tag:blogger.com,1999:blog-582368152716771238.post2423971123596280474..comments2024-03-28T14:41:03.793-05:00Comments on The Grumpy Economist: Stuff cheap, people expensiveJohn H. Cochranehttp://www.blogger.com/profile/04842601651429471525noreply@blogger.comBlogger35125tag:blogger.com,1999:blog-582368152716771238.post-32466505478926813942021-01-26T03:45:02.800-06:002021-01-26T03:45:02.800-06:00"Have college professors seen a rise in pay c..."Have college professors seen a rise in pay commensurate with the tuition growth rate or are we paying for more administrators?"<br />I lived in proximity to ASU. They built half a dozen new buildings, renovated at least one dorm, increased the breadth of classes available, all the implied hiring and contracting involved. Tuition paid for it, in bulk. Probably some bonds too, but they have to get paid off too, and... that's likely future tuition as well. When government tells everyone they really NEED a college degree, the demand responded predictably, I'd say.pyrodicehttps://www.blogger.com/profile/13095307475832603912noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-16534425261484242682020-10-13T12:45:20.066-05:002020-10-13T12:45:20.066-05:00Easy enough to just say whenever the government is...Easy enough to just say whenever the government is omnipresent in that aspect of the economy the more likely there are dramatic price increases and little innovation.@chismillionairehttps://www.blogger.com/profile/11168611818949915029noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-30737393172667421122014-05-22T22:08:52.757-05:002014-05-22T22:08:52.757-05:00Do return to the "goods are free" econom...Do return to the "goods are free" economy idea. One thing I've noticed is that it isn't just info for shopping (on hi-low quality and goodness of fit to personal needs) that's increasingly valuable. It's also just knowing where things are. When goods are free, you buy a lot of them, and forget where you put them. One response is to buy only as needed--- and let the store (=Amazon) keep more inventory and keep track of where everything is. Thus, retailing services will be increasingly important. Eric Rasmusenhttps://www.blogger.com/profile/01609599580545475695noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-67967103132719401962014-05-22T21:55:53.954-05:002014-05-22T21:55:53.954-05:00This sounded right to me till I thought twice abou... This sounded right to me till I thought twice about college education and realized that at the high-quality end (top 150 colleges and universities) it *is* exposed to international competition, and thriving because of it. Moreover, it's hard to start a foreign college to undercut American ones because you have to hire professors who can and will quit to work for more attractive US jobs. <br /> On the other hand, the massive low end of post-secondary education may well be driven by government loan subsidies and direct funding. Eric Rasmusenhttps://www.blogger.com/profile/01609599580545475695noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-13155298470424955362014-05-22T14:47:44.509-05:002014-05-22T14:47:44.509-05:00I agree with this article 100%. It makes sense for...I agree with this article 100%. It makes sense for people doing services to charge more because time is money, and of course certain items can be created in bulk (maybe 100 pieces an hour) but time for one person is valuable. As a business women I spend 10-12 hours a day working to service people because I believe in high quality items. My time is very valuable and should not be paid less because machines could make it faster. Quality over quantity is what I believe. Less time= less money. Emily Thttps://www.blogger.com/profile/11573249156132832791noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-2716981479884599682014-05-22T01:48:12.144-05:002014-05-22T01:48:12.144-05:00I definitely agree that the things in are getting ...I definitely agree that the things in are getting cheaper and the services of people are getting more expensive. It is obvious where people get the idea of inequality between people of different expertise knowledge. Now people are spending money on people for their expertise rather than the actual good because of this mindset of self-interest. I have never really looked at the economy in the way that makes me think about items themselves being next to nothing compared to what people have to spend for the service of the provider. The economy is already heading in the direction of labor costing more than goods and it is going to keep heading in that direction. For example, berries grown with no upkeep would be les expensive than a berry bush that has been planted and maintained by a farmer. It is the cost of the labor behind making things that is where the real value of a product comes from. When people buy hand carved wood they are paying for the labor that went into the wood because the wood itself if probably a lot cheaper than the labor it took to hand carve it. The economy is all about open-ended questions that have a multitude of answers. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-49040113156485880402014-05-20T13:04:35.093-05:002014-05-20T13:04:35.093-05:00This blog sheds light to a reality that we are exp...This blog sheds light to a reality that we are exposed to today. John Cochrane’s argument about the constant increase in value of an expertise of the seller and the declining costs of physical goods raises concerns as to why such phenomenon occurs, and how it impacts the economy. As a college student, the weight of college tuitions that continuously becomes substantial to endure, I am completely aware of the excessive increase in service costs. I believe that technological progressions, alongside the improvement of human capital, are notable contributors of the increase in demands of value of expertise of the seller. In my opinion, as the market becomes more challenging and difficult to thrive in, most firms incorporate the use of technology in developing their products; employers would invest in expensive physical equipment and human capital (prospective applicants with technological knowledge). As a result, it contributes to the overall increase in expertise services.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-84104685212093765082014-05-15T09:49:28.619-05:002014-05-15T09:49:28.619-05:00The image caption says most of the electronics cos...The image caption says most of the electronics cost decrease represents quality improvements. Even if the metric is just floating point operations per second, it still draws into question the validity of the graph. People are paying similar prices for phones and computers today as they were ten years ago, maybe more with all the additional services, most of which are automated.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-64783504137336119872014-05-08T12:42:29.995-05:002014-05-08T12:42:29.995-05:00I think this post misses the point a bit. I agree...I think this post misses the point a bit. I agree that in real terms goods have gotten cheaper and people more expensive, but how much of this is due to the quality adjustments being included in the data series? I don't know about anyone else but the last 3 TV's I've purchased for my living room have all cost ~$800. The latest one is far superior but it still cost the same in nominal terms and all 3 have provided me with roughly the same quality of life. In my opinion we should be focusing on how much a given amount of "utility" costs. I'll pay more for expertise because it increases my utility but I still spend the same in nominal terms for the TV viewing experience. This is why middle / lower class feels pinched more and more. Baseline goods still require a given outlay and every service people acquire costs more.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-80482476472813044922014-05-08T04:07:13.618-05:002014-05-08T04:07:13.618-05:00Yes, this is Baumol's cost disease. See this a...Yes, this is Baumol's cost disease. See this article from The New Yorker, in particular its last paragraph: http://www.newyorker.com/archive/2003/07/07/030707ta_talk_surowiecki Moggionoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-54580114948663970902014-05-08T02:39:38.450-05:002014-05-08T02:39:38.450-05:00Tradeables cheap, non-tradeables expensive.Tradeables cheap, non-tradeables expensive.Anonymoushttps://www.blogger.com/profile/16457784177791878796noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-53804172106548870602014-05-07T18:39:25.728-05:002014-05-07T18:39:25.728-05:00I think cheap things, expensive people is only hal...I think cheap things, expensive people is only half the story. The services that have risen in cost the most are the ones where state subsidy and regulation are heaviest: College is notorious for it's aggressive price discrimination and massive subsidies that result in serious inflation - health care costs are soaring for similar reasons. And child care has seen increases in regulation and minimum 'standards' that have driven its costs upwards. You can even see the 'regulatory' premium on the goods side: housing costs have stayed relatively high in part because of land use regulation that limits supplies of new housing and unregulated hardware costs have fallen much faster than regulated wireless services have.<br /><br />In every case government's meddling and manipulation has been a key contributor to the excessive increase in services costs. There's no reason that lectures and paper grading should rise in cost faster than car repair or a restaurant meal, it's just that colleges are much better rent seekers. This differential between the 'have' sectors who have state protected cartels and subsidies and the 'have not' sectors exposed to international competition is a major contributor to income inequality. (Sorry, John I couldn't resist bringing IE up).VeracityIDhttps://www.blogger.com/profile/18150768365582647260noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-1116311269441494712014-05-07T13:58:36.400-05:002014-05-07T13:58:36.400-05:00This makes me think about the relationship of infl...This makes me think about the relationship of inflation to inequality. Seems to me decades ago, when we were all more equal, inflation used to make TVs more expensive while simultaneously shrinking rich folks bank accounts. Perhaps inflation is the great equalizer?<br />Peter Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-76415514422276934612014-05-07T13:53:26.714-05:002014-05-07T13:53:26.714-05:00My recollection is Baumol said the costs of things...My recollection is Baumol said the costs of things requiring more human involvement naturally rise relative to those things requiring less. So, generally the cost services provided by people will eat up more and more of our income compared to goods. He included government services. The chart certainly seems consistent with this.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-57390329557929263482014-05-07T13:48:34.884-05:002014-05-07T13:48:34.884-05:00Yep. And perhaps that is why you should consider ...Yep. And perhaps that is why you should consider free trade the greatest tool of all in eliminating inequality (unless of course you take a rather pedestrian and selfish view that equality should be measured by artificially and conveniently drawing geographical boundaries).Vivian Darkbloomhttps://www.blogger.com/profile/18362419878968863283noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-80461010146215765882014-05-07T13:42:23.449-05:002014-05-07T13:42:23.449-05:00Brings to mind Bryan Caplan's musings on a &qu...Brings to mind Bryan Caplan's musings on a "pure service economy":<br />http://econfaculty.gmu.edu/bcaplan/serviceTGGPhttps://www.blogger.com/profile/11017651009634767649noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-70902707260615856932014-05-07T13:23:26.557-05:002014-05-07T13:23:26.557-05:00Not a good explanation of anything tech. The peopl...Not a good explanation of anything tech. The people in China who assemble this stuff have become significantly more expensive over the past ten years while the cost of the stuff continues to plummet (and much of the manufacturing is increasingly automated anyway and coming back on shore). Robots cheap, people expensive is probably a better description of the next ten years.Steamboat Lionhttps://www.blogger.com/profile/12645780586629716757noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-63817599063285010262014-05-07T11:44:18.422-05:002014-05-07T11:44:18.422-05:00Some people cheap, some people expensive ... there...Some people cheap, some people expensive ... therefore ... um ... inequality.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-14354747785983340592014-05-07T11:13:51.727-05:002014-05-07T11:13:51.727-05:00Check out what kind of growth there has been in &q...Check out what kind of growth there has been in "people" in health care.<br />http://authenticmedicine.com/wp-content/uploads/2012/07/483994_447875728578712_1927873976_n.jpgJB McMunnhttps://www.blogger.com/profile/15468282698533043544noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-36540259692292871852014-05-07T10:28:02.305-05:002014-05-07T10:28:02.305-05:00Physical things getting cheaper relative to wages ...Physical things getting cheaper relative to wages is pretty much the definition of rising real incomes - which I think we universally agree is a good thing. Absalonhttps://www.blogger.com/profile/09131268683451462949noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-15311677084495280872014-05-07T09:21:34.671-05:002014-05-07T09:21:34.671-05:00It would certainly be helpful in redistributing th...It would certainly be helpful in redistributing the variance around, and perhaps also reducing, mean income.<br /><br />I would like to know how energy costs fare in this graph. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-27474518395056528582014-05-07T06:26:01.419-05:002014-05-07T06:26:01.419-05:00Is this Baumol's cost disease?Is this Baumol's cost disease?Brad Evanshttps://www.blogger.com/profile/00208847905098372823noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-62381854951748916092014-05-07T02:27:02.526-05:002014-05-07T02:27:02.526-05:00"Just the measurement of GDP and inflation in... "Just the measurement of GDP and inflation in such a world raise lots of open questions."<br /><br />I agree with this sentiment.<br /><br />Then, why the fixation on a 2 percent inflation ceiling (in the case of the Fed, ECB) or the sentiments of many others that "inflation should be zero" (the old BoJ and many pundits in the USA)?<br /><br />Would not a better goal be robust economic growth, as long as inflation (as measured) is somewhere in low digits?<br /><br />Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-48011538498594841352014-05-07T00:36:23.563-05:002014-05-07T00:36:23.563-05:00“Larry Summers' Martin Feldstein speech”?!?!? ...“Larry Summers' Martin Feldstein speech”?!?!? Those two are from Harvard, which is a guarantee of poor quality. I’d rather read Micky Mouse’s Donald Duck speech.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-63449965737691907082014-05-06T22:15:23.710-05:002014-05-06T22:15:23.710-05:00In my perfect automaton future, goods become arbit...In my perfect automaton future, goods become arbitrarily cheap, excepting capital robot goods, but jobs become just as arbitrarily scarce. The only expertise left belongs to those who can invent and repair robots.<br /><br />So I see cars getting cheaper, but mechanics and factory workers getting relatively poorer. Meanwhile robotic engineers start earning a larger share of the pie...but what this has to do with healthcare I just do not get...must be a temporary bubble from the wealth effects people find themselves gaining before they also are replaced by robots.LALhttps://www.blogger.com/profile/08196675112184615614noreply@blogger.com