The Expensive Scam

I ran across this Post on Productivity Capacity, which carries a short and concise definition of the difference between this term and GDP. What I found lacking is the expression that no Economy operates on the Productivity Capacity boundary. There are a number of reasons for this, mostly dealing with management deficiencies. Unemployment is a relevant factor, but Underemployment is an even greater magnitude factor, with Overstaffing creating a major third factor; especially in the realm of delayed Project Starts. One can discuss the delays of financial forwarding in this Age of Credit Crisis, which hinders the acquisition of Project resources. GDP shows great success if it can actually absorb 70% of the Productivity Capacity.

Mark Perry has a good Post on Unemployment. It clearly expresses that a great majority of States have less Unemployment than what was considered Full Employment some short decades ago. The interesting fact resides in the exact placement of the Unemployment. The States suffering the greatest levels are all States which were fully developed under older technologies, where old Capital has to be bought out and replaced before a revised Business format can be introduced. Many Economists fail to concentrate on the degree of degraded infrastructure, and its impact upon Recessionary conditions. Such degraded Technologies are the first to close down under Recessionary conditions, and the slowest to develop alternate Employment because of the need to eliminate old Plant, before introduction of new Capacity.

Readers really need to read this Post by Alex Tabarrok; be sure to check out all the links. Bank credit has not really changed through the progress of this Crisis; there being Cause to claim that the Fed and Treasury measures are better suited to save the Big Bankers who wrote all the bad debt, rather than the small Unit Business. The real Slowdown is coming from lack of Demand, not lack of Credit extension. The average Reader should understand that policies are set by Politicians to please major Contributors, not necessarily because there is any Need for Change. lgl