Not exactly. NIPA depreciation attempts to correct for changes in
accounting conventions (through the capital consumption adjustment)
to reflect the actual economic life of equipment. You can say they
get it wrong, but you can't say they don't try.
Doug
On Jun 14, 2006, at 11:42 AM, Michael Perelman wrote:
Absolutely. As a result, the accuracy of measures of profit is
questionable.
On Wed, Jun 14, 2006 at 07:05:37AM -0700, Sandwichman wrote:
Regarding depreciation, it needs to be remembered that it is a
convention, not a measured physical reality. So if depreciation is 6%
for a number of years and then moves up to 8% it is not because
things
suddenly started wearing out or becoming obsolete sooner. It is
because the accounting convention changed. That change may reflect
factors that have developed over a longer period of time or they
might
ignore factors that should be taken into consideration today. To tie
depreciation back into the subject line about unproductive labor, it
seems to me that rates of depreciation relate to the notion of
fictitious capital to the extent that the conventional notation may
understate the rate at which capital equipment may be losing value.
--
Sandwichman
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu
