From Poverty to Prosperity Watch
By Arnold Kling
By almost every measure of appliance ownership, poor American households in 2005 had much better living conditions than the average American household in 1971
….to purchase those 11 basic household appliances in 1973 would have taken 551.1 hours of work, 13.8 weeks or 3.4 months working full-time at the average hourly wage in 1973. To purchase those same eleven appliances in 2009 would have only taken 171 hours of work, or 4.3 weeks or 1.1 month.
In Book 1, we emphasize the long-term reduction in cost of goods. This is due to innovation and productivity growth.
Think of the dynamics of developed economies as consisting of resources moving out of sectors where productivity tends to grow faster than demand and into sectors where demand grows faster than productivity. As Robert Fogel (one of the economists interviewed in our book) points out, demand will grow faster than productivity in education, health care, and leisure.
I wish we had fewer barriers to entry in education and health care. There is too much credentialism and emphasis on accreditation. The public school system is too much of a protected monopoly. Without these barriers to entry, I think that the recession would end much sooner, because we could transition more resources into education and health care more easily.