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I'm not a subscriber so I can't read the article but I have a personal hypothesis about this. Developed economies have begun to enter a post scarcity state. Dai
by DubiousPusher 7y ago
I'm not a subscriber so I can't read the article but I have a personal hypothesis about this. Developed economies have begun to enter a post scarcity state. Daily goods like food and household items are not responding to inflation because they are no longer scarce. The combination of economies of scale, automation and cheap foreign labor have brought many goods to this point.
Meanwhile, things which are still governed by scarcity, medicine, property, education are skyrocketing in price. In part because those are more opaque markets with some bad incentives but also in some part ecause people can devote much greater percentage of their income to these things.
What it really looks like to me is these economies are straddling a the line between acarcity and non-scaecity. I'm no economist though.
- legitster 7y agoWhether intentionally, you are describing the Baumol effect - where productivity gains in some sectors actually cause other sectors to become more expensive in comparison.
- airstrike 7y agohttps://www.fullwsj.com/articles/economists-got-the-decade-all-wrong-theyre-trying-to-figure-out-why-11576346400 https://www.fullwsj.com/articles/economists-got-the-decade-a... ;-)
- harryh 7y agoInflation has nothing to do with the scarcity of goods. It has to do with the scarcity of money.
- ambernightcruse 7y agoThe first sentence is incorrect, inflation is about too many dollars for the amount of goods available for purchase. You're thinking of deflation, which is the relatively small amount dollars for real goods in the economy.