you are a trader, you probably have had first-hand experience with technological obsolescence. The computer you purchase for your trading is obsolete almost the day you purchase it. Within a year, the trading software you use has also become obsolete. Did you know that the average life of a computer model is now less than 12 months? And this is true for most consumer electronics. Thirty percent of sales are for products that did not exist a year earlier.

Years ago I gave up on the idea of buying a camera. No sooner did I obtain one than it became obsolete. The manufacturer came out with a new model that had more capabilities than the one I just purchased. It was maddening. It caused me great frustration. Worse than that, it irritated my lust gland (the lust gland shares a common duct with the greed gland). I wanted to buy a new camera at least once a year. The only cure was to not own a camera at all. I wonder what that does to the Gross Domestic Production figures. It is the same way today with software. I have had to learn two new operating systems in the past four years. I had to learn to use three different word processors in that same period of time. Is this progress?

Certainly I have made Microsoft Corporation’s output look better, but it has cost me a great deal of precious time to do it. I was able to write “Trading Optures and Futions” in just nine months, but it took me 1-1/2 years to produce it. Why? Because I had to simultaneously learn a new word processor and operating system to produce that manual. Both the operating system and the word processor are now considered obsolete. Is the struggle and fight to learn the quirks in software productive? My assistant and I have spent (wasted) numerous hours trying to get Microsoft Word to produce in a format we can live with. How do you measure all the lost time and money from the many conversions that have to be made because of the use of computers? In fact, many have questioned why all the billions of dollars invested in computers have failed to boost productivity and growth in the way they were supposed to. Does anyone really know the answer?

Cyberspace

Next may be the most difficult output of all when it comes to measurement. How in the world do you measure productivity in cyberspace? Countless hours are now spent by workers

If you are a trader, you probably have had first-hand experience with technological obsolescence. The computer you purchase for your trading is obsolete almost the day you purchase it. Within a year, the trading software you use has also become obsolete. Did you know that the average life of a computer model is now less than 12 months? And this is true for most consumer electronics. Thirty percent of sales are for products that did not exist a year earlier.

Years ago I gave up on the idea of buying a camera. No sooner did I obtain one than it became obsolete. The manufacturer came out with a new model that had more capabilities than the one I just purchased. It was maddening. It caused me great frustration. Worse than that, it irritated my lust gland (the lust gland shares a common duct with the greed gland). I wanted to buy a new camera at least once a year. The only cure was to not own a camera at all. I wonder what that does to the Gross Domestic Production figures. It is the same way today with software. I have had to learn two new operating systems in the past four years. I had to learn to use three different word processors in that same period of time. Is this progress?

Certainly I have made Microsoft Corporation’s output look better, but it has cost me a great deal of precious time to do it. I was able to write “Trading Optures and Futions” in just nine months, but it took me 1-1/2 years to produce it. Why? Because I had to simultaneously learn a new word processor and operating system to produce that manual. Both the operating system and the word processor are now considered obsolete. Is the struggle and fight to learn the quirks in software productive? My assistant and I have spent (wasted) numerous hours trying to get Microsoft Word to produce in a format we can live with. How do you measure all the lost time and money from the many conversions that have to be made because of the use of computers? In fact, many have questioned why all the billions of dollars invested in computers have failed to boost productivity and growth in the way they were supposed to. Does anyone really know the answer?

Cyberspace

Next may be the most difficult output of all when it comes to measurement. How in the world do you measure productivity in cyberspace? Countless hours are now spent by workers

Certainly I have made Microsoft Corporation’s output look better, but it has cost me a great deal of precious time to do it. I was able to write “Trading Optures and Futions” in just nine months, but it took me 1-1/2 years to produce it. Why? Because I had to simultaneously learn a new word processor and operating system to produce that manual. Both the operating system and the word processor are now considered obsolete. Is the struggle and fight to learn the quirks in software productive? My assistant and I have spent (wasted) numerous hours trying to get Microsoft Word to produce in a format we can live with. How do you measure all the lost time and money from the many conversions that have to be made because of the use of computers? In fact, many have questioned why all the billions of dollars invested in computers have failed to boost productivity and growth in the way they were supposed to. Does anyone really know the answer?

Cyberspace

Next may be the most difficult output of all when it comes to measurement. How in the world do you measure productivity in cyberspace? Countless hours are now spent by workers who are using the Internet and various company “intranets.” Are these people being productive or not? In fact, the closer an individual or company is to the cutting edge of technology, the more time and energy are wasted in attempting to learn how to use that technology. Do we count this time as productive, or is it simply lost time? We are dealing here with intangible economic factors.

Economic statistics fail miserably at capturing many of the benefits of information technology and much of that information exists in cyberspace. Information technology, while costing us time and effort to learn such new terminology as the word “cyberspace,” has the potential benefit of rendering improved quality, savings of time, convenience, and increased consumer choice. At least, so we are told. Can such improvements be measured?

When you use an ATM (automatic teller machine), saving time, the anguish of standing in line, and the frustration that can be caused by a human teller; does that in any way show up in your nation’s GDP figures? And what if you’re robbed while using that ATM? Does that add to the measure of the thief’s productivity?

What I’m saying here is that at least part of any global stock market rise or fall may be because the GDP of many nations is being badly understated (or overstated), and official GDP figures are increasingly in error. They are leaving out an ever growing part of the economy which defies measurement. But there’s more.

The Global Economy

A steadily growing portion of trade and investment decisions are being made by multinational companies. An example would be in the merger of a major telecom in one country with that of a major telecom in another country. Is the first country’s GDP correct in counting the output of the merger in its economy or should the second country count it as part of its own GDP? Is Japan’s economic output more accurately measured by counting its US Toyota production as part of its own economy or should such output be considered part of the US economy?

How would you measure the productivity of firms making international mergers? There have been a number of these around lately. Conventional statistics were originally devised for keeping account of the production of physical goods. But more and more, the output of some societies is not the production of material things. The US is fast becoming a producer of ideas and information. Large segments of output of the wealthier nations take the form of services. Ideas, information, and services are less visible, and equally less measurable. Statisticians are far behind in their ability to measure the realities of today’s economies. They continue to turn out masses of figures that measure material output. In fact, they produce more of such figures than ever before. But these figures fail to take into account such fast-growing sectors as telecommunications, computer software, cyberspace, health care, and financial services. We are being flooded with a wealth of misinformation. Is it any wonder that prognosticators relying on such information have been horribly wrong about the equity markets?

Joe Ross
Trading Educators Inc