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Thank you. > It's surprising because intuitively you'd think those things would be devalued. I guess this is where my intuition totally fails. In an economy t
by trgn 2y ago
Thank you.
> It's surprising because intuitively you'd think those things would be devalued.
I guess this is where my intuition totally fails. In an economy that grows more productive, commodities _fall_ in value, as they cost less to produce. A society with more yards of linen is a wealthier one than one with fewer, all things being equal. That intuitively makes sense. But that non-commodities, say, two hours listening to music, would need to fall because they aren't part of that productivity increase in other industries makes no sense to me. You pay performers for two hours of _your_ enjoyment, not theirs. So obviously you would value it more if you're richer (say, as a highly productive linen producer). I mean, simple supply-demand should still explain it. Demand is elevated (more disposable income of linen producers), and supply remains constrained (only so many performers). Where is that paradox?
I don't know. Some things I never grok, and beaumol is really one of these things.
- VHRanger 2y agoI mean, think about a plumber or a carpenter. Those jobs haven't really been more productive since the 1970s. Sure, PEX or nail guns are marginally better than previous methods, but not by that much. But since we still need plumbers or carpenters, they're more expensive than they were in the 1970s. Because of opportunity cost - imagine 1h of plumber's time in terms of TVs over 50 years. Because all opportunity cost is translated to cash, plumbers are more expensive now despite not being a growth sector. It's the economic equivalent to Amdahl's law in a sense. Things that can't be easily improved become economic bottlenecks (healthcare, education, construction).
- trgn 2y ago> Those jobs haven't really been more productive But their services aren't commodities. You're not paying a plumber to lay pipe. You pay a plumber to be in a dry house that doesn't smell like excrement. That value of course rises since demand rises. So of course, their labour value increases, since they're keeping the houses of a wealthier people free of odors. The same with education. The value of an education is the entry cost to participate in a productive economy. Of course that value is higher in more productive societies. Why should cost of an education drop, if its value rises? Again, it's not interchangeable in a global market, education is not a commodity. And I mean, imagine everybody's time in terms of cost of TVs to produce, not just those in unproductive industries. Isn't this just the effect of commodity prices dropping? Thanks for the explanation though, it starts to trickle, but there's nothing unintuitive about cost disease to me. It's just, well yeah, duh.