By Arnold Kling
Shalah M. Mostashari writes,
As more firms take advantage of the cost savings of an increasingly international division of labor, continued growth in the variety of imports coming from developing nations can be expected.
Pointer from Mark Thoma.
Let me take this issue of product variety in a different direction. We went to the mall yesterday, something that I do pretty rarely. So the variety of products, which you might be used to if you went to the mall frequently, left me stunned.
We were somewhat interest in three things–a new watch for me, a new phone for one daughter, and a new wallet for another daughter. We bought nothing.
We may actually have experienced the paralysis of choice. There were so many different kinds of watches, so many different phones, and so many different wallets that it was somewhat numbing.
You can see where there is a lot of slack in the economy. Notwithstanding research that suggests that product variety has really improved our standard of living, I suspect that we could sustain a major contraction in the variety of goods without suffering a major loss.
In fact, it may be true in general that we could sustain a large decline in economic activity (as measured by income and spending) without suffering a major loss. There are so many goods that we don’t need. People may be able to get by for a long time without steady employment, instead working only sporadically. They do not enjoy an affluent lifestyle, but they do not fall into sub-human conditions, either.