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« Three Blog Posts of Interest | Main | Austrian Philosophy & Economics: Call for Papers »


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More data on cheaper and smaller devices is great.

But, I presume the comment on this specific observation as supporting no great stagnation is tongue in cheek?

We wouldnt say the CPI is low because one component was low...

No tongue in cheek. I believe life for the average American today is better than it was 5, 10, 20, 50 or 100 years ago. Straight up. It would be better still without all the government intervention, and especially the recent boom and bust, but I live way better than my parents and my kids will live better than I do.

This raises an important but subtle point: I also have no doubt that my kids are going to live way better than I do when they are my age, but not nearly as well as they would in the absence of government intervention.

It also illustrates just how far we've come in the last few centuries: I'm glad to live at a time when the bleakest thing I can say about the future is that the iPhone 20 will be mind-blowingly awesome, but not quite as mind-blowingly awesome as it would have been without the heavy hand of the state. Here's something to consider: my two-year-old can make her way around an iPhone and an iPad quite capably. My kids have, at her fingertips and whenever they want to watch them, all the old Sesame Street clips that I loved when I was a kid.

From the vault, here's an article I wrote about the day the iPad was unveiled and contrasting it with the State of the Union Address. Key point: "(a)djusted for inflation, the low-end iPad is about 1/10 of the price of the first Macintosh."

The more you store, the less valuable each bit is. Diminishing returns should not be an unfamiliar concept here.


I agree with your observations about an American's standard of living now vs past but think unless America changes direction quite radically they will follow the path of Europe where your observations would resonate with very few as regards a European lifestyle now vs past.


Yup. An external drive loaded with free scholarly works and software goes for less than one semester's worth of the new fee my local college will charge to pay for womens' soccer.

Academia as we know it is a proud tower built on venality.


My cup runneth over.

Steve: "my kids will live better than I do."

Well, I sure hope you are right, but I know you don't actually think that the latest electronic gizmo proves the point. It's usefulness rides on innumerable strata of technology and infrastructure, which themselves require an extensive division of labor and knowledge, trade, and favorable political and social institutions and social capital to maintain, much less expand. This ecology, like any other, can be poisoned, shrivel up and die, in which case your 1 TB HD becomes trash. I wish I could be 100% confident that we are not witnessing that process.

We still get innovation in certain economic areas, such as hard drives, in which government regulators or "stakeholders" have little control. Other than FCC regulations on EM emissions, there is no government or private stakeholder able to block innovation.

Almost all other sectors of our economy which interact with the environment, use chemicals, require large facilities in this country, etc. are subject to some sort of regulatory slow step which can easily become a veto. The future of innovation in this country is being killed in all areas except for business areas where you can design in the US, build outside the US then market in the US.

A group in water-short So. California has been trying to get permits to build a desalinization facility using seawater in Huntington Beach for more than 10 years. It still must pass more regulatory levels with NIMBY and Luddite opposition at every stage.

I've worked in the tech industry all my life, mostly on consumer electronics like mobile phones and laptop PCs. Steve is certainly correct that the pace of change is high. Though that pace often looks slower if you're in the middle of it.

But, I agree with the critics too. Technology is only one small piece of consumer spending, it's reduction in cost doesn't significantly reduce inflation. It doesn't lead to significant reductions in the cost of living or increases in consumer surplus.

As "gwern" mentions above it's subject to diminishing returns. I have a 300GB hard drive in my PC of which ~15GB is used. Large hard drives are only of interest if you're a "media freak" as one of my friends once put it. For most consumers only video files consume enough space to make a large hard drive more useful than a small one.

I think in long run there are many problems, though I don't think they'll prevent growth continuing they may slow it to a crawl. For a long time productivity improvements in manufacturing and construction have greatly assisted growth and capital accumulation. Services are trickier though, they're much more easily subject to political interference because of their local nature. Technology looks magical to those outside it, and for that reason politicians are less likely to attempt to tinker with it. Services often don't, so we have "Parkinson's Bike Shed" effect where everyone has an opinion.

What's also interesting is the story of the discovery of the giant magnetoresistance effect and the rapid development of the effect into the high data density devices we have today. The two who discovered the effect were professors at universities in France and Germany. Research was supported by the governments with some degree of the government-industry cooperation for which France is famous. They went on to win the Nobel Prize in Physics and we got terabyte drives.

Well, the process of economic growth is fundamentally driven by millions of entrepreneurs discovering innovations. As long as this process is allowed to occur there is always the tendency for improvements in living standards.

The example of Stephen Bialkowski doesn't suggest that central planning helps/causes innovation. Since scientific discoveries made at government universities will not be converted into actual improvements in living standards without private enterprise being allowed to take advantage of these scientific discoveries. In the Soviet Union, where a lot of cutting edge science was done at universities, the general population did not benefit the slightest from the research since the critical element of private entrepreneurship wasn't present.

reminds me of Joan Robinson’s Essay on Marxian Economics published in 1942.

She noted that when the communist manifesto was published, its battle cry ‘Rise up ye workers, rise up for you have nothing to lose but your chains’ would have had some currency in 1848.

Alas by 1942, Robinson suggested that this battle cry would have to be amended to ‘Rise up ye workers, rise up for you have nothing to lose but your suburban home and your motor car.’ The forces of history can be cruel.

what would be the the battle cry be now: 'Rise up ye workers, rise up for you have nothing to lose but your iPad and your air miles'?

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