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 del

Since I am not much of a fundamentals trader, I tend to stay away from government statistics. To me, they have very little value. As far as I can see, they are full of errors. Let me explain.

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 deli

clusions 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 del

ou 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 del

e 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 del

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