There is an assumption that labor is not paid for R&D work, nor that R&D may be contracted to outside firms, innovators are not rewarded.
Bottom line, raw manual "labor" is a shrinking share of work that is being done, of economic activity. This is a fact of economic development. Those with better education, and are more creative, get compensated better. Those without education, have to compete with 100's of millions overseas.
R&D, advertising (for brand building) other forms of IT and media are, according to the author, not counted. The author himself is not part of the input to GDP and therefore should not be paid.
As for the benefits of economic growth acruing only to the owners of capital ... this happens to include workers with retirement plans and pensions.
Further, there is no calculation of the benefits of lower prices due to improved productivity.
Humbug.
Seizing Intangibles for the G.D.P. - New York Times:
Seizing Intangibles for the G.D.P.
THE plain fact is that when it comes to measuring how much the American economy produces and who gets what share of the pie, the federal government's most celebrated statistic — the gross domestic product — leaves something to be desired.
The G.D.P. is useful, as far as it goes. It tells us how much value — often called national income — is generated each year from the production of goods and services in the United States. The G.D.P. also breaks out how much of that income goes into profits and how much into wages and salaries.
This is where the trouble is. The numbers show that the profit portion of the gross domestic product has risen mildly in recent years, while the wage-and-salary share has shrunk slightly. There is evidence, however, that because of the way the G.D.P. is calculated, the actual shift is much more pronounced."
and...
"The Bureau of Economic Analysis, which issues the G.D.P. reports each quarter, is on the case. So are two prominent economists at the Federal Reserve. They all seem to be finding that the current methods for calculating G.D.P. undercount the dollar returns from research and development. What's more, this payoff is not showing up in workers' paychecks.
The approximately $300 billion spent each year on R & D is a big concern of the bureau's economists. Until now, it has been counted as an expense, reducing the profit total within the G.D.P. Starting in September, however, the bureau will publish an experimental G.D.P. account that parallels the standard quarterly report, except for one change: R & D will be counted as capital investment rather than as an expense.
There is logic in this change. Consider the process of making and selling a dress. The cloth and thread — the raw materials — that go into the dress are an expense that must be subtracted from the sales price of the dress, once it is sold, to arrive at a profit. The automated sewing machine that makes the dress, on the other hand, is counted in the G.D.P. accounts as a capital investment because, once installed, it makes dress after dress, generating a stream of revenue. It is an investment drawn from retained earnings to generate more earnings.
Similarly, the research and development that made Prozac possible generates revenue for years, just as the sewing machine does for the dressmaker. Successful research and development yields long-term returns, and the bureau's experimental G.D.P. acknowledges as much, by classifying R & D as capital investment in the satellite account. Capital investment, in turn, counts as a contribution to profit in the G.D.P.
This reclassification leaves no doubt that workers are being left behind as the G.D.P. expands. When R & D is counted as profit, the employee compensation share of national income drops by more than one percentage point. In a $12.5 trillion economy, that's big money."
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