How do you distinguish the two in general? If over some period of time technological improvements reduce the cost of almost all goods (and also therefor the value of the human labor involved in the more traditional ways of producing the goods), what has happened is just drops in real cost, but it has also decreased people's income and probably created unemployment. If we calculate deflation using a basket of goods and don't print exponential amounts of money, it also caused deflation.
Purchasing power parity. You're conflating a drop in the factor of human labor with a drop in the vlaue of that labor, but they're not the same thing. For example it may take me only 1 hour to do in Excel what would take me 3 hours to do with pen and paper, but the value of an hour of my work has not dropped; it's probably risen due to the greater complexity of accounting tasks I can perform and my increased technical knowledge. I spend 3x less time on each client, but I can handle 3x more clients. My wafes ought to stay the same in real terms, or even rise depending on how well I can operate Excel. Your cost to get your books done may have fallen in real terms thanks to my doing it faster with Excel, but my hourly rate has not.
Under deflation, though, everyone has less money so I have to keep cutting my rate to stay competitive. Now even though I'm more productive I'm getting a lower return on my productivity. Arguably,this is a problem currently facing much of the labor force in the US.
It's terrible from the producer's point of view, which is why there are so few participants in the chip market. The thing is, technology is not the whole economy, and is far from being there for many years to come (ie Star Trek type replicators).
Any economic situation can be good for individuals who are positioned to take advantage of it, but in macro you need to consider the economy as a whole, through to food and extractive industries etc.
