Yes, your argument is correct, but don't your (1.) and (2) increase
unemployment?
Gene
On Sep 23, 2007, at 12:29 PM, raghu wrote:
On 9/23/07, Eugene Coyle <[EMAIL PROTECTED]> wrote:
contributes to productivity gains.) What I mean is that consumer
demand is a factor in productivity gains. If people aren't buying
stuff, i.e. increasing their buying, productivity gains won't come,
will they? I mean, why bother improving if you (the producers,
collectively) can't sell more.
I don't see why this necessarily follows. Producers can make
improvements either (1) to produce more with the same amount of labor,
or (2) produce the same amount with less amount of labor. You'll have
productivity gains in both cases.
Increased buying is only relevant for unemployment not productivity.
Producers may be forced to adopt productivity-increasing changes even
in a stagnant market because of competition.
-raghu.
