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Comment by nicoburns | Hacker News Reader

Which is the hidden downside of free market economics. It incentivises exactly this kind of cost cutting, even when it isn't beenficial to society.

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Downside? We wouldn’t have the level of wealth today if we didn’t become more efficient in our production (I.e. lower cost).

The level of wealth we have is disproportionately assigned to the minority of people best able to exploit the majority of people. Obviously we can go back and forth on the specifics of how the world's current state of prosperity has benefits and harms, but to present that level of wealth as intrinsically beneficial is disingenuous.

You didn’t address my point at all. You claimed that “cost efficies” are a negative about capitalism and I said that’s the reason why level of wealth has changed increased dramatically even for the lowest rung.

Just because it’s disproportionate doesn’t mean my statement isn’t true.

Your points are not mutually exclusive. The efficiencies are a large part of the reason we’ve collectively grown our wealth. They also are at times not the most advantageous to our society.

Right, that's the upside: cost cutting by means of more efficient production. This can often be good. But not all cost cutting is equal. Say for example if a company cuts their costs by lobbying for lower taxes on the product that they sell. This could well be harmful to society, but is still incentivised in our economy.

We need more nuance in our policy than "always incentivise lower prices".

But it is beneficial to society. It keeps prices low and accessible.

What good are increasing wages if it is accompanied by inflation that negates those increases?

The truth is that the minimum wage worker today is able to purchase a LOT more than they could in the past.

The only two costs that have gone up disproportionately are housing and healthcare. The former is due to bad government policy that encourages homeownership as an investment. The latter is due to cost disease.

Outside of space-limited desirable locations where house prices are the result of a bidding war, the problem of house prices is related to expectations and the resulting regulation.

To get an FHA loan, all sorts of stuff has to be present and in good condition. Zoning requirements, building codes, and the ADA have all jacked up prices. You can't just build yourself a shack anymore.

Example location: Sommerville Massachusetts, where you can't legally build the city today. Nearly everything is in violation. The same applies in Manhattan.

Example feature: We now have to have arc fault interrupters and wired-together fire alarms, even if you can't stand them. For decades we got by with low-cost circuit breakers and battery-powered fire alarms.

People who are living well start to see expensive things as being important, and so they feel that the features should be mandated, and it seems like only a trivial cost... but just like software bloat, it adds up over time. Sellers of the features push for it too. We end up pricing less-well-off people out of the market.

I am simply prohibited from building a house that would have been good-quality construction in medieval times. I can't even build an ordinary house of the 1980s... and even last year's design is often illegal to build. There is a ratchet effect here. Requirements keep getting added, but none are ever removed.

Except for rent, which shows no sign of stopping it's climb in cities and their associated suburbs.

The housing market is hardly an example of free market economics.

So, what is the example then?

Personally, I think free market belongs to a class of spherical cow models.

Rent is also tied to bad housing policy that prevents building.

> What good are increasing wages if it is accompanied by inflation that negates those increases?

Nothing. But that’s not the situation we’re in. The implication that your “if” would come true is an argument against any increase in wages ever. but it assumes that we’re in some sort of equilibrium where everyone spends 100% of their money and spends it on the same things.

> The truth is that the minimum wage worker today is able to purchase a LOT more than they could in the past.

Except for energy, housing, health care, and education. But besides that sure, android phones are cheap!

Housing, healthcare, and education are expensive because of increased demand and unwillingness or inability to expand supply (e.g. restrictions on building denser housing in a lot of desirable areas, strong social pressure to get a 4 year education). Some of them are actually exacerbated by public involvement - easy access to credit for education means universities can charge a lot more.

It's not just electronics that are cheaper. Things we take for granted now - owning a refrigerator, a car, heck even things like electricity and plumbing - were out of reach for many people a matter of decades ago. Sure many of these things were made in good old 'Murica back then and created low-skilled jobs - but these products also cost a much larger percentage of the average household's available income.

You're also ignoring the immense benefit that free global markets provide for countries other those in the First World. China's shift to a free market economy singlehandedly halved global poverty. We tend to index heavily on the American that needs to change fields when his job is "shipped overseas". Rarely do litanies against free markets consider those overseas - almost always in a more precarious financial position than the country that is losing low skilled jobs - who get a chance to improve their lives due to free global markets.

Appliances today have much shorter lifespans than previously, so it's hard to tell if they're cheaper or more expensive.

Whatever the reasons of higher expense, key items are still pricier.

Many of those "key" items weren't even considered "key" items a matter of decades ago, because their costs were too high for the average family and most didn't even think to expect those things. When did the notion that even every moderate high school student go to a four year university become prevalent? Certainly it was some time in the last half century. Same with electricity. Electricity and associated electronics have become so prevalent that we buy desks with USB ports, and the thought of living in an home with no electricity is practically foreign to most people. And healthcare? Infant mortality nearly halved from 1949 to 1970 (28 to 17 per 1000 live births), and has since more than halved over again (5.8).

I think it's important to view the trajectory of progress not in how is lines up with how reality lines up with our expectations (because any optimistic society will - and should - strive for better), but by seeing how our reality lines with with what used to be reality.

When did the notion that every even moderate high school student could get a job and buy a house stop being prevalent? Certainly it was some time in the last half century.

Yes we get it, it's great that we have antibiotics and electricity, but it's completely missing the point. Food, shelter, education, and health are not luxury goods, they are the foundation of a functioning civilization.

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