Steve Horwitz and Mark Perry look at trends in household appliance prices and ownership. Perry writes,
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.
READER COMMENTS
Joshua Lyle
Nov 30 2009 at 11:39am
The comments on Mark Perry’s post linked to some data indicating that “net tuition” of college education have actually gone down since the College Board started tracking them in ’94/’95 even as sticker prices have skyrocketed. Is this price discrimination at work again?
Thomas Sewell
Nov 30 2009 at 12:23pm
Even worse, the credentialism in public schools works against hiring the best qualified as teachers. A typical teaching college graduate is much less prepared to be an excellent teacher (partially for content reasons and partially for self-selecting intelligence qualifications) than a graduate with a math, history, physics, etc… degree or a private less traditional teaching certification like a set of Montessori certifications. Even in states that have loose credentialing laws, individuals wanting to teach with just a “normal” degree in what they are teaching are required to spend significant money and time before and during their first few years of teaching jumping through bureacratic hoops, classes, and testing.
I personally know of a public Montessori k-8 that would love to hire a bunch of Montessori certified teachers instead of typical teaching college graduates, but because they don’t have the right credentials (typically because they are targeting private schools to work at, not public schools) they have to do it the other way around.
The school hires certified teachers and then provides private Montessori certification classes for them over their first few years teaching at the school. It mostly works, but it’s way more expensive than necessary and the end result is still less than if the state credentials weren’t required and they could hire people smart enough and personally motivated enough to get the right Montessori credentials to begin with.
Without credentialism required by law, schools could hire better teachers (especially in today’s economic environment) for less money. Of course, that wouldn’t make the NEA happy, just taxpayers and parents.
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