Ohio miners forced to attend Romney rally without pay...

[Kevin]

We got here because we were discussing whether the benefit of productivity was to drive down prices. In many ways it has. And, we've all pointed out the ridiculously low prices of most imported consumer goods, like TV's, Computers, Appliances, and to some extent cars. Things that cannot be imported, or traded like that have experienced above average inflationary growth (education, health care, lawyers, etc).

Again part of the issue with your arguments is that you kept using an example that you presented like it was real life, not just hypothetical that was flat out wrong. I built custom systems for people in the late 90's early 00's and entry level systems were $1000 or so at the time, it was nearly impossible even using the lowest end of parts to build a system that could do what they wanted for less than $600. Now an entry level system that is miles beyond that is about $500 and I could build or purchase a fully functional system for under $300 I simply could not do that in in the late 90s. I'm not doing any adjusting of the dollar, in 1999 dollars you paid about $1000 for a system that would run Win95/98/NT reasonably well. In 2012 you pay $500 for a system that runs Win7 reasonably well. You kept claiming that the replacement cost for a computer that you got in 99 that has worn out/broken/whatever would now be $1500. It didn't make sense because it was completely the opposite experience.

I worked with many people that didn't need a lot of computing power, but the old Commodore 64 that still ran just fine simply didn't have the software they needed it couldn't hook into even a 300 dpi scanner (and really it usually a 1200 dpi scanner which meant even steeper memory requirements) and convert their photos to digital images for their business website. But yes I did help get 286 and 386 systems that were running versions of DOS or Win 3.1 to function to the level needed because that is all they needed, but in many cases even though the parts they might have needed were cheaper than they were when they bought the computer it was still less expensive to migrate them to newer more powerful technology. That 4MB ISA memory expansion card that was $500 when the 386 was released was only $300 now but I needed 2 of them and a $200 video card (that was $800 when the system first came out), that $800 was better spent on a 300 MHz Pentium II system. Since the vast majority of users wanted to do more than a 386 could handle manufacturers weren't making parts that could make a 386 work better, they weren't building 386 systems that only cost $100 because there was no demand for them anymore because they were tools that simply didn't do the job, it was not easy to insert images in word processor documents and it never would be on 386/486 level technology.

Now starting around 2003 or so the base computer had software and hardware that was good enough to handle what most people needed, it could do photo manipulation, handle all the network connectivity technology, etc. Demands for new features have slowed down, so an argument could be made that there would still be demand to just put the efficiency gains into making cheaper and cheaper 2003 level systems. But the reality of that market is that things get cheaper AND more powerful.

You kept trying to use that industry as an example to support your core argument and it was an awful example because you were wrong. Had you just talked about widgets or cars you would not have muddied your point and not elicited some of the confused responses you got.

If we were allowed to manufacture and sell a 1960's technology (mid-sized passenger) vehicle, it would sell new for less than $10,000. We've layered on about $3000 in safety and emission standards, and about $10,000 in quality improvement. Be that as it may, we all enjoy our longer lasting, less polluting, higher quality safer vehicles. Maybe that is worth doubling the price.

Now you get into an example that actually illustrates what you are saying instead of illustrating the opposite of what you are saying. I will point out the Geo Metro. It sold for under $10K in the 89-97, I think there were trim packages on the 97 models that came in over $10K. People didn't really buy them. Yes they sold 700,000 or so in that time frame. Ford sold something like 1.4 million Taurus from 92-95 so twice as many in 1/3 the time. This is a car that got 40-55 MPG cost less than $10K brand new and if you got the 4 door hatch model could comfortably seat a 6'5 person in the back seat (I know from personal experience). My 89 Metro had more rear leg room than 02 Taurus does. My Taurus is about as big as a passenger car can get, I actually considered the Metro mid size.

But even if you get rid of the safety and emission standards and use 1960's tech (and really that was pretty much what a Metro was) you'd make a car most people wouldn't want to buy, so no one makes them. I lament this as well, because I would buy one. But cars need to sell in the millions or have a much higher profit margin (sport cars) to be made. Options like you mention have existed, people just didn't buy them.

Are we experiencing the price benefit of the 18% productivity increase in Real GDP from 2001 to 2011?

And yes I snipped off the rest of your post which actually laid out your argument fairly clearly without using examples that were opposite of the point you were trying to make, etc. I don't have enough knowledge of it all to argue much. I worry about some of the policies, but I also believe that in some cases they have cushioned the blow and that is good.


I'd also invite some deeper discussion from people that know more and understand more than I about this mostly fluff article about Japan's economy the last 22 years. I know they haven't really grown in 22 years and I know many people who have traveled or lived in Japan during that time and it's not a country that has fallen apart like people say will happen to the US and they have made some of the same decisions we are making now.

It's different living in a no growth economy but I believe you don't have to growth beyond what is needed to handle increases in population either, though it may take an attitude shift.