Quote:
Originally Posted by well named
I thought this explanation of how the prices of various goods/services change relative to each other was informative and interesting: The Baumol Effect. It's not something I was previously familiar with, and the explanation seems intuitive.
Another way to frame the question is: why are prices for the necessities of life going down for higher skilled workers but remaining the same for lower skilled workers? My answer is why would we expect them to do otherwise.
Adam Smith: If among a nation of hunters, for example, it usually costs twice the labour to kill a beaver which it does to kill a deer, one beaver should naturally exchange for or be worth two deer. It is natural that what is usually the produce of two days' or two hours' labour, should be worth double of what is usually the produce of one day's or one hour's labour.
If the deer hunter increases his skill and doubles his productivity and the beaver hunter doesn’t, there’s no economic reason why the 2:1 exchange rate should change. So the deer hunter will be able to get twice as many beavers for the same quantity of labor or work for half the time to get 1, but the beaver hunter will still only get 2 deer for 1 beaver. Same holds if we substitute a capitalist deer rifle manufacturer into the productivity equation: if the deer hunter kills twice as many deer due to borrowing a more efficient rifle from the capitalist—the deer hunter will still get 2-deer / 1-beaver, the beaver hunter 2-deer /1-beaver, and the capitalist pig 2-deer/ 1-beaver.
*Along the above lines (labor theory of value) and too far left of my sweet spot in terms of remedies, but she provides a nice paradigm shift that's right
on the money (literally), imo:
The Value of Everything: Making and Taking in the Global Economy
Last edited by John21; 06-02-2019 at 12:42 AM.