Thursday, March 3, 2011

Treading water, in a river

Just a reminder: America is getting richer, but many available consumption bundles are also constantly disappearing. Generally the disappearing bundles are ones that most people don't really want, but there's no economic law that says you have to be getting better off, even if you're one of the people getting richer.

For example, you can't just decide you're happy with your current computer and internet connection, and keep them forever. In 10 years they won't be selling the computer, they may not be selling the internet speed, and even if they were, computer programs and the internet would expect more from you anyway, diminishing your ability to function normally. Sites and programs want to run smoothly, but they also want to have more advanced features, and the minimum system requirements bar is raised as more people become equipped to clear it. You can't continue to consume the "same old" websites when they just don't exist in the same old form any more.

This is somewhat speculative, but my computing experience seems to actually get worse for the last couple years prior to getting a new laptop, even controlling for actual hardware or software degrading within my computer. It's a bit like treading water, in a river. And rivers go downhill.

In a similar vein, when we hear about people in less fortunate parts of the world living on a dime a day, we tend to react by imagining what it would be like if we lived on a dime a day, in America. But even adjusting for purchasing power, that's not quite the right comparison because we actually can't buy the things here that they can buy for a dime. As we got richer, we abandoned a lot of bundles that most people no longer wanted, because they were no longer living on a dime a day. For instance, if you were sufficiently poor, you might be willing to trade regular food for a greater amount of lower-quality (less tasty, say) food. But perhaps sufficiently low-quality food is no longer readily offered in stores here, because so few people want it. And if you want to trade guaranteed high-quality hospital access for more food, forget it! You can't just sell off your American right to walk into any American-quality ER in the event of an accident. (more food, lower-quality health care) is just not a feasible bundle here.

Minority preferences are always at risk of going unserved. If you were looking to give them a welfare boost, I wonder if there could be an advantage to the approach of trying to cater to their preferences rather than giving them a transfer that changed their minority status?

Tangentially related: Tiebout sorting

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