Britain’s productivity could be better than thought because officials may have underestimated the size of the telecoms industry. Advances in broadband and digital technology may not have been shown in GDP numbers by the Office for National Statistics, analysis suggests.
The work, instigated by the ONS after a review of economic data in 2016, found that inflation in telecommunications services may have been overstated by 90 per cent from 2010 to 2015.
The problem is that we want to adjust for quality/performance as well as just price. For that’s the true measure of inflation. It’s also a difficult thing to do.
The general US agreement is that they overstate inflation by 1 to 2.5% a year. Doesn’t sound like much but over the decades it sure as hell mounts up. I’d expect the UK overstatement to be less than that (amazingly, I think ONS better than Census etc over there) but still to exist. It’s also the explanation for “real wages static for 50 years” and the obvious evidence of reality that real incomes have risen.
My real reading of this would be something which I think comes from Feynman. When a number of clearly wrong no one does come out and prove that it should be radically different. Rather, we get a shuffle away from the wrong closer to the right, it taking a number of shuffles to get to reality.