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« "I always find it refreshing to take a quick, clean intellectual shower in the cold, pure waters of libertarian thought ..." | Main | Some New Data on Income Inequality »


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One of the most difficult things for some people to grasp is that growing government intervention, control, and spending are hampering the economic well-being of the country, when precisely our standard and quality of life has been improving.

The key is Bastiat's and Hazlitt's point about "What is seen, and what is not seen." What is not seen is the greater degree of wealth and well-being (and consumer choices) we could have if not for the intrusiveness of the State in our personal and economic affairs.

In other words, we are not as wealthy and our standard of living is not increasing as fast as it might, if not for the heavy hand of political interference.

If a runner takes for granted and gets used to the weights attached to his ankles, he may consider that his running pace is "not really that bad" and maybe a lot better than others with whom he compares himself.

He does even think about how much faster his pace could be if the ankle weights were to be removed (or even significantly reduced in term of their weight).

So, yes, things seem to be getting better all the time. But not as better as they could be getting, if not for the size and burden of the State.

Richard Ebeling

It is very convenient to choose the one catagory of products that has most benefited from technological innovation in the past half century. Run the same calculation on education for example, and the result is not impressive.

There are a small number of products that don't fit this pattern so nicely. Education is one in the sense that it's much more expensive in labor hour terms. The question is whether it also delivers greater value (college, for example). Perhaps not. Cars, houses, and medical care all cost a little or a lot more than in the past, but all are of notably higher quality, offsetting the increase.

And for what it's worth, 100 years ago the average American spent about 75% of their household income on food, clothing and housing. That's now around 35%. The leftover makes it possible to pay for those cars, medical care, and education.

We should not forget that there are a significant number of goods and services about which it is difficult to determine their "real" market value due to the distortions and miscalculations caused by government.

Education is certainly one of them. Education in America is not a free market commodity, given the dominance of state owned and funded institutions of higher learning. Or the fact that so much of the costs of attending nominally private colleges and universities are subsidized in one way or another by state and Federal governments.

In the Soviet Union, government central planning tended to generate shortages of a wide variety of goods that the citizens of the "worker's paradise" would have liked to obtain.

In the American system of interventionist planning, we seem to generate a variety of wasteful surpluses, whether they be farm crops or an over supply of college students and professors.

The more highly interventionist the society, the more difficult it becomes to reasonably estimate the real value and cost of things provided on the market.

But, of course, the central point that Steve and others are trying to bring out is that in spite of the "visible hand" of what Adam Smith called "the man of system" who attempts to move us about on the "great chessboard of society" according to his preferred designs, the market remains amazingly resilient, innovate and productive.

Which is both the strength and weakness of a market economy. It can withstand a lot of interventionist, regulatory, and redistributive abuse, and like in those old Timex commercials, it takes a licking but keeps on ticking.

However, it also means that the political plunder can go on for a very long time, and to a very great extent, before the real negative effects of such policies fully show themselves.

Richard Ebeling

Education is both strongly controlled by government and strongly driven by ideological concerns that are shielded by that government protection and control. This is less true of unvierisites than of community colleges, and less true of community colleges than K-12. K-12 is a disaster, and the more we have federalized it (thanks G.W. Bush!) the worse things have gotten.

For example, I asked my community college English comp students when was the last time they had more than a week's worth of grammar per year, and they said 6th grade. 6th grade is the last time American students have had any actual lessons on grammar. Now imagine if 6th grade was the last time our students had had math (except for a week to brush up) or had had science? Could you imagine how bad their math skills would be? Yet, I have been told specifically to not teach grammar in my English comp classes.

A comedy site in Britain recently described University as "A giant, pissed-up creche". I know quite a lot of students, and I get the impression it's getting close to that.

Of course, it's worth mentioning that in 1964 a "stereo" specifically referred to a system capable of, well, stereo, which was then the exclusive domain of the audiophile. (In Britain, for instance, the BBC did not even play stereo records.) Basically, today's equivalent of the ad Perry shows would be something like a Clearaudio turntable and PSB bookshelf speakers.


I know as an economist that measures such as this are useful. But I am increasingly dismayed at the conclusion that we are "better off" because we can afford iPods and iPhones - or high end stereos, to continue with your example.

I see that we are working harder and longer than our parents, e.g. how many of us can survive if only one spouse works. I know that I am straying from the domain of economics when I ask: What is a qualitative measure of "better off"?

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