This article puts its finger on some interesting questions.
Circa 1930, when Agatha's domestic servant was an affordable basic but a car was not, JM Keynes famously predicted a 15 hr workweek. His productivity and GDP growth projections that this prediction were right. But, the workweek didn't change much. "Work hours" changed, but it wasn't productivity that caused changes. Wars, women's' liberation, college, child labour norms and such caused changes. Increased productivity did not.
Why? The most common economics-ey answer is "the hedonic treadmill." As wages increased, so did our demands. We want smartphones, fancy cars, expensive medical care and such. Essentially, this argument implies that we choose to work a lot to consume more.
I think hedonic treadmills are this is part of the answer, but grossly insufficient. A better answer. Economics should be providing better, more curios treatment of the question.
This article mentions “Baumol's cost disease,” but like the hedonic treadmill, I don't think it's a sufficient answer.
Economics is cursed by "post fact storytelling" issues. I think it needs to be balanced by post fact question-asking.
Did GDP-per-capita "really" grow 5X-10X during this period. What does that mean exactly, considering that an average person can afford more of some things and less of others? A 15 hr workweek pays less than a month's rent.
Car prices themselves are also an interesting case. Until about 1930, auto manufacturing (US) experienced its proverbial "hockey stick growth." Each year processes improved, prices went down and the number of units went up. By about 1930, the US market was saturated. Cars continued to evolve and improve, but prices stopped decreasing as production volume leveled. From this point on, productivity/GDP trends are means faster or nicer cars... it stops meaning more affordable cars.
In short, I think there are some serious discrepancies in the meaning of GDP when considered over short periods and long periods of time.
Circa 1930, when Agatha's domestic servant was an affordable basic but a car was not, JM Keynes famously predicted a 15 hr workweek. His productivity and GDP growth projections that this prediction were right. But, the workweek didn't change much. "Work hours" changed, but it wasn't productivity that caused changes. Wars, women's' liberation, college, child labour norms and such caused changes. Increased productivity did not.
Why? The most common economics-ey answer is "the hedonic treadmill." As wages increased, so did our demands. We want smartphones, fancy cars, expensive medical care and such. Essentially, this argument implies that we choose to work a lot to consume more.
I think hedonic treadmills are this is part of the answer, but grossly insufficient. A better answer. Economics should be providing better, more curios treatment of the question.
This article mentions “Baumol's cost disease,” but like the hedonic treadmill, I don't think it's a sufficient answer.
Economics is cursed by "post fact storytelling" issues. I think it needs to be balanced by post fact question-asking.
Did GDP-per-capita "really" grow 5X-10X during this period. What does that mean exactly, considering that an average person can afford more of some things and less of others? A 15 hr workweek pays less than a month's rent.
Car prices themselves are also an interesting case. Until about 1930, auto manufacturing (US) experienced its proverbial "hockey stick growth." Each year processes improved, prices went down and the number of units went up. By about 1930, the US market was saturated. Cars continued to evolve and improve, but prices stopped decreasing as production volume leveled. From this point on, productivity/GDP trends are means faster or nicer cars... it stops meaning more affordable cars.
In short, I think there are some serious discrepancies in the meaning of GDP when considered over short periods and long periods of time.