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He did not say that the drop in the price of PCs was representative. He (successfully, I think) provided an example showing that a gain to productivity benefite
by jcrites 15y ago
He did not say that the drop in the price of PCs was representative. He (successfully, I think) provided an example showing that a gain to productivity benefited everyone, not just the holders of investments.
What is an example of an industry where gains to productivity don't benefit everyone? Gains to productivity in farming enable the price of food to drop. Gains to productivity in housing enable the price of housing to drop. How does it only benefit the rich?
Even if the price does not drop directly as a first-order effect (such as if the company whose productivity is boosted keeps the difference as a profit), it will eventually through market pressure; a new price equilibrium will be established. In perfectly competitive market (such as food) a competitor will use the productivity boost to lower costs and undercut the first. The resulting competition will lower the market place. Productivity gains lower prices (real prices), benefiting everyone.
- marshray 15y agoI'm trying to be careful not to argue that "gains to productivity don't benefit everyone". My personal feeling is that probably sometimes it does and sometimes it doesn't, but I haven't researched it enough to back that up. Mainly I think discussions of any squishy data set carry a lot more weight once we throw out some outliers and general purpose computers are a definite outlier. Food production in the US is one of the most heavily subsidized (i.e., artificially manipulated) sections of the economy.