It turns out that the things we absolutely must have, such as a home – are getting more expensive, while the things we would quite like to have, such as a really big TV, are getting cheaper.
A tweet from Mark Perry, of the American Enterprise Institute, using data from the Bureau of Labor Statistics, makes the point:
So since 1996, the price of college text-books has soared, as has college tuition, childcare, food and beverages and housing.
The cost of new cars is about flat, clothing costs are falling a tad as are household furnishings, smart-phones are crashing in price, software even more so.
So what’s going on?
Mark Perry puts it down to the ‘miracle of manufacturing’. Over time this delivers lower costs. Globalisation lowers costs too, so that explains cheaper smart-phones and LCD TVs.
There is another wider point.
Services which are delivered by people are less likely to fall so rapidly in price. Say a teacher takes a class of 25 children. That teacher needs to get paid for their time, and would not be happy to see their salary fall over the years. So you would expect the cost of a TV to fall relative to the cost of teaching over time.
But there are some oddities, which may change.
The cost of text-books and college tuition may have risen since the mid-1990s, but technology may change this. MOOCS – massive open online learning courses, in which some of the best teachers in the world put detailed lessons together online – and for free – and online teacher resources such as the Khan Academy will surely disrupt education – leaving teachers with a quite different role, more related to social interaction.
The combination of genome editing, wearable tech, big data and AI will totally transform healthcare.
So the cost of college tuition, text-books – which will be replaced by ebooks and online classes – and healthcare – provided by GPs – will fall.But the cost of childcare – requiring a set number of adults per ten children will rise, the cost of education when it entails interaction – such as PE – will rise and the cost of human intensive parts of healthcare such as nursing or occupational therapy should rise. Or if they don’t rise, it means wages are falling which is not such a desirable outcome. At the very least, the cost of labour intensive work, measured in wide screen TVs, will surely soar.
But the cost of childcare – requiring a set number of adults per ten children will rise, the cost of education when it entails interaction – such as PE – will rise and the cost of human intensive parts of healthcare such as nursing or occupational therapy should rise. Or if they don’t rise, it means wages are falling which is not such a desirable outcome. At the very least, the cost of labour intensive work, measured in wide screen TVs, will surely soar.
As for land, one assumes the cost will go up for as long as the population rises –then again, in many parts of the world, the population is falling and is likely to do so in many more parts.
